Dear Twitter: You're a Utility - Get Off The Fence And Start Acting Like One

On Friday Twitter suspended UberMedia's UberTwitter, Twidroyd and UberCurrent apps for "violating Twitter policies and trademarks." Twitter continued: "We’ve had conversations with UberMedia, the developer of these applications, about policy violations since April 2010". UberMedia's Bill Gross then responded by saying the suspensions "took us by surprise". Huh? Wha? We're obviously not getting the whole story from either side, but it's clear Twitter had had enough of UberMedia's creative interpretation of their TOS to take a dramatic action to make their point.

The blogosphere is preoccupied with the notion that this is proof that Twitter is at war with the developer ecosystem and that they're somehow manipulating the playing field to favor their own homegrown apps. But that discussion misses the larger point: Companies like UberMedia are attempting to profit directly at the presentation and consumption end of the stream infrastructure that Twitter has bought and paid for. IMO UberMedia has the right to monetize "consumption environments" (their apps) that add value to end users. At the same time, Twitter deserves to be compensated for the utility they're providing to UberMedia. 

The only issue here should be: Who gets paid and how much?

Twitter is at an important inflection point. They need to come out and clearly articulate their position on attempts by outside parties to monetize the stream(s) built on top of their infrastructure. My personal opinion is that Twitter should construct a model whereby commercial “rebroadcast” companies like UberMedia can choose to monetize streams delivered on their platform(s) however they want, but they must compensate Twitter on some type of metered basis (API calls or other) for providing the underlying infrastructure that gives UberMedia the opportunity to monetize on Twitter's back in the first place.

At the end of the day Twitter is an information utility – they’ve admitted as much on several occasions. They should start acting like one and begin pricing their product accordingly. If not, we can expect more of these types of altercations going forward.

The Probability of Facebook Acquiring Twitter is Exactly 0.0%

The WSJ ran a piece yesterday entitled 'Twitter as Tech Bubble Barometer' in which they reported executives at both Google and Facebook have had "low level talks" with executives at Twitter about a potential acquisition of Twitter. In the very next sentence they state that "the talks have so far gone nowhere". Ok let me get this straight: Low level talks that went nowhere - wow, that's quite a scoop! Their fascination though was on the rumored $8 - $10 billion dollar valuation of Twitter and on whether Twitter would be more likely to end up with Facebook or Google. Well let me answer that question, at least partially: 

The probability of Facebook acquiring Twitter is exactly 0.0%.

The only thing that Facebook and Twitter really have in common is the status update. However, the respective environments in which these updates are created, exchanged, and acted upon are radically different. Twitter is a public space and Facebook is a private (or semi-private) space. It's almost incomprehensible to imagine how a combined entity would resolve these two spaces in to anything that would provide any real value to its users. In short, a Twitter/Facebook combination would be a functional / experiential train wreck.

An acquisition by Google on the other hand is an entirely different matter. Twitter's orientation around the "Interest Graph" makes it ultimately much more monetizable over time than does Facebook's Social Graph, and it dovetails quite nicely with Google's subject-matter / intent-based value proposition. Twitter and Google are in this sense highly complimentary. No such synergistic relationships exist between Twitter and Facebook.

If Twitter ever figures out that its primary value proposition is in its broadcast / notification capabilities and starts to re-orient its product around the channel metaphor as outlined by Joshua Kerievsky at Industrial Logic, they (Twitter) have the opportunity to ultimately become substantially more valuable than Facebook. Unfortunately the Twitter product has essentially drifted sideways for the last two years. Until they get someone on board who has a strong vision toward driving the product (and revenue) beyond the "Promoted" suite of ad products, they risk falling disappointingly short of realizing their full potential value.

For the time being I don't see Twitter entertaining any acquisition overtures. They have $300 million in the bank which gives them plenty of runway to figure some things out. If they can re-orient the product in the next year like I hope they will, they'll have no problem getting to an IPO. And remember, neither Twitter's current nor former CEO are especially fond of Google - both had their companies acquired by Google (Evan Williams with Blogger / Dick Costolo with Feedburner) only to watch Google essentially bleed them to death.

The only way that Twitter sells to anyone is if Dick can't get the revenue machine cranking on all cylinders within the next 12 - 24 months. If he can't, I think the board takes it out of his hand and takes an offer from Google at between $15 - $25 Billion dollars. My bet (and hope) however is that Twitter eventually finds its groove and goes it alone. 

UPDATE: Felix Salmon from Reuters wrote an excellent piece today entitled "Understanding Twitter's Valuation". I highly recommend it, especially if you've wondered how a rational person could value a company with relatively meager revenues of less than $50M at an enterprise valuation of $10 Billion dollars.

The Inevitability of Facebook, and other Fairy Tales

I don't believe in the "inevitability" of Facebook or Jack in the BeanStalk, although they're both great stories. To me Facebook is simply AOL circa 1998 dressed up in new Web 2.0 clothes. Don't get me wrong, I do think they'll end up being a very profitable company - just not as profitable and all-encompassing as many believe. Here's why....

What's happening now is the money-making limitations of being a Social Graph hub are being exposed, and Facebook has been forced to bastardize it's privacy policy and perform emergency business model surgery because of it. The hockey stick expectations of Facebook's future revenues need to be adjusted to reflect these limitations. In fact, if it were possible to arb Twitter against Facebook (Long Twitter at $1.5B and Short Facebook at $15B) I would do it immediately. Long 10 units of Twitter against short 1 unit of Facebook at current valuations to make $15B against $15B. It's the ultimate bet that the Interest Graph oriented platform monetizes better than the Social Graph oriented platform over the long term - and that Twitter's management is superior to that of Facebook's.

And therein lies the irony of Personal Graph monetization (I'm defining the Personal Graph as the combination of one's Social and Interest Graphs): People wont pay to communicate with people they already know, but they will pay (in one form or another) to connect and interact with people and content they're interested in but not currently unaware of, or are hard to find. You see, Facebook's decision to initially orient around a user's social graph is what will ultimately constrain it's ability to monetize at scale. At a certain point your symmetric "friends and family" Social Graph constrains your expression and exploration in a way that asymmetric, distributed Interest Graphs do not.

With that as a backdrop I wanted to pass along Loren Feldman's post on his decision to quit Facebook. I know a lot of people feel like Loren does - that Facebook is redundant and/or of little use outside of  keeping in touch with friends and relatives. BTW, there's nothing wrong with keeping in touch. It just doesn't make Facebook the $100 billion dollar company that many predict it will inevitably be.

Anyway, I'll have much more to say on this going forward. For now, here's Loren's post:

1938 Media / Report #17

I Quit Facebook

So I quit Facebook. I did it for a few reasons. None of them particularly "heavy".  I spoke about them on my site. I'll explain a little more here.

I never used it. I really never did. It was just too much. I have time to spit out bullshit to twitter in between other shit. It's easier.

It was impossible to figure out how to use whenever I did try and use it. Simply the worst interface ever. All the different fucking settings and walls and pages and profiles. Is it all cross posting? What's the difference with all this shit anyway? It was impossible to figure out.

I don't trust them. It's well documented how umm maybe less than honorable with people's data and privacy Mark Zuckerberg really is. Do a quick search on the matter if you are unfamiliar. His sister Randi is Julia Allison's best friend, need I say more?

It's not going to hurt my business one bit. It's not. I'm bigger than Facebook. I don't mean that arrogantly I'm just saying that I think my brand is established and I have a really cool site that I control. It's where my AUDIENCE and COMMUNITY is. I am Loren Feldman of I am not
So that's basically it. No big deal really. What is a big deal though is this newsletter. I've been enjoying writing lately and I'm going to do more of it here. 
As always thanks for the support.
Best Regards,

Tribes are what matter, and Twitter is the perfect place to find your Tribe

I've watched this talk from Seth Godin at least 10 times over the past few months. And every time I watch it I think about Twitter, and the incredible power that it provides to anyone on the planet to start, join or expand a Tribe they're passionate about. Take a few minutes and watch this video, and think about what's possible. @socialmedia411 is a small example. The untapped opportuntities out there for you and/or your organization are enormous.

Seth Godin on the Tribes We Lead

There's a lot more great TED talks at