If it’s one thing folks in the valley and elsewhere in the blogosphere like to pick on, it’s Twitter’s revenue model or lack thereof. Techcrunch enlightened everyone today on the hoax by BBspot about Twitter’s purported premium accounts,
The author of the post mocks Twitter’s lack of an apparent business model after 3 years in operation, and writes that the startup’s CEO Evan Williams today finally announced plans to introduce a paid premium account scheme. Never mind that the news would have gotten broken on an obscure blog when the U.S. is mostly asleep, but other things should have given away that this concerns a hoax.
Twitter revenue is no doubt a sensitive issue for the VCs who are coy on the subject. Last month, it was Readwriteweb who reported on a conversation with Todd Dagres, one of the investors in Twitter. Dagres laughed off questions on Twitter’s business model or lack thereof,
“We think it’s kind of funny…We know how we’re going to do it, and we’re very confident about how we’re going to do it, and it’s not necessarily in our interest to tell people how we’re going to do it.”
I can see his point of view, the VCs are probably thinking that here are a bunch of free-loaders (aka Twitter users) questioning our judgement. As if we would invest in something that didn’t have potential or didn’t have a plan to monetize it.
Note: Even if these VCs decided to flush a truckload of money down the toilet, it’s really their business and their stakeholders’ problem because they’ve invested money in the company, not the average user.
So why do we care so much about Twitter revenue and go into a frenzy every time someone mentions “Twitter” and “revenue” in the same sentence?
Twitter-envy: Let’s start with the most obvious reason and that’s the good ol’ fashioned green. Many rational people with entrepreneurial aspirations are probably wondering – how on earth did Twitter get all that dough and other much-deserving startups didn’t? What makes Twitter so special? Also, Twitter’s growing popularity can’t be making folks on competing social sites, too happy either.
Curiosity is only human: While newly minted entreprenuers are looking for clues in the Twitter story, for what will get them funded, others are just …curious. Afterall, Twitter is the greatest phenomenon in recent history and everyone seems to be talking about. It’s shocking to the common Joe/Jane who aren’t as well-versed in the ways of the Silicon Valley as to why this “phenomenon” doesn’t make any money yet and has to be propped up through private funding.
It’s like crack: Let’s face it, Twitter is an addiction. Once you get going, it’s hard to stop. It’s not as if users were born with it or even grew up with it, we had to change our behavior around Twitter. This time, 5years back, how many people were thinking, “Hmm..I think I’ll send out a 140char message to (thousands of people whom I’ve never met ) about my imaginary cat.” Twitter has changed the way we communicate and share information. So, naturally loyal users don’t want it to go down the tube, they want it to live long and prosper. In this day and age, how many brands can boast of such unconditional loyalty?!
Don’t forget the Twitter ecosystem: Let’s do a fun experiment. Google all the apps and sites out there that start with ‘Tweet’, ‘Twitter’, ‘Tw-something’. and count them. Thanks to the wonder that is an open API and thriving developer/entrepreneurial base, there are thousands of startups and related consulting businesses that are all based on one product and that’s Twitter. Can you imagine what would happen to these businesses if there was no Twitter? There’s an entire ecosystem built around one shining star and the possibility of that star failing is (and should be) making many folks nervous.
Lastly, nothing lasts for ever: ..and certainly not VC-funding. One doesn’t need to be a rocket scientist to know that if Twitter doesn’t make money soon or get acquired, there’s a good chance VCs will pull the plug . Of course, the assumption benig that VCs are rational businessmen and make these kinds of decisions based on a site’s revenue-generation potential. I mean, how many more years will the VCs continue to fund this non-revenue generating site? Afterall, this is serious business not a hobby, right?!
In any case, investors in Twitter should be grateful for the attention because it’s the buzz that’s going to keep this site alive and kicking. There is really no such thing as bad publicity and the last thing, any stakeholder in Twitter wants is the site to become irrelevant and out of the news.