Kevin Wassong is the president of Minyanville Media Inc., a digital network that creates branded content about the world of finance. Prior to joining Minyanville, he built one of the first “new-media” advertising agencies, digital@jwt, within J. Walter Thompson, and before that was assistant to the chairman of Creative Artists Agency as well as a development executive with network TV shows including Golden Girls and Empty Nest.
I consider myself an early adopter of technology. I had all the first Apple (NSDQ: AAPL) computers–and still have them. I also was online in the early ’90s through Prodigy, and I had Pointcast for those who remember. (Hopefully they bring that one back now that bandwidth has caught up with the times.)
I’ve worked in technology and the Internet for almost 15 years and I’ve seen companies come and go. I’ve lived through the dot-com boom and bust and resurgence. There have been a number of occasions where I’ve asked, “What am I missing?”
Twitter is one of those occasions.
I Tweet, but I have yet to figure out why. I have also yet to figure out how Twitter can make money.
What am I missing? Twitter is a $250 million company? Really? It’s actually instant messaging but semi-useless unless you have a tremendous amount of time on your hands or took an Evelyn Wood speed-reading course. Are people willing to pay to broadcast the most mundane crap about their daily life? The better question is: don’t we have something better to do than read about the mundane crap of someone else’s life?
Investors are practically throwing money at Twitter in the hopes that it’s the next Facebook. Well, Twitter. you sir are no Facebook. This brings me to my point: There’s a trend emerging that feels awfully familiar. It’s the trend of chasing the next big shiny thing.
In 1999, I was running the interactive division of J. Walter Thompson. I had started the group in the New York office. The oldest advertising agency in the world was devoid of any technology or interactive marketing unit. The 30-second spot ruled the day. About two years into starting this division, a senior executive who had just left CNN to join a company called All Advantage approached me. He took me, my head of account services and media director to lunch and put an offer on the table. “I want to hire the three of you: marketing, business development and sales,” he said. He explained the business model, and at the end of the meal said, “What do you think?” I asked him two questions: “What am I missing? How do you ever make money?”
I told him no matter how many times he tried to explain it, I still did not get the idea. I could not figure out how the company would ever make money. My head of account services and media director both left to join the startup. All Advantage raised over $200 million. The concept was this: Download a small application to your desktop. Set up a profile. Start watching ads and get paid for the ads served that were based on your profile. More targetable, higher receptivity, shared revenue with the viewer. That was the theory.
Except, advertising was invented so someone could foot the bill for good content consumed by consumers. When my assistant received a check for $25 from All Advantage for one week of viewing, I knew then that they were onto something, but not what they thought they were onto. They were onto how to bankrupt a company in the shortest period of time. And, they did that successfully!
My account-services director had relocated to San Francisco for the head of marketing job. He called me and said, “This place is amazing. We have a new building on the 101 and we’re hiring 700 people.” Seven hundred people! I asked him to explain how the company was going to make money. And I still couldn’t understand. Less than eight months later, he called to say they were shutting it down and he was moving back to New York.
I feel like I am having deja vu all over again. When venture execs start making statements like, “We’re not concerned about revenue,” you know that we’re going off the rails on a crazy train. The internet is about innovation and creating new business models or accelerating old ones, but inherent in innovation is something called a business model. And inherent in creating a business model is something called revenue. There are businesses that are before their time in generating revenue. YouTube is one. It will ultimately succeed and luckily it’s owned by one of, if not, the deepest-pocketed company in the world.
Don’t get me wrong — I’m a friend of the Twitter trend. I have Tweetdeck and my team Twitters, but as I said at the outset, I must be a twit, because I’m missing how this company will ever live up to the hype of what it has become. Times like these are the breeding grounds for innovation. The Great Depression was the catalyst for growth and innovation with companies like Disney (NYSE: DIS), IBM and United Technologies emerging as leaders on the backside of the economic disaster. But these companies had a key element to their foundation: revenue and a business model.
Plato said, “Necessity is the mother of invention.” With Twitter, I’m seeing the invention; but I’m missing the necessity.