45 Comments

Summary:

In a few hours, Twitter will host its first developer conference, Chirp in San Francisco. There are many questions surrounding the company’s attitudes towards its third party developers and who it might compete with. In reality, the company has a much bigger challenge ahead.

Photo of Twitter co-founder & CEO Ev Williams by Randy Stewart via Flickr.

A few days back, I stopped by at the brand-new Palo Alto, Calif. offices of Facebook. It is a gigantic open space, with desks lined up next to each other as far as the eye could see. Interiors that could provide an apt backdrop for an IKEA catalog. Big screens, Macs and PCs and engineers with headphones tap-tapping on their keyboards. To a Silicon Valley long-timer like myself, in the words of The New York Yankees legend Yogi Berra, it was like déjà vu all over again.

You walk around the office and as an outsider you suddenly feel less smart as you feel brain waves bouncing off you. A quick chat about engagement advertising, a conversation about super-sized data centers and a 30-minute gab session about the future of activity streams -– all this at arms length. Add suits to this mix and you are looking at a fearsome combination of brains and business. So when I walked into a meeting with Facebook COO Sheryl Sandberg, I said: “This feels like an old-fashioned technology company — congratulations!” It’s old-fashioned in its invention of the future.

By now you must be wondering — what has this got to do with Twitter and its problems? How about — everything!

Why? Because the future of these two companies are intertwined! They are the Kane & Abel of our new pulsating two-way, near-real-time Internet. Together, they dominate the zeitgeist. They are the future of communications and interactions. They already have a large portion of our Internet attention. To put it simply, they are competing for essentially what is the next evolution of the Internet: The People Web.

If Facebook’s vision of the Internet is about an Internet connected to Facebook’s brain via hooks, then San Francisco-based Twitter is the anti-Facebook. Mark Zuckerberg and his troops are marching like an all-conquering Roman Army that will soon enough cross the billion-dollar (in revenues) threshold. And they control their own destiny.

In comparison, Twitter at present feels like a benign United Nations Force. Forget the obvious metrics such as subscribers (where Facebook has a big lead over Twitter), what I’m talking about are the two companies and where they are in their corporate lifecycles. Twitter, despite its recent growth spurt, is still a pre-pubescent. The introduction of a somewhat ambiguous and tenuous business model based on an ideal called “resonance” shows how much work is ahead of Twitter.

Back to the Future

In order to understand the steep road ahead, one has to go back to the earliest days of Twitter and see how it has transformed since its launch on a fateful night in 2006. Over the past three years or so, I’ve watched it go through three phases:

Phase One: Twitter was initially a messaging service with its primary role being connecting distributed group of friends via SMS and the web. It used the SMS clients of the cell phone and that was it. It later launched a web version of the service.

Phase Two: Twitter, when it released an API, became a platform that in turn spawned hundreds of applications that used the API, which led to several million dollars being invested in the Twitter ecosystem, betting that Twitter would eventually become the platform of the new social web. (Read: Social Atoms and the Twitter Ecosystem)

Phase Three: Twitter is trying to be a product and then a platform. In the process of doing so, the company is “filling holes” in its current offering, as described by one of Twitter’s early backers, VC Fred Wilson. The acquisition of Tweetie was merely the start of phase three. (For a common sense explanation, check out this comment by a GigaOM reader.)

While Twitter’s actions might have raised the ire of third-party developers, leading to furious hand-wringing, the company is doing what it needs to do: justify its $1 billion valuation and figure out a way to become a business that can be sold — either to a corporate buyer or someday to public market investors. That’s why I don’t really fault Twitter trying to be a product in addition to being a platform. Now here is where things get interesting.

So far, by not focusing on being a product and instead being a platform of the People Web, Twitter has been viewed as a company that would help weave a social fabric across the web by providing a social graph and an identity system. The developers then could dream up fancy products that would attract more people to the Twitter fabric. However, reality often comes in the way of utopia.

Twitter needs to build a “product” in order to make money. Sure one way to make some quick dollars is to sell its data stream to Microsoft and Google, but to me that’s like selling the mining rights to a gold mine instead of panning for gold yourself. No wonder the company has to fill the holes.

Herein lies the rub –- the company will need time to build (or cobble together) this product, figure out a way to generate revenues and at the same time build and scale a massive infrastructure that would support Twitter and its ecosystem. And that is precisely Twitter’s weakness.

Fear of a Facebook Planet

On the flip side, Facebook is moving in the exact opposite direction. It already has a product: Facebook.com. It is making hundreds of millions of dollars from it. It has a platform, but that wasn’t good enough, so it is going to introduce a new, vastly improved one at its upcoming F8 conference in San Francisco later this month. In a conversation earlier this year, Facebook’s platform engineering chief, Mike Vernal, told us that Facebook.com was nothing more than “info aggregation with a great photos app.”

Using the Open Graph API, Facebook wants to turn any plain web site — say, CNN — into a Facebook page, giving it the ability to collect fans, publish stories to their Facebook stream and appear in the social networking site’s search results. (Read: Why Facebook Connect Matters and Why it Will Win.)

Liz put it best when she summed up our visit to Facebook by saying, “Though Facebook fan pages on the surface seem like a response to Twitter — allowing celebrities to collect fans who are not actually their real-world friends — they’re bigger than that. Facebook has trained 350 million users to publicly post-personal endorsements. In other words, it has an army of volunteers ready to organize the web on its behalf.” Now you can also understand why Facebook is building its data centers, buying thousands of servers and spending millions of dollars on developing a massive software library.

Facebook.com (or Facebook Mobile) allows the company to make money. Facebook Connect is the platform (read: tentacles) that makes it possible for Facebook to collect data from across the web, organize it for the People Web and in the process, make more money.

What is to Chirp About?

Tomorrow, Twitter is going to host its first developer conference, Chirp. I am going to be very interested in knowing and learning about how they are thinking about the future and how quickly they are going to rev up their machine. The good news is that they have some great people who have built awesome products in the past — Dick Costolo (COO) and UX expert Doug Bowman are amongst the most well known apart from the co-founders Ev Williams and Biz Stone — especially on their engineering team.

Nevertheless, what Twitter says or doesn’t say will in many ways define the outcome of this great (web) game. Zuck’s Army is on the move. Twitter is still assembling its troops. Whichever way you look at it — that is truly Twitter’s real big problem!

Photo of Twitter co-founder & CEO Ev Williams by Randy Stewart via Flickr. (CC)

  1. Ian Greenleigh Tuesday, April 13, 2010

    I’m getting to a somewhat surreal phase in which people frequently seek out my opinion about the various social media platforms out there, questions usually prefaced by “We were trying to figure out if it’s worth…” When the questions surround Facebook and FB Connect I tell them that I don’t like either one. They seem somewhat shocked, and simultaneously, relieved.

    “But,” I say, “that doesn’t mean I don’t need to invest heavily in making sure I’m there, on Facebook (and on Facebook-connected nodes) with the 400 million people that use it an average of an hour per day.”

    Your post today brought up this same fight for objectivity I’ve mentally struggled with of late. I don’t personally like hanging out on Facebook, but this should be of no significance to my employer, or anyone else for that matter. I fancy Twitter for personal use, but as you illustrate so well above, it is a “prepubescent” business model they’re working with, no matter how cool it is.

  2. I couldn’t agree more Om – Great post!

    I think with Twitter it’s all going to come down to ” Bells & Whistles” and F.B is leading this charge for the social fabric in our lives …

  3. Sanjay Maharaj Tuesday, April 13, 2010

    Om, So you see Facebook as a real threat to Twitter who is only now begining to define their revenue model. I see the two in co-existance, people will live on Facebook but Twitter is where people will commuicate in an instant. Don’t you think it is bit unfair to compare the two when Twitter is only a few years old while Facebook came into existance long before Twitter did and Facebook went through the same growing pains and search of a revenue model like what Twitter is goign through now?
    I guess the challenge for Twitter in the past has been to make it a utility which people will will use over and over again and now that they have been successfull at that [50 million plus Tweets a day] and have become a utility they can now figure out how to monetize this.

    1. Sanjay

      You missed the point — the point is that despite being a cool service, the big problem for Twitter is to stay relevant and become a real business at a time when one of its biggest rivals is executing on all fronts and essentially trying to steal its thunder.

      Rest is just noise in my opinion.

      1. Om, thanks for your comments,I think Twitter will be a relevant player in this space once they are able to get through their growing pains and defining their revenue model. You are correct that it needs a good and fast execution strategy

      2. Om, I think you forget the point that FB and twitter are apples and oranges in the evolving social space. FB is an individuals tool that is trying to incorporate API gadgets to overlay a social mob component outside its core competency. Twitter on the other hand is much more mob based and in a realtime environment that lends it relevancy to communication areas that are hardly conceived of at this point. Twitter will alone change some aspects of the news industry in the near future and who can say where it goes from there. FB, will do what they do and expand to try to take over the world. Yet, in the end, if they’re not careful they will dilute what made them great and become the next aimless MySpace.

  4. Andrew Anderson Tuesday, April 13, 2010

    Maybe because it is late, but I am still trying to figure out exactly what your the point you are trying to make is.

    Can you sum it up in one paragraph for me? I am serious.

    Facebook it cool and all but, Myspace was once in Facebook’s position too.

    My bet it that in 5 years there is something new that will be at the top of the food chain. In fact, I think I got a glimpse of it last week. But we will see.

  5. @andrew
    I think facebook will be lasting longer than myspace. myspace is no more than static user pages, but facebook is a lot more.

    1. Thanks for making that point on my behalf. Saved me time to answer that question, though he doesn’t realize the difference between MySpace and Facebook is that MySpace wasn’t a tech company. It had as much technology innovation capabilities as a neighborhood taqueria.

      Of course, he didn’t read the bit about Facebook building actual technology which is what gives them an edge. Or that they are ready to explode themselves as long as they get to dominate the social web.

      Oh never mind. I need to go pack :-)

      1. I agree FB is way more than any MySpace will ever amount to. I mean the switch from MS to FB was like a Godsend moment. MS is like the old web as FB is the new web IMHO.

  6. Interesting. I think Twitter is a pimple on FB’s ass and it’s hard to see that changing. Twitter is about publishing content. 95% of users don’t come back regularly, it is a basket case of engagement. The need for them to monetize through “Tweetsense” with this bs resonance overlay is frankly a little embarrassing if that’s the best they could come up with. Ads in communication tools are just bad for everyone. I think Twitter has more chance of being worth $100 million than $1 billion.

  7. Twitter is so radically different than FB, the two should never be spoken in the same sentence.

    FB wants to be the everyone’s birth certificate on the web. Facebook Connect is seeing to that. Twitter wants to be the pulse of the world, and where ever there is trouble and strife, we hear of it first on Twitter.

    People will never use Facebook to break news, just as Twitter will never be the de facto social hub for family and friends. The two are mutually exclusive.

    1. “People will never use Facebook to break news”. Wrong! The Obama campaign and election for instance showed how FB could be the pulse of the world and in a more efficient way. Another example is the recent haitian earthquake. During that time, some people I know used FB to ask if any FB user could locate their buried family members. FB is real guys! Twitter ain’t there yet. Journalists are using it, I got to admit (e.g. election in Iran), but OM made a point. Twitter could really be eliminated by FB who already offers status updates, makes money, is a product, is a platform, does not loose 95% of their users after the first visit… Twitter should come up with more or with better or with more I don’t know… IMHO.

  8. Om,

    Thank you for such an insightful article. I see your points for the power of Facebook especially the way they continue to extend their tentacles across the web. It is tough to avoid the power 400 Million people bring to the party.

    I do suggest not ruling out Twitter just yet. Their power lies in the real-time interaction between people which is another powerful tool companies can leverage. Facebook has not cracked the real-time interaction yet.

    My suggestion…Twitter needs to develop an easier way for new users to understand how to use them effectively. A high rate of users don’t return to Twitter because it is hard for them to grasp what to do in the beginning especially when most people are used to the easy user experience of Facebook.

    @Rohan
    I could not agree with you more regarding ads in Communication tools. People don’t want them and will quickly grow frustrated when they get forced on them. The frustration will lead to migration to other communication tools not inserting disruptive ads.

  9. Very interesting post but I agree somewhat with Sanjay. Do Twitter and Facebook really compete? Facebook is a totally different beast. Twitter has now become an information sharing service the ultimate news aggregator, Hence why they changed the tag line to what’s happening now. Also with the launch of @anywhere this puts Twitter out there in the same as Facebook connect. I agree that it is still becoming a product and I think there is somewhat of an identity crisis the peoplem using twitter seems to be the ones moving it in the direction it is going. From a personal point of view I treat the platforms extremely differently and do beleive it will be a co-existence that will compliment each other rather than necessarily compete.

  10. Medha Vedaprakash Wednesday, April 14, 2010

    Great food for thought Om! I couldn’t agree more. Twitter needs to move away from being a feature to providing a real product first that attracts new users and creates stickiness for existing ones. FB has definitely won the audience game and soon we may even see the government or the united nations run on its platform:) But isn’t that FB’s biggest downfall or are they too big to fail? Interesting to see how this social media war unfolds!

Comments have been disabled for this post