Twitter's One Real Problem. No, Not Developers!

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)

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