Another day, more Twitter. Are you annoyed? Fine, so am I. But you see, if you are a budding manic techno-bloggo–analy-journalist like myself, you need to cover this stuff. There’s this thing called Search Engine Optimization (SEO), which is why most people on the Internet write about Twitter.
For those of you who don’t know what Twitter is: It’s a software application designed to make the world even more manic and ADD-driven by encouraging people to broadcast any thought they’ve ever had into the Internet via the use of text messaging. I break down the Twitter camps into three kinds of people: 1) The people who are addicted to it 2) The people who hate it 3) The greedy bastards who want to make a lot of money on it.
As I detailed yesterday there are a ton of venture capitalists into the company at valuations up to $1B! Keep in mind this company just started generating revenue in the last part of 2009. The revenue is likely small, but it will now grow fast, now that Twitter has invited large corporations to inject their messages into the text-topia.
But what about the little guys, the Twitter parasites? There are a dozens of little startups which are developing “apps” or add-on features that integrate with Twitter. Some examples are Seesmic, TweetDeck, StockTwits, Twitpic. Yes, it seems like everybody and their cousin in Alabama has started a Twitter app company. What’s to become of them?
Well, Twitter has caused a big kerfuffle in this world, first by buying Tweetie and then announcing it will introduce its own link-shortener application. This has spread fear and panic among Twitter applications developers that Twitter is about to go on a campaign of either cherry-picking the apps it likes or replacing the functionality with internal development that puts many of them out of business (as a link-shortener app will likely do to Bit.ly.
This “meme” or idea was originally baked into the blogosphere by venture capitalist Fred Wilson (who also happens to be a Twitter board member). He asked if these Twitter parasite applications were the General Computer or the Lotus of the 1980s. General Computer, you probably never heard of. Lotus went onto a long and distinguished software career and was eventually bought by IBM for $3.5 billion.
I have an even better analogy: TCP/IP stacks. At the outset of the Internet revolution, there were a whole gaggle of companies that sold “TCP/IP stacks,” which added incrementally better functionality to how your computer could access the Internet. Sounds kind of absurd, doesn’t it? Just like it did with many applications, Microsoft decided this was a relatively easy thing do do with its billions of dollars so it simply filled in all this functionality itself, buying some smaller companies and building other pieces on its own. Microsoft decided to just bundle the TCP/IP elements in Windows 95 with a service pack. The essentially eliminated the TCP/IP stack business.
The TCP/IP companies included NetManage and FTP Software, both of which went public (it was the Internet bubble after all) ! Netmanage later acquired FTP. The combined company achieved more than $100M in revenue, but that was the peak of the business. NetManage limped along for many years and was eventually acquired by a company called Micro Focus in 2008 for $73M.
Well, the writing is on the wall for the mini-Tweeters. Don’t be greedy. If you built something nice and you get an offer from Twitter you should probably take it, cause they could put you out of business pretty quick. If you are not part of the mother ship, you’d better get on board soon. If you are a company developing incremental technical funcationaly (such as Bit.ly), you’d better either sell out to Twitter or do something else. It’s far too easy for Twitter to add features like this on its own. In the case of Bit.ly, what I suspect happened is that Twitter offerered to buy them, they said no, and Twitter said, “fine, then, we’ll build it.”
Pay attention to the Microsoft lesson, you mini Tweeters. It’s time to sell. And don’t haggle to much on the price.