Tag Archives: Twitter

The Reason Twitter Bought Tweetie: User Experience

Twitter recently bought my favorite iPhone app Tweetie  and announced that it would become the official Twitter app for the iPhone. They also said it would now be free. Unsurprisingly, there was a lot of handwringing from the Twitter developing community (and some great t-shirts), but as Chris Dixon wrote, “Until Twitter has a successful business model, they can’t have a consistent strategy and third parties should expect erratic behavior and even complete and sudden shifts in strategy.”

The reason that Twitter bought Tweetie is that they are no longer content to own the platform, they also want to own the user experience. With this increased interest in the user experience, Twitter has changed their ability to impact the customer ecosystem and how they may try and monetize in the future.

Consider how Twitter looked a few days ago:

While acquisition efforts continue to be strong on the basis of a viral growth and an evangelist userbase, there existed serious problems with Twitter’s customer ecosystem. By positioning themselves as a platform, Twitter had enabled literally hundreds of developers/companies to build a user experience for Twitter users. The result, however, was a little bit of a mess. If you’re using a Twitter client ad it’s slow or  loads incorrectly you have to go find another client. The whole process of getting a client (mobile or otherwise) adds to the complexity of onboarding a new user. I think the simplicity of the Twitter website is why it seems to be the most used client.

My personal experience was probably similar to many others: started on twitter.com; drawn to other apps because of advance features; returned to twitter.com for simplicity and performance. The purchase of Tweetie, syncs well with the news that Twitter.com has a major redesign on the way.

Twitter has always banked on simplicity, a simple four input registration, simple communication tools (@ replies, RT, etc.) and now Tweetie… simplest, cleanest, iPhone app around. It must have killed Twitter to see these bloated apps from Seesmic, Tweetdeck, etc.

Twitter has given up being just a platform, they want to control the user experience from end-to-end. Personally, I don’t blame them.

A platform is great, but when the user experience suffers it can cause a lag in user growth or impact the revenue potential of the platform, then you must take steps to be more involved in the user experience. Much like Apple with the iPhone and Facebook,  Twitter is realizing that a tighter grip on the user experience is probably the right path toward  user growth and revenue.

So, now Twitter has a customer ecosystem under control,  the next step will be how to monetize it. I’ve already posited on why I think advertising is the wrong path for Twitter, but I see little downside for closely managing the user experience. Tweetie is/was a great app and this acquisition bodes well for Twitter users from a user experience standpoint.

Why Twitter shouldn’t pursue an advertising business model

First, a confession. I made the decision recently that when I start an internet company it will not be dependent on advertising for revenue. As an aficionado of the lean startup model and customer development process, I believe it imperative to have paying customers from the get-go. When I developed the Customer Ecosystem model, I explicitly included a revenue component that was independent of advertising. The simple fact being that as VC funding becomes more tight and companies need to show their worth more quickly, advertising as a revenue model is going to become a relic… a bubble throwback that we will all talk about, but probably not think about employing.

Recently, Twitter co-founder Biz Stone and COO Dick Cost0lo have  made comments about the first substantial real revenue stream that we’re going to see from the über-hyped microblog company. And if you chose chose advertising (really cool, non-traditional advertising) in the pool…. prepare to collect your winnings.

Even though Twitter has millions of users and can probably become profitable rather quickly, I think it is a mistake for Twitter to pursue an advertising model.

Who has succeeded, and I mean “knocked it out of the park” succeeded in using an advertising model? Google…and that’s about it.

The internet is strewn with the living dead of companies that have tried to become internet kingmakers and failed using an advertising revenue model: AOL, Yahoo, MySpace, MSN Digg, and countless others.

And then let’s look at the key players in the market who generate their revenues from ads, the up-and-comers like Glam Media. Well, they recently took Series E (!) funding.

Many of the businesses that are reliant upon advertising are getting CRUSHED. Look at the the New York Times, NBC Universal, Clear Channel etc… the simple fact of the matter is that it’s becoming very hard to be a business that matters with advertising as a revenue model.

Sure, Facebook may be able to pull it off, but like Google they are also turning the advertising world on it’s head and there’s still no promises of success. Consider:

Google: Changed the advertising world on its head by making ads relevant, practical and contextual. And of course, they executing the living bejeezus out of their  biz model. Anyone with any doubt about about their ability to execute should try to advertise on MSN or whatever the hell they call it now.

Facebook: In the process of changing the advertising world through massive amount of demographic/psychographic data that allows for targeting via affinity. We still don’t know if they will be able to pull it off. Smartly though, Facebook is hedging its bets and looking seriously at other business models.

Twitter: Trying to re-do advertising model. The problem is that they just don’t have the numbers compared to Facebook and their growth is slowing.

I’m not saying that Twitter is in trouble, far from it. I’m just saying that an advertising model, no matter how innovative, will have a hard time succeeding.

So let’s look at what Twitter does have:

  1. Loyal, active (not to mention affluent) users
  2. The attention of the corporate world
  3. A core technology that would be difficult  for competitor to supplant/replace

If this doesn’t spell subscription model, I don’t know what does.

I was excited last week to read that Twitter was considering a subscription model in Japan, only to have them put the kibosh on those plans the next day.

It’s too bad. Because Twitter could have a very strong customer ecosystem:

Acquisition: (Good) Despite somewhat stagnating growth compared to Facebook, and an unremarkable viral coefficient in the truest internet business sense, Twitter spends virtually nothing on acquisition, gets tons of free press and is promoted actively by many corporations and individuals.

Conversion: (Fair) More than half of twitter registrants never follow anyone, tweet or get followed. This is not so bad considering their acquisition numbers, but it speaks to and underlying weakness in conversion to a mass market.

Upsell: (Good) Obviously, we’re in pure speculation territory here, but I see huge potential in multiple subscription levels on both an individual and corporate basis. I can imagine a $5.99 a month subscription for individuals who for the following features:

  • Ability to send direct message
  • Ability to send more than 25@ replies per month
  • Backup/storage/offline accessibility to tweets
  • Support for more than 500 followers

Obviously the corporate subscription would have some similar features, but would focus on marketing/support and would have robust analytic tools.

Retention: (Good) If there was a ever a trapped customer it would be the Twitter customer. Sine Google killed Jaiku (and I’ll never understand that one) there has only been one microblogging platform. Additionally Twitter users love the service and promote it heavily. Eventually, a new technology may come and replace Twitter, but not in the near future.

Twitter is a great company with a world-changing product… let’s just hope that their revenue model (when it eventually comes) won’t consign them to the garbage heap.

UPDATE: Twitter testing enterprise tools. Looks like a good first step.