Can the fledgling microblogging service become a social media powerhouse to rival giants like Facebook—or will it be gobbled up?
It's easy to laugh at nonsense on Twitter, the microblogging rage. "My nose is leaking," writes someone called Zapples,
"so imma go to sleep now.…" But I've heard lots of similar drivel (and
even produced some myself) on the phone—an important technology if
there ever was one.
The key question today isn't what's dumb on Twitter, but instead how
a service with bite-size messages topping out at 140 characters can be
smart, useful, maybe even necessary. Here's why I'm looking. In the
last few months, the traffic on Twitter has exploded, growing far beyond its circles of bleeding-edge tech enthusiasts and hard-core social networkers.
Businesses such as H&R Block (HRB) and Zappos are now using Twitter
to respond to customer queries. Market researchers look to it to scope
out minute-by-minute trends. Media groups are focusing on Twitterers as
first-to-the-scene reporters. (They were on top of the May 12 China earthquake within minutes.) Loads of new applications and services
are growing around the Twitter platform, leading some to suggest that
the microblogging service could become a powerhouse in social media.
Popularity Brings Outages and Funding
Twitter has come a long way since its grand debut at the South by Southwest tech conference (BusinessWeek,
4/02/07) only 14 months ago. It quickly landed $5.4 million in venture
funding. New crowds learned to communicate in haiku-length blog posts,
even throwing in Web links with abbreviated addresses. They developed new vocabulary, with new verbs, including the all-important "to tweet."
But with Twitter's soaring popularity comes one big problem:
All-too-frequent outages in a service that seems to be outgrowing its
own technology. In the last month, the company has replaced key members
of its tech staff, including lead architect, Blaine Cook..
To ramp up, San Francisco-based Twitter appears to be positioning itself for another round. A Cnet (CNET) report in April said the company is raising $15 million to $20 million. Twitter won't comment on funding, but Fred Wilson, a partner at Union Square Ventures, an investor in the first round, doesn't deny the rumors. "Where there's smoke, there's fire," he says.
What the Future Holds
So, I set out to delve into Twitter. And on May 8-9, I looked to
Twitter's own community for help, asking the following questions:
• Is Twitter a fad, a feature, or a growing giant?
• How are businesses using Twitter?
• What is Twitter worth?
• A fourth question, implicit in the whole exercise: Should we all be Twittering?
Responses poured in, more than 250 of them, some pure opinion,
others furnishing facts and links to blog posts and articles. You can
read many of them on Twitter search engine Summize by looking for #bwstory.
Social Habit
Much of the Twittering crowd argues that Twitter will continue to grow
in importance, perhaps rivaling other social media powers such as Facebook. "I have hundreds of friends on FB, but have done 10x the networking, connecting & communicating on Twitter," tweets Christian Anderson.
Biz Stone,
a Twitter co-founder, tells me on the phone that the plan is for
Twitter to grow by a factor of 10, or even 100. "It can become a
communication utility," he says, "something people use every day."
How could tiny Twitter ever become such a titan? It's not the core technology, which is simple, but instead the community. Twitterers find and follow the people they care about on the service. Late in April, following one of Twitter's outages, TechCrunch's Michael Arrington wrote:
"I realized that in the last two months a subtle shift occurred: I now
need Twitter more than Twitter needs me." Arrington, who has nearly
17,000 people following his Twitterstream, continued: "It is now an
important part of my work and social life, as I carry on bite-sized
conversations with thousands of people around the world throughout the
day. It's a huge marketing tool, and information tool. But it is also a
social habit that's hard to kick."
Developer-Friendly
It may seem to Arrington that everyone he cares about is Twittering.
But despite impressive growth, Twitter's universe is small. Estimates
for the Twittering masses range between half a million and one million
active users. Even if this undercounts the number of those who post
their tweets through cell phones or other sites, Twitter is still
pint-size compared to Facebook, with its 70 million users. And even on
Twitter, plenty of people predict that the crowd will abandon the
service en masse when something more alluring turns up. "Too flakey,
both technology wise and audience—too fickle," tweets one.
Still, there are a few reasons why Twitter might endure. First, it's
simple and easy to use. What's more, Twitter is weaving itself into
larger networks. Most recently a link with News Corp.'s (NWS) MySpace will enable users to shuttle data between those sites, eBay (EBAY), and Yahoo! (YHOO).
Also, like Facebook, Twitter has a large and vigorous developer
community. "It's already a platform, a classic textbook definition," tweets Jonathan Yarmis of AMR Research. David Troy,
for example, founder of Roundhouse Technologies in Baltimore, recently
launched a geography application called Twittervision, where you can
click on a country—say China—and see the tweets as they appear. "We have more local stuff coming," he says. Another application, called Twistori, shows a stream of Twitters showing what people are wishing, feeling, thinking.
Promotional Tweets?
Businesses, of course, are more interested in what Twitterers are buying. Dataminers like Seattle's Visible Technologies are helping companies such as Hormel Foods (HRL) and Panasonic pore through millions of tweets, finding customers talking about their products. Dell (DELL),
a Visible customer, scouts out the tweets and dispatches its Twittering
workers to jump into the conversations. At a conference last week, the
company claimed to have boosted sales through these efforts by $500,000 in recent months.
Lots of other companies are starting to use Twitter for quick customer
service. To see whether they were really on the line, we held a race. We sent a tweet. Seven had responded within an hour, led by H&R Block.
The Search for Viability
One of the last questions we asked: If you could invest in Twitter,
would you? It's a key question. To get the funding it needs for its
tech upgrade, and perhaps an eventual stock offering, Twitter needs to
make a viable business case. If it falls short, Twitter is more likely
to wind up as an application in a larger Web company, such as Google (GOOG). The company has launched an advertising program on its site in Japan, but it's "largely experimental," Stone says.
Twitterers, of course, have all sorts of ideas about how to monetize
the system. Some suggest subscriptions, or perhaps using promotional
tweets every once in a while tied to the words in tweets. Stone avoids
details. The goal now, he says, is to raise money, nail down the
technology, and grow Twitter until it's enormous. Money comes later.
But he and the others know that if they wait too long, Twitter risks
disappearing into the belly of a competitor or succumbing to copycats.
And that's provided that those of us who Twitter so prolifically now
are still hooked on 140-character communications.
Check out the BusinessWeek.com slide show to learn more about the Twitter story.
