I woke up this morning to a post on TechCrunch about an impending Google acquisition of Twitter. Jeff Pulver, a Twitter investor, offered his perspective on his blog, and Ouriel Ohayon wrote it up as well.
It’s become very clear that Twitter is a runaway success. There are lots of reasons for this, but I want to concentrate on the two that I think are the most interesting:
- Twitter lowered the barriers to UGC effectively to zero. This, in my view, is the underlying reason for the massive adoption. Twitter is not really a medium for consumption. It’s a medium for expression – and its really really easy. What’s more, the fear factor is reduced to almost nothing because even if you say something stupid, it quickly dissolves into the endless stream of tweets and disappears. While its very possible to write brilliant tweets…most tweets are far from brilliant…but who cares? We’re participating. Ever since Geocities made it possible for “regular people” to start expressing themselves on the web, we’ve been witness to a trend towards ever easier platforms and formats for online expression. Twitter is quite possibly the ultimate expression of that trend. I’m all for the success of Twitter, but god help us if Twitter lives and the NY Times dies…
- Twitter demonstrates the power of centralization. Talk as much as you want about openness and distribution, but Twitter is really about centralization. Yes it’s true – users create the content in a distributed fashion using any number of interfaces – but that content has value only because others know where to go to get it. If the Twitter phenomenon wasn’t highly centralized, it would have no brand value, no value as a real time search engine, and no value as a platform for brands or individuals trying to reach an audience.
So where do we go from here? Three observations:
- Almost certainly, someone will eventually acquire Twitter. Its too big and too popular not to have business value. Whether or not that acquirer will overpay is something that we might never know. After all, it took years for eBay to admit there were no real synergies with Skype. Does Twitter have synergies with GOOG/MSFT/YHOO? Yes, of course. But that doesn’t mean that the acquisition price is going to be right. Twitter should trade their well-earned but (largely) revenue-less hype for cold hard cash and/or stock in a profitable company as soon as they can.
- Look at the other end of the spectrum – look for the opposite of Twitter. Since UGC can’t really get any easier to produce than tweeting on Twitter, my suspicion is that innovation will now have to take us in the other direction: lowering the technological barriers to creating high-quality and unique content online. Wix, an Israeli start-up run by a very talented team, is an interesting step in this direction. Wix allows “regular people” to create complex interactive flash objects for the web. Wix is an example of an emerging sophisticated authoring environment for web content. Animoto and Slide are other examples of this. You could argue that MS Live Writer (which I’m using right now) is another – for blog posts, it’s better than MS Word. I think we’ll see more innovation in this direction. Together, these tools may evolve into a sort of “MS Office” for the online, interactive world.
- VCs should focus on the paradigm not the derivatives. As a venture investor, its very hard to get excited about derivative products and services that depend on Twitter (or Youtube or Facebook or LinkedIn or Outlook) for their market and their success. VCs should be looking for start-ups that define a new medium of expression or an entirely new consumer experience. Those internet exits that are not driven by revenue are usually driven by this. They succeeded in defining an entirely new experience AND they managed to establish market dominance. This, however, is a very high bar. First, lots of web services seem innovative at first glance but are not a paradigm shift. Anything short of a paradigm shift is, unfortunately, a feature evolution. Second, its not enough to be a paradigm shift, you must be able to establish dominance in the new paradigm. That’s not easy (just ask any of the 100 social networks no one ever talks about). Finally, getting a VC to be willing to take a risk on something entirely new is no easy task. But if you’ve got something that fits in that category, let’s talk.
If you still have doubts that Twitter is a phenomenon to be reckoned with, this Daily Show clip should help…
|The Daily Show With Jon Stewart||M – Th 11p / 10c|