Twitter is inside the tornado

The latest changes announced by twitter on their API have caught many third party developers by surprise and outraged passionate tech bloggers. In 2010, Venture capitalist Fred Wilson was warning third-party developers to avoid becoming hole-fillers in Twitter’s garden.

Twitter has crossed the chasm and is inside the tornado.

I am making reference to the 2 best sellers from Geoffrey A. Moore who strongly influenced the Silicon Valley. Moore popularized concepts such as Early adopters, the Diffusions of Innovations and the Whole Product Model It is the dynamics around the Whole Product that I am going to talk about as it really resonates with what we can see with Twitter.

A bit of tech history

What is going on and why is this happening?

If you took the time to look at past trends or if you have read those 2 books from Moore, this shouldn’t surprise you. Some developers and users do not understand Twitter’s attitude because they love Twitter with passion and think Twitter should, like Google mantra, don’t be evil. But this is not about acting good or bad or being right or wrong. It’s business in a high-growth market. Twitter is a company and they have to make returns for their investors. To do so, the most obvious strategy is to eat part of the ecosystem which is the most likely to make profits.

Twitter is entering a phase well documented in Moore’s Inside the Tornado. In particular, in Chapter 4, The Lessons that Intel and Microsoft Taught subchapter summarizes that:

The basic principles here are as simple as they are draconian:

  1. Recruit partners to create a powerful whole product.

  2. Institutionalize this whole product as the market leader.

  3. Commoditize the whole product by designing out your partners.

Please bear in mind that the book was published in 1999 and they are a few differences in the various concepts. Basically, the Core Product is the platform and the Whole Product is composed of the platform and the ecosystem of third party applications around it. The Whole Product is the real product that people uses. When there is a third party application which becomes too important (from a business point of view) or too strategic, then the Vendor of the Core Product either:

  • acquires the third party developer filling the important hole or

  • ditch it for another one or

  • creates its own version making the previous third party developer irrelevant.

In the short story of tech, this happens constantly. Microsoft did this with WordPerfect and with Netscape which were extensions of the Core Product, Windows. Apple has also done it many times, the most recent example being with Google Maps being replaced by Maps on iOS6.

Can we make some predictions about Twitter?

It is likely that the investors are applying extra pressure on Twitter to generate revenue. While Facebook early investors must have been happy about the Facebook IPO, the post-IPO valuation is probably not helping Twitter as there is no hope for achieving the same level of valuations without significant revenue.

Today, Twitter has already taken control of some important parts of its ecosystem:

  • URL shortener: for analytics, which can be monetized.

  • Mobile clients: for the end-to-end user experience and making sure that ads are displayed. Owning the mobile app will also allow Twitter to take advantage of the context to provide a more compelling user experience and increase relevance of ads. Twitter now controls all the touch points and can provide a consistent look and feel and experience.

  • Photo: for stickyness

I think that the next targets will be:

  • Tweet scheduling: Heavy users and brands need way to schedule their tweets to avoid spamming their followers. Buffer, a service that I personally use and love, is the leader in this category and could be acquired or copied. Heavy users pay for the service.

  • Twitter Brand page: Twitter has started to offer new features to brands. Some services like Twylah provide better looking alternatives and could therefore be acquired or copied.

  • Media: Twitter is already big with traditional Media such as TV. Anything that will help them getting stronger and create revenue could be a target.

  • Innovative ads: I don’t believe there are clear leaders in this space. The current trend is to have Promoted accounts and Promoted tweets. There could be new ways to advertise on twitter based on the tweet, context and location. Even though this is not how I use Twitter (I use it mainly for information and news sharing), many people share their thoughts and ask their followers for advice. Based on some clever AI, Twitter could provide brands with the ability to automatically respond to tweet. For instance, a user saying “Feel like having a pizza” could receive a mention about a relevant local offer.

  • Real-time search: Google is leading traditional search but Twitter could become big in “real-time” search, i.e. searching for breaking news or short-lived deals.

  • Big data: Twitter has become the Internet pulse and Big Data is huge on it. An article on Wired shows how the political index knows what the public is thinking. There are huge opportunities behind Big Data but they are very difficult to spot and extremely hard to guess who Twitter should acquire or replace.

What can third-party twitter developers do?

Today, there is not such thing like a platform-independent developer. Every developer develops on a platform: being iOS, Microsoft Windows, Facebook or the Internet. The Internet is the only platform which do not really belong to anybody. Even if Google “owns” a large chunk of it, from the most used search engine to Chrome, the Internet remains the most friendly platform.

For Twitter third-party developers, the options are limited:

  • Make money like there’s not tomorrow: Tapbots is a good example of a very small development company which sells its apps. Tweetbot is a very good Tweeter iPhone and iPad client which has sold in high volume. It is a short-term strategy but when it works, it can generate good revenue for a very small developer shop for a limited period of time.

  • Create value in areas which are not the core competencies of Twitter. Zynga is a good example of a company which was able to create significant value on top of Facebook without being strategic and is also far from the core competencies of the platform provider, Facebook. For Facebook, it would make no sense to copy or acquire Zynga.

  • Fill a hole, execute like a rockstar and pray : Tweetie, TweetDeck were good examples but once the hole is filled, it is “game over”.

Please share your thoughts, you can contact me on Twitter @florentstroppa

PreviousCan Dalton Caldwell realize Jack Dorsey's original dreamNextLe phénomène Firechat

Last updated