Today I’d like to introduce you to an awesome game I love to play when I’m bored. It’s called the Hypothetical CEO. All you need to do is find some struggling or oft-questioned company and ask yourself “What would I do if I was the CEO of … ?” It’s entertaining if you enjoy strategizing and makes for great discussion – if you can find someone else with a similar business geek personality to discuss with.
Sessions of the Hypothetical CEO are going to become a regular post here on The Netsetter so our little band of startup junkies can get to know each other. So even if you are normally a comment lurker, I highly encourage you to join in, throw some opinions around, even if they are wild, silly or daft ideas!
Today’s Hypothetical:
What Would YOU Do If You Were In Charge of Twitter?
Background
Not a day goes by that I don’t see a questioning of Twitter’s monetization strategy – or more precisely lack of one – in the tech media. Pundits have floated the profitability of selling paid accounts, spots on the recommended list, and focusing on real-time search to sell ads. After a recent $35m funding round, Twitter has taken enough capital that they no doubt have enough to burn through for some time to come. But assuming they aren’t shooting for acquisition, and they continue growing, then they’re going to do something reasonably soon. The question is … what?
My Answer
Personally I think that Twitter’s opportunities are only growing with time. It’s hitting a big hockey-stick in traffic which means the numbers are flying upwards. Keeping this trend going is vital because monetization will only get easier as the market expands and Twitter cements its spot at the top. But to stay on top of the burn-rate Twitter should do something, I think it could try these two strategies:
- License Search to GooglePundits have been heralding the brilliance of real time search and I think they are right, it’s pretty cool. And it’s something Google needs to get in on to remain the search leader. That means sooner or later they will find a way to index either Twitter and other messaging services, OR put together their own (possibly open) framework and service. I think Twitter should try to cut a deal with them to let Google use Twitter technology to provide this service to its userbase, and monetize it how it sees fit. In return a generous license fee would keep Twitter in the money while it expands and it would potentially stop a competing product from entering the market. The drawback is the long term ramifications, and that partially depends on who controls the underlying data.
- Introduce Groups and Fee-based Closed Groups for Business“Twitter for Business” is getting bigger. Services like Yammer and Presently are taking advantage of the fact that using Twitter for closed groups is at best, difficult. Adding group functionality is something people generally want, and adding fee-based closed groups would mean taking the business market and generating revenue out of it. After all given the choice, I’d much prefer to have one Twitter account and use it sometimes for public messaging, and other times for private business messaging. At Envato we’ve been looking at using services like Yammer, but it’s one more account and service to use and that’s just painful.
I think business applications could be a strong business model for Twitter, while search licensing would give it the revenues to sustain growth. And that’s what I would do if someone were to magically bequeath the CEO title on me tomorrow!
What Would YOU Do?
Of course nobody other than Twitter’s actual CEO knows all the particular challenges, numbers and pressures of the job, but for our purposes – who cares! You’ve seen my answer, now I invite you to jot down your own thoughts in the comments, tear my strategy up or give your own! Does Twitter really need to worry about making money? Are there opportunities in business accounts or services? Is advertising the path to take?
Well, I had one idea, but it’d probably be a tad unethical unless it was properly disclosed. If Twitter were to replace all links to Amazon.com, eBay.com etc with their affiliate links then they would make an absolute killing. I’ve bought products via Twitter when people I follow recommended them – Twitter could take a piece of that pie.
Then again, I’m sure people would complain about it even though personally I wouldn’t mind at all if Twitter profit off of other peoples recommendations and influence.
Great topic…we use Twitter a lot.
So if I was CEO, I’d have a brilliant two phase plan:
1. Building on your suggestion above, I’d charge a yearly fee for a set of premium features including ability to create your own groups (can post to them, view them, etc.), and also to BELONG to any number of private groups as well.
Something like $20 a year to do this. They have the numbers to make this actually profitable, and it doesn’t hurt the current use model.
Could have tiers of this so an “business” version might add SSL encryption, corporate branding, and a sanctioned set of 3rd party tools.
2. Charge to post…gasp…255 character tweets
There is absolutely potential in twitter for business. I have a client (which shall remain unnamed due to NDA forms) that is doing just that. Only, they’re not doing it through twitter, they’ve already created their own application (that functions very similarly to twitter) and are targeting businesses and non-profits.
They’re monetizing on the fact that twitter lacks so heavily in this area (yet has a good general concept). From what i know, they already have 10′s of thousands of regular users on their (individual) application, the (to share/collaborate) application is still in beta, but already a huge success.
@David: That’s really true, just makes you think how intrinsically monetizable Twitter is.
@Dave: I’d so pay for 256 characters too
Though I suspect it’d rile up a lot of users, a lot of people seem to love that 140 limit.
@Chris: What’s amazing to me is that Twitter seems to be leaving a lot of opportunities like that on the table. I’d love to know the inside thinking, I guess we’ll know in time
I’d sell it to Google, Microsoft or Facebook as soon as possible before Twitter ultimately and predictably loses it’s market position and something newer, better and cooler comes around.
I wouldn’t run with any of the ideas I have heard so far. If I was CEO I wouldn’t touch much at all right now because they have obviously hit on a formula that works very, very well and any changes they make can derail that quickly (Facebook anyone?). They have a huge network of API developers who can try these changes for them, without needing to do anything official other than maintain the platform stability.
Google are great at indexing pages and searching them, but those pages are far from a flow of realtime information and events. This slight shift is exactly what could lead Twitter to be the ‘next’ Google if they play their cards right.
I have no doubt that there are incredible advertising opportunities but anything they add now will detract from growth (if you have ads you want people to click them, not so much use your site). Likewise if you are trying to grow your platform that is a different proposition to growing an advertising network.
I would be exploring different ideas privately such as advertising and semantic search and sentiment tracking and more, but I would keep these strictly private as labs projects until their time comes.
Invest, invest, invest in scalability measures.
Twitter will only ever be as good as its weakest link, which at the moment is reliability. (Although it is a lot better now than it ever has been)
I’d flip it. Twitter is booming, and who knows where the peak is. Are we at the peak now? Maybe. Sell it while it’s hot.
I see lots of people talking about raising the limit on tweet size and I get the impression they don’t know why it’s 140 to start with
140 is the maximum length of one SMS message without splitting the message in 2. I suspect this is becoming less necessary these days what with iphones, blackberrys and the google phone being so popular but I think that for the forseeable future the character count is highly unlikely to increase.
Honestly I wouldn’t do anything just yet. They are still a fairly young company and, I believe, still have lots of growing room. They are just now hitting mainstream and to sell now would be a mistake.
I think starting small is a great way to go. Start with the ads, like they seems to be testing on Twitter pages already, and then get into larger streams of revenue like search and business applications.
I think selling Twitter would be a really bad move. Twitter is only just becoming a household name (at least from my experience). As the user-base expands beyond the techy savvy more and more then monetization will become even easier.
Targeted advertising would be easy to impliment, and there is a lot of spare room in the sidebar, meaning that it wouldn’t be too obtrusive. I’m sure that if they poured half of the profit from selling ads into advertising Twitter to the masses then they’d be in a better situation.
I really like Collis’ ideas, although I’m not 100% convinced about merging with Google. I do think that over time Twitter could be a serious rival to Google, and this is an opportunity too good to sacrifice.
If I was CEO I would probably try implementing ads into Twitter search, but only once it had grown considerably and was somewhat nearer Google in size. Right now I would sit tight. I would focus more right now on improving user experience, rather than profits. So for instance groups would be a great idea, but why not make them free? This would be really well received by everyone, and could help grow Twitter’s popularity significantly.
Twads: Sell Twitter accounts to companies (or individuals) that allow them to write tweets that target certain keywords. These tweets then show up in the feeds of users that have tweeted those about those keywords. Pay per view or pay per click perhaps?
Maybe even allow users to opt out of the ‘Twads’ by paying a small fee.
Of course, I would never call this ‘Twads’.
I don’t see where Twitter’s search is a technology asset. It is a business asset, because Twitter has all that information in its system and can access it directly. From what I can see from the results of a search on Twitter, they are simply returning the entries that match a criteria in reverse chronological order. No mystery there.
In the short term, I would insert advertising on the right side of the twitter page, colors adjusted to match the user’s theme settings. Perhaps Google’s Adsense. With the traffic they have that should at least bring in enough to stretch their operational cash reserves for a while longer, without compromising anything. This is essentially what you see in linkedin.
Adding paid services which target business use would be a good strategy, but one which should be adopted sooner rather than later, as other companies will start moving into that space. Now is the time to take advantage of the fact that Twitter is the leader in micro-blogging to extend the range of the service and keep ahead of the pack.
I agree that selling ad space would be the way to go in the near term. Yes, that will more than likely alienate a few, I think others understand the need for revenue and will not mind too much. I am of the camp that if I am going to see advertising, I want it to be as relevent to my interests as possible. So, working with Google Adsense or something similar would make the most sense.
I also agree with the idea of creating paid services for businesses. I see twitter as being a huge asset for any customer support organization. I also think the uses are limitless. If I were CEO, I’d try to focus creatively on all of the areas twitter could add true value to businesses and try to take those on before others do.
Great post! I am going to love this series!
i would add images to it, rather than just text. its about time they look into more features.
Oh, I like this game, and this blog. Thanks Collis!
The first thing I’d do when I was Twitter’s CEO, was to sell it to Google, and keep a fine share of the money
Just kidding.
Serious ones:
1. I’d have the tinyurls deciphered again, so they look like real links, and these can be found more easily.
2. I’d create a website, that is a search engine, but only for twitter pages. Because often, there are great recommendations for websites or products (etc.) on twitter, that are pushed down by Google’s other sources (and with the deciphering of the tinyurls, these tweets will be found better)
3. Create more business opertunities by making groups, private groups, some sort of appointment thing working with twitter, etc.
i would add images to it, rather than just text. its about time they look into more features… plus i dont know why search is such a new and hyped thing.. every site has a search facility.
If i were the CEO,
* I would like to bring in Video inside twitter.
* Strike a deal with Google for Search visibility.
* Allow twitter updates to integrate with Facebook, Orkut, Hi5 and such social networks using some open standards.
* Allow people to generate money by posting twitter updates on some event and following the updates would be chargeable:)
* Would like to bring in lots of mobile apps for twitter.
* Would allow businesses to buy sub domains with the main domain twitter.com, and thus enable them to hold encrypted group based twitter posts. And branding their sub domains too will be facilitated.
Sell it off and give the money back to the investors.
I would sell it now while it’s hot. I’ll go back to Facebook and make the deal happen, get the cash and get out.
Definitely wouldn’t sell twitter if I were the CEO. I’ve made it this far and though practically, it’s bout profits but I’d likely prefer to get that through implementing thorough business strategies than just leave it amidst its booming simply bec. of money.
Reading your comments:
- as much as possible id like to make twitter FREE no certain account levels, giving another room for premium accounts would somehow isolates certain groups of people rather than networking on the same ground. and also id like the thought of sense of equality in here no VIP section for celebs, personalities as long as you tweet.
- I’d like the idea of building groups as long as its free.
- im against in injecting some image or video features in twitter. twitter became popular bec. of its simplicity, the tweet list isn’t confusing and VERY READABLE and the thought of integrating these stuff would definitely make twitter same like facebook and other SNS sites. personally, i prefer twitter since I can easily browse and read every tweets w/o getting dizzy with some fancy attachments.
- agree with Ben
- @Daan they already have it. Just needs further improvement for better search.
- Yeah deciphering is a must for tiny urls. Would be very helpful.
You should make a twitter type site for the design community, do like buysellads and corner this growing and active community.
Digg/Twitter/Facebook for the design community, could be a fun project.
Active home page like deviant art, featured work. Could be something big, name it right and you could expand it into deviant art territory.
Make your main holding company, and active community rather then list of sites.
Typing too fast… Meant to say, make your main ‘basecamp’ for all your projects (currently envato) an active community of designers… deviantart/facebook/twitter/popurls/digg all in one tight package. Users would have their own profile page like deviant art, the site would promote and feature work like deviant art. Users could tweet updates and make friends within the community and also have it link up with all the other social network companies, users could pull in tweets from twitter etc… popular links on home page would rise on vote etc.
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I would share ad revenues with anyone twittering by starting an internal Twitter ads network.
Now it would pay to have 1000′s of followers.
Compete with Google and innovate a new kind of “search”.
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