Twitter’s Dearth of Deals

Twitter has plenty of venture capital in the bank – enough from the outside looking in to let it operate for a couple of years without having to worry about generating a dime of revenue.

Meanwhile, the Twitter ecosystem continues to grow and evolve as third-party developers create new and interesting services using Twitter’s API. The three hottest “markets” are search (Scoopler, Twazzup, etc.), publishing (Tweetdeck, Seesmic, Splitweetl) and photographs (TwitPic, YFrog, TweetPhoto).

What’s interesting and puzzling is as more services are created, Twitter has stayed pretty much the same. Sure, it recently introduced a new way to manage friends and followers but if Twitter was ice cream, it would be vanilla while the rest of the market would be Ben & Jerry’s.

So, here’s a couple of questions:

1. Why has Twitter remained so unidimensional?

2. Why is Twitter is averse to acquisitions. The biggest deal it has made so far was Summize, a search engine, a year ago.

With Twitter growing so quickly, perhaps the company looks upon acquisitions as distractions at a time when it still needs to harden its infrastructure.

Maybe acquisitions aren’t part of the overall mix if Twitter can develop the services it needs internally such as analytics.

Twitter could do some serious wheeling and dealing without spending a lot of cash. There are no lack of popular services created by individuals, who would be happy to take some Twitter cash and be part of the Twitter team.

For example, what about Tweetdeck, which just celebrated its first anniversary. Tweetdeck has about 20% of the publishing market – the same as Twitter.com. Jesse Stay suggests Twitter will purchase TwitPic, the most popular photo-sharing services.

Much like Twitter’s mysterious approach to creating a business model, M&A is another thing that makes you scratch you head when it comes to Twitter’s strategic direction.


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4 Comments

  1. Posted July 5, 2009 at 3:55 pm | Permalink

    Why doesn't someone else just buy up all the good Twitter-based applications that Twitter isn't purchasing, bundle them up on the cheap and give it a name ("Ultimate Twitter Portal"), and then sell them to a competitor like Facebook?

    • Posted July 12, 2009 at 4:43 am | Permalink

      Hahah. That would funny. Facebook should buy them itself.

  2. Posted July 5, 2009 at 10:16 pm | Permalink

    It may be a simple case of analysis paralysis… twitter is so under the microscope that whatever they do is scrutinized. It could be that they're just so concerned about a mis-step that they're not sure what to do at all.

    I'd love to see some kind of advertising model – and expect to see one in the next 12 -18 months, regardless of the hesitation on twitters part.

  3. Posted July 12, 2009 at 5:16 am | Permalink

    Not sure if Twitter is that averse to acquisitions at the end of the day. In fact, I think their only business model at present is acquiring companies. The biggest deal they have made since buying Summize was buying bit.ly. There was no cash exchange; they gave bit.ly shares of Twitter in lieu of money. This is "unofficial," but it's fairly obvious that this happened. The only big tech blog to report this for some reason was ReadWriteWeb. They noticed that Bit.ly was moving its servers and other miscellaneous office supplies into Twitter's offices. The other tech blogs just said Twitter was setting bit.ly to default and refused to reveal that bit.ly had been rewarded shares of Twitter.

    If I'm Twitter, and I'm playing the M&A Roulette game, then I'm going all in. That is, I'm not worrying about how I'm going to sell ads on Twitter or turn Twitter into a "freemium model" website. The only thing I'm worrying about is getting registered users and growing traffic. This process of course would entail acquiring companies, sometimes in less obvious ways.

    So, Twitter does have a business model. It's put ALL your thinking and resources into growing traffic and acquiring companies–sometimes in secret if you can–and then spin the roulette wheel. And I think it will probably work. It's going to be bought for $700 million or so in the next 3-4 months.

One Trackback

  • By A Shopping List for Twitter | Twitterrati on July 20, 2009 at 7:19 am

    [...] new Twitter Obsession – including mine – is what acquisitions should Twitter make to further establish itself as the leading [...]

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