Titans of tweet: Twitter founders Evan Williams (far left), Biz Stone (in eyeglasses), and Jack Dorsey (far right) hoist cold ones with Ted Wang, a law partner at Fenwick and West (seated on bar), and venture capitalists Fred Wilson of Union Square Ventures, Bijan Sabet of Spark Capital, and Peter Fenton of Benchmark Capital. The number of Twitter users surged to 75 million last year and the company inked deals worth a reported $25 million with Google and Bing, but its real fortunes depend on proving that tweets have value. “We don’t think we are there yet,” says Williams. But, he adds, “it’s clear there are a lot of ways to make money.”
At the microblogging company Twitter’s San Francisco headquarters, in the sixth-floor conference room, founder Evan Williams was declining to tell me anything about the company’s strategies to earn revenues when, suddenly, his cofounder Biz Stone blurted, “Whoa!” It was 10:10 a.m. on January 7, and it would prove to be the latest Twitter Moment, showing how far the service has moved beyond its early status as an amplifier of personal minutiae and confession. A minor earthquake had just struck: a magnitude 4.1 temblor centered 45 miles to the southeast. Throughout the Bay Area, thousands of Twitter users seized their smart phones or PCs to peck out 140-character-or-less tweets–updates in the form of text messages, Web-based instant messages, or posts on Twitter’s website. Quake-related tidbits coursed through the company’s servers at the rate of 296 per minute, according to tracking done by the U.S. Geological Survey.
The quake was felt more strongly in Mountain View, the site of Google’s headquarters–which was metaphorically appropriate. In the first seconds and minutes after the quake, anyone tapping “earthquake Mountain View” (or the name of any other nearby municipality) into Google’s search field found that the only hits pertaining to the new quake were … tweets. While the Google results page included direct information feeds from the USGS and a slick Google Maps display of recent temblors, none reflected the latest event. Official USGS-confirmed data on the quake wouldn’t show up until 10:20 a.m. But at 10:12 a.m., the sixth-highest search return was a rolling scroll of tweets posted “seconds ago”: Wow, that was an earthquake jolt in Mountain View!
The elevation of such observations to the main results page of the Web’s dominant search engine was more than just a coming-of-age for the nearly four-year-old service. Twitter’s performance as a communication channel during the Mumbai terror attacks in November 2008 and the Iranian election protests last year, its emergence as a political organizing tool during the 2008 U.S. presidential election, and its unexpected role in assorted emergencies (There’s a plane in the Hudson. I’m on the ferry going to pick up the people. Crazy) had already planted Twitter in the zeitgeist. What the Google hits really represented was the first significant opening of the revenue spigot. Google had recently agreed to pay Twitter for a real-time feed of all tweets; this deal, and a similar and earlier one with the Microsoft search engine Bing, were reportedly worth $25 million combined, making Twitter profitable for the first time. That was big. “I sent a text to Ev the day that we closed the [Google] deal, and I said, ‘I’m going to throw up,’ ” Stone says. “He texted back, ‘I know.’ ”
With the deals, Google and Bing were acknowledging Twitter’s power. The company has helped define a new development: the real-time Web, in which information is generated and consumed almost instantaneously, with social networks, blogs, and other news sources operating in increasingly interlinked ways (CNN Breaking News, for example, has nearly three million followers on Twitter). “Twitter has provided a new building block for the social Web,” says Jonathan Zittrain, cofounder of the Berkman Center for Internet and Society at Harvard University (see “Twitter and the Real-Time Web”). “Amidst the clamor of ‘Just had a great bowl of soup’ and other trivialities there can be mined some amazing information.”
Twitter and the Real-Time Web
On the real-time Web, information is created and consumed instantly, often through blogs and social networks such as Twitter and Facebook. The phenomenon exploded last year, as the surging use of URL-shortening services indicates; Web addresses must be shrunk in order for links to fit inside 140-character tweets. Twitter attracted new users and expanded its reach, but it still carries a lot of babble.
Twitter has experienced exponential user growth in three years. But the rate slowed at the end of 2009.
But the question remains: how can a simple technology that’s become a crucial part of the Internet be turned into a cash cow? Last September, the company reportedly gained more than $100 million in new funding, atop earlier rounds totaling around $60 million. (Returning investors included Benchmark Capital, Institutional Venture Partners, Union Square Ventures, and Spark Capital; the new players joining them included T. Rowe Price and Insight Venture Partners.) “It definitely feels like there is a shift occurring on the Web–and we think it’s a multibillion-dollar opportunity,” says Brian Pokorny, a partner with SV Angel in San Francisco, which has invested in Twitter and other companies involved in the real-time Web.
But to make any business model succeed, Williams says, Twitter must keep attracting new users–and prove that tweet-borne information is actually useful. “We are honestly still focused on ‘How do we create more value?’ ” he says. “We have all of this content talking about what’s happening in the world right now, and we think there is a lot more value to be gained by users, giving them the right content at the right time. That will lead to advertising and revenue possibilities, but those are completely dependent on people getting value out of it and businesses getting value out of it. But we don’t think we are there yet.”
The deals with Google and Bing were, therefore, crucial first steps–not only toward