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Business Impact


Name: Twitter

Allows users to post 140-character messages. Twitter has become fertile ground for breaking news as interesting posts and links to external websites are rapidly reposted from user to user. The business model for sustaining the service remains unclear, perhaps even to Twitter. Twitter was chosen by the World Economic Forum as one of its Technology Pioneers 2010.

URL: twitter.com
San Francisco, CA
Telephone number:
(415) 896-2008
Year Founded:
Number of Employees:

This story is part of our January/February 2010 Issue
See the rest of the issue

Executive Leadership:

CEO: Evan Williams

Bio: Dropped out from the University of Nebraska. Prior to Twitter, Williams was Blogger program manager at Google and then a co-founder of the Odeo podcasting company.

COO: Dick Costolo

Bio: Bachelors from the University of Michigan. Prior to Twitter, Costolo was the Group Product Manager for Google’s Ads group and FeedBurner Co-founder. Costolo was an early investor in Twitter.

Board Members and Advisors:

Ronald Conway, Anchor Intelligence

Dick Costolo

Jack Dorsey, Chairman

Peter Fenton, Benchmark Capital

Jason Goldman

Bijan Sabet, Spark Capital

Evan Williams

Fred Wilson, Union Square Ventures


Total funding raised is $155 million. $5 million was raised in July 2007 in series A funding from Charles River Ventures, Union Square Ventures, Marc Andreessen, Dick Costolo, Naval Ravikant, Ron Conway, Chris Sacca, and Greg Yaitanes. In May 2008, Series B funding raised $15 million from Union Square Ventures, Bezos Expeditions. Spark Capital, Digital Garage, Kevin Rose, and Tim Ferriss. In February 2009, Series C funding raised $35 million from Benchmark Capital, Institutional Venture Partners, Spark Capital, Union Square Ventures, Charles River Ventures, and Digital Garage. A series D round held in September 2009 raised $100 million from Insight Venture Partners, T. Rowe Price, Spark Capital, Benchmark Capital. Institutional Venture Partners, and Morgan Stanley.


Twitter provides a social networking service based around 140-character messages called “tweets.” The company is currently acquiring expertise in social software design. In 2008 Twitter acquired Values of n, a startup that designs collaborative software. It also acquired Summize, a startup that searches online reviews and blog discussions to create reviews and ratings of digital content.


Twitter competes in the micro-blogging and social networking spaces. The blogging environment is highly fragmented, including those provided by newspapers, internet media, social network websites and individual webpages. This space, together with the social network landscape, is dominated by three players: Facebook, MySpace and Twitter. As of July 20009, Twitter is the 3th largest mobile social networking sites in the US with 4,131,800 users and 7% reach (behind Facebook and My Space) according to Nielson.


Twitter has focused on attracting users by adding features to its product, such as the ability to import contacts from webmail services offered by Google, Yahoo, and AOL. It has also recently launched a new site called “Explore” for third party developers to interact with Twitter. In addition, Twitter also launched a new visualization tool called Twitter Blocks to build a developers community that develops more Twitter applications.

So far this strategy had proven successful as Twitter’s number of unique visitors in the US grew from 3.4 M in Oct 2008, to 23M one year afterwards, and nearly 40M worldwide. Additionally, Twitter has been gaining commercial users, such as JetBlue which uses Twitter to communicate status reports and marketing messages. Moreover, Twitter is also seeking to expand beyond the US and its English-speaking users. In April 2008, Twitter launched Twitter Japan in partnership with Digital Garage. Judging from its success, it could be foreseen that support for other languages follow in 2010.

Challenges and Next Steps:

Even though Twitter has been gaining traction and getting more users, the viability of its business model is still in question. In November 2009, reports surfaced announcing that Twitter Japan planned to allow premium account holders to charge followers to unlock certain images, external URLs and text. The premium access could either be purchased as part of a subscription or on a per-tweet micro-payment model. This micro-payment revenue model had long been considered a possibility and it seemed like Twitter Japan could be a viable pilot. However, Twitter denied the reports almost immediately.

Until now, Twitter’s CEO, Evan Williams, has spoken in several occasions about selling advertising and analytics to companies. Nevertheless, external providers and third-party developers, (such as those selling applications for smartphones) seem to be profiting more from Twitter, rather than Twitter itself.

Twitter has several patents protecting its IP. However, in 2009 TechRadium, a company that develops, sells, and services mass notification systems filed a lawsuit against Twitter claiming that it thought up the whole concept of mass notifications first, and points to three issued patents. Apparently, Twitter had foreseen similar lawsuits and had increased the size of its legal department by hiring Google’s deputy counsel for products and intellectual property, Alexander Macgillivray.

Compiled by Jimena Almendares

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