I *Still* Don’t Get Twitter

What’s the value of Twitter? As I see it, there are a few use cases:

1. It’s a real-time search engine. News spreads quickly as people retweet stories, and you can ask a question in Twitter and often get rapid-fire responses.

2. It’s a marketing vehicle. Businesses can tweet a promotion and see it virally re-tweeted across thousands or millions of tweeters.

3. It’s a way to keep up with friends. You get snippets of info from friends and colleagues that require little to no effort to read or to write.

All this is well and good uses. My concern is that they aren’t really sustainable use cases. For example, as a marketing vehicle, I think it will be hard to keep Twitter from becoming a giant spam honey pot. Right now people actually respond to some marketing tweets. A few years from now, after the novelty has worn off, the click-through rate (CTR) on Twitter marketing messages will plummet the same way we’ve seen CTR plummet on email and banner ads. And spammers will enter Twitter in droves and try to deluge all of us with spam tweets.

You can argue that email and banner ads are still big business, and I agree. But let’s make one thing clear about both email and banners – both of them monetize a useful technology – in the case of email marketing, it works because people use email, and banners are effective because people read Web content. So Twitter marketing will only work if there is a primary usage to Twitter beyond just marketing. If Twitter becomes inundated with marketers and spammers shouting at users, the utility of the tool is diminished. So for Twitter to build a long-term use case, the marketing has to be ancillary to a primary usage.

What about keeping up with friends? I find this argument to be weak. Compared to Facebook, the functionality of Twitter is limited. Facebook is a rich medium to share thoughts, photos, videos, and interests with friends – Twitter is 140 words and a cloud of dust. I think a lot of people use Twitter right now out of novelty, but ultimately (unless something changes), I think people will return to Facebook as their primary medium for communication with friends.

So that leaves us with ‘real time search’ or ‘information discovery.’ Word does travel fast on Twitter. There’s value there. But the value ultimately is at a “meta” level. By that, I mean that it really doesn’t matter if you or me or another friend of mine tweets about a specific story, what matters is that there is an overall surge of activity around a particular story, link, phrase, etc. You can think of Twitter as a human directory of news. When millions of people are tweeting and retweeting information, the aggregation of those individuals becomes a powerful way to deliver real-time news.

That’s interesting as a concept, but there are some problems. First off, if Twitter ultimately becomes a “wisdom of the crowds” news service, how is it really different that Digg or other similar services? Secondly, if and when ‘real time news discovery’ via Twitter becomes a meaningful channel of information, it is subject to manipulation. Just as Digg and other human-powered sites have ended up being manipulated by heavy users or outright optimizers. Digg’s solution to this problem – build an algorithm to impact the results. But once you build an algorithm, you start to lose the original purpose of your tool – the human-powered results.

So there you have it – its a bad excuse for Facebook, the marketing component will be abused by spammers, and the discovery component will become a victim of its own success. I still just don’t understand how Twitter will be a major player two years from now!

 

10 Web Sites That Squandered the Opportunity

Winning on the Internet is part skill, part luck. There’s no doubt that Google got lucky when they stumbled onto the cost per click model, and when Yahoo decided to basically give them their entire search results business. But Google has also been incredible smart and has made some absolutely brilliant decisions in their short ten years. But for every Google, there are ten or 100 companies that are dead or dying that either weren’t lucky, or weren’t smart. Here’s my list of the top ten companies that “should have been” but are now basically watching from the sidelines.

1. Salon.com. Before blogging was cool or content was monetizable, there was Salon.com, a site that drew millions of visitors with high-disposable income. Salon.com figured that the best way to make money off these visitors was to charge them a subscription fee. When that didn’t work, they decided to make visitors watch minute-long informercials before they could read any content. In both cases, visitors basically just decided to go elsewhere. Today Salon.com is worth about as much as a mildly-popular blog – the Company’s market cap is $425,000!

2. Productopia. You’ve probably never heard of this site, right? Well, at some point in 2001, it was about as popular as Dealtime, BizRate, Nextag, or any of the other nascent comparison shopping engines. When the bubble burst, however, the Company’s investors got scared and withdrew funding. Imagine if they had stayed afloat – considering their competitors all got sold for between $400 million and $1.6 billion, I think they would have been OK.

3. Classmates.com. I’ve mentioned this one before. Imagine a “social” Web site that “networks” you and your friends. Gee, that sounds like something Microsoft might value at $15 billion. Unfortunately, Classmates decided that the best way to make money was to charge users monthly for a crappy site and use misleading advertising to sign up new subscribers.

4. ValueAmerica. Back in 1998 or 1999, this company was basically an Amazon wanna-be. I actually ordered a stereo from this site and was pretty happy with it. The problem was, however, that they gave me a $100 coupon on a $150 stereo – not the most profitable customer acquisition strategy. The site ended up going bankrupt and a series of shareholder lawsuits and accusations against the CEO followed.

5. WebVan. Do I really need to mention this one? Great idea, happy customers, and one billion spent on infrastructure before they had enough business to support it.

6. AOL. Lots of customers, dominant marketshare. Terrible customer service, inability to innovate, bloated infrastructure. Today it’s basically a legacy domain name that is slowly fading into oblivion.

7. CRGazette.com. OK, this is a personal one for me. This is a great Iowa newspaper. At first, they offered all their news stories for free, but someone in upper management decided that they needed to restrict access to subscribers-only. So I stopped reading and found other sources for Hawkeye sports information. Later they changed their mind and they now offer free articles, but I’ve moved on.

8. Fark. OK, I guess this is still pretty popular, but really why isn’t Fark Digg and Digg non-existent? Probably because Fark was sort of a cult of personality and never bothered to use any technology to get better.

9. Internet.com. Imagine what you could do with a URL like this. Really the possibilities are endless. Instead, Jupiter Media seems to treat it like a parked domain. This site is currently barely in the top 5000 Internet sites. You own the URL and you can barely crack the top 5000. Wow, now that is pathetic.

10. Yahoo. The number one missed opportunity of all time. All hail the incompetent management at Yahoo. And yes, I still haven’t sold my stock yet . . .

 

Collaborate or Die

Lately I’ve been playing around with StumbleUpon.com and it’s pretty addictive. For those of you not familiar with this site, it works like this: you download a toolbar for your browser that says “Stumble.” When you click on it, it takes you to a site that it thinks you might like. This is determined by the categories you select as areas of interest, and also by how you rate past sites you have visited.

For example, let’s say that StumbleUpon shows me PayScale.com, an online compensation survey. I rate it as a “I like it.” The site has also been rated by many other users as well. Over time – after I’ve rated maybe 50 to 100 sites – StumbleUpon can match me up with other users that have also rated similar sites similarly. As a result, it can start showing me sites that people like me have already reviewed, making it likely that I will also like these sites. This is known as “collaborative filtering”, most famously seen in Amazon’s “people who liked this, also liked this” box.

Right now, StumbleUpon is basically a fun way to find funny or cool sites. I mostly end up with joke sites, strange pictures, or YouTube videos. The potential of StumbleUpon, however, is much greater. Indeed, rumor has it that eBay is about to acquire the company for $75 million. That’s a lot of dough for a service that sends people to lawyer joke summaries.

But think about StumbleUpon this way: if I rate sites for a few months, I’ll probably have 500 to 1000 sites rated. That’s a pretty good profile of my likes and dislikes. Now let’s say that the Stumble toolbar expands from just the ability to randomly access cool sites to an actual search box. So now I type in “los angeles airplane tickets” and StumbleUpon determines that people like me really prefer Kayak.com over Orbitz. As a result, I get sent to the result that works best for me. Sort of like Google’s “I’m feeling lucky” feature, but much more personalized.

You could even take a regular search engine approach and show me the top ten listings based on my personalized preferences. If you think about it, which would you prefer: results based on sophisticated computers with oodles of complex algorithmic code, or results based on 500 people just like you who have already looked through a bunch of sites and found the two or three that they like the most. Personally, I’d bet on the people.

As much as a lot of Web 2.0 companies seem to be over-hyped, and over-valued, I do think that companies that use the “wisdom of crowds” to personalize results have the potential to provide far more accurate results for users than an algorithm by itself. I count Flickr (photos), Digg (news stories), and StumbleUpon (Web search) as the leaders in this arena.

Granted, as with any technology, the more popular it becomes, the more likely it is susceptible to manipulation. Just as the rise of search engines created an entire industry of “search engine optimizers”, so too will the rise of “social media” create an entire industry of “social media optimizers.”

It may, however, end up being harder to game social media than it is to game a search engine. I can envision closed networks of users that work as a collective to decide the best sites for their group. In other words, in the current social media world, it is possible to “Digg bomb” and generate buzz around a news story simply by spamming the results and voting a site up the ranks. But if users have the ability to approve or reject members of their ‘crowd’, you could truly end up with a spam-free world where you really trust the results that you get back from the social media engine.

The number of people using StumbleUpon, Flickr, and Digg is still very small – probably 90% live within 50 miles of San Francisco! But once these sites reach critical mass, you have to wonder whether traditional search sites like Google and Yahoo will start to seem far less relevant and somewhat anachronistic.