(Note: Twitter CEO Jack Dorsey stepped down in October. Many have said that Twitter needs to find a business model, hence the need for Jack to make room. I just spoke with John Borthwick, who is an investor in Twitter, through Twitter's acquisition of Summize. John thought it would be worth re-publishing and sharing this interview since in it, Jack elaborates on possible business model strategies. I thought it would be worth republishing as well. This interview first ran on July 20. Enjoy)
In 2004, I wrote: “I’m searched, therefore I am. To borrow from Rene Descartes' philosophy, in today's Internet-obsessed world, we know we exist, not because we think, but because we're searched.” Today, thanks to Twitter, it's more like "I'm followed, therefore I am." Indeed, even Twitter CEO and co-founder Jack Dorsey says Twitter essentially captures the "status of everything." Wait, I thought Google was God? Anyway, Jack came to the Vator studio for a three-part interview to talk about Twitter’s business model, the Summize acquisition, the introduction of video updates, and how he views Seesmic, which calls itself a video Twitter, FriendFeed and Twitter clones, such as Pownce, Plurk and Identi.ca. And, that's all in this interview.
I started by asking why Twitter bought Summize for $15 million in mostly stock, rather than licensed the technology. "We’ve always seen filtering and real-time search as a key component to the product,” he said to me. "We see Twitter as a real-time repository of state, in addition to a communication tool."
Indeed, if you spend enough time Twittering, you'll probably begin to see how this "real-time repository of state" makes Google searches look really stale. Just do a quick "Twitter search" about a topic, and you'll see that the information that comes up changes with every update, which is quite often. That same topic will get the same top two dozen links on Google.
Twitter's ability to deliver the "real-time state" of everyone and everything - including a plant (inside Jack joke) - raises its value significantly, in my opinion. If Twitter were public, I would have raised its rating after the Summize deal.
So, what are Twitter's business models?
Obviously, there is a potential business model around paid search, one form of monetization that Jack and I discussed in this interview. In this interview, Jack talks about when this may be introduced. But we also talk about a number of models, including charging Whole Foods, JetBlue and others to use Twitter to capture market research about their customers. In the case of CNN and other news outlets using Twitter, it's very conceivable that Twitter will make money much like news wires make money - meaning licensing the data.
Jack also talks about how Twitter makes money today - through SMS - and that even though his team thought the mobile phone would be the predominant platform through which updates are made, it's not. Finally, Jack talks about whether Twitter will allow for video updates, much like Seesmic, and how he sees the competitive landscape.
(Note: Jack joins me for two other interviews. One is on how Twitter is changing the way we socialize (and stalk, err, I mean observe). The other interview is on lessons Jack has learned as an entrepreneur. Watch for those in the next week.)