July 1, 2009
How Siri assistant plans to make money
Free service plans to take fees from partners for delivering services to users
In this segment, Bambi Francisco interviewed Tom Gruber, co-founder and CTO of Siri, a company that recently came out of stealth mode, and is a virtual assitant on the iPhone.
BF: We were going to talk about the business model. It's a great application as soon as it launches. It's going to be a free application but you have to make money somehow. So how is Siri going to make money?
TG: The great thing is that when you're in a mobile situation with your phone, and the virtual personal systems exist to help you do things such as things you want to do online or offline. For example, if you want to get tickets to a concert, game, make a restaurant reservation, or see a movie, all of these things cost money. So being close to the process of which people make these transactions is easily monetized. The other thing that is interesting is that the intent to do things is known to be valuable. This helps gain any other kind of attention for this monetization. It's extremely targeted because we have a deep understanding of what they are trying to accomplish and wouldn't be wasting their time with any irrelevant ads.
BF: Let's go back to the transaction. So you have relationships with Open Table and several service providers. So when you help book a table through Open Table, you would take a fee?
TG: Each one has a particular contract. But like I've said, if you're near anytime there's a transaction, there's usually affiliate program or particular ways to monetize that.
BF: But if you think about many applications on the iPhone charge a buck. They don't charge much. Did you think about making a subscription base?
TG: The founders created this company because they wanted millions and millions of users.They wanted this to be mainstream consumer and the best way to do that is to give it away for free.
BF: I have been following the mobile industry since 1999 which is not too long. But I remember when the idea was to have your mobile device and pass by a florist and be able to buy flowers right on your mobile device. What is the biggest obstacle in making this a reality?
TG: In terms of the money side of it? It's trust. So the Siri personal assistant is capable of holding your credit card and using it for you. It's all about human trust. Do we have opportunity to have people learn to put their trust in the system? With small purchases like that, people just agree to have it paid.
BF: And what type of services do you think are going to be more prevalent?
TG: Entertaining as well as taking a taxi to it. Buying flowers and having it sent. You might even imagine, you're in a bookstore and you may grab your phone and order music that is playing in a cafe...anything that is an impulse thing to do. I don't think we'd be doing considered purchases like buying a car; we would only do on-the go things. There are countries where this is already a routine.
BF: This is soon to be available on the iPhone in private beta but you have ideas of moving this off to the Kindle.
TG: We don't have the Kindle yet. But the basic thing is that this is intelligence in the cloud brought down to the mobile device. It can work on any mobile device. If it has the ability to talk to the device, it gives speech and so on. We're ready, there are twenty employees, and we are going to be serving millions of people. So we're going to do one thing well and then move to the next.
BF: We wish you the best of luck and I can't wait to be a private beta user.
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What is Twitter?
Twitter is an online information network that allows anyone with an account to post 140 character messages, called tweets. It is free to sign up. Users then follow other accounts which they are interested in, and view the tweets of everyone they follow in their "timeline." Most Twitter accounts are public, where one does not need to approve a request to follow, or need to follow back. This makes Twitter a powerful "one to many" broadcast platform where individuals, companies or organizations can reach millions of followers with a single message. Twitter is accessible from Twitter.com, our mobile website, SMS, our mobile apps for iPhone, Android, Blackberry, our iPad application, or 3rd party clients built by outside developers using our API. Twitter accounts can also be private, where the owner must approve follower requests.
Where did the idea for Twitter come from?
Twitter started as an internal project within the podcasting company Odeo. Jack Dorsey, and engineer, had long been interested in status updates. Jack developed the idea, along with Biz Stone, and the first prototype was built in two weeks in March 2006 and launched publicly in August of 2006. The service grew popular very quickly and it soon made sense for Twitter to move outside of Odea. In May 2007, Twitter Inc was founded.
How is Twitter built?
Our engineering team works with a web application framework called Ruby on Rails. We all work on Apple computers except for testing purposes.
We built Twitter using Ruby on Rails because it allows us to work quickly and easily--our team likes to deploy features and changes multiple times per day. Rails provides skeleton code frameworks so we don't have to re-invent the wheel every time we want to add something simple like a sign in form or a picture upload feature.
How do you make money from Twitter?
There are a few ways that Twitter makes money. We have licensing deals in place with Google, Yahoo!, and Microsoft's Bing to give them access to the "firehose" - a stream of tweets so that they can more easily incorporate those tweets into their search results.
In Summer 2010, we launched our Promoted Tweets product. Promoted Tweets are a special kind of tweet which appear at the top of search results within Twitter.com, if a company has bid on that keyword. Unlike search results in search engines, Promoted Tweets are normal tweets from a business, so they are as interactive as any other tweet - you can @reply, favorite or retweet a Promoted Tweet.
At the same time, we launched Promoted Trends, where companies can place a trend (clearly marked Promoted) within Twitter's Trending Topics. These are especially effective for upcoming launches, like a movie or album release.
Lastly, we started a Twitter account called @earlybird where we partner with other companies to provide users with a special, short-term deal. For example, we partnered with Virgin America for a special day of fares on Virginamerica.com that were only accessible through the link in the @earlybird tweet.
What's next for Twitter?
We continue to focus on building a product that provides value for users.
We're building Twitter, Inc into a successful, revenue-generating company that attracts world-class talent with an inspiring culture and attitude towards doing business.
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Siri is a Virtual Personal Assistant - a new way to interact with the Internet on your mobile phone. Like a real assistant, Siri helps you get things done. You interact with Siri by just saying, in your own words, what you want to do. You can ask Siri to find a romantic place for dinner, and get reservations for Saturday night. You can discover things to do over the weekend, get tickets to the movies, or call a cab when you’re out on the town. You don't have to search through a bunch of web pages, following links and hunting down facts. Siri does all the work giving you the information you need at your fingertips.
We believe that in five years most people who use the Internet will have a Virtual Personal Assistant (VPA) to take care of the details of using online services. We will look back at the birth of VPAs in 2009 and wonder how we ever got by without our trusted assistant. The days of wading through links and pages from your mobile interface will seem quaint, because the natural way to interact with the rich world of information and services is to have a conversation. As John Batelle, the author of The Search, says "The future of search is a conversation with someone we trust."
Tom Gruber
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