April 19, 2011
Did Twitter buy TweetDeck for $50 million?
If so, UberMedia just suffered a serious blow to its business plan, based on monetizing tweets
Uhoh, UberMedia. Looks like a pivot might be in order.
Twitter has acquired TweetDeck for between $40 and $50 million in a combined cash and stock deal, according to unnamed sources. Though there has yet to be official confirmation from either party, the report follows word from two weeks ago that Twitter was already in advanced talks with the people behind the popular Twitter client.
If the acquisition is announced sometime this week, as expected, it will represent quite a reversal. Back in February, it had been all but confirmed that UberMedia, developer of several unofficial Twitter applications, had acquired TweetDeck for as much as $30 million.
That deal, reported in the same week that UberMedia raised $17.5 million from Accel Partners, had been intended to bolster the company’s business of monetizing tweets. Even before the TweetDeck deal, UberMedia-owned applications (UberSocial, Twidroyd, Echofon) accounted for up to 15 percent of originating tweets. By adding TweetDeck to its armory, UberMedia would have held control over one in five tweets.
Twitter obviously didn’t like the sound of that. And the company had plenty of money to make sure it didn’t happen.
As many look on with increasing wonder at how Twitter will effectively monetize its platform (that other social site looks like it's doing just fine), the issue of tweet fragmentation has become a hot issue. The San Francisco startup has put more and more pressure on third parties to not develop their own clients and it has freely suspended those that do so, like UberMedia.
You can’t really blame them. Only 58 percent of tweets originate from official apps, according to March data published by Sysomos. That means nearly half of the site’s content could be getting monetized by somebody else, something that can’t possibly be pleasing to Twitter investors. Could you imagine Facebook losing a dime from virtual good sales in Zynga’s games?
I can’t.
Relatedly, TweetDeck 2.0, the first major revamp of the app for iOS, just hit the App Store last week. Too bad it’s not getting stellar reviews. Its average rating is three-and-a-half stars, with customers calling it “one big step back,” “just another twitter client” and “awkward at best.” Ouch. Maybe the best minds over at TweetDeck were too busy juggling competing offers from UberMedia and Twitter to worry too much about product.
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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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