Twitter Stock and Slowing Growth

In mid-December I bought Twitter stock for ~$45 a share.  Here’s why: 

  1. I’m bulling on Twitter as a social network. I think it has lots of great use cases that almost anyone could benefit from.  It will only grow in popularity once people start realizing what it is. 
  2. I think Dick Costolo is a great CEO and product person. I’ve watched numerous interview with him (including this great PandoMonthly one), have followed his path since Feedburner, and I believe he has the company running on the right track and is doing a great job.
  3. Twitter is just now starting to monetize but I think they’ll be able to pull in a good amount of money.
  4. When I bought their market cap was 20 billion.  At 10x multiples, that means they have to have yearly revenues of $2 billion.  That seems feasible for me that they’ll get there.

I was happy with my purchase. Then, on Wednesday night Twitter announced their first ever earnings since going public.  What a disaster it was.  First off, everyone compares them to Facebook even though they are completely different.  Second, they have seemed to have stopped growing.  Look at this chart:

That’s not good.  They need to grow.  They only added 1 million US users in Q4.  Wow, that is a crazy low number. 

So, while I am still a believer, I think it might be a tough year or two (or three) until they hit mainstream.  Trust me, it’ll be a better world when they do.  

PandoMonthly’s Fred Wilson Talk

One of my new favorite things to do is watch the PandoMonthly videos.  They are really long – usually over 90 minutes – but it is a super in-depth interview with one of the internet’s big dogs.  My favorite one so far is a 2-hour video with John Doerr who worked early on at Intel and sits on the board of Google and Amazon. 

Last night i watched Fred Wilson’s interview.  Some highlights:

  • He talked about how it was a huge loss for Twitter to not buy Instagram.  He thought that with the trifecta of tweets, images and video, Twitter could challenge and possibly unseat Facebook.  But Twitter didn’t have the assets that FB had of pre-IPO shares or valuation to be able to offer them the amount they needed, thus they lost the sale.  He remarked on how it was just genius for Zuckerberg to recognize that possibility. 
  • He talked about CEO’s of his portfolios such as the Twitter trifecta, Etsy and Tumblr.  How Twitter is like the Beatles in that it had multiple creators who were all vital at different stages: Jack at stage 1 in building the product, Ev at stage 2 in building the company and Dick at stage 3 in building the business.  He also points to this terrific post about how Tumblr is all about David Karp and is really a one-person product. 
  • On that he told a story about how at Etsy, they were promoting the #2 guy to the CEO position and he went to the board and said, “hey, you’re promoting the wrong guy. That guy down the hall is beloved by the company, runs the biggest business unit and bleeds Etsy.  You should promote him.”  Pretty cool story of something putting the company’s interest above theirs. 
  • Hating Saas: he talked about why he hates investing in Saas companies (1:18 mark) because they get commoditized too easily. 
  • About bitcoin: he talked about how it is the closest thing he’s seen to a replacement for cash money and that’s why he’s investing.  He’s also investing there because he’s burnt out on social. 
  • About SnapChat: It’s not a replacement of instagram, but rather the text message (or WhatApp).  It’s not a photo service but rather a messaging service.  (see my thoughts on Snapchat here)
  • About blogging every day:  He hates how media distorts his message so he’s taken it on himself to create his own media so he can control it. 

All in all, some good stuff.  The full video is here:

Election Thoughts: Twitter and Nate Silver

The election is over and we can get on with our lives.  For me, living in Colorado meant that our television stations were nothing but ads either telling us that Romney was a bastard or that Obama was incompetent.  I know people who believe those messages and I don’t want to really talk about whether they’re right or wrong. It’s just exhausting.

I loved watching my Twitter feed on election night. I have to say that for live, unpredictable events like disasters, elections, and sports, – twitter really shines.  That said, i was also really impressed with the coverage on television.  The big board on CNN was way more informative with actual stats than any other medium. They knew where things were going down, when they were happening, and why. Twitter was snarky and fun but TV was actually helpful.

The big winner to me for this election was Nate Silver.  If you don’t know Nate, and I didn’t until a little it ago, he’s a guy who first gained recognition for developing a system for forecasting the performance of professional baseball players.  One day he woke up and wanted to the same for politicians.  Last election in 2008, he built FiveThirtyEight.com (538 is the total number of electoral votes out there) and used his crazy smart algorithms to predict, with really cool charts, who would win.  When the final votes came in, he correctly predicted the winner of 49 of the 50 state and all 35 Senate races that year.  Way closer than almost every one else.   Continue reading Election Thoughts: Twitter and Nate Silver

Some Predictions

With a new year (i know we’re a month old already) I’ve been wondering more about what the future holds.  I have a few thoughts i’d like to share and get your thoughts.  They are some prediction of the technology space.  Here they go: 


More and More Social Networks. 
I wrote in 2007 when Facebook released “The Platform” that they would take over the web.  Their product updates since then have great and as a result, they’ve been killing it for years and been gobbling up users (approaching 1 Billion now).  However, this year I saw more and more social networks emerge. You have Path, Instagram, Foursquare, FoodSpotting and others. It’s easy for me to see now that in the future everyone will be on Facebook but that’s not where everyone will share.  It will be fragmented.  Depending on what you share (Food, Books, Photos, etc.), you may be someplace else and sharing with a smaller group.  Facebook will continue to be a huge company but their days of being the only game in town are numbered. Social is now not a facebook-only feature. Everyone has it.  The future is more about what your social activity revolves around.  I’ve started to tell people that “facebook is a fad” and it’s old news.  That’s not entirely true but it’s more true now than ever. 

The Future of Local Publishing 
More and more people are trying to get into local publishing.  The local newspaper has seen its classifieds, sports, world news and national news all get marginalized by other outlets (TV, internet, twitter, etc.).  All that’s left is local.  I used to be bullish on Patch, but that’s waning as i don’t see them innovating and it seems to be too big and too expensive an operation at each location.  That may change though.  With that said, here’s my prediction for what wins in a local community:  

You have a site, this could be a WordPress site or Tumblr or whatever.  It’s managed by one to three super-engaged people who are not pulling a salary (or a minimal one).  They do two things.  First, they curate all the news from papers, blogs and other local sites that are reporting in their community. Second, they accept via twitter and their site submissions of links and news.  They curate both of them and then spit it out back to their followers on their site and on Facebook and Twitter.  This becomes the best real-time source of news.  

This works because it is impossible for one source to aggregate all the information themselves (what newspapers used to do) but it is all being covered by other people who are willing to share.  The new local publisher is a connector of local interests to other web sites.  I could see this being just a twitter feed or a Tumblr blog.  Whatever the destination is, it’s heavily conversational and constantly curated. 

Just some predictions i have.  Would love to hear your thoughts. 




Long-Form Content is Coming Back

I’ve noticed over the past year or so that the number of friends of mine who blog is decreasing.  I’m seeing less posts.  To me this is because Twitter and Facebook have taken all their thoughts.  The “I love Tron!” thoughts are now going into status messages and not into blog posts.  Which, to me, is fine.

But there’s actually been an increase in long-form posts i’m seeing.  The blogs i’m reading are full of actual articles of great stuff.  It’s great to get the “I love Tron” type comments on to Facebook and Twitter so the blog can hold longer form of actual thoughts and analysis.

I recently read a great article by Clive Thompson about just this topic.  His theory is that something more complex and interesting is actually happening.  He says, “The torrent of short-form thinking is actually a catalyst for more long-form meditation.”  He states, “We talk a lot, then we dive deep.”

Continue reading Long-Form Content is Coming Back

Everything is a Remix

I just saw a great video that breaks down Led Zepplin and how many of their tracks were stolen from other tracks.  While interesting, it makes the larger point which i completely agree with that “everything is a remix” today and it always has been.  Taking previously created content and altering it to make something similar but also original and unique is what art’s all about.

Over the past few years, i’ve grown to love the music mashup which is when a DJ takes two or more (sometime a dozen) songs and mixes them all together to create a new song.  Some of my favorites have U2+a rap song, an instrumental with Star Wars soundtrack, and 80’s classic with Jay-Z (links to all songs are below).  I’ve noticed a few things: (a) that listening to these tracks is totally different than listening to the original, even though they sound extremely similar; (b) the best music mashups have a classic rock backbone and then from another tune faster lyrics on top of it.

Mashups and remixes of all kind are all over.  I’m seeing it in TV shows, for instance in The O.C. where they did an episode just like the Spider Man movie or when Avatar recycles the plot from Dances With Wolves.  Everyone has biases and influences so it’s rare to find something truly original.  Even when copying though, you are creating something new.  When Twitter launched, people thought it was just a copy of the News Feed application that was just one part of Facebook ,but it’s grown into something completely different than Facebook.  I always thought a cool movie idea would be an entire movie and narrative but every lined used is from another film.  Some lines are famous, and others wouldn’t be as recognizable. I think it’s a cool thought.

I’m pro-remix.  I think more people should try it.  Personally, I have a goal for myself over the next 12 months to actually create a music mashup of my own where i can actually use the tracks i enjoy the most to make something original.   I’ll let you know how it goes.

Here are my favorite music mashups that i’ve posted on my music blog where i post one good song every weekday:

Fred’s 10 Golden Web-App Rules

This past weekend i watched this video from Fred Wilson about what are the 10 Golden Principles of a Web application. Fred has been an investor for over 20 years and is on the board of some of this decade’s premier companies such as Twitter, FourSquare, Tumblr, Etsy, Delicous, and more.

The 10 Golden Principles of Successful Web Apps from Carsonified on Vimeo.

  1. Speed.  Fred sees speed more than a feature. Speed is the most important feature and he argues that this is more important with mainstream users an early-adopters who are more forgiving.  Everyday users have no tolerance for slugish apps.  I heard the same thing from Google when they presented at Techstars.  They measure everything and if it’s slow, they fix it.  Fred mentioned pingom as something they use to measure every portfolio company.
  2. Instant Utility.  If a user has to spend too long to configure the service – it won’t catch on.  YouTube is a great example of how it won by providing instant feedback rather than delaying the gratification.
  3. Voice.  Consumer software is media today.  Consumers approach in the same way the approach magazines, tv shows, etc.. Software has to have a personality and if it has no attitude, then it won’t catch on.
  4. Simplicity.  Just one main feature at launch.  Fred points to Delicious as a perfect example of this.  Make the app super simple and then go from there.  There are lots of good posts on how to focus on this.
  5. Programmability.   Make your app accessible from other developers.  This means read+write API’s and if’s not “write” it’s not an API and might as well be RSS.   Allow other developers to add energy, data and richness.  In Fred’s mind this is absolutely essential and he’s hesitant to invest in anything that isn’t programmable.
  6. Personalizable.  You want make your app infused with your user’s energy.
  7. REST URLs.  Make your app easy to navigate – give everything a URL. This also makes is discoverable from Google.
  8. Discoverable.  There are millions of web pages and web applications.   This point means SEO but it also means that your app itself should be self-promoting.  This means social media and branding.
  9. Clean.  This is UI requirement.  You need to be able to come to the page and be able to immediately determine what to do and what’s going on.   It has to be inviting and simple.
  10. Playful.  An app should be fun to use and it’s use should encourage future use.  Weigh Watchers is a good example as it establishes points and goals and getting the points and acheiving goals is something that should be embedded in each application

There one more interesting point he spits out at the end about the name and brand of a company.  He talks about how important it is to him that the company purchases the actual name of the company.  For example, Foursquare was playfoursquare.com and they insisted that they change.  He also insisted that del.icio.us become delicious.com.

The 10 principles are interesting to think about and a good checklist for any startup to have.  I’ve definitely been guilty of ignoring some of these in my past work.   Interesting stuff

Twitter Ads Will be Organic

Was watching this video today (below) with the Twitter COO.  When asked about the advertising strategy, he says:

You will see an advertising strategy from us in the very near future.  And i think that it will be…um…fascinating and completely non-traditional and people will love it…. The genuis of Google when Google first rolled out ads was that the ads were also the kinds of things that people were looking for.  So we want to do something that is organic and in the flow of the way people already use twitter and not here are the tweets and here are the ads.  So it’ll be very organic.  It’ll be very cool and people will love it when they see it.

This is exactly the right strategy.  I know from experience as does anyone who’s every tried to sell traffic to ad agencies that the banners are not working. The click-throughs and engagements are low.  The IAB unit needs some help and the best way to help is to generate ads organically within the content.  What Twitter’s strategy is, i’m not sure but i did see this video today where Steven Fry suggested that tweeters can sell access to their accounts.  That would be interesting.

Here’s Twitter COO below. The ad discussion is at 17 minute mark

Techtacky

This is an interesting chart that i found on Seth Godin’s blog here:

Techtacky

As he says: “The challenge is in designing structures and transparency that will attract the good guys while burying or repelling those that seek the new technology (because they can’t find anywhere else to go). In other words, you either need to move the top left to the top right (not easy, but possible*), or educate the bottom left of the grid in how to contribute to the culture (really difficult indeed). The best new media (like blogs and possibly twitter) open doors to people who didn’t used to have a voice. The worst ones (like blogs and possibly twitter) merely create new venues for scams and senseless yelling.”

People like to bemoan new technologies but it’s just lazy to criticize the entire sector.  Some innovations move you ahead (upper right) and some introduce new problems (lower right)

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Spying on Myself and LifeTracker

Picture 3Fred Wilson had a post this weekend about MyWare and his love of it. I couldn’t agree more as i’m a huge proponent of tracking my own activity. For instance,

Fred wrote that he likes to keep this data because, “I am interested in this sector of implicit behavior data. I believe that publishing the things I do on the web will allow web services to get smarter about me and give me better experiences.” I keep track for different reasons.  I actually like to keep data about myself. I find it interesting and i use to remember events of my life.

But i see it going even further.  What i wrote was:

When i look at the web, i see people trying to capture experiences. They capture photos on flickr, videos on youtube, and notes with people on email. Their life is being tracked but not in a comprehensive way.

I could imagine a site – call it “Lifetracker.com” which tracks all the things you do. You plug in last.fm, gmail (or other email), google voice, flickr/picassa, twitter, credit card (mint), youtube and other web services. I then matches 3 things: the data, the contacts, and the time. It creates a timeline for you and marks who you’ve been interacting with and when. There’s an API so each new web service you start using you can plug into it.

There are several benefits: (1) as you mentioned, you can give this data to services for recommendations; (2) you can search your life. If google is web search, twitter is real-time search, this would be “me search”; (3) just like we don’t remember phone numbers anymore b/c we put them into our phone to retrieve any time we want, we can start throwing information into lifetracker such as meeting notes, audio recordings of phone calls, etc. so we don’t have to write stuff down and remember it. Use the cloud as a memory storage instead of your brain

I see this coming and it’s really exciting to think about it.

I do think it will happen.  What do you think?