US Edition Twitter is not for sale and never will be, according to its super-bright chief executive and co-founder, Evan Williams.
“I don’t anticipate it being for sale – ever. We are just getting started and have a lot more to achieve,” he says, sitting in @plover, one of the many meeting rooms at Twitter HQ named after a bird in a tweet-esque style.
The microblogging service, which began four years ago and has attracted everyone from Oprah to Obama to take part as users, has actively transformed the way that people communicate both on and offline. Before Twitter, the concept of sharing information on a global basis in real-time simply did not exist.
But Williams, or @ev as he is known on Twitter by his 1.2 million followers, is no stranger to coining new phrases or types of behaviour in the digital space. This is the man, after all, who invented the term “blogger”, creating one of first major blogging platforms, also named Blogger, that fuelled the rapid rise of web journals, as they were previously known.
Both Facebook and, reputedly, Google tried on separate occasions to purchase arguably the hottest technology company on the planet last year – and failed. With a valuation of $1bn (£680m) at its last round of funding in September 2009 and having attracted over 100 million registered users worldwide (and that does not include the number of people who use the search service or just consume tweets, without having an account), there was only one crucial piece of the puzzle missing: a business plan.
When I last interviewed Williams six months ago, Twitter employed only 60 people in a cramped office in downtown San Francisco. Now there are 175 members of staff and it has decamped to a few streets down the road to more spacious offices which once housed Bebo – the now virtually defunct social network that AOL is trying to sell after an $850m buyout two years ago.
Williams is visibly energised by Twitter’s growth and evolution into a large company.
“I am more excited about Twitter right now than I have been for a long time, as we have finally built up the resources and infrastructure to be able to execute on a bunch of ideas and business products we have had running around our minds for months,” he says.
“People forget that we needed time to grow internally. Because of the rate of our user growth we get thrown in with the likes of Facebook and Google, when we are a much younger company and stuff takes a lot of time to build,” he explains.
Despite the DJ booth (a leftover from Bebo days) and some other Silicon Valley-style youthful office touches such as a positively retro arcade game and some pretty blue cushions saying “Home Tweet Home” scattered around the sofas, it has become a fully fledged business.
“We are now fully focused on the second half of Twitter – making it a successful business,” says co-founder Biz Stone, now the company’s head of creative marketing, who came up with the original concept while brainstorming with Jack Dorsey, Twitter’s chairman and third founder. This is a far cry from the casual conversation that led to Twitter’s creation.
Back in 2006, Williams, Stone and Dorsey were all working on a podcasting project called Odeo, which was taking its time to grow. During a random brainstorming session, Dorsey shared the idea for Twitter: a quickfire messaging tool which allowed people to share small snippets of information as it was happening. A year later, Odeo was sold off and the team was concentrating full-time on the simple concept.
Since then, Twitter has been developed for different markets and platforms – without needing a marketing budget. The viral effect of Twitter has been remarkable. Every tweak and adjustment to the service has been analysed across blogs, newspapers and even on the US television news.
But in spite of Williams’ unflappable cool whenever he has been asked about monetising the service, the pressure has been growing to answer the key question when it comes to fast-growing digital businesses – what’s the revenue model?
Four weeks ago, the impatient analysts finally got their first glimpse of such a model: “promoted tweets”. After four years of resisting any moves towards traditional advertising – with uSocial, a marketing company once offering $500,000 to put a banner advert on the site for one day – Twitter’s money people came up with branded messages. Stone has described them as “ordinary tweets that businesses and organisations want to highlight to a wider group of users”.
During phase one of its roll-out, promoted tweets have only appeared at the top of some of the Twitter.com search results pages, in a similar style to Google’s advertising model. The second phase of the roll-out will see promoted tweets expand beyond Twitter search and “relevant” ones appear clearly marked in user’s timelines.
Best Buy, Bravo, Red Bull, Sony Pictures, Starbucks and Virgin America have been the first companies to post branded tweets
“This is the first advertising platform I can think of where advertisers are using the platform for their organic content [the company’s regular tweets] as their advertising content,” says Dick Costolo, Twitter’s chief operating officer. “Our adverts are tweets – they are native to the service.
“Unlike Google, where the search results are split into adverts or results, promoted tweets are deeply embedded within the service and users can interact with them in the same way they can with other tweets – replying or retweeting.
“Brands’ creative teams can’t just put a typical advert out on Twitter as it won’t resonate with our users – they are forced into being creative and honest when communicating with their Twitter users,” he explains.
He believes the service will generate a lot of money for Twitter because it uses a different metric to measure consumers’ engagement with the promoted tweets. Instead of using more traditional web metrics such as the number of views or the number of clicks, Costolo’s team is measuring the 10 to 12 different ways people interact with a branded message and then “rolls that into a formula which creates a score of resonance”.
Costolo remains guarded on the details of the “formula” but says that the system has allowed them to see which company’s tweets are working well and which aren’t. Now solely tasked with making Twitter profitable, Costolo will also be in charge of rolling out “commercial accounts” this summer – the second stage of Twitter’s business plan.
Businesses that use Twitter and want to get more of the experience will be able to pay an as yet undisclosed amount – Costolo says that the company was not ready to release pricing plans – for an account to be verified, multi-authored and for access to a dashboard of analytics generated around their own tweets.
It is at this point, Costolo is keen to stress, that user experience will be protected at all times and never sacrificed for commercial gain. However, interestingly, he says he is under no pressure from Twitter’s backers, such as Morgan Stanley or Spark Capital, to turn a profit.
“There is no sense of urgency to make money,” he says. “The thing that is of real urgency is to protect the long- term value of the platform and protect the user experience. This always takes precedence over everything we do and will guide our monetisation ideas, which we hope will enhance the user experience.
All three executives are predictably tight-lipped about their current revenue levels, but Stone does reveal: “We are making money – I don’t know what the exact books are – but obviously we are not anywhere near where we need to be... we are still operating a lot on our capital base.”
Despite its phenomenal global growth, Twitter remarkably still only operates out of its one office in San Francisco. Costolo earmarks Los Angeles and New York as the locations that would probably be next on the expansion list, and then the UK and Japan, where growth is “massive”.
“Eventually we will need local sales forces about the world, but there is no set timetable at this stage. We will expand accordingly,” he says.
Another major reason for Twitter’s large uptake – apart from its usefulness – is the large ecosystem of services, such as Twitpic – a tool for adding photos to tweets – which have grown up around the platform . Many people, after initially signing up via Twitter.com, then continue to access the service through a range of these other third-party sites.
Recently, Twitter acquired one of these third-party client sites, Tweetie, which makes mobile phone applications, and created its own mobile client on the iPhone, BlackBerry and Android platforms. This move has led to concerns that Twitter is starting to encroach upon these third-party businesses in a bid to make money and take ownership of the brand.
Williams denies the allegation: “Consumers were getting confused as to what client to use on mobile phones. We had to majorly invest in a mobile platform so we could properly attain our goal – to get hundreds of thousands of new people using Twitter.”
Williams is also at pains to point out that all monetisation plans take into account and include the unique Twitter open-source ecosystem. For instance, promoted tweets will be opened out to third-party clients – who wish to host them – in exchange for a 50-50 revenue share.
Another area that has brought in large amounts of revenue has been Twitter’s search partnerships with Google, Microsoft and Bing. These deals, completed in the last six months for unknown amounts of money and lengths of time, allow each search engine to index all of Twitter’s data and pull it into the main body of search results. Each search engine realised that Twitter’s own search engine was outpacing them with real-time results on live events and wanted a piece of the action.
However, with rumours abounding that Google is working on developing its own real-time capabilities, how long does Williams see the partnership lasting?
“Google has never focused on creating its own content so our relationship is very complementary at the moment, and I can see it lasting for the foreseeable future. The search engines need our information to index in their own ways,” he says.
Twitter’s own search engine is not being neglected, though – quite the contrary. There is a dedicated team of developers actively working to make it more intuitive. It processes 600 million queries a day – mainly through third-party services – and in terms of pure volume of queries it is now larger than any other search engine, according to Williams.
“We are working on getting better at surfacing more relevant information and our 'Top Tweets’ function, which prioritises the most re-tweeted updates on Twitter, has helped that process along.
“But we know many people are only using our search engine now and consuming information via Twitter – and not tweeting – so we need to make this service as good as other search engines, in terms of generating relevant search results.”
Williams views mobile as Twitter’s greatest opportunity for growth. Twitter currently has 65 deals in place with mobile carriers around the world, and is working on increasing that number on a daily basis so it can achieve global SMS coverage.
When asked what Twitter will look like in five years’ time, Stone says: “I hope in five years’ time people think of Twitter not just as a triumph of technology but as a triumph of humanity, that we helped people with this new messaging tool we didn’t know we needed until it came along.
“The real aspirational answer is: a very profitable company that is also having a very positive global impact.”