When Twitter Ain't Running, Ain't Nobody Running: Business Lessons

Posted by: Nick Leiber on August 7, 2009

This is a post by guest blogger Jonathan Ezor.

jonathan_ezor.jpg On Thursday, August 6, 2009, the microblogging service Twitter was hit with a dedicated denial of service (DDOS) attack, an Internet-based effort that clogged and ultimately shut down Twitter’s servers until the company could launch a defense. DDOS attacks are nothing new; ISPs, corporations and organizations face them all the time, and many of the “Trojan horse” computer infections are designed to place “bot” programs on victim computers to help launch future DDOS attacks. It’s no surprise that Twitter was targeted; not only is the service widely popular and frequently featured in the media, but it has been used for political as well as commercial purposes, raising its profile among potential attackers. (CNET reported that the August 6 Twitter outage was the result of a massive attack targeting a single user in the Republic of Georgia.)

What may have been missed, however, is the business lesson of the Twitter DDOS incident: how many other companies were down because Twitter was? While Twitter (the service) can be accessed via the Twitter Web site, Twitter (the company) publishes an application programming interface (API) that enables anyone to write software to connect to and communicate via the service. The API also includes access to search tools, enabling software developers to create programs that not only allow posting (or “tweeting”) to Twitter, but sophisticated analysis of trends, tracking company mentions, and other information management. This capability has led to an explosion of Twitter-compatible programs, including desktop software like TweetDeck and Seesmic Desktop, smartphone Twitter programs for the iPhone,
BlackBerry and Palm Pre (for which I use Twee) among others, and business Twitter tools like coTweet. For now, most of these tools (like the Twitter service itself) are free, although there is clearly money being spent on development and promotion in anticipation of revenue, whether from advertising, software, advanced services, or some combination.

The problem, though, is that all of these new companies and products are depending on a single service, Twitter, which is small, privately held, and currently not generating revenue. While the company “plan[s] to build Twitter, Inc into a successful, revenue-generating company that attracts world-class talent with an inspiring culture and attitude towards doing business,” it could shut down tomorrow, whether voluntarily, because of funding problems, or if it suffers so many attacks like the August 6th incident that keeping it running becomes prohibitively expensive. What happens to all the companies and products being built upon the Twitter foundation if it goes away, or even if it changes its model and ceases supporting the API? More to the point, how many of those firms and their investors (or customers) are considering those risks? Since most or all of them were down and unable to restore their services until Twitter managed to fix its problems (and since they go down each time the well-known “fail whale” appears on the Twitter site, indicating a system or overcapacity failure), they are probably thinking about them now.

Almost every business depends on others, from suppliers to landlords to corporate customers, and one’s poor fortunes can impact on those with whom it is linked. For that matter, even when a business doesn’t rely on other companies, the employers of its customers can cause it problems; just ask any restaurant or other shop located near a shuttered automobile plant.

Entrepreneurs in particular are vulnerable to this problem, since newer businesses have less of a cushion of either suppliers or customers on which to rely. The lesson of the Twitter attack, though, is that relying on a single company, no matter how popular or well-funded, for one’s entire business, is like having a portfolio of a single stock. Just as you should diversify your portfolio, you should also diversify the elements on which your organization depends.

Jonathan I. Ezor is the director of the Touro Law Center Institute for Business, Law and Technology, and an assistant professor of law and technology. He also serves as special counsel to The Lustigman Firm, a marketing and advertising law firm based in Manhattan. A technology attorney for more than 15 years, Ezor has represented advertising agencies, software developers, banks, retailers, and Internet service providers, and has been in-house counsel to an online retailer, an Internet-based document printing firm, and a multinational Web and software development company.

Reader Comments

Domenick Celentano

August 7, 2009 9:15 PM

As an Adjunct Professor in Entrepreneurship, I have incorporated Social Networking into my Small Business Management class. Twitter is rapidly becoming a powerful tool for small businesses to get closer to their customers. There are many cases of small businesses building Twitter into their Marketing Mix and using it as the primary vehicle for delivering promotions, targeted messages, etc. Essentially many businesses are relying on Twitter to be a revenue driver.

One example that has received much press is a proof of concept franchise called Naked Pizza in New Orleans. They have been building the business model using Twitter as a revenue driver. The most recent example is a story that highlighted a Twitter promotion that drove over 70% of a single days sales! It is enlightening to check out the article in this link: http://www.techcrunch.com/2009/04/24/a-sign-of-things-to-come-naked-pizza-erects-twitter-billboard/. Naked erected a sign in front of their location asking customers to follow them on Twitter!

The vulnerability of Twitter as you have highlighted in this post could put many smaller businesses into a tail spin.

It will be interesting to see if other entrepreneurs will use the Twitter outage as an opportunity to develop more robust alternatives.

Dom Celentano
Silberman College of Business
Fairleigh Dickinson University

Steve Kim

August 8, 2009 7:33 PM

I run a web design and search engine marketing firm in Las Vegas, NV: Media One Pro. We utilize twitter for many of our clients as it is a very useful networking and updating tool. We also feel that these attacks have opened up the vulnerability of relying on a single service (and one that doesn't generate a profit so long-term stability is unsure) and that it is important to consider a contingency plan should a vital part of your service goes down. Are there any other known companies like Twitter that offer the same functionality but with more security measurements in place? Can a twitter-like application be ran in a mirror configuration in case twitter goes down again, and you can simply switch to your backup?

Steve K
Media One Pro
Web Design/Marketing

Jonathan Ezor (@profjonathan on Twitter)

August 9, 2009 7:04 AM

Thank you both for your comments. To Steve, there is at least one open-source alternative to Twitter, although it's not well publicized. More info at http://laconi.ca/trac/, and one example at http://www.identi.ca .{ProfJonathan}

Gini Dietrich

August 9, 2009 1:53 PM

I founded and run a PR firm, which is now doing both traditional and new communication, of which Twitter is a tool. But our mantra has been, and always will be, social media is about developing and fostering relationships, and connecting and engaging with people. We use the available technologies to enable to do this and make us more efficient.

But if Twitter goes away, people are pretty resilient. For instance, by 9:00 CST on Thursday, I had more than 30 emails, I had 10 friends create Facebook groups from which to converse, and I had 50 LinkedIn messages.

I love Twitter. I hope they quickly figure out how to monetize it (I know how, but they've not asked me) and what happened on Thursday doesn't happen again. But if it does, people will find a new way to converse and engage because they're not using it as a strategy, but as a tool.

Gini Dietrich
CEO
Arment Dietrich, Inc.
http://twitter.com/ginidietrich
http://spinsucks.com

Glenn Hurwitz

August 10, 2009 2:44 PM

I am still learning how to use these sites for marketing.

-glenn
Founder,
www.GlennIsHere.com (Computer Stuff)
www.GlennIsGreen.com (Eco Stuff)

Ivan W. Burwell

August 12, 2009 7:22 AM

Twitter reminds me of the Apple Newton, the world’s first Personal Digital Assistant (PDA). Remember that? During his tenure as the Apple CEO John Sculley put great resources behind the Newton. But the product never caught on.

Years later the Palm Pilot would catch on. It was based on the same principle, only smaller. The difference was that the technology around the Palm Pilot had caught up with the idea and that made the Palm Pilot much more useful to the masses than the Newton ever was.

Twitter is a first-of-its-kind medium that has caused a lot of buzz, whether the system is working or not. ’80s musical icon M.C. Hammer said he felt like he lost his voice when Twitter went down as some 1.2 million people follow Hammer on the medium (online.wsj.com/article/SB124960455068513013.html). But the system is free right now and the company isn’t making any money. In today’s economy anything that’s free is attractive. Eventually, however, Twitter needs to earn money in order to continue being a part of our culture.

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What's it like to run your own company today? Entrepreneurs face multiple hurdles new and old, from raising capital and managing employees to keeping up with technology and competing in a global marketplace. In this blog, the Small Business channel's John Tozzi and Nick Leiber discuss the news, trends, and ideas that matter to small business owners. Follow them on Twitter @newentrepreneur.

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