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Twitter and Internet Business Models

Posted by: Rob Hof on January 02, 2008

Allen Stern at CenterNetworks and others wonder if microblogging phenom Twitter is toast. What’s the business model? they ask.

I think Jason Calacanis is right when he says that it probably doesn’t matter for a guy like Twitter creator Evan Williams, who can raise the money he needs to get the service to a large enough scale that some kind of advertising becomes the obvious model. Or at least getting bought by Facebook. But at the end of his post, he tosses in an important exception that too many people forget in the current era of Eyeballs 2.0:

* Note: if you’re not a player like Ev, and you don’t have unlimited access to capital do not take this advice and focus on building revenue streams.

Oh, OK. But doesn’t that eliminate the vast majority of Web services out there? And it kind of works against the implicit assumption that it’s so easy and cheap to do a startup, anyone can become the next Google or Facebook. I suppose it’s only right that the market should decide who’s a winner and who’s a loser, so I don’t disagree with Calacanis as much as Matthew Ingram does. But that’s a pretty wide gulf between business models—don’t bother making money/do bother making money—based only on the reputation of the entrepreneur, not the service itself. That part does feel kinda bubbly to me.

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Reader Comments

Dave Taylor

January 3, 2008 10:02 AM

Clearly if you have a "business" that doesn't have cash flow and has no existing mechanism to generate revenue, let alone profit, it's not actually a *business*. Twitter is a cool application and it's interesting, but it's not a business. Heck, Rob, you're writing for *Business*Week, you should know that. :-)

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BusinessWeek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, Douglas MacMillan, and Spencer Ante dig behind the headlines to analyze what’s really happening throughout the world of technology. One of the first mainstream media tech blogs, Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.



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