Twitter

Getting Acquired and Then Getting Shut Down

By Mark Evans in Startups 2 Comments Tags: , , ,

Hey, the good news is you’re being acquired. The bad news is a key part of the deal is the product you’ve been nurturing, growing and pouring your heart and soul into will be shut down as part of the deal.

Welcome to the exciting world of team-buying in which the acquirer has far more interest in the people who built the product than the product itself. Case in point is Twitter’s purchase of Vancouver-based Summify last week.

Twitter essentially bought co-founders Mircea Pasoi and Christian Strat and the Summify team, while blowing off the service, which used social data to create a personalized news. Summify has stopped accepted new users, and has already removed or disabled some features.

The buy-and-close transaction is interesting because it is almost as if the product served as a public audition for the people who developed it. While the team performed on stage, the potential acquirers observed from the seats to determine whether there was good talent for hire.

In some ways, being bought but having your product shut down must be bitter-sweet for entrepreneurs who were able to execute on the vision for the product they developed. On the other hand, getting handsomely paid AND having an opportunity to work for a fast-moving company that wants you to be part of it is a good way to get over the loss.

Still, it must be a conundrum for entrepreneurs to accept this kind of deal. As much as it is flattering to be wanted, it comes with a price. It does make you wonder whether some entrepreneurs would hold out for a deal that doesn’t throw their baby out with the bath water, even if means turning down a fairly attractive offer.

At the end of the day, Summify has to qualify as an entrepreneurial success. The founders are probably happy, Summify’s investors are pleased, and Twitter got what it wanted.

Would you reject an acquisition offer if it meant your product had to disappear, or would it not matter?

 

The $400M Question: What’s Next for Twitter?

By Mark Evans in Social Media 1 Comment Tags: , ,

Here’s a riddle: what do you do with 100 million active users and $400-million of freshly-raised venture capital?

Answer: Pretty much anything you want, which can be a good or bad thing depending on your perspective.

That’s the situation facing Twitter, which has a “truck load” of money to do whatever it wants. With no need to do an IPO or be acquired, the world is Twitter’s oyster. It can make acquisitions, drive hard into different businesses such as advertising, analytics and data aggregation/distribution, or as GigaOm’s Mathew Ingram suggests, it could become a publisher. Flipboard, anyone?

Heck, Twitter could pull a Hewlett-Packard and completely reinvent itself by making a major acquisition. This is admittedly a far-fetched idea but given how crazy the high-world has been turning these days, you never know! I mean Michael Arrington is no longer working for TechCrunch, and Carol Bartz claims Yahoo “f@$ked me over”.


Data = Advertising Revenue?

So how does Twitter and CEO Dick Costolo move forward? The nice thing about having $400-million is it provides lots of financial latitude. The problem with having so much money is there’s a lot pressure to do something dramatic. Maybe even do something like create a business model!

The lowest hanging fruit for Twitter is clearly advertising given Twitter could crunch the vast amount of data it generates to deliver extremely targeted advertising. While Twitter has been slow off the mark to embrace advertising, my take is users will quickly accept it as part of the landscape even if Twitter decides to aggressively drive forward. There’s no reason why Twitter’s Promoted Tweets shouldn’t be as effective and lucrative as Google AdWords.

The thing is it is difficult to see how Twitter could spend $400-million to blow out its advertising business. So how does it spend all this money?

Acquisitions, Anyone?

Well, there are a bunch of acquisitions (e.g. TwitPic, UberMedia) could make but they could eat up $50-million to $75-million, unless Twitter decides to purchase an analytics company. Twitter could buy an advertising network to support the growth of Promoted Tweets. It could spend some more money on its infrastructure, which still isn’t rock-solid and will need to be expanded as more users are added. And there’s money to be spent internally on developing new features and applications.

Even so, it is hard to imagine how Twitter could spend $400-million but I’m sure there is some kind of plan, right? Then again, maybe there isn’t a plan other than taking $400-million when someone really wants to give it to you.

Right now, Twitter can pretty much do anything. The key will be moving forward decisively and aggressively to execute on the opportunity. While Twitter has received a huge boost of confidence from its investors, Twitter’s financial success is no slam-dunk given the challenges it has had creating a robust business model. So it important to remember having $400-million doesn’t fix your problems. It only puts the pressure on.

They say money can’t buy you happiness but Twitter is about to discover if it can buy success.

HootSuite: Canada’s Biggest Web Success Story?

By Mark Evans in Uncategorized No Comments Tags: , ,

HootsuiteYou know what’s strange about Hootsuite’s success? It’s how muted the enthusiasm has been in Canada.

Sure, a lot of people recognize that Hootsuite is a leading service to use Twitter and other social media services but it’s not like people are falling over themselves to thrust the Vancouver-based company into the spotlight.

Maybe that will change after Hootsuite said earlier this week that it now has two million users, many of them people happy to pay a monthly subscription fee. Even more impressive is the number of Hootsuite users has doubled in the past few months.

Hootsuite’s modest profile – and I know some people will push back against this description – may have to do with the fact it hasn’t loudly blown its own horn. Instead, the company has steadily continued to move forward by adding new features and, of course, introducing a freemium business model that has been embraced by many users.

Hootsuite also “suffers” from the fact it has a group of low-key investors as opposed to high-profile VCs looking to show how savvy they were in their startup financing activities.

In a way, it is refreshing to see a company enjoying so much success seem to take it all in stride. I’m sure the company could be a lot more aggressive and self-promotional but that doesn’t appear to be its style.

For more on Hootsuite’s success, check out The Next Web.

Hootsuite

What Does 10,000 Tweets Mean?

By Mark Evans in Social Media No Comments Tags: , , ,

10000I’m not sure how this ranks in terms of an “accomplishment” but I recently posted my 10,000th tweet on Twitter.

That works out to about eight tweets/day. If a tweet takes a minute to create, I’ve spent 160 hours creating content. Either that’s been a good investment in terms of personal branding and providing value to the community, or it’s been a lot of productive time wasted.

Given I’m so vested in social media as part of what I do for a living, I can only see 10,000 tweets as a solid investment. A necessary evil in offering social media consulting service is you have to walk the walk in addition to talking the talk. It is difficult to suggest a client commit themselves to Twitter if you’re not already drinking the Kool-Aid.

I do have to admit that cracking the 10,000 tweet barrier also provided more food for thought about the amount of time spent on social media. One of the key issues I’m trying to attack is how to become more focused and productive. For all the benefits of social media, it’s also a time and focus killer.

In many ways, social media is double-edged sword for me. I see it as valuable but, like many people, grapple with how and when to use it.

Some People Should Be Twitter-Free

By Mark Evans in Social Media, Uncategorized 5 Comments Tags: , , ,

No twitterJust because Twitter has more than 200 million users doesn’t mean it’s a tool for everyone.

In fact, there are some people who just shouldn’t use Twitter because it gets them in hot water more than it helps them build a personal brand, promote a business, or provide valuable or interesting content.

A case in point is Toronto councillor John Parker, who seems to think Twitter is a platform to opine about “hot chicks”. Not that there is anything wrong with hot chicks or using Twitter to talk about hot chicks but not when you’re an elected official with a high profile.

Parker’s stumbles and bumbles on Twitter may be light-hearted but it clearly shows he has no clue about the inappropriateness of “hot chicks” tweets or the downside of Twitter given what gets said on Twitter goes way beyond Twitter.

Parker joins a long list of politicians, athletes and celebrities who should be told “Sorry, no Twitter for you”. It’s like giving the car keys to a teenager who proceeds to drive recklessly. At some point, you have to ask for the keys back.

The problem with Twitter it requires little or no thought to tweet. It plays right into our multi-tasking, impulse-purchase world. You think or do something, you instantly tweet it – damn the consequences, implications or fallout.

It explains why most tweets are value-less, inane or digital flotsam that would be left untweeted. I suggest there be a tweet-meter that measures the goofiness of tweets. If tweets fall before a certain level, you’re on probation. If the bad behaviour contents, you’re banned from Twitter.

Some people should stay away or walk away from Twitter to save themselves and protect the rest of us from their digital noise.

LinkedIn and the Downside of an IPO

By Mark Evans in Social Media No Comments Tags: , , ,

The world is abuzz, aflutter and agog about LinkedIn’s IPO, which saw the price of its shares more than double to $94 from the offering price of $42. LinkedIn is now worth a staggering $8.9-billion, or 40X revenue.

To some people, the LinkedIn IPO harkens back to the original dot-com boom when valuations were sky-high and investors were completely irrational. That may be true but remember most of the IPOs done a decade ago were crappy companies with little or no revenue that played upon the bubbly enthusiasm of this new thing called the Internet. LinkedIn, on the other hand, has revenue, 100 million users and a global brand name. In other words, it has fairly strong fundamentals.

But as people sober up from LinkedIn’s spectacular debut yesterday, here are a few thoughts:

1. The biggest thing about being a publicly-traded company is everything you do is on the table. There are no secrets anymore that can kept behind the scenes like when you’re privately-owned or VC-backed.

At the same time, there are expectations to meet from investors and analysts looking for certain finance results. If you exceed targets, you’re rewarded; if not, you’re penalized. For publicly-traded companies, it puts pressure on them to perform, and may get them to do things such as raise prices or introduce new services to drive revenue.

2. While LinkedIn had strong revenue ($243.1-million), I think companies that don’t have strong revenue will have a more difficult time doing an IPO unless they also have a compelling brand. Facebook could do an IPO in a heartbeat, and I think the enthusiasm among investors would dwarf LinkedIn’s.

Twitter could easily do an IPO based on its user base and brand recognition. The only problem is Twitter’s financial fundamentals may be an issue because it’s still not generating enough revenue. This explains some of the strategic decisions Twitter has made recently.

3. There will likely be a flurry of IPOs as entrepreneurs and, as important, VCs try to take advantage of the LinkedIn IPO to pull some money off the table. My advice to investors is to be pragmatic and careful, and be prepared to get stung if you’re not prepared.

More: The New York Times has a good piece on LinkedIn’s IPO with a great first paragraph: “It’s not 1999, but the big Internet I.P.O. is back.”

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