This one's a surprise. Twitter will have turned a profit in 2009, a BusinessWeek report claims, citing sources. What happened? Search deals with Google and Microsoft brought in a nice chunk of cash for the company, which has raised well over $100 million in venture capital and has a paper valuation floating somewhere around $1 billion.
Considering the company has not yet put forth a long-term revenue strategy, this would be one of those Christmas miracles along the lines of a neurotic mom getting home to her stranded 8-year-old by fortuitously hitching a ride with a polka band fronted by John Candy.
So let's look at the details. Sources told BusinessWeek's Spencer Ante that Twitter's search deals with Google and Microsoft's Bing brought in $15 million and $10 million respectively, and that Twitter has managed to cut some of the high costs related to text-message functionality. (These costs were so exorbitant that Twitter temporarily had to restrict some international SMS codes.) OK, cool. Those numbers are decently plausible, and Twitter's strategic hire of a mobile business-development dude early this year likely had something to do with it. And Ante's article makes it clear that while sources have told him that Twitter will end 2009 on a profitable note, that doesn't mean it's going to be profitable next year.
But there's a difference between being cash-flow positive and being profitable, and it's also not totally clear as to what Twitter's other expenses are, or what they will be next year.
Ante writes:
Now that Twitter has become so popular, it has gained bargaining power with telecom companies and has managed to renegotiate so many deals with carriers that the company pays far less for the services. "Those used to be the biggest line item," says one source. "Generally speaking, those costs have gone away. Now people are the biggest line item."
People. Yes. Like the new office space they just moved into, and their still-expanding payroll, and stuff like that. Also: hardware, and other forms of defensive weaponry against evil whale attacks. The company also sometimes buys stuff, and continues to develop new features--like the current test of "contributors" accounts that it may end up charging for. So even with costs cut via a savvier mobile strategy, there are plenty of other costs that could be escalating simultaneously.
What's good news for Twitter is that getting $25 million out of search deals (if that's indeed true) shows that the company could expand that into a stronger long-term revenue strategy. Critics have been lukewarm on the possibility of Twitter attempting to support itself with advertisements or paid accounts, and nobody's really gone into depth on the question of whether the businesses currently raving about Twitter's power of "conversation" will cough up for more in-depth analytics.
What Twitter's homepage looked like before it went down on Thursday night.
(Credit: CC u07ch/Flickr)Twitter stumbled again overnight on Thursday. But this time, it wasn't the work of the "fail whale," the cuddly cartoon personification of the site's excessive technical baggage. Rather, the site was replaced with a foreboding message from "Iranian Cyber Army" before crashing entirely, indicating that it had been the victim of a malicious attack that targeted its internal servers.
Co-founder Biz Stone posted a brief clarification on the issue late on Thursday night. "Twitter's DNS records were temporarily compromised tonight but have now been fixed," he explained. "As some noticed, Twitter.com was redirected for a while but API and platform applications were working. We will update with more information and details once we've investigated more fully."
At the risk of sounding like an evening-news anchor calling attention to exactly how dangerous your treadmill is or how many diseases you can get from the ball pit at Chuck E. Cheese, I think it's time to explore the question: Is it safe to use Twitter?
For one, Twitter's track record with security has been shaky at best. A security flaw this spring exposed the data of a number of employees and allowed a hacker to pilfer some internal documents. Several high-profile accounts, like those of Britney Spears, Ashton Kutcher, and CNN anchor Rick Sanchez, have been targeted individually. Twitter has been the victim of phishing attacks. Other hackers have proved that Twitter accounts can be set up specifically to corral botnets of infected PCs. And in perhaps the biggest incident of all, a politically motivated denial-of-service attack in August that targeted multiple social-media sites managed to cripple Twitter entirely.
Think of it this way: if Facebook, a far bigger and more mainstream site that's had concerns about user privacy splashed all over the news recently, saw its homepage replaced with a nefarious political message, there would probably be a fresh round of calls for CEO Mark Zuckerberg's resignation. Twitter's heavy users are, for better or for worse, accustomed to sporadic downtime and glitches. They're also less likely to ever visit the Twitter.com homepage, considering the service has so many points of entry--text message, as well as third-party apps for mobile, Web, and desktop. Users have become accustomed to logging into third-party applications with their Twitter credentials.
That, perhaps, makes the overnight hack a bigger concern. Even though it's unlikely that user accounts were compromised in this DNS redirect, it's yet another sign that Twitter's security operations have time and again proven weak enough that the service doesn't exactly seem watertight.
A political message, or just plain obnoxious?
On the other hand, we still don't know much about this attack and it may have been less sophisticated than some may fear. One, nobody's exactly sure yet who the hackers were. "Of course, just because a message saying 'This site has been hacked by Iranian Cyber Army' has been posted on a Web page does not necessarily mean that hackers from Iran are responsible for the defacement," Sophos security consultant Graham Cluley wrote on his blog Friday.
Additionally, Cluley said, the aim seems to have been to either get a political message through or to simply be obnoxious. "Fortunately there is no indication at this point that the page was carrying malicious code, and this attack appears to have had political motivations rather than being designed to steal confidential information from users," he wrote.
"It really looks like it was people were redirected to a 'hactivism' site," weighed in fellow Sophos analyst Beth Jones via e-mail. "There was no malicious code on the site claiming to be the 'Iranian Cyber Army' either. It looks like they just hacked the registrar to redirect traffic. So it's quite probable that none of Twitter's own servers were touched."
Another reassurance is the fact that Twitter simply doesn't have the kind of sensitive data that a Facebook or Google does. While it does have millions of mobile phone numbers stored to power its text-message app, not to mention archived private "direct messages" between users, Twitter does not index a whole lot more that isn't otherwise public. Facebook, for example, has many members' credit card numbers on hand (if they've ever used its "gift shop" feature), not to mention extensive personal data in profiles like addresses, birthdays, and family connections. Members who are still concerned about the security of their Twitter accounts can take the obvious step of changing their Twitter passwords to something that they don't use on their e-mail, Facebook accounts, or elsewhere--just in case.
Beth Jones says she has confidence in Twitter. "I wouldn't say their security is second-rate by any means," Jones said via e-mail. "As it stands, they weren't actually compromised, but I can see from a user point of view the questions and concerns. At Sophos we see a new site compromised every 3.6 seconds. That's easily close to 24,000 sites a day, and of those, the vast majority are legitimate sites that get hacked."
That doesn't mean that Twitter shouldn't start making it more clear that it takes security seriously. If the company, which is now beta-testing a "Contributors" feature that may pave the way to paid corporate accounts, begins storing financial information, we can only hope that their security operations are turned up a few notches. Or, ideally, an order of magnitude.
This post was expanded at 6:23 a.m. PT with comment from Sophos' Beth Jones.
A look at one of Square's receipts for Sightglass Coffee, a San Francisco establishment in which founder Jack Dorsey has invested.
(Credit: Square)Small business is front and center for Square, the new mobile-payments company founded by Twitter co-founder Jack Dorsey. Previously in a quasi-stealth mode (OK, more like San Francisco's worst-kept secret), Square has now launched in beta, is accepting e-mail requests for preliminary accounts, and has put up a basic Web site to explain the company's premise.
The Square hardware is a small, inexpensive card reader that plugs into the audio jack of a compatible device, including a mobile phone (it's starting with the iPhone and currently has job postings up for BlackBerry and Android engineers). It processes credit card payments, geotags their locations on a map, and e-mails a receipt to the buyer.
"Even though a majority of payments has moved to plastic cards, accepting payments from cards is still difficult, requiring long applications, expensive hardware, and an overly complex experience," the Square Web site explains, talking about how the company premise was hatched when now-executives heard about an artist whose sales were hindered by the fact that he was unable to accept credit card payments.
What hadn't been reported before is that loyalty programs and microdonations are built in as well. Square can track a history of your purchases at a given establishment for discounts and promotions, effectively replacing the buy-10, get-one-free card at coffee shops. Additionally, Square donates a cent of each transaction to a nonprofit organization that the merchant chooses.
CNET first reported the company's name (it had been code-named "Squirrel") as well as some of the details about its business model: low production costs, possibly to the point where the devices can be distributed for free, and profits from transaction fees. (It's not clear whether they actually will make them free.)
Square has set up offices in San Francisco, New York, and St. Louis, with a team of 11 employees announced on the Web site. It's backed by Khosla Ventures and some angel investors.
Something has been rocking the boat over at Twitter, where stability issues on Monday afternoon caused the company to temporarily take down Twitter Lists, a popular and relatively new feature that lets members group Twitter accounts into categories.
"We began experiencing a very high rate of errors and we are working on the underlying problem," a post on the Twitter status blog read. It was later updated saying, "We are now recovering from this unexpected downtime. The Lists feature is temporarily unavailable as we diagnose the cause of the outage."
Many members had reported sightings of the "fail whale," Twitter's error message featuring a cartoon whale, earlier on Monday. It may have been more noticeable than usual because of the day's status as "Cyber Monday," a big day for holiday e-commerce deals--which in this day and age means plenty of people hunting on retailers' Twitter accounts for fire-sale promotions.
Obviously, amid all the seasonal shopaholism, somebody forgot to feed the whale.
An example of Brizzly's new tweet translation.
(Credit: Brizzly)Web-based Twitter client Brizzly made a dual announcement Friday: first, it's opened up into a full public beta mode (previously, an invite code was required); and second, it can now translate tweets into your default language on the site.
To translate a tweet in Brizzly--which already expands links, videos, and photos posted to Twitter, creating a more visual experience--you can click on a question mark for an instant translation. This is interesting, as Twitter has made its first moves recently in launching translated versions of the service (starting with Spanish), meaning that there will potentially be many more non-English tweets flowing through the system. It uses Google Translate, so needless to say, it's not totally perfect.
It was a controversial new addition: Twitter had just started rolling out a new feature that built "retweets," a user-created way to quote other tweets, into the main Twitter application. But on Wednesday, plagued by errors, Twitter appears to have pulled the feature for further maintenance.
A post on the Twitter status blog late on Wednesday morning reads that it was "working on (a) high number of errors." The Next Web dug up some discussion from Twitter's developer IRC channel and found that "retweet is temporarily unavailable while we deploy a bug fix." There is not yet word on when it will be back.
The feature was so new that some Twitter users, myself included, never had it in the first place. But it promises to significantly change one part of the Twitter experience: with official, integrated retweets, gone is the signature "RT" in front of a quoted tweet. Instead, a retweet button pushes the original tweets into the retweeter's followers' streams of messages. Like so many Facebook redesigns and restructurings, that hasn't gone over so well with existing users. The blog Twitter Watch called integrated retweeting "the worst ever."
"While current users may get used to the feature, it's going to alienate new users," the Twitter Watch blog asserted. "Twitter isn't like Facebook; it can't boast the same network effect that makes Facebook indispensable. So it needs to keep things simple for new users. But now each new user will need to understand why much of their early friend feed will consist of messages they didn't subscribe to."
But there are advantages, too: with built-in retweets, it gets much easier to track exactly how popular or influential a given message or user is.
Unsurprisingly, at least one research company agrees that valuing a company at $1.1 billion before it's unveiled a long-term revenue strategy is a little bit premature.
A firm called Next Up Research released a study this week that estimates Twitter's actual value as somewhere between $526 million and $674 million--or somewhere between 47 and 61 percent of what its valuation was in September when Insight Venture Partners, T. Rowe Price, and other investors pumped nearly $100 million into the company..
The positives for Twitter? It's been able to scale to approximately 70 million users while maintaining a single office in San Francisco and about 80 employees--well, sure, but the fail whale does tend to rear its head--and the fact that you can use it almost exclusively as a low-end mobile application means a whole lot of potential for global reach.
Next Up's concerns are pretty predictable: It's not sure how Twitter will keep up its momentum as it prepares to roll out a revenue model. It spelled out a few options that have been tossed around over the past few years--ads on Twitter.com, ads in tweets, charging for access to its application program interface (API), premium accounts, selling data and analytics--but noted that "most revenue generation options available to the company have the potential to alienate at least some of cult-like Twitter's user base."
Regardless, the research firm is guessing that revenues will come. It's projecting $134 million in revenues in 2013, "in an optimistic scenario." Now let's sit back and see how Twitter does it.
Corporate tools take note: You can tell Twitter exactly what you're doing, and it'll tell LinkedIn too.
Chalk one up for the cringe-worthy marketing term "personal branding": there is a new partnership between Twitter, hub for informing the world exactly what you're doing and thinking at all moments of the day, and LinkedIn, the business-networking tool on steroids. In an announcement Monday, the two companies explained that LinkedIn status messages can sync with Twitter.
"The business use case of Twitter is turning out to be very important, and more and more people are finding that the persona they create for themselves on the Web is part of their resume in many ways," Twitter co-founder Biz Stone said in a joint video with LinkedIn founder Reid Hoffman that was posted to the LinkedIn blog.
So, in short, LinkedIn's "status" feature now syncs with Twitter with an optional check box--a feature that the two companies say should be rolling out over the next few days. Likewise, can set your Twitter status as your LinkedIn status by using the hash tag #li or #in, so that you can rest assured that your tweet about "watching Gossip Girl and eating cold pizza" won't immediately show up to potential clients or employers trawling your LinkedIn profile. (Full disclosure: This was my Twitter status tonight. If you believe that it renders me professionally unsound, please feel free to let me know.)
All snark aside, this is probably a very good bet for LinkedIn, which continues to grow fast and make money but which hasn't yet really jumped into the latest social-networking trend of real-time, streaming information. Inking a partnership with Twitter is much easier than launching some other kind of initiative to get members to update their statuses more often. Tweets sent to LinkedIn, presumably, could also be grouped in with LinkedIn status messages to form some kind of business-intelligence live stream. The sort of information that people want to share specifically with colleagues and professional associates could be of interest to high-end advertisers or the market research community.
Twitter, meanwhile, is going to want to stay in the limelight of the business community as it considers a long-term business model--one of the microblogging service's potential moneymakers has been launching a "dashboard" of analytics for people and companies who use it primarily for professional purposes rather than, you know, filling the world in on which beer was just discovered in the back of the fridge.
Also for Twitter, this is yet another potential source of tweets as it attempts to become the world's foremost repository of real-time information. Earlier this year, MySpace announced an official way to sync Twitter and MySpace status, and in a matter of weeks its link-shortening service had become the second most popular on Twitter (trailing Twitter's preferred Bit.ly).
Facebook, meanwhile, appears to have been more reluctant: a Twitter app on its platform has pulled tweets into status messages for some time, and an unofficial app lets members tag selective tweets with the hashtag "#fb" to cross-post them to Facebook, but the only time that Facebook has put out a big, official announcement about syncing with Twitter was when it added an easy-sync feature for "fan pages," profiles for brands and marketers.
Not surprising. Twitter is a hot name in marketing these days, and in order for Facebook to establish fan pages as an ideal spot for brands to build a presence, an easy Twitter sync is a selling point. But in the long run, it's an advantage for Facebook, which once tried to buy Twitter and was snubbed, to keep its treasure trove of what-the-world-is-thinking somewhat to itself. After all, it can get away with it: with well over 300 million active users, Facebook is significantly bigger than Twitter, and could be diluting its own product by openly sourcing status messages out to Twitter. LinkedIn, better known for its networking features than any kind of status updating, isn't running that kind of risk.
Until then: "At SFO airport at bookstore. Deciding between @gladwell and @tferriss. Need real, serious insights. Thoughts? #li."
So how do you say "fail whale" en español? Twitter has launched a Spanish translation, according to a blog post Tuesday (in Spanish) by co-founder Biz Stone.
It's the first of multiple volunteer-assisted translations for the microblogging site, the post explained. A look at Twitter's public timeline will show that it's used in many languages across the world, but until this point, the Twitter.com site has been English only. Now, users can go into their settings to translate it into Spanish.
This could be key as Twitter attempts to grow bigger overseas amid allegations that its traffic has plateaued. Facebook, for example, saw significant growth overseas when it started launching user-translated versions of its site.
To better inform the Twittering masses, we have gone to the trouble of plugging the term "fail whale" into Google Translate to see how you say it in Spanish. That didn't go too well with the algorithm, so we tried "whale of failure" and came out with "la ballena de fracaso." Unfortunately, that just doesn't have the same ring.
But this is not actually the first time that Twitter has toyed with launching a non-English edition. Last year, Twitter board member Joi Ito hyped up the launch of a standalone Twitter Japan site, powered by an investment from Ito's Digital Garage, that was notable because it was ad-supported (Twitter still hasn't rolled out ads or even said that it will for sure).
Biz Stone filled in CNET News on the status of Twitter Japan via e-mail on Tuesday night: "(It's) doing very well. A few of us were there a few weeks ago to launch a brand new mobile service. We had a really fun tweetup in Tokyo."
Twitter hasn't said what the next translations of its site will be, though presumably they'd pick a language that's already spoken by many users or one spoken in a region where it hopes to make big inroads. Or they could just be cutesy and launch in Klingon or Pirate.
This post was updated at 10:40 p.m. with comment from Biz Stone.
A look at the Facebook news feed in Brizzly. Check out the buttons at the top to toggle back and forth between Facebook and Twitter.
(Credit: Brizzly)Brizzly, a Twitter client that's still private beta, on Wednesday added the ability for members to follow their Facebook contacts as well through the Web-based service (unlike many of its competitors, Brizzly has opted to not take the form of a downloadable desktop app)--and to post Brizzly updates back to their Facebook profiles. For those of you who have Brizzly accounts, it should be live later on Wednesday if it isn't already.
It's a natural move: Most Twitter clients, like TweetDeck and Seesmic Desktop, also support updates from Facebook to one degree or another. Brizzly, created by San Francisco-based Thing Labs and spearheaded by Blogger and Google veteran Jason Shellen, makes a Twitter feed look quite a bit like a Facebook news feed by expanding image and video links from services like TwitPic and YouTube.
Through Facebook Connect, Brizzly can pull in your news feed so that you can toggle back and forth between a Twitter view and a Facebook view. But it's a little bit limited for now: currently, it's just the revamped "top stories" news feed, not the live-streaming feed that had been Facebook's default until this week.
Of note: when you've clicked on Facebook view in Brizzly, the Brizzly bear mascot is wearing a Facebook-logo sweatshirt and waving a pennant. Now that's just plain cute.
UPDATE: We hear the bear's name is Phineas.
