Twitter's descent into the extractive
37signals.com
37signals.com
Is trying to be profitable now considered a bad thing? Is selling a startup to big company that will close it down the only exit strategy that HN praise?
I know that some people feel betrayed by twitter for cutting something that used to be free. But what should twitter do? Jeopardy its own business in order to make others happy? That's not how business works.
edit: s/that/they/
But more interestingly for me it seems that the way they have gone about this seems like they are trying to piss people off. Their actions have the same sort of uncomfortable feeling around them that you get when a sensitive relative asks how you like their plaid and striped outfit. The words conflict with the reality and its clear to everyone that is the case.
So why doesn't Twitter just charge for API access? $X per K API calls? They charged for the 'firehose' (too much though, nobody seems to want to pay that much) but still. It may be there is no pricing model underwhich the current company can survive, perhaps its the tech equivalent of Hostess.
For me is it always comes back to what they want to be, what is their "mission" statement? Is their mission to be real time news? Is it to be social situational awareness? Is it to be a highly focussed advertising channel? A club house? I wonder if they have a mission, does it tell them what to do next? If not why not?
Yes, I'm just as confused by them as everyone else.
Focusing on big goals rather than on making money, and on creating more value than you capture are closely related principles. The first one is a test that applies to those starting something new; the second is the harder test that you must pass in order to create something enduring
[1] http://radar.oreilly.com/2009/01/work-on-stuff-that-matters-...
So why doesn't Twitter just charge for API access? $X per K API calls? They charged for the 'firehose' (too much though, nobody seems to want to pay that much) but still.
Charging for API access (or the firehose) casts them in the role of a utility -- infrastructure. So too does their diminishing tolerance, such as it is, for "Twitter clients". One might imagine their investors prefer to envision the company's future not as a utility-style service upon which others build user-facing properties, but as a dominant entity in full control of all direct or derivative revenue streams, real or imagined. A utility-style valuation is not what they signed up for, so any lean in that direction is being corrected.
Another anecdote. I was trying to create a viable replacement for the newspaper briefly. E-readers were new, but had gotten past 'fringe.' There were some vendors who had good hardware but not great software, one of the vendors was Plastic Logic which had exclusive control over a process for making flexible e-ink screens that were very durable. At the time, (and to some extent today), that the screen needed a glass substrate meant large format e-readers weren't feasible. My iRex Illiad V2 had the largest screen at the time and folks complained bitterly when a coffee cup or some other modest 'event' cracked the screen. I decided that to blow the lid off this we needed to marry a big flexible screen with a core of open source software and a new UI so I talked with the guy at PL who helped the CEO define the overall company strategy (well that is what he said, hard to know etc etc). The key founders at PL were the scientists who had 'invented' this technology. They knew how huge it could be and dammit all that money was going to flow right into their pockets! E-readers were a zero trillion dollar market and they had showed a reader which had some really nice properties for shipping 'later that year'. The only problem was that nobody knew what a 'real' UI was for these things, nobody knew what the best price points were, they were only B&W and tablets were threatening (iPad hadn't been released yet) and I said "You can't possibly hope to out invest everyone else in making these things successful, especially Amazon who has a built in way to make money off these things in perpetuity. If you stay on this road you are already dead."
Obviously not what the guy was expecting to hear, after all they could do something nobody else could! Except that geeks and freaks like me were buying e-readers for exorbitant prices because we did that kind of thing but the real market was much lower in price, and a company trying to capitalize the creation of an entirely new fabrication process was going to amortize all those costs over their ability to deliver what was essentially a consumer electronic device? You can bet all your money on one number at the roulette wheel but its not a good business strategy.
Needless to say things played out exactly as I said they would, PL was always just about to release or finalize their specs when the next thing dropped and added new checklist items they needed to go back and implement, early results with the UI were poor and the price floor fell out with Amazon pushing things out at cost. Their reader that they thought they would get $1,000 for was going to under perform a $400 reader with a built in pipeline of content.
Compare that to making displays and selling them. Sure its the 'parts' business and your margins are a lot lower but you can start amortizing the cost of your manufacturing right away. And as things start falling out in the e-reader market you find niches that are under served and get folks to attack those markets with your parts. You watch you learn you profit on all the investment everyone else is doing. And then you step in with your own awesome solution.
It would do Twitter good to embrace the utility model, then while that was keeping the lights on, figure out what this thing was really doing, why did people value it, what did it do that couldn't be done elsewhere, and then move up the value chain. But if they remain afraid that "someone else" will get there like they have, they open the door for alternatives which will kill them anyway. Just like Plastic Logic who you never hear about any more and nobody had any big payday. Emerging markets are great, but they are fragile, and missteps are more costly. I hope they figure it out.
But there are many paths. Like an architect or a slum-lord: both in the game of real-estate.
There is a difference between the hi road and the lo one. In terms of social standing.
I think a more interesting question is this: can a business be important, useful, and have a huge user base and yet be best suited to be a smaller company? Is it a problem with the current system that a company sometimes delivers less value to its customers as it gets bigger?
I was late to the Twitter game and it's running continually on my machine, but the programmer in me screams "This is a monolithic service dressed up as a protocol!". What we need is a P2P protocol which does the same thing.
How realistic is it?
"Tent is a new protocol for open, distributed social networking.
Tent is decentralized, not federated or centralized. Any Tent server can connect to any other Tent server. All features are available to any server as first-class citizens. Anyone can host their own Tent server."
They're already running a beta service for end users at http://tent.is/.
of course, the nightclub is a business, and are just maximising their profits along good old-fashioned lines of supply and demand, and as an early patron you had no formal relationship with it, but it is far from unreasonable to feel disgruntled nonetheless.
However, when a business involves network effects, the morality changes. If WordPress.com started charging exorbitant fees, cutting off functionality, or putting annoying ads everywhere, I could simply move my blog to any number of other hosts or self-host it and none of my readers would be any the wiser. However, Twitter grew because it offered this liberal, API-driven architecture that allowed tools to flourish and whatnot. Now, we're feeling like we're in a bait-and-switch moment and we can't leave because our followers have followed us on Twitter. If we left, we could no longer connect with them. We're stuck and unless Twitter does something so crappy that we're willing to start over, we have to live with it.
Heck, if Twitter was like this from the beginning, would a competitor have gotten the growth that we gave Twitter? Let's say that Twitter and Jaiku committed to a 15-year feature set as part of a community promise in 2006. Twitter told us as users and prospective users (before we built large follower networks) that they were going to shut down third party access and plaster ads over the feeds while Jaiku told us that they would commit to ensuring third party access, but might run ads. Would we have looked at Twitter and Jaiku and given Jaiku the growth and network?
I know it's unreasonable to ask a company to commit to a 15 year feature set. I'm not suggesting that we have any rights to force Twitter to act how we deem proper. However, when a company creates a lock-in system (like Twitter does with followers) and they perform a bait-and-switch, I think we do have the right to be mildly annoyed and to point out that this might not be the most moral way of acting.
Lock-in allows companies to act against their users in a way we should be against. That doesn't mean we're against profit. For example, there was a pizza place near me that offered a large cheese pizza for $5. It wasn't especially good pizza, but it was $5 and my roommate and I loved it for that. Later, they raised the price to $7.80 (IIRC). I assume it wasn't so profitable at $5. However, at nearly $8, we felt we'd rather pay an additional couple dollars to get better pizza. We didn't begrudge the store their price hike. We didn't feel they owed us cheap pizza. Why? Because they held no power over us. We could re-make our decision as things changed.
For those of us using Twitter, we can't re-make that decision. Twitter got some of us to use their service because of things they're now taking away. Maybe other competitors would have had more traction if Twitter acted this way from the start. But they locked us in and then acted in a way inconsistent to what got them the lock-in. That's bad. It isn't take to the streets bad. It isn't quit the service bad. But it is bad enough to blog and/or comment about.
The issue isn't that we want to deny Twitter the ability to profit. The issue is that Twitter locked us in and now we feel like we don't have other options for that style of communication. Twitter has become a sort-of monopoly over that type of communication and they might start using that monopoly power not to merely become profitable, but to become more profitable than a competitive market would allow - at our expense.
In some ways, it's tough to be a monopolist. Everyone gets to take shots at you. In a competitive market, people generally don't take shots so much because they don't care: they'll just move along to something else that makes them happy. Twitter's changes are making some people unhappy. Maybe no other service could be profitable doing less - that is entirely possible. It's entirely possible that Twitter is being as awesome as possible and that they're nearly saintly in their devotion to their users needs - as much as is humanly and technologically possible. However, we don't and won't know that because of Twitter's lock-in and because of that lock-in, these changes might not feel like Twitter trying to merely continue along and earn a modest profit for its investors, but an exercise of power over us. That sounds more dramatic than I meant it to. I mean, it's Twitter, not the heart surgery that someone needs. Still, it's annoying when we feel someone isn't dealing with us in a square way. When there are loads of competitors, we can say "well, it just costs about that much to get me a pizza." When there's only one competitor, we become less forgiving because monopoly power has been levied against us in the past to our detriment. There are loads of alternatives to 37signals' products. There are loads of alternatives to WordPress.com. There are loads of other local pizza places. The same isn't true of Twitter.
Also, I can't see twitter as a monopoly. Monopoly to what? They have a monopol on SMS length message network run on internet? Yes, twitter has a monopoly on twitter. It's not like they have a monopoly in complete social and news network market.
Everyone creating a twitter client or application should have known that twitter can refuse to let it run, or change the rules. They have been pretty clear about that, and they have been doing it for a while. That's their right to do so. There is a feeling of betrayal amongst developers, but it was their choice to build a product upon platform they don't control, in the same way as iPhone developers that know that Apple can just refuse to let them in the app store, but they still build for that platform.
In terms of the monopoly comment, Twitter is the one or one of two places where people can "follow" you. RSS/Atom are pretty much dead. Twitter has a monopoly on a network where you can post things and those postings show up in your followers' feeds. The recent spat about Facebook makes it clear that their news feed will never show your postings to a majority of your followers unless you pay to promote it. With Twitter, I see each posting that anyone I follow posts. Twitter became the place to follow people you don't know and to post things to be read by people you don't know. Twitter allows me to aggregate many people's micro-blogs into one feed. Facebook doesn't allow this since I don't see all posts and there really isn't another micro-blog/status message system. If there is another, I'd be interested in knowing about it. However, even if you made a Twitter clone, the issue remains that with no people using it, it isn't helpful. Facebook simply doesn't meet the need that Twitter does. I'm realizing that I've forgotten about Google+, but ultimately any of these closed services are only as big/useful as the network of people using it.
Really, it would have been better if something more open had taken off, maybe based on RSS that would have allowed a multi-network solution. If tweets are public, it's easy to publish RSS feeds of the tweets and for a third party service to aggregate them. Twitter and Twitter2 could be competing services on UI and such and merely read the feeds of the other so that users of either network could follow users of the other network. This could be generalized to any number of competitors. In many ways, this is what FriendFeed was trying to do: allow you to follow people on many services rather than being locked into closed networks. However, Twitter's initial liberal openness might have stunted that. Twitter is so open. Why not build your network on Twitter rather than creating a network of sites?
Companies have the right to change their service offerings. We don't have the right to force them to continue to offer what they used to offer. However, when a company uses a somewhat liberal, open philosophy to grow its user base and lock us in and later decides to switch that bait, it's quite reasonable to be annoyed. Twitter didn't rise to its market power via the new policies. They used very liberal policies initially to grow and make sure that competitors didn't capture that growth. Now that they've locked-in lots of users and competitors have left the market, they're using their new power to act differently. Again, it's completely possible that even with competition, Twitter's ne behavior is the best a company can do to remain profitable and they acting in the absolute best way possible. However, if they had these policies from the start, would someone else have gained their growth instead? If they didn't have this lock-in, could someone else be profitable without resorting to these changes?
Ultimately, when companies are able to exert power over us, it's a bad thing. It's a bad thing when Apple does it, it's a bad thing when Twitter does it, it was a bad thing when Microsoft did it, etc. I'm not saying that it rises to the level of doing anything about it beyond moaning on HN ;-). However, it isn't something that we should be pleased with. It's something that we should acknowledge as sub-optimal. In an optimal situation, we would have choices and be able to move to competitors without hardship and that would (hopefully) lead to companies acting in the most user-friendly way they could while still remaining profitable. Optimal solutions aren't always possible, but Twitter's moves just feel not so nice. They feel like bait-and-switch techniques and that we can't just change services. It isn't evil, it isn't even particularly important - I mean, in human history, it probably won't warrant a footnote. But it's bad for us as users when a company does one thing while it has competition, that competition dies off, and then they switch to another mode of business. Again, that sounds way over-dramatic for what I'm trying to convey which is merely that these changes have come about because Twitter has gained power not due to them and are using that to make their non-important (in the life, health, shelter way) product a little worse for us. However, it's an anti-user use of power that rises to the level of moaning about it on the internet.
Now, am I saying we shouldn't blame Twitter? Of course not! The people, particularly and especially developers, have every right to be upset and the criticism of them locking down their API, changing the rules, bending the rules unfairly, and just generally acting in bad faith are justified. That said, in the end your point still stands. Twitter is a business and this is how it has chosen to become profitable. We have two choices now. Either deal with it or not use/develop for it.
In my own personal opinion, I think that despite the anti-Twitter sentiment within the developer and tech community Twitter will still thrive precisely because of what they're doing now whether it's right or not. Obviously Twitter has decided that the prospect of losing the developer community is worth the risk. Hey, that's business.
This is an implementation of the "hellban":
http://www.codinghorror.com/blog/2011/06/suspension-ban-or-h...
AFAIK you can get hellbanned automatically (site flags you as a likely spammer) or by a moderator. In most cases the people getting hellbanned deserve it, but in a few the call is questionable (IMO; but this is YC's site and not a democracy).
math0ne is currently in this state. He has a response to this thread that is marked dead (I can see it, you won't see it unless you toggle showdead to yes on your account page).
The fact that he has been in this state for so long and still posts (though not very often) is somewhat mind-boggling.
well, even if you are not hellbanned, there's very little to show whether your comments are being read or not. hn's commenting model is far more soapbox than discussion.
If I consistently got no replies or upvotes to my posts here I'm pretty sure I'd stop posting at some point but YMMV.
Entrepreneurs and developers building startups want to find the best vectors to balance offering things people want with things they're willing to pay for (whether directly or indirectly) and it's thus interesting when a company that's veered to far in one direction has to change its course.
There's a judgement here (meaning in the larger discussion and not just Dalton's post) however it's more evaluative than merely moral.
*to be fair, lock-in is kind of annoying.
1) You ruin the experience because of the business model. People switch to a competitor that is annoyances free as you were.
2) You ask for money. People switch to a competitor that is free as you were.
3) You invent a business model that is an added value for users instead to be a problem. You win.
To make "3" working you need to be open minded and design the business model for months, with creativity, thinking at your users. It's hard but you could do it, but unfortunately there are this guys that gave you millions that will ruin this process. So "3" is very very very hard for Twitter IMHO.
I guess to succeed in this business you need to have your business model figured out from the start, else you may end up making similar decisions as twitter did under pressure to make money quickly.
Also, Twitter has 1500 employees. That's absurd.
I have an user, I can acces the site via a simple text-based protocol, who cares what weird client I'm using?
They're not quite sure what they can do with it, but they know any hope of monetization is lost if all they are doing is providing a backend for third party clients.
It contains nothing we didn't know before, it's not interesting at all and there's no value in it. David just talks shit about another company.
Big consumer IPOs which tank hurt investor confidence across the market, and particularly in the tech IPO sector in the future.
This way we will finally have something we can settle on, we will have multiple competing clients and no censorship or arbitrary rules, and no monetization.
Only problem is that it may be a harder technical problem than it sounds.