Stowe Boyd

Surprise! Twitter Ecosystem Attracting Less Investment

For a piece coming from an analyst firm with the work ‘insight’ in its name, you’d expect a bit more insight offered and not just numbers.

CB Insights has determined that ‘pure play’ twitter start-ups are getting less funding than formerly:

Pure-Play Twitter Startups Attract 50% Less Venture Capital and Angel Investment Than Last Year » CB Insights

As Twitter’s popularity has grown with users, we wondered if this popularity translated into more investment by venture capitalists and angel investors into pure play Twitter startups?  CB Insights’ venture capital and angel investor data suggests that venture capitalists and angels may be a bit less sanguine about the Twitter ecosystem than they were last year.  This is the opposite of what we saw in an earlier analysis for another hot ecosystem – Apple’s iPad and iPhone ecosystem – which saw a 220% increase in funding vs. last year.

First, the bad news…Last year (from June 2008 to May 2009), we’d seen $21.6M fly from venture capitalists and angel investors to pure-play Twitter startups.  In the June 2009 to May 2010 timeframe, the investment funding dropped over 50% to $10.4M.

Now, the good news…The number of investment rounds held nearly flat with 11 rounds in our analysis of last year vs. 10 rounds in the more recent timeframe.  This does, however, show that average amounts invested by investors has dipped fairly dramatically going from nearly a $2M average round last year to just over $1 million more recently.  We also saw a high degree of collaboration between angel investors and venture capital firms on these deals and that these pure-play funded Twitter startups were going to a diverse array of industries.

There are lots of theories on why the amount invested has dipped with the most popular explanation being a feeling of uncertainty by application developers and investors alike about the direction Twitter will go.  More recently, compounding the uncertainty are acquisitions by Twitter of the likes of Tweetie and Summize (filling holes on its platform)?  Time will tell if these moves will drive investors to be even more cautious about the platform?

Oh, damn: not ‘time will tell’; not that lame line.

The post links to Fred Wilson’s incediary Twitter Inflection Point post of last April, in which Wilson (an investor and board member of Twitter) throws down the gauntlet, and basically warns the Twitter ecosystem that Twitter will be filling the self-created ‘holes’ in the product, and many niches in the Twitter ecology will no longer be viable for third-party vendors.The following week was the Twitter Chirp conference, where Ev Williams announced the acquisition of Tweetie to be the Twitter client on iPhone, as well as a Twitter developed Blackbird client.

So, there is ‘no time will tell’ involved. Here’s what I wrote after Wilson’s comments and before Chirp:

Twitter Raising The Infrastructure: App Builders Better Run For The Ultrastructure

Here’s what is happening: Twitter is consolidating its position at the center of the ecosystem it has engendered, and as part of that functionality that is deemed necessary to the infrastructure is going to be built by them, or at least owned by them through acquisition.

The old model had a lot of holes, like search, clients, Url shortening, pictures, and geolocation. These niches had many players trying to establish themselves, creating a rich ultrastructure above the platform:

Twitter started to buy some companies to fill glaring holes (like Summize for search) and they have built some parts of other capabilities (like their own URL shortener for direct messages), but mostly the maps was still a mess.

Now, they have bought Tweetie, built a client for Blackberry, and they are moving toward a new theory of where the platform begins and ends:

Of course there is no saying that Twitter will leave the line there. They are going to have to make their roadmap clear at the upcoming Chirp developer conference, so that third parties can make reasonable investments in new applications without the fear that Twitter will step on their toes.

However, I am making a bet. I am sure that Twitter realizes the value of analytics: the treasure of information about the flow in Twitter can’t be treated as a side show, because it is the show. Therefore, I am predicting that Twitter will build or buy technology to capture all sorts of information — what links are streaming by, who’s using what hashtags, and sentiment about brands — this is enormously valuable. Acquisition of companies like Radian6, bit.ly and a few others would make sense, especially considering the value to large companies, media, and even political parties.

The other ultrastructure niches really make sense as independents. Consider games: they come and go, like hit music, and it requires a big sprawling community of developers. Not a good fit inside a single monolithic company. The same is true with communities, like Stocktwits. And obviously, niche apps.

***

So, Wilson’s shot was heard round the world, and now Tweetie is part of the new Twitter infrastructure.

This won’t mean the end of competition by players like Tweetdeck or Seesmic. These have large and dynamic communities of users. But we have to see how Twitter plays this nesw game. Will they use the same APIs as everyone else, or will they exploit their knowledge and access to the inner workings of Twitter’s technology to make their own offerings faster and more reliable, a sort of Microsoft approach? Will Twitter transform itself into a Salesforce-like platform, with hundreds of integrated offerings, but owning the CRM heart of the platform?

So, investors are steering clear of those potholes, and maybe even areas like analytics, which Twitter will want to move into, even if they haven’t done anything yet. The future is very cloudy, and the investors are looking for lower risk bets elsewhere, which doesn’t concern Twitter’s shareholders.

It does suggest that Twitter might be served by an IPO, however, since that would be the cheapest way to attract the capital it needs to build its own ecosystem of services as a competitive strategy against Facebook and other social networking giants (like Apple and Google).

related articles

• Venture capitalists tire of Twitter-y start-ups (news.cnet.com)
• Investors Squeamish About Third-Party Twitter Apps [STATS] (mashable.com)
• The New Reality of the Twitter Ecosystem (gigaom.com)

Steve Jobs Told Me So Says Jason Calacanis

Jason Calcanis says he spoke with Steve Jobs about the Facebook flare-up. Whether he did or not, what he posted in his email newsletter is dead-on:

via email

Anyway, here is what Steve Jobs is thinking during the keynote:

Now, certainly you’ve heard about Apple’s huge data center in North Carolina. You know, the one that reportedly cost one *billion* dollars. Experts say that Apple’s data center cost roughly double what Google and Facebook spent on similar facilities.

Apple’s massive, cash-generating successes have come from soup-to-nuts services like iTunes and the iPod, the App Store and the iPhone. It’s a logical conclusion that Apple would want to take on the social and search layers next.

PING is not music service; it’s a social network precursor.

Game Center is not a game matching service; it’s a social network precursor.

The largest and most-loved Apple product line—to the tune of over 275 million units sold—is the iPod. Their second biggest revenue success is the iPhone, of course. In order to use it, you need to put in a credit card.

Facebook and Twitter have users. Apple has customers.

The difference? Customers give you their credit card number.

Jason goes on to suggest that Jobs should acquire Twitter and Zygna: maybe so. He doesn’t mention Netflix, which I think is more central to his long term goal: the battle for the living room (see Social TV: The Future Of TV Is Social).

But it is clear that billions of iPod, iPhones, Mac, and iPads form an awfully large base of users to start with, if you are launching a new social network.

I remember trying to convince Adobe to roll out an instant messaging product in the late ’90s, since Adobe’s free player was on 98% of computers. They told me they didn’t want to be in that business.

Jobs clearly wants to be in the social network business, and with one giant step he has gotten pretty close to the front of the pack.

related articles

• Ping-Facebook Partnership Killed By ‘Onerous Terms,’ Steve Jobs Says (huffingtonpost.com)
• If Apple Can’t Deal With Facebook’s “Onerous” Terms For Ping, Why Is It In Apple’s Keynote Screenshots? [Apple] (gizmodo.com)
• Steve Jobs on Why Facebook Is Not Part of Apple’s New Ping Music Social Network: “Onerous Terms” (kara.allthingsd.com)

iTunes Ping: Social Music

Apple has rolled out the long-rumored and much awaited social iTunes in the form of Ping.

Ping is a streaming, social network-based suite of capabilities that has been integrated across the world of iTunes, in a way that is reminiscent of early versions of Last.fm, and using the now standard open follower model popularized by Twitter.

To use the service, an iTunes 10 user has to click on the new Ping label in the left sidebar of iTunes, in the STORE area. Then there is some setup, basically geared toward what should be presented to followers and privacy controls on followers:

Once this is set up the user has a minimal profile with location, bio, name provided by the user and some musical genre categorization offered by by iTunes, along with streams of actions taken by the user, like buying music, liking albums, and purchasing tickets for concerts:

(I did include an avatar, but Apple is still ‘processing’ it. I wonder if humans are eyeballing it for nudity or something.)

I followed a few celebrities, like Dave Matthews, and I sent out a call on Twitter, and got a few followers and following set up, for experimental purposes. Now when I look at ‘recent activity’ there are actually posts and activities from inbound stream (=those I follow).

(mostly everybody is following, and not doing much else yet.)

The integration of concert information associated with artists is very cool, and suggests how Apple expects social commerce to be a main source of revenue:

The instrumentation for Ping is spread throughout the store, so anytime you are looking at music for sale you will be able to ‘like’ it, rate it, buy it (d’uh) or write a post (stream based) or review (album based).

In the future, all online commerce will be socialized.

I find the fact that reviews and posts aren’t the same thing sort of strange. But we’ll have to see what gives after some more rooting around.

Lastly, everything I am saying about music could be extended to the other sorts of media that iTunes markets: TV shows, movies, books, whatever. But it hasn’t been at this point.

I have only fooled with Ping for an hour or so, so my empirical analysis will have to be delayed for a few days, at least. However, the largest glaring gap to me right now is the fact that my own music — the stuff I have on my hard drive — isn’t part of the Ping experience. If I want to ‘like’ or post about something I am playing on my local iTunes instance I would have to open the store, find the song or album there, and then make my gesture. This is just a pain, but could conceivably be remedied when Apple allows me to upload my music to that enormous cloud server park they are building. Then all my music will be indexed, cross tabulated, and sharable.

Recall that a few weeks ago a new release of iDisk that included the tantalizing capability to stream audio from the cloud to my iPhone or MacBook (see Apple Takes A Baby Step Toward iTunes In The Cloud). There is no doubt in my mind that we are headed in that direction.

Imagine a future release of Ping where I could share playable playlists, or live stream a Stowe Boyd radio station, or I could listen to a new track recommended by a friend and comment on that streaming recommendation. Or imagine streaming movies in sync with my son Keenan, with Facetime heckling superimposed so it is like a living room experience, although he is in his bedroom at college.

Apple is on the threshold of something fundamentally transformative. It turns out that some commentators agree:

Om Malik, Why Ping Is the Future of Social Commerce

Ping may function like a cross between Facebook and Twitter for iTunes by allowing you to follow celebrities, create social cliques and get artist updates via an activity stream. I think it could have tremendous impact on social sharing and commerce.

From a content perspective, there are three different types of media we love to talk about: movies we see, music we listen to and books we are reading. These are accepted social norms. In fact, many relationships are made on the basis of collective love of a movie and many friendships have started with mixed tapes.

It makes perfect sense for a music service to be social. I’m not alone: The popularity YouTube, the fast-growing MOG and the sadly defunct iLike and Imeem show that people gravitate towards music as a common, collective experience. A recommendation from friends on Last.fm often resulted in me buying many-a-few music tracks. My friends who listened to Thievery Corporation turned me on to The Broadway Project and Chris Joss, which I ended up buying on the iTunes store or via Amazon’s MP3 store.

This click-and-go-somewhere-to-download model of affiliate links can never match a unified experience. Amazon, for example, encourages bloggers and others to link to things they like and then get a piece of the action. This separates social from commerce and treats them as two discrete activities. On the post-Facebook Internet, I don’t think anyone can afford to keep these two actions distinct.

I agree with Om, and obviously Amazon will have to rethink its ‘enormous catalog’ model for commerce, and scramble to make it all social. And Apple and its competitors will have to provide hooks so that I can take my Ping stream and embed it in my blog, direct it to Twitter, and so forth.

I have been saying for years that ‘in the future, all online commerce will be socialized’, and Apple is showing how this is going to be realized.

Apple apparently considered integration with Facebook, but couldn’t come to terms, according to Kara Swisher. Strategically, Facebook is likely to become a direct competitor with Apple, so Jobs is playing go with Zuckerberg, and has won this game.

Amazon might make the devil’s bargain with Facebook to counter Jobs, but that’s a matchup that might just not do much. We’ll have to see if Bezos is impatient.

But there are many doubters out there too:

Sam Diaz, Ping: Apple should leave social to Facebook, Twitter

Ping is an interesting idea and music is something that we have been sharing with friends for the longest time. It strikes me as interesting that Apple has come up with a way to allow people to “share” their music tastes but not the music itself - which I never would have expected Apple or the record labels to do. Is this one way to make “sharing” music OK?

Apple is good at what it does - hardware, software, design and, of course, marketing. But social networking? Even if it is tied to music, I just can’t see widespread adoption of Ping - even if it’s forced on us through iTunes.

Man, Diaz will regret this a year or so from now. Maybe he missed the experiment with streaming via iDisk? Did he miss the launch of the new Apple TV? Can’t he imagine a Flipboard channel based on what’s happening in your iTunes network, with embedded videos, photos, music samples?

Another oddball take on Ping:

Chris Matyszczyk, How Apple’s Ping dings Twitter, Facebook

Ping picks at the nice parts of Facebook and Twitter—friending and following—and offers these benefits to its users without the generalists’ pains.

Unlike Twitter, for example, these are all real people. Unlike Facebook, you can just wander around and see who or what you like without having to become someone’s friend and without having to like anything at all.

This is real people with a real enthusiasm meeting in a bar and talking about a subject they love, rather than about a subject they often hate—themselves. There’s very nice music playing in the background, too.

How many truly passionate, fundamental enthusiasms do large numbers of people share? Movies and sports, probably. Books and food, perhaps. (I wonder if there really are all that many.) Right now, these are often all being talked about on Facebook, each fighting with another for sufficient attention across very mixed groups.

It might not happen that hundreds of niche social networks will suddenly become enormously successful as people decide to fragment themselves across their various enthusiasms. But there are a few core subjects that arouse passion, conversation and the spending of money. Music is one. Apple is another.

Why do the passions have to be shared by large groups of people? Isn’t it sufficient that there are many small groups of people sharing passions? Oh, and don’t leave out TV, which is an enormous passion, as are sports. And yes, people will tolerate — or even seek out — fracturing their social being across multiple services: the post-modern identity is a network of identities, a multiphrenic sense of self.

Are these tech mavens completely missing where this is headed?

related articles

• Ping: First Look at the iTunes Social Network (readwriteweb.com)
• Why Ping Is the Future of Social Commerce (gigaom.com)
• iTunes 10 Is All About Ping, Apple’s Social Network for Music [Ping] (gizmodo.com)
• 10+ random thoughts on Ping and iTunes (ouriel.typepad.com)
• Will iTunes’ Ping Be a Success? (mindjumpers.com)
• Ping Is the Last Nail in the Coffin for MySpace (mashable.com)

TLists

I haven’t even had a chance to review Twitter’s new Tlists integration which seems to have gone live on 13 August, but Tlists is popping up all over:

AOL “Head Of Technology” Jeff Reynar Already Bails For Startup After Half A Year

AOL’s Jeff Reynar, hired in January as “head of technology for engineering and products in New York,” and later also “engineering lead for AOL’s Content business” has already left the company, we hear.

Reynar will be going to a Twitter startup called Tlists, we hear. Tlists builds Twitter “channels” based on Twitter list metadata, and is used by red-hot iPad startup Flipboard.

It looks to me that Tlists is mostly grabbing individual Twitter lists — like Brian Solis’ “Thinkers” list — and republishing them, and aggregating some into “super lists”. This is going to take some more exploration.

‘Who To Follow’ Feature on Twitter

I saw MG Siegler’s post this morning about a new ‘Who To Follow’ user search feature on Twitter. I opened the Twitter page and there is was:

Twitter was recommending two people I might want to follow and currently have not been. There is a ‘view all’ link that takes you to a second screen:

and on this screen the rationale (or part of one) as to why I might want to follow, say, Jolie O’Dell is presented in the form of other people that are following her.

This is going to turn out to have results much like the recommended users’ list: those that have lots of followers will be displayed more frequently, which will simply accelerate the power laws.

Now, I am assuming that the ‘recommenders’ — those whose names show up as followers of the suggested users — are people known to me, which makes it a social analysis at least. But I would have to know something about their algoritm to find out if it does more than that.

For example, I might be interested in following more people in the design world, and fewer professional writers. Or, more directly, I might not to see recommendations of people that I used to follow but no longer do. Or I may want to follow people that follow and are followed by people from very different social circles from me.

At present none of this possible twiddling is made accessible to us, but certainly Twitter could wander in that direction over time, making it a much more useful tool for growing your network. But even in this preliminary state, I see that it will lead to a surge in following behavior over the next weeks and months, and an especially big help to newbies.

related articles

• Twitter’s “Who to Follow” Feature Should Always Recommend Kanye West (fastcompany.com)
• Twitter to recommend friends for users (newstatesman.com)
• Did Twitter Just Kill Off Follow Fridays? (blogherald.com)

Disqus Releases ‘Likes’

This morning I noticed this on my site:

From the Disqus blog:

(Re)Introducing Community Likes

This feature continues Disqus’ goal to help pull a true community out of the audience that visits your site. Liking comments has been a core piece of Disqus since the beginning, and we’re now extending this feedback mechanism to the top-level page or article itself. Community Likes is an easy, quick way for your visitors to give feedback and make their presence known on your site, all without having to post an actual comment.

Community Likes also functions as a slick way for people to share the article on Facebook and Twitter (only if they give it a thumbs up — but don’t worry, we’ve been seeing over 90% likes over dislikes). That means that liking content with Disqus’ buttons taps into the power of both Facebook’s and Twitter’s social networks.

Hmmm. Aside from the fact that I think blogs and websites can have ‘true community’ without Disqus comments, I like the idea of what they are up to, especially for blogs and websites that are a bit short on social gestures.

But for me, and others that are using Tumblr and other platforms that already have a ‘likes’ capability, we are going to have a clash of social engagement. Should a visitor to this post use the Tumblr ‘like’ or the Disqus ‘like’? Or both? Is there some way for a blog publisher to collate these together?

This is perhaps (yet another) situation where you have wonder Tumblr doesn’t implement its own integrated commenting solution. It is inviting this sort of confusion, or worse, watching the rich social integration of Tumblr getting diluted by third party commenting plug-ins, like Disqus or JS-Kit.

I am going to watch and see what happens, but I am sure confusion is going to ensue. Disqus offers publishers the means to disable these features, which is my first instinct, I confess.

What do you think? Which would you use?