Thursday, February 26, 2009

Todd Dagres on Twitter's (Eventual) Business Model

I was talking yesterday with Spark Capital founder Todd Dagres... and I asked him if the rumors were true that he has begun Twittering. (Spark is the lone Boston investor in San Francisco-based Twitter, having recently participated in the company's $35 million fourth round.)

It's true, but his Twitter identity is tough to find. (It's here.)

A pithy sample post: "Lots of coats and ties in the room. Ties = bear market."

I asked Dagres why he'd started using Twitter (though others at his firm blog, he has never been a big blogger), and when we'd hear about Twitter's business model.

"I tried it because I wanted to see what all the fuss was about," Dagres said. "This thing is growing about as fast as I’ve ever seen anything grow before. Now, I’m addicted to the stupid thing. I follow Shaq and a few other people who’ve got interesting insights." That would be Spark colleagues Bijan Sabet and Santo Politi, and Jonathan Seelig from GlobeSpan Capital. (While at Battery Ventures, Dagres was an investor in Akamai Technologies, which Seelig helped start.)

Dagres says that Spark and Union Square Ventures are the two biggest shareholders in Twitter.

"We think it’s kind of funny to listen to people [in the press] talk about the lack of a business model," he said. "We know how we’re going to do it, and we’re very confident about how we’re going to do it, and it’s not necessarily in our interest to tell people how we’re going to do it. There is a biz model that has yet to be implemented. Of course, I can't guarantee it’s going to work."

Dagres continued, "All of a sudden there will be some changes that won’t undermine the experience or the virality -- but it will be pretty obvious how we’re going to moentize it."

Twitter hasn't generated any revenue thus far. Dagres said that changing that situation was definitely a project for 2009. But "we’re in no rush right now," he said.

Isn't it nice to fantasize, amidst the current economic gloom, that you work for a company that is under no pressure to start bringing in revenue any time soon?

"Calgon, take me away....."

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Blogger PALS said...

Many popular politicians, artists are using twitter. It is now the time for him to use it.


March 1, 2009 6:53 PM  
Blogger Gramercy Studios said...

TWITTER, like facebook, youtube and myspace before it, is just another failed business model; nothing to sell to consumers and nothing for them to buy. for example:
facebook is a failed business model. if you took away the microsoft money subsidzing facebook--there are no significant revenues. the millions of eyeballs on facebook do not nor ever will buy anything or click through the ads on the sites, thus adversting revenues will always fall short. the same goes for twitter.
5 years from now--it will be facebook and twitter WHO? just like we are already forgeting myspace.

March 2, 2009 11:36 AM  
Blogger Henry said...

Yeesh, you're wrong, Gramercy. Though Myspace is not the current It Thing of the internet, it's very profitable. Twitter is a phenomenon. Hard to see how they won't be able to turn a profit.

March 2, 2009 12:02 PM  
Anonymous Michael said...

I think if Twitter can maintain relevancy they will be able to profit, the real question is how do they do it without seeing a huge drop off in users. I think it can be done but they will just have to be innovative again and find a good advertising model hybrid.

March 2, 2009 2:32 PM  
Blogger Robin Wendell said...

A Tranquility Bird in my Brew

I woke up this morning on my first month twittering anniversary to find 200 plus folks in my teensy followers box on my twitter account. TEXT Wowser. I feel so lucky to be followed by and follow such interesting and informative folks. I have to admit that I started my account on a lark, being of the opinion that social networking sites were probably self-involved twaddle. Now, a month down the twitersphere universe, I have changed my tune.

I’ve bopped around the net and read some critics of twitter. “What are you doing?”, BIG YAWN, right? Who, la de da, cares right? Well it’s not quite as simple as that.

There is an old swing song that goes, “It’s not what you do, it’s the way that you do it, That’s what gets results.” Sure there are a lot of less than thrilling folks on twitter but that’s life; the great news is that is not like they are seated next to you all the way to Chicago. It’s possible to choose your travel-mates. I personally find an occasional food item or personal epiphany-tweet fun but if hearing about breakfasts or the cute little golden hairs folks have found on their toes is not your cup of tea you can just change seats.

Social Networking curmudgeons rant on about how twitter is not “real life”. Well, I agree that clicking on a tiny-URL ROSE, TwitPic - is not the same thing as going outside and sticking your head in a bush. In fact -- in some ways it’s better. Outside it’s grey and wet. My bushes have no roses and if I stick my head in one I will (1 get soaked, and (2 come out looking like I got caught in a kitty cuisinart. Twitter is not a replacement for real life but sometimes -- less is more.

Another thing I have noticed during my fledgling tweet flights is that the brevity of the venue condenses the personalities of people like heat reduces a sauce on the stove. Their joys, foibles, rants, loves, and woes are boiled down to an essence. Interested, curious, helpful, intelligent, loving, joyful, ruminating, investigating, creative and fun - those are the people I hang with. Ranters abound everywhere, but a twitter advantage is that while, with a page to rant you can be an expert or philosopher in 140 characters it comes off as a big baby twissy fit. On the other hand goodness and joy reduces down to light -- small but still very bright and illuminating.

Full blog post: Tranquility Bird

March 22, 2009 8:44 PM  
Anonymous Anonymous said...

People are just starting to think about the content and experience within Twitter, rather than Twitter itself.

If you consider how "conversation" can occur (@saruhAI) then apply that to "branded conversations" - think about how brands and companies can engage and connect with Individuals in a way far more interesting than pushed ads or click throughs?

I think it's early days and there will be a lot of innovation and experimentation (either that, or, we'll get dumbed down Goog Ad Words littering the space and ruining it).

August 8, 2009 11:06 AM  
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October 7, 2009 4:15 AM  

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