Twitter Beats Facebook in 140 Characters

My friend Rick says I'll win this debate if I can sum up the case for Twitter over Facebook in 140 characters. Terrific! I only need 125:

Dell and Amazon sell goods via Twitter. Tweeps find homes and jobs and create companies. Businesses don't depend on Facebook.

I win.

Beyond the tweeting
Let's break this down further. Twitter is emerging as a powerful platform for business because it's expansive; it introduces you to new people, rather than merely reconnecting you with the folks you already know. I love my family, but finding them on Facebook isn't likely to get me more business, nor sell me what I need.

In Twitter, profitable connections occur all the time. For his forthcoming book Twitterville, author Shel Israel has chronicled the story of a man buying a house in New Hampshire via a conversation that began on Twitter. A Toronto-area fundraiser collected $25,000 for charity thanks to Twitter. Micropayment systems such as TwitPay and Tipjoy are taking hold in the Twitterverse, threatening to transform Twitter into the world's cheapest real-time garage sale -- and in the process supplant eBay (Nasdaq: EBAY  ) , Overstock.com (Nasdaq: OSTK  ) , and Craigslist.

These stories and more help to explain why investors increasingly see Twitter as a platform for business development. Take StockTwits, which indexes and organizes stock-related tweets to create a snapshot of investor sentiment. Last year,the firm raised $800,000 from a series of angel investors. Not bad, when the underlying platform lacks a business model.

Or does it? This really is the most specious part of the Facebook-Twitter debate. Of course Twitter has a business model. That neither you nor I know its substance is immaterial. Those who've committed tens of millions in fresh capital are impressed by what they've seen. Are they crazy? Fit yourself for a straitjacket if you answered "yes."

I'll huff and I'll puff and not quite blow your house down
Rick's other complaints about Twitter are equally specious. Sorry, pal, but if you're unhinged about how @ replies give you only "half the story," and how URL-shortening services aren't built into the website, then you aren't a credible critic -- and you aren't paying close enough attention.

Twitter has given rise to an ecosystem of mostly free services that allow users to shorten URLs and view tweets, replies, and related tweets as conversations. TweetDeck and Seesmic Desktop are two of the most popular. Others include Tweetree, which collects threads and displays images, and TweetGrid and TweetChat, which transform Twitter into a functional chatroom. These and other third-party creations access Twitter via its application programming interface, or API, and account for more than twice the traffic of its website, according to Twitter.

Businesses understand this richness in communicating with customers and prospects. Commercial real estate broker Colliers International is using its twitstream to establish expertise and defend against rivals such as LoopNet (Nasdaq: LOOP  ) and Jones Lang LaSalle (NYSE: JLL  ) . Comcast (Nasdaq: CMCSA  ) and Whole Foods Market (Nasdaq: WFMI  ) provide varying levels of customer service via Twitter. JetBlue (Nasdaq: JBLU  ) uses Twitter to announce deals and promotions. Would any of these same businesses say that they depend on Facebook? I seriously doubt it.

Remember the rebels
That's because Twitter is like eBay: a platform that began as an idea, then became a business that spawned other businesses. Facebook is like that, too. Unfortunately, Facebook suffers from management indecision so often that open revolt occurs regularly.

Twitter is avoiding these fits and starts by taking its time. Co-founders Evan Williams, Biz Stone, and Jack Dorsey recognize that advertising is the very least of what they can do, and they've been very public about their desire to create something bigger.

Investors and businesses alike appear to believe that they will. So do I. And so should you.

Tweet! Tweet! It's related Foolishness @ replying to you:

LoopNet is a Rule Breakers recommendation. Amazon, eBay, and Whole Foods are Stock Advisor selections. Dell and eBay are Inside Value picks. Jones Lang LaSalle and LoopNet are Hidden Gems recommendations. Try any of these Foolish services free for 30 days.

Tim didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. Its disclosure policy finds it hard to twitter while jittering. Stupid caffeine.


Read/Post Comments (13) | Recommend This Article (10)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 18, 2009, at 3:44 PM, pondee619 wrote:

    "Of course Twitter has a business model. That neither you nor I know its substance is immaterial"

    And Nixon had a secret plan for getting out of Veitnam. the fact "(T)hat neither you nor I know its substance is immaterial" is not a ringing endorsement of investing in a company should it go public.

    I challenge every Fool writer to state how the company s/he endorses does or will make money. If you can not state how a company can, does or will make money, then please just shut up.

  • Report this Comment On May 18, 2009, at 3:50 PM, TMFMileHigh wrote:

    Dear pondee619,

    Done:

    http://www.fool.com/investing/high-growth/2009/02/17/why-twi...

    http://www.fool.com/investing/high-growth/2009/02/18/heres-h...

    Thanks very much for commenting and Foolish best,

    Tim (TMFMileHigh and @milehighfool on Twitter)

  • Report this Comment On May 18, 2009, at 4:15 PM, pondee619 wrote:

    Ads and selling my information to people who will try to sell me something? That's it? Is that all there is? The information highway becomes nothing more than a country lane covered with billboards? This is the great investment opportunity of the next generation?

    Twitter as the yellow pages. Let your fingers (thumbs) do the walking. It's as if someone were listening in on the party line and selling that info to the Fuller Brush man. Is this a lasting business model?

  • Report this Comment On May 18, 2009, at 4:32 PM, TiltnSpill wrote:

    I may regret this... but I'll be sitting on the sidelines if this company goes public.

    I think Twitter is a novelty. A service for Tweenagers to follow their favorite celebrities while they tweet from their phones at their favorite coffee shops.

    Possible 10-bagger or not... I don't think I could live with myself if I bought twitter stock.

  • Report this Comment On May 18, 2009, at 4:55 PM, TMFMileHigh wrote:

    Dear pondee619,

    >>Ads and selling my information to people who will try to sell me something? That's it? Is that all there is? The information highway becomes nothing more than a country lane covered with billboards? This is the great investment opportunity of the next generation?

    No, you're thinking of Facebook.

    Twitter, on the other hand, would be a conversational intelligence engine that allows every service you use to serve you smarter, and in real-time.

    If you really think this isn't valuable, ask yourself why both Facebook and Google are now including some real-time data in their platforms.

    Thanks again and Foolish best,

    Tim (TMFMileHigh and @milehighfool on Twitter)

  • Report this Comment On May 18, 2009, at 8:14 PM, DaytonFlyers wrote:

    would google or apple please by twitter

  • Report this Comment On May 18, 2009, at 11:05 PM, biltmorebrat wrote:

    Why Twitter pwns Facebook in 140 characters:

    Facebook overpromises and underdelivers; Twitter underpromises and overdelivers. Facebook is closed and complex; Twitter is open and simple.

  • Report this Comment On May 19, 2009, at 8:09 AM, pondee619 wrote:

    Tim:

    "Twitter, on the other hand, would be a conversational intelligence engine that allows every service you use to serve you smarter, and in real-time.

    But how would twitter make money off this conversational intelligence? (A definition would be helpful, seems like an oxymoron joke in the making) The machine serves me better. That's great. BUT, how does twitter, and its investors, make more money off this improvement? Charge more for its ads? The service may be great. The platform the best since God rested. Businesses can better devine what I might want to spend money on. I can listen in on what the the stars and deal makers the world over want me to hear. BUT, how does twitter make its money? So far, all I got is selling ads, smart ads, but nothing but ads.

    "If you really think this isn't valuable, ask yourself why both Facebook and Google are now including some real-time data in their platforms."

    So people keep coming to their sites to look at their ads? How do Facebook and Google make their money off their real-time data in their platforms? Selling ads?

    Do YOU really look at the ads on line? When you "google" something, doing some research, do you want an answer to your question, or an opportunity to buy a relevant widget?

    Tim: you explain that twitter is a great service, I dispute that but that is not the issue. The issue is how do you make money off this great service. Show me something other than selling ads. Please.

  • Report this Comment On May 19, 2009, at 9:54 AM, TMFMileHigh wrote:

    pondee619,

    >>So far, all I got is selling ads, smart ads, but nothing but ads.

    No, no, a thousand times no. I am *not* arguing for Twitter ads. Did you read either of the stories you asked me for? Once more:

    Think about how much better your experience might be if you gave Netflix (Nasdaq: NFLX) opt-in access to your tweets via the Twitter API. You'd receive recommendations based on your past rentals, your friends' rentals, and what you and your friends are talking about right now. Amazon (Nasdaq: AMZN), Apple (Nasdaq: AAPL), Williams-Sonoma (NYSE: WSM), Sirius XM (Nasdaq: SIRI) -- any company that recommends products, services, or entertainment -- could benefit from access to your tweetstream.

    Source: http://www.fool.com/investing/high-growth/2009/02/18/heres-h...

    "Access to your tweetstream" refers *not* to placing ads but allowing, say, Netflix, to populate its profile database about you -- which already contains movies you've rented, recommendations from your friends, your ratings, etc. -- with tweets that relate to what you're watching or what you would like to watch.

    So, for example, you tweet a friend asking how the new Star Trek movie was. Her response: "Awesome! You should see it!" Netflix captures this data and sends you an email asking if you'd like to add Star Trek to your wish list for when it's released on DVD, or recommendations for older Star Trek films that, according to its database, you have yet to watch. See how this works? Netflix gets smarter by listening to you.

    This is intelligence worth paying for and I believe Netflix would pay if given the chance. I believe that businesses of all shapes and sizes would.

    Please also refer to my earlier commentary about the cost of focus groups and how Twitter could make a lot of money offering a real-time alternative.

    In short, and with due respect, I've given you plenty to chew on -- numbers and all. The rest is up to you.

    FWIW and Foolish best,

    Tim (TMFMileHigh and @milehighfool on Twitter)

  • Report this Comment On May 19, 2009, at 11:55 AM, pondee619 wrote:

    "This is intelligence worth paying for and I believe Netflix would pay if given the chance. I believe that businesses of all shapes and sizes would."

    And what would Netflix do with that intelligence?

    "Netflix captures this data and sends you an email asking if you'd like to add Star Trek to your wish list for when it's released on DVD, or recommendations for older Star Trek films that, according to its database, you have yet to watch." And twitter is the yenta listening in on the party line.

    Great, an indivualized AD.

    " See how this works?"

    Yep. I get targeted for an ad from personal information that I traded with a "friend" but left out in cyberspace for ANYONE to use.

    An ad to everyone, to a group, to a cadre or to me personally is still just an ad. It that all there is? Apparently so.

    BTW, have you read 1984? Twitter is retailings Big Brother?

  • Report this Comment On May 19, 2009, at 12:53 PM, TMFMileHigh wrote:

    pondee619,

    >>An ad to everyone, to a group, to a cadre or to me personally is still just an ad.

    Sure, but that's not what I'm suggesting. The common definition of a tailored enhancement from a service you already pay for is called excellent customer service. My argument stands.

    Moving on now. Thanks again for your comments.

    Foolish best,

    Tim (TMFMileHigh and @milehighfool on Twitter)

  • Report this Comment On May 19, 2009, at 1:23 PM, KTRNicodemus wrote:

    I think facebook is a large pile of spam and useless fluff wrapped around something that could be useful. It will be replaced soon enough by something else. By the way, didn't Zuckerberg recently say that they still don't have a business model, but they promise they are working on it and should know in a year or two? I should think that alone would have most of you running for the exit. No vision, no direction, no plan. It is like they are winging it as they go...oh wait, they are.

    On the other hand, twitter is extremely useful, IF you understand how to use it, and IF you use a third party application (like tweetdeck), and IF you don't have too many or few followers (and people you follow). There are too many barriers here for the common man to find value. Never mind how many people are signing up, how many actually use the service and have a meaningful number of connections?

    Ads or charging for premium accounts (however they spin it) won't work for twitter.

    That's my two cents.

  • Report this Comment On May 19, 2009, at 1:28 PM, pondee619 wrote:

    Tim:

    ">>An ad to everyone, to a group, to a cadre or to me personally is still just an ad.

    Sure, but that's not what I'm suggesting"

    Then what is it you are suggesting? I'll grant you the focus group argument and the data sold in that regard. Otherwise, twitter will sell acess to my info so that a company can personally target their ad campaign to me.

    Excellent customer service comes not from listening at my window (computer) to hear what I am telling my friends. It comes from paying attention to our (vendor/consumer) relationship.

    For twitter to make money, it must sell access to my words so an ad campaign can be target to (against) me. In a nation that values its privacy, this is tenuous.

    It might make a good living selling my info so that ads can be sent my way. But it is still just advertising.

    Your arguemnt may stand, but only in your mind.

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