Would you rather have Twitter or a cell phone? Former Apple (Nasdaq: AAPL ) evangelist Guy Kawasaki will take Twitter, thanks. "I think Twitter is, arguably, the most powerful branding mechanism since television," Kawasaki recently told blogger Robert Scoble of Fast Company TV.
Since TV? That's hard to believe. So I asked Kawasaki to quantify Twitter's contribution to his newest venture, Alltop.com, a feed aggregator that acts as an online magazine rack.
"It's hard to quantify the revenue impact because Alltop doesn't have much revenue at all right now. We're still trying to achieve critical mass. However, without Twitter, we wouldn't achieve critical mass without reliance on luck and prayer," Kawasaki said in an email to me last week. "If there were no promotion of Alltop for a week, our traffic would go down by 20%" [emphasis added].
A river of cash, flowing
Translation: Twitter = network effects = traffic = revenue. That's about as quantifiable as it gets. Private equity investors have taken notice.
Take StockTwits. Created by Soren MacBeth and Howard Lindzon, the site indexes and organizes stock-related tweets to create a snapshot of investor sentiment. (Read more in Twitter for investors.) Silicon Alley Insider says the firm raised $800,000 from Yahoo! News general manager Alan Warms, MarketWatch co-founder Bill Bishop, and former Wall Streeter Roger Ehrenberg of IA Capital Partners, among others.
Twitter's founding trio celebrated the news. "Congratulations to StockTwits, a Twitter API project that just closed almost $1M in funding," wrote co-founder Biz Stone in a tweet to followers last week.
But StockTwits is one of many Twitter dependents seeking and receiving funding. Sawhorse Media, creator of The Shorty Awards for short-form accomplishment in dozens of Twitter categories, has received "a low six figure amount from a couple of prominent angels," Sawhorse CEO Greg Galant confirmed to me via email. (Vote for the Fool in the finance category.)
Patrick Koppula, formerly of Facebook sensation iLike, says that Twitter is the third-largest source of traffic for his video-sharing venture ffwd, which recently beat out Google's (Nasdaq: GOOG ) YouTube in the Open Web Awards. Draper Fisher Jurvetson has committed $1.7 million in seed funding, Koppula says.
Other businesses being built on Twitter include Xpenser, in which tweets help users track spending, and FilmBuzz, an entertainment channel that lives as a Twitter profile.
That's not as crazy as it sounds. Kawasaki's profile is already worth more than $10,000, estimates TweetValue. FilmBuzz creator Dave Taylor says he'll monetize the profile with sponsored tweets. "I am working on building up a greater following for FilmBuzz, then plan on offering paid sponsorship slots to distributors and studios. One tweet out of ten, say, could be something like 'Liked The Dark Knight? Then you'll love Batman IV. [advert]' or similar," Taylor says.
Maybe that's why Ehrenberg, when asked about investing in Twitter businesses, told me he was betting on StockTwits and "others to come." Platforms like Twitter are fertile ground for entrepreneurs.
Your portfolio in platform shoes
For us Fools, too, because platforms are value creators. Think of how Apple has been transformed by the iPhone, which venture capitalist John Doerr has called "the third great platform" in the Mac maker's history.
To be fair, Doerr was touting his firm's iFund in making those comments. But history proves him right. He's a very rich man for having invested in platforms early. Here's why:
- Platforms create network effects. More users create more value. Think of how Netflix (Nasdaq: NFLX ) weaves together community ratings with a recommendations engine.
- Platforms have a margin of safety. When users and partners commit to a platform as a source of income, they're motivated to see it succeed. Think of how developers embraced and extended Microsoft's (Nasdaq: MSFT ) Windows. Intel (Nasdaq: INTC ) caught its own platform tailwind when PC makers chose its chips as the digital brains behind Windows.
Today's emerging platforms include salesforce.com (NYSE: CRM ) , whose Force.com tools help developers to create software for the cloud, and Amazon (Nasdaq: AMZN ) , whose Web Services are helping to new digital businesses keep capital costs low.
So, if I have to make just one prediction for 2009, let it be that next year will be the year of the platform. But not just any platform -- a platform that's simple, accessible, and a springboard for entrepreneurs and investors alike.
Twitter, in other words. 2009 is your year.