But when he got bounced from his late-night gig at
O’Brien could no longer take to the airwaves to reach his fans, so
Twitter became his open hailing frequency. He later thanked Twitter
“for saving my ass.”
O’Brien isn’t the only one who is tapping Twitter’s
mass-media potential. The social network, which will celebrate its
five-year anniversary in March, last year signed up more than 100
million people who sent more than 25 billion updates called tweets.
The new funding comes even as the company experiments with how to wring
sales from its surging popularity and find the kind of business formula
that drove up the fortunes of
Now Twitter finds itself at a crossroads, where it will finally have to answer the question: Can it make money?
“2010 was the year Twitter became a phenomenon,” said
The man in charge of turning Twitter into a business is
a former improvisational comedian turned technology entrepreneur who
joined Twitter in 2009 as chief operating officer. Costolo, who
replaced Twitter co-founder and product guru
out advertising initiatives that have attracted more than 80 big brands
It will now be up to Costolo to determine whether
Twitter becomes the next major independent Internet company like
Facebook or the next promising start-up to get bought or flame out like
Even with surging interest in Twitter, Costolo insists “we have every intention of remaining independent.”
Twitter has turned down takeover offers from
and Facebook, and intends to compete with them for users and
advertising dollars. Costolo wrote in a recent tweet that “too many
people worry about exit strategies when they should be worrying about
Part of his entrance strategy was helping Twitter
raise cash to expand while relieving pressure for an initial public
stock offering, which Costolo says is still on the distant horizon.
That investors valued Twitter at nearly
in 2010, the first year the company sold advertising, according to
research firm EMarketer. By 2012 Twitter’s revenue will reach
In addition to advertising, Twitter gets millions of dollars from
to show tweets to users of their search engines. Twitter does not
disclose its financial information, but those distribution deals, worth
“Twitter is big, it’s here to stay and it’s an important part of the Internet,” said Twitter investor
“What has to happen next is that Twitter has to figure out how to make
money. That’s the next step, and they are well on their way.”
The Web’s third-most-popular social network began as
a side project growing out of founders Biz Stone and Williams’ work on
blogging software and Twitter Chairman
140-character messages, or tweets, to followers. Now more than 95
million messages ricochet around the world each day, spreading news
instantly. More and more people are taking part in this global
Twitter has been embraced by political leaders and
celebrities who use it to promote themselves and companies that use it
to promote their products. The
seized on Twitter to foment a revolution that might have been crushed
without the viral power of Facebook and Twitter to instantly spread
news and video. The torrent of firsthand accounts from around the globe
has achieved such cultural significance that the Library of Congress
plans to archive them.
Twitter also was instrumental in fueling dissent this week against Egyptian President
Twitter’s influence is still dwarfed by Facebook,
which has more than half a billion users and a vast global reach. A
recent Pew Internet & American Life Project study showed that only
8 percent of adult Internet users in the U.S. use Twitter.
Yet Twitter is one of the rare Internet companies to
make such a big splash in the mainstream. It has been likened to social
networking service Facebook and
The success of Twitter has turned its low-key founders Stone and Williams into Internet celebrities. Twitter’s
And Stone was recently a surprise guest on “The Colbert Report” to give host
BP oil spill: “In honor of oil-soaked birds, ‘tweets’ are now
Despite all the hobnobbing, Twitter’s offices are as
democratic as the service. Company executives sit elbow to elbow at
long desks and lunch at small tables with employees. Staffers flock to
meeting rooms named for different types of birds. They take breaks to
learn “twideokinetics,” a combination of meditation and martial arts,
with Twitter Chief Technology Officer
take a jog with Tweetfeet, the company running club. Each new employee
gets a copy of Twitter’s 10 operating principles (“be a force for good”
and “make things happen” among them).
Stone said he was proud of Twitter’s corporate culture, which has drawn top recruits from Facebook,
“Twitter was built on the fundamental belief that
people are good and that if you give them the tools, they will do good
things,” Stone said.
Now Costolo is bringing business discipline to
Twitter. The 350-person company is building data centers to cope with
crushing traffic and has hired 250 people in the past year alone. It’s
trying to combat its image as an innovation laggard. And it has
clarified its vision: It’s billing itself as an information network
that connects people to what’s important to them as it happens.
Costolo is the quintessential operating executive
whose job is to bring “order, focus, calm and execution,” Twitter
investor Wilson said.
For much of its young life, Twitter had no real plan
except to keep up with its explosive growth — and to keep its users
from seeing the “fail whale,” the cuddly cartoon mammal that surfaces
when Twitter is flooded with too much traffic.
Co-founder Williams said he was amazed that the
service kept growing in popularity even when for so long there were so
many hurdles to using it. Last fall he oversaw a redesign of Twitter’s
website that made it easier for users to post photos and videos, and
easier for marketers to reach out to those users.
“Now we have gotten to the point that we can rise to
the challenge,” Williams said. “We are building on the lessons of the
last couple of years that have shown us what Twitter is and how to run
Twitter’s challenge is twofold: making the product easier and more engaging and, most important, making money.
Social media networks have been reluctant to flood
their sites with ads targeting the millions of people who interact with
one another online. Instead they have sought out less obtrusive and
more natural ways to connect users with marketers.
For Twitter, that has meant trying to come up with ads that are so relevant and useful that users don’t think of them as ads.
Costolo claims Twitter has “cracked the code” on
that kind of advertising and predicts advertisers will soon spend
millions of dollars on Twitter. Analysts say Twitter’s efforts so far
Called Promoted Tweets and Trends, these ads show up
at the top of Twitter feeds or trends. Advertisers pay anytime someone
interacts with the Twitter update by clicking on a link, forwarding the
update to friends or replying to it.
On average, 5 percent of Twitter users who see a
promoted Tweet interact with it, a rate that Costolo said was “an order
of magnitude greater” than most online ad campaigns. Promoted Trends go
for as much as
“We have definitely seen great success in partnering with Twitter,” said
But some advertisers are not yet sold. Costolo is
banking that will soon change. He concedes that there is “a ton of work
left to do on the advertising platform,” but says he has never seen an
advertising business work so well so quickly.
Twitter is ramping up by building a national sales force, hiring executives from Facebook and
and expanding its reach overseas, where it is experiencing torrid
growth. It must continue that pace to succeed as a major Internet
“We all believe that Twitter could be one of the
great Internet companies,” Costolo said. “We know we have to prove
that, and we know we have a lot of work to do.”
(c) 2011, Los Angeles Times.
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