Business plan obfuscation: Twitter style

Charles Hudson says it: “why the ‘you don’t need a business plan’ meme is crazy talk.

Where did that come from? Well, there’s this little theory that was reported on a bunch of blogs that Twitter and other companies don’t have business plans.

That’s bulls**t.

But here’s why the story gets told: Twitter doesn’t want to talk about its business plan in public. If they told you what they are doing, how they are planning on making revenues and spending their money they’d be handing their competitors a MAJOR advantage.

Twitter is brilliant, though, because they told a believable story instead of just saying “we’re not showing you our business plan.” When I was there Friday interviewing Twitter’s execs I asked about the business plan. Biz Stone told me they were doing research. He told a great story! We’ll have that video up shortly so you can hear exactly how they are positioning the company.

I wish I was smart like those Twitter folks.

The thing is I’ve met a couple of VCs who were considering investing in Twitter. The word on the street is that Twitter HAS a business plan and has done a lot of thought about where future revenues will come from. THAT is why they got invested in.

They just aren’t going to show it to us. And they shouldn’t.

Oh, and if you REALLY think you can get funded without having a business plan you’re probably smoking something illegal. Can I come along and film you trying to pitch a VC if you think you can do that?

81 thoughts on “Business plan obfuscation: Twitter style

  1. @Lazy,

    Please know that the Los Angeles Fire Department is using a handful of Web applications such as Twitter and Google Groups as a complement to the well established “mainstream media” sources that we’ve used with great success for decades.

    Along with robust telephone systems that have ring-down lines to wire services, as well as broadcast television and radio networks across the nation, we have for years sent an e-mail blast to many of our stakeholders.

    All that was necesarry to implement Twitter was adding a single e-mail address to that lengthy distribution list.

    While we haven’t considered Twittering the Firehouse cook, we will warmly welcome your suggestions as to how we can make these ancillary offerings not only useful but palatable.

    Respectfully Yours in Safety and Service,

    Brian Humphrey
    Firefighter/Specialist
    Public Service Officer
    Los Angeles Fire Department

  2. @Lazy,

    Please know that the Los Angeles Fire Department is using a handful of Web applications such as Twitter and Google Groups as a complement to the well established “mainstream media” sources that we’ve used with great success for decades.

    Along with robust telephone systems that have ring-down lines to wire services, as well as broadcast television and radio networks across the nation, we have for years sent an e-mail blast to many of our stakeholders.

    All that was necesarry to implement Twitter was adding a single e-mail address to that lengthy distribution list.

    While we haven’t considered Twittering the Firehouse cook, we will warmly welcome your suggestions as to how we can make these ancillary offerings not only useful but palatable.

    Respectfully Yours in Safety and Service,

    Brian Humphrey
    Firefighter/Specialist
    Public Service Officer
    Los Angeles Fire Department

  3. apparently some fire dept does. I hope it’s just for telling the
    cook what groceries to buy. Not sure I would want my fire dept relying on an unproven, unscalable, not yet proven secure service for my public safety needs. But then again
    i might have a higher bar than the SV Web 2.0 geeks
    2

    r
    r

  4. apparently some fire dept does. I hope it’s just for telling the
    cook what groceries to buy. Not sure I would want my fire dept relying on an unproven, unscalable, not yet proven secure service for my public safety needs. But then again
    i might have a higher bar than the SV Web 2.0 geeks
    2

    r
    r

  5. How many of the 400,000 Twitter users DO NOT read TechCrunch and GigaOm?

    Is there any mainstream traction at all?

  6. How many of the 400,000 Twitter users DO NOT read TechCrunch and GigaOm?

    Is there any mainstream traction at all?

  7. @17 What a mature, well thought out, insightful response to the argument
    This is the level of insight I only get from my 10 year old. You could have easily said “you mother wears combat boots” and made the same point. The logic you are using to support Twitter was the same used for CB radios and Pet Rocks— “look how many people are using it!”

  8. @17 What a mature, well thought out, insightful response to the argument
    This is the level of insight I only get from my 10 year old. You could have easily said “you mother wears combat boots” and made the same point. The logic you are using to support Twitter was the same used for CB radios and Pet Rocks— “look how many people are using it!”

  9. Thanks @ericdotnet – That’s what I thought, but I occasionally hear about twitter exchanges, so I wondered if I was missing something.

    Again, thanks.

  10. Thanks @ericdotnet – That’s what I thought, but I occasionally hear about twitter exchanges, so I wondered if I was missing something.

    Again, thanks.

  11. wow, things get pretty fiesty here at scobleizer.com

    on the discussion of whether twitter was a dumb or smart investment, well you know what i think on that one. i put my money on the line and i like the odds of success, but the great thing is we’ll know in 2-3 years whether it was a good bet or not.

    on the discussion of “do you need a business plan” the answer is yes, eventually you do. and investors need to feel confident that there are a number of totally viable options to choose from.

    but i believe that Umair is on to something with this post (and i know he says nice things about us in it, that’s not why i am referring to it though) where he says you need to be flexible about business models early in the life of a company.

    http://www.bubblegeneration.com/2007/07/deal-note-twitters-nonexistent-business.cfm

    Fred

  12. wow, things get pretty fiesty here at scobleizer.com

    on the discussion of whether twitter was a dumb or smart investment, well you know what i think on that one. i put my money on the line and i like the odds of success, but the great thing is we’ll know in 2-3 years whether it was a good bet or not.

    on the discussion of “do you need a business plan” the answer is yes, eventually you do. and investors need to feel confident that there are a number of totally viable options to choose from.

    but i believe that Umair is on to something with this post (and i know he says nice things about us in it, that’s not why i am referring to it though) where he says you need to be flexible about business models early in the life of a company.

    http://www.bubblegeneration.com/2007/07/deal-note-twitters-nonexistent-business.cfm

    Fred

  13. The main fact behind the question of the business plan is that if you only looks at the service you understand twitter has huge cost (SMS) and no revenu….
    And adwords cannot cover cost.

  14. The main fact behind the question of the business plan is that if you only looks at the service you understand twitter has huge cost (SMS) and no revenu….
    And adwords cannot cover cost.

  15. @33 From what I’ve seen, you cant. People just type
    @havingFun: bla bla.

    So if you’re following one person, and you don’t see the other party they’re responding to, you have no clue what they’re talking about.

  16. @33 From what I’ve seen, you cant. People just type
    @havingFun: bla bla.

    So if you’re following one person, and you don’t see the other party they’re responding to, you have no clue what they’re talking about.

  17. Since you’re such a fan of Twitter and because their helpfiles are pretty useless: How do you respond to someone’s tweet?

  18. Since you’re such a fan of Twitter and because their helpfiles are pretty useless: How do you respond to someone’s tweet?

  19. > Twitter has 400,000 users and is gaining at a quite
    > consistent rate. Anyone who watches
    > http://www.twittervision.com for more than 20 seconds
    > can see that there are people all over the world who
    > use it and who aren’t using other services.

    GAH! But Robert, this really doesn’t tell us anything.

    1) How does Twitter define a user? Am I still a “user” even though I opened an account, twittered lightly for a few weeks, then quit?
    2) What’s Twitter’s 30-day-active graph look like?
    3) What’s Twitter’s churn rate? How many people join and then quit [x] days later?

    And, seriously, Twitter has nothing new, nothing disruptive, nothing creating any sort of barrier to entry. Userbase is *not* a barrier to entry.

    How much would it take for people to leave Twitter for the next shiny thing? Practically zero.

    Compare that to Facebook, where people have tons of mail, wall-messages, apps-data, etc.

    Or Ebay, where people have earned a trust # and feedback over time. That’s not immediately replicable. Also, on ebay, buyers go where sellers are and visa versa… there’s a three-way relationship there not mirrored in any way by Twitter.

    * * *

    There’s a lot Twitter could have done to be useful AND create lockin at the same time. For instance: enabling people to set up priority-groups, group-types, etc. That would have helped target and filter messaging AND would have required an initial investment in time from members that they’d likely be loathe to repeat on another service.

    But right now, leaving Twitter and going somewhere else is a 30 second deal.

    And lastly, what does Twitter have that others don’t have, that others can’t easily get? Server space, bandwidth, computing power, SMS-gateways? Amazon, Ebay, Yahoo… they could all probably imitate Twitter in the blink of an eye.

    400,000 peeps? Come on, Scoble, that is laughably small. How many people are on MySpace? How many frequent users/buyers does Amazon.com have? For that matter, how many DSL members does Earthlink have?

    400,000 is not even a blip. The only reason people talk about Twitter is because a handful of popular bloggers and other geeks have adopted it as their new toy.

    It’s cute, I grant you that. And for some people, undoubtedly fun.

    But sheesh, put this stuff in perspective, will ya? :)

  20. > Twitter has 400,000 users and is gaining at a quite
    > consistent rate. Anyone who watches
    > http://www.twittervision.com for more than 20 seconds
    > can see that there are people all over the world who
    > use it and who aren’t using other services.

    GAH! But Robert, this really doesn’t tell us anything.

    1) How does Twitter define a user? Am I still a “user” even though I opened an account, twittered lightly for a few weeks, then quit?
    2) What’s Twitter’s 30-day-active graph look like?
    3) What’s Twitter’s churn rate? How many people join and then quit [x] days later?

    And, seriously, Twitter has nothing new, nothing disruptive, nothing creating any sort of barrier to entry. Userbase is *not* a barrier to entry.

    How much would it take for people to leave Twitter for the next shiny thing? Practically zero.

    Compare that to Facebook, where people have tons of mail, wall-messages, apps-data, etc.

    Or Ebay, where people have earned a trust # and feedback over time. That’s not immediately replicable. Also, on ebay, buyers go where sellers are and visa versa… there’s a three-way relationship there not mirrored in any way by Twitter.

    * * *

    There’s a lot Twitter could have done to be useful AND create lockin at the same time. For instance: enabling people to set up priority-groups, group-types, etc. That would have helped target and filter messaging AND would have required an initial investment in time from members that they’d likely be loathe to repeat on another service.

    But right now, leaving Twitter and going somewhere else is a 30 second deal.

    And lastly, what does Twitter have that others don’t have, that others can’t easily get? Server space, bandwidth, computing power, SMS-gateways? Amazon, Ebay, Yahoo… they could all probably imitate Twitter in the blink of an eye.

    400,000 peeps? Come on, Scoble, that is laughably small. How many people are on MySpace? How many frequent users/buyers does Amazon.com have? For that matter, how many DSL members does Earthlink have?

    400,000 is not even a blip. The only reason people talk about Twitter is because a handful of popular bloggers and other geeks have adopted it as their new toy.

    It’s cute, I grant you that. And for some people, undoubtedly fun.

    But sheesh, put this stuff in perspective, will ya? :)

  21. When you say Twitter has no loyal users (not to mention new technology) you are totally full of shit. I really hope you don’t come back here like you promised originally because I expect my readers to be smart and you, sir, aren’t to that bar yet. Twitter has 400,000 users and is gaining at a quite consistent rate. Anyone who watches http://www.twittervision.com for more than 20 seconds can see that there are people all over the world who use it and who aren’t using other services.

    Have a nice day. Hope you keep your promises.

  22. When you say Twitter has no loyal users (not to mention new technology) you are totally full of shit. I really hope you don’t come back here like you promised originally because I expect my readers to be smart and you, sir, aren’t to that bar yet. Twitter has 400,000 users and is gaining at a quite consistent rate. Anyone who watches http://www.twittervision.com for more than 20 seconds can see that there are people all over the world who use it and who aren’t using other services.

    Have a nice day. Hope you keep your promises.

  23. They had all sorts of things: Buy It Now, Feedback System, etc.

    Killer Apps can be less than tangible–in Ebay’s case it was CREDIBILITY. TRUST. SAFETY. You can’t steal that, at least not quickly.

    What was YouTubes? Free hosted, no-plugin required video. Facebook? College student tailored. Myspace? Place for bands, hosted music, customizable profiles and UNRESTRICTED ACCESS.

    That’s the point: Buzz is not a foundation to build a business on, especially with how fickle you people are. All Twitter has is buzz: no new technology, no massive market share, no loyal users, no killer app.

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