BUSINESS BLOGS
BUSINESS BLOGS
category: business
25 Jan 2009

Twitter is making the same mistakes Facebook did, which are:

- raising money instead of generating any,
- letting the valuation get ahead of realistic business prospects which will make any M&A nearly impossible,
- thinking that the “success” its had with its obsessive, early-stage adopters can be mirrored to the broader world,
- will obsessively create valuations based on online advertising estimates even though the company is at best a communications and/or e-commerce play,
- mistaking a API for others to use as a business model
- encouraging other businesses to build applications on top of their grid, without itself knowing that their business is/will be.

There are some differences:

- Twitter is more of a mobile app than Facebook is, and mobile, while wildly speculative, is all about hype and fads with very little to show for it.  On top of this, the wireless world remains a largely closed one where to become a true success you need to operate in the world of carriers, something that is impossible to pull off.

- If Facebook really wanted to, it could put Twitter out of business by pushing their own status update feature (more people have a Facebook account than Twitter will ever have).

- Lastly, while over time a majority of Web surfers might have a Facebook profile and could stay somewhat engaged with it to varying degrees, the same simply cannot be said about Twitter.  In other words, having a social network profile on Facebook is pretty vain, sure, but having a Twitter account is plain crass when anyone with common sense and objectivity thinks about it.

But, once again, don’t take it from me.  When Facebook raised money at the $15B implied valuation, people said “this is the new way” and a bunch of other BS.  A $250M valuation is a far cry from a $15B one, for sure, but in 2009, if Twitter is the new Facebook, then $250M valuation with $0 revenues is basically a $15B one that will corner Twitter before long.