When Google Went Public … (Twitter IPO)

Fittingly it was with a tweet that Twitter announced the filing of a S-1, the first formal step towards an IPO. The document remains confidential so debating their financials is nothing but a speculative argument at this point. Twitter has become my most important social messaging platform, a place where (as @hunterwalk) I’m able to share ideas, find new interesting voices, discover great content and get a snapshot of what the world is thinking. I use other products but I live in Twitter.

The reportedly 2,000+ Twitter employees must be thrilled about this next phase of their company. Besides generating incredible wealth for many of them, being a public company is both a symbolic step towards becoming indelible and a very real milestone with both benefits and costs.

I arrived at Google in late 2003, prior to our S-1 being filed in April 2004. There was already lots of internal and external speculation about our trajectory but until the document went public, no one understood just how powerful a business model the company had created. During my interview process Google HR was very secretive about the value of my equity. In fact they told me only the number of shares I had been granted. Without knowing the number of shares outstanding or the enterprise value of the company, a grant total was totally useless but they essentially said “trust us.”

What changed once we went public and how might these same shifts impact Twitter?

  • Data Got Locked Down: Before our IPO Google was notably open with its data internally. There were many ways to access near realtime revenue and other tools we could use in the course of managing daily business. With the public offering came regulatory requirements and many of these dashboards went behind authenticated logins, where only certain Googlers could access based on job needs. If you filed for access there was often a delay in approval. Larry, Sergey and Eric remained committed to being as open as possible but the days of our sales chief standing up at Friday meetings and announcing revenue for the quarter were obviously over. Google has done a remarkable job of remaining transparent internally but with a stock offering comes certain changes that are non-negotiable. If they haven’t already, Twitter employees will soon find themselves partitioning tools and data by function
  • Public Currency for Acquisitions, Hiring: Whereas all stock to this point as been speculative — it *might* be worth something in the future — liquidity in the public markets means Twitter will have a strong weapon for more acquisitions and hiring candidates. Not necessarily the employees who want the IPO pop (more on that below) but they can put together packages which match the current expected value of one’s current employer. From an acquisition standpoint it will be interesting to see whether Twitter uses cash or stock. Stock is cheap now but expensive later if you believe the share price will rise. Google historically pays cash, although there were notable examples such as the YouTube deal.
  • A Different Type of Employee Gets Hired: It’s silly to say that Twitter will no longer be a startup once they IPO. The reality is they’re not a startup now — risk is off the table, thousands of employees, hundreds of millions in revenue. Post-IPO though there’s a psychology that seems to impact potential hires — you start getting fewer risk takers applying and more careerists. This isn’t absolutely a bad thing — hiring more experienced leaders is important for a company’s stability and Twitter has certainly already raided lots of Google talent to build its management layer — but it does start to change the personality of the company. People would sometimes ask me if post-IPO did Google start hiring “B+” talent instead of “A” (the assumption being that the best people would no longer want to work at Google). My answer was a definitive NO. We still hired “A” quality people, it was just increasingly a different type of smart. More pragmatic, more about scale. Our founders worked hard to maintain the culture and I think much of Larry’s first few years as CEO has been about returning to what he remembers Google being in the early 2000s. Twitter CEO Dick Costolo and his team will have the same challenges — some old timers memorializing “the old days” while also realizing that Twitter 2014 cannot be the same as 2008.
  • Flight of Talent: There’s usually a burst of departures in the six months after an IPO, then it kinda returns to normal levels. Lots of fully-vested “old timers” leave. Since many Twitter employees are sitting on heavily appreciated stock options, a public offering will finally give them the liquidity to sell shares. Important to note this isn’t just about getting cash in their pocket, it’s about getting cash to pay the IRS for the tax burden that would come with exercising previous stock grants.

Having many friends at Twitter I’m obviously happy for the company. As a Twitter user it’s bittersweet because while this IPO will increase the stability of the company, it also will continue to push them to seek growth which may evolve aspects of the product I love so much.

When Google finally went public in August 2004, after a long and weird registration process, there were a few minutes of clapping, high fives and private calculations of net worth. Then we all went back to work.

The Geo Wars: How Foursquare survives…..

With Yelp, Facebook and perhaps Twitter moving into Foursquare’s territory, and the start-up already facing competition from Gowalla, MyTown and others, pundits are starting to wonder, “will foursquare survive 2010?

My opinion: yes – and they’ll be big – if they can execute the following two tricks:

1) Make sure 4SQ is an experience, not just a utility
If checking-in is predominantly just a way to publish your current location to FB or Twitter, then 4SQ will ultimately lose to those services. But if 4SQ can build an experience on top of checking-in, they will create a differentiated use case. Examples of what this experience could be incl:
a) GAME: extending the mechanics of badges, mayorships, leaderboards, etc
b) RECOMMENDATIONS: using my personal geo data to not just track where i’ve been but provide me suggestions of where to go
c) COMMERCE: Discounts, sweepstakes, etc for checking-in at locations

2) Hit escape velocity fast!
We always overestimate the ability for bigger companies to staple on yet another use case to their product. Consumers often want simple tools that satisfy a need. Now at over 1m check-ins/week, 4SQ needs to throw everything they can at growing quickly and getting adoption in order to cross over to the mainstream – to become the snowball. This means eliminating frictions to sign-up even if it means collecting less info on users in the nearterm or relying more on FB Connect; accelerating a partnership or two for distribution even if it means paying to seed distribution; or being ruthless about delaying advanced user features in order to make sure the basics work across multiple platforms.

As an early 4SQ user I want the innovator to win – they can leverage my loyalty to help them out – put me to work – Dens, whatcha want me to do? Invite five friends this month? Update five listings? Mobilize us!

Once escape velocity is achieved you gain two advantages:
a) network effects of new users
b) competitors are playing catch-up, building the product you were as opposed to the product you’re becoming

If they get reduced to being a utility (“publish location”) or end up focused on too narrow a group of users, they’ll get passed by general purpose geo services or social networks on one side and out innovated by gowalla, mytown, etc on the other.

Alright, gotta run and check-in somewhere….

Why do geeks hate partial feed RSS but love Twitter?

In 2007 the hot debate was partial vs full RSS feeds – giving all your content in the post vs enticing a click back to your website with just a teaser via RSS. When some publishers reverted to partial feed in order to drive traffic and actually monetize their audience, they were often flamed with “UNSUBSCRIBE!” comments.

Fast-forward to 2009 and Twitter is loved by these same outraged readers despite the fact it functions often as a partial feed RSS. It’s the return of the click! People don’t mind now actually visiting a website. I think of my own experience with TechCrunch – pre-Twitter i’d consume 99% of their content in my reader. Now i’m more likely to click on a Tweet and go to their website if there’s something of immediate interest, and their feed has become non-timely catch up consumption.
Why do geeks hate partial feed RSS but love Twitter? Because in their mind Twitter’s truncation of content delivery isn’t a violation of the internet – it’s a technical limitation based on the service’s SMS origins. No pointy head suit is making the decision to limit their feed in order to monetize you on their site.
So of course the totally illogical reality is that when consuming content on your iPhone, Publisher XYZ’s partial feed in your Reader app makes you mad, but Publisher XYZ tweeting the headline and link to their new post makes you happy. Same experience, different context, different user reactions.

Hey! Get Off My Name. Username disputes are the domain squatting of the future.

On the heels of WIPO‘s announcement that domain disputes increased to a record 2,329 cases in 2008 (8% increase from 2007) a much more interesting question is starting to be raised. What rights do brands have to their usernames on social services such as MySpace, Twitter, and YouTube. As most of the major companies have already secured their URLs, the most valuable real estate for them to cultivate these days is their persistent space within these social communities. And today it’s the wild west with each service arriving at its own set of principles mixing various legal arguments with their own business objectives and user protection.

Take Apple for example – one of the world’s most powerful and loved brands. Of course Apple.com is their corporate website but what about their social presence? Let’s see what the username “Apple” yields on these four prominent social spaces:

MySpace (/apple) = DJ Apple. Brand Fail.
Twitter (/apple) = Squatter. Brand Fail.
YouTube (/apple) = Some user named Apple. Brand Fail.

Wow, so Apple fails to occupy the real estate associated with their brand on three of the most important social publishing and community tools of the Web2 era. You think they’d want to address this, yes? But how? There’s no clear WIPO-like rules in place for service usernames. And none of these users are violating Apple’s trademark or creating brand confusion so it’s unclear that Apple has any legal right to the usernames since “Apple” is a generic term. For clear trademarks or impersonations it’s easier to claim your brand.

Basically in this case brands are left with two choices:

1) Negotiate directly with the user and try to purchase the namespace a la buying a domain name.

2) Contact the service provider and try to get them to reclaim the name on behalf of the brand, sometimes using the carrot or stick of advertising spend. This often happens under the cover of darkness when the user account is inactive but what happens when the user has a vibrant community around them? Does the service provider really want to set off blogosphere shitstorm and be accused of selling out their users?

So what’s a potential best practice for this new reality?

A) Free market + easy account transfer. Service providers such as MySpace could support the ability to transfer an account and its history to a new user name along with a payment to the account holder negotiated between the brand and the user. Make the transfer option available with a minimum payment of $5k in order to minimize the number of account transfers. Once transferred on the legacy account, support a ” has relocated to ” for a 90 day period.

B) Separate official namespaces for brands – /brand/name as opposed to /user. Is this part of the Twitter revenue strategy?

Does anyone know of services or communities that are elegantly handling the username issue? (I’ll offer up that it’s a challenge for us here at YouTube).

Note: I haven’t included Facebook because as a Real Name system there really isn’t a /apple equivalent. The issue of whether user-created fan pages are being embraced by brands or shut down is a separate post. Coke at least did something very novel with their user-started fan page.

How YouTube Uses Twitter…

Given all the stir that google’s new official twitter account has caused (@google), i thought it might be fun to give a bit of history on our YouTube account (@YouTube) while we can still claim the title of “google product with the most followers.” 

We first got our Twitter account, jeez, must have been back in early 07? I know some of the Twitter guys from their Blogger days and pinged Biz about cool stuff we might do together. My initial idea was that we’d tweet out the URL of a YouTube video automatically when it passed 1,000,000 cumulative playbacks. But when i did the math it turned out that we have a tremendous number of videos that hit this milestone each day. It would be too much for even the most dedicated tweeters! So we put that idea aside but there’s a few similar ones that we’re thinking about doing – some which i know @sacca wants to see. Would people want something as simple as a “Tweet this video” button?
So in 08 we decided to jump on the Twitter bandwagon and start sending out interesting videos, links to new blog posts, links to new features and even the occasional bug report. We follow a few folks from the YouTube community and hope to add more each day. Overall i’d say we’re excited about the immediacy (and brevity) of the platform. Users are increasingly coming to services like YouTube and Twitter to search for breaking news so we’re learning from watching how users discuss these events on Twitter.  And of course, share their great YouTube videos plus give us feedback.
The feedback itself is actually what i’m most impressed with these days. After we do a new code push our engineers are all monitoring Twitter to see what users are saying. Oh sometimes there’s hilarious drama but generally the community is awesome about giving us their views. In fact one engineer built a little google app tool which allows you to graph tweet traffic over time for a specific query. We use it to see when there was a particular spike in YouTube related tweets. Usually around a new feature release or when someone notices a bug. 
So YouTube users – know that we are listening to you and sometimes we’ll jump in if we think we can help. Tweet @YouTube and definitely follow us if you want the latest YouTube updates.
Oh, and btw, i’m @hunterwalk if you want to follow me.

Twitter will need filters in order to thrive longtern

New communication channels often get praised because signal:noise ratio is way higher than mature channels. Email was fantastic – then came spam and 10,000 people having my address. Part of the love for Twitter is that it still has a pretty high signal:noise ratio. But this changes over time as you add more followers – people will ruin their own experiences by introducing noise due to social pressure and design failures (see my posts “Psychology of the Salad Bar” and also how this is impacting FriendFeed).

So what does this mean for Twitter? IMHO their continued growth and longterm utility will be based upon filters – both explicit user controls (such as groups) and implicit prioritization (order by “interesting” not chronology). If Twitter doesn’t do it, certainly the ecosystem of developer apps will nail it. Ev has talked about designing with constraints – he famously fantasized about a social network which limits you to only 10 friends. Well, that’s one way to keep high signal, low noise. Another is to treat data intelligently, and my bet is that’s the way Twitter (or the ecosystem) will go.

Here’s some of the filters i’d find potentially useful:

Explicit (ie dependent upon me)

  • groups/folders
  • deprecate/mute tweets containing kw= or #=
  • Google Reader integration – if i already subscribe to someone’s feed, i don’t also need to see their tweet announcing they just posted

Implicit (ie do it for me)

  • sort by interestingness (based upon # of retweets, how often i tweet @ that person, etc)
  • collapse dupes – turn retweets among those i’m following into a single group
  • conversation view a la TweetTree

btw, if you want to follow me: http://twitter.com/hunterwalk