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Twitter Final

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Twitter Final

  1. 1. A Business Plan for Twitter November 30 2009 Kshitij Chaudhari Under the guidance of : Prof. Alireza Khorsand
  2. 2. A Business Plan for Twitter Table of Contents Executive Summary ...................................................................................................................................... 4 1. Company Description ............................................................................................................................... 5 A. Nature of Business ............................................................................................................................... 6 1. The Industry .................................................................................................................................. 7 2. Marketplace needs ........................................................................................................................ 7 3. Methods to satisfy the needs ......................................................................................................... 7 4. Unique Competencies ................................................................................................................... 8 2. Market Analysis ........................................................................................................................................ 8 A. Industry Description and Outlook ........................................................................................................ 8 B. Target Market ....................................................................................................................................... 9 C. Competition ........................................................................................................................................ 10 1. Strengths ..................................................................................................................................... 13 2. Weaknesses ................................................................................................................................. 14 3. Opportunities............................................................................................................................... 15 4. Threats......................................................................................................................................... 15 5. Conclusion .................................................................................................................................. 16 3. Marketing and Promotion ....................................................................................................................... 17 a. Overall Marketing Strategy ............................................................................................................. 17 1. Strategy ....................................................................................................................................... 18 2. Communication ........................................................................................................................... 19 b. Ongoing Marketing Evaluation....................................................................................................... 19 4. Sales ........................................................................................................................................................ 20 A. Customer Profile ................................................................................................................................ 20 1. Today’s Customer ........................................................................................................................... 20 2. Tomorrow’s Customer ................................................................................................................... 20 B. Sales Strategies................................................................................................................................... 21 1. Sales Force .................................................................................................................................. 21 2. Sales Activities............................................................................................................................ 22 5. Management and Ownership .................................................................................................................. 22 a. Company Structure and Policy............................................................................................................ 22 11/30/2009 Kshitij Chaudhari P a g e |2
  3. 3. A Business Plan for Twitter b. Key Management and Operating Personnel........................................................................................ 23 6. Economics of the Business ..................................................................................................................... 23 A. Revenue Models.............................................................................................................................. 23 B. Worst Case Contingency Plan......................................................................................................... 25 7. Conclusion .............................................................................................................................................. 26 Works Cited ................................................................................................................................................. 27 Table of Figures Figure 1 Milestones for Twitter .................................................................................6 Figure 2 Twitter user Page .......................................................................................10 Figure 3 Tumblr .......................................................................................................11 Figure 4 identi.ca......................................................................................................12 Figure 5 Jaiku ...........................................................................................................13 Figure 6 technology camel .......................................................................................17 Figure 7 Twitter people ............................................................................................23 11/30/2009 Kshitij Chaudhari P a g e |3
  4. 4. A Business Plan for Twitter Executive Summary Twitter was started in March 2006 by three people namely Jack Dorsey, Evan Williams and Biz Stone (TechCrunch, 2009). However, they opened the company for public use in July 2006 with the help of Obvious Corp. Twitter is a micro-blogging website which allows users to keep in touch via very short i.e. 140 character messages. It allows users to post their ‘status updates’ as they call it through the browser, instant message or a text short messaging service available for the cellular phone. Twitter was among the pioneers of micro-blogging and since 2006 has gained a vivid popularity. The website attracted a total of 9.3 million unique visitors in March 2009 which was a 131% jump over their previous month statistics (Schonfeld, 2009). With all these huge numbers and buzzing popularity among the people Twitter has gained a huge base of loyal fans and members. Twitter has also managed to attract a lot of corporate conglomerates who want to stay in touch with their consumers. Twitter has raised a lot of capital from venture capitalists over the last two years banking on the fact that they could provide their investors with excellent returns. However, the one thing they have failed to do is come up with a strategic business plan. A while back in March 2009 they publicly announce a guide called Twitter 101 which would help businesses and people use Twitter properly from a business standpoint. The guide however lacked clear and precise strategy and planning (Milstein, 2009). This project report will delineate a clear and concise business plan that is strategically beneficial for Twitter. The report will introduce Twitter as a company and explain in depth the service it provides. The report will analyze the industry, the technology and the competitors and their role in creating a solid business plan. This report will provide a SWOT analysis of the company along with a marketing plan that corresponds to the financial plan and a strategic management plan. The report will conclude with an optimized plan that Twitter should follow for continued growth and economical gains over the next few years. The plan however, will be limited by the information available publicly since Twitter is still a privately held company. 11/30/2009 Kshitij Chaudhari P a g e |4
  5. 5. A Business Plan for Twitter 1. Company Description Twitter is a micro-blogging service hosted at the domain twitter.com and started by three people namely Jack Dorsey, Evan Williams and Biz Stone in March 2006. The service was started by Obvious Corp and has been a huge cultural phenomenon since it gained popularity (ChrunchBase, 2009). Due to its huge success a specialized version of the service was started called Twitter Japan. Although it is unclear as to the coining of the term micro-blogging, the popularity of the term was widespread due to Twitter. Micro-blogging is a web service that allows its users to post messages that are limited to a length of 140 characters. This form of message service that allows people to post messages and lets them choose the people that can see them or broadcast to the internet for everyone is called micro-blogging. Unlike the original service namely blogs, micro-blogging has gained a wide popularity due to the limited size of the messages being posted. These messages usually were intended to be updates. According to Twitter.com the 140 character messages were supposedly were meant to answer one simple question, “What are you doing?” However, as the service gained popularity the messages were engulfed huge range of forms and answered a lot of questions about you, the people you interact with or simply anything else. People could post feeds about their life, about their work, about what they thought of certain things or happenings. Basically, the service evolved as a new medium for communication. Recently, Twitter.com has changed their status update statement from “What are you doing?” to “What is happening?” (Stone, 2009) 11/30/2009 Kshitij Chaudhari P a g e |5
  6. 6. A Business Plan for Twitter FIGURE 1 MILESTONES FOR TWITTER A. Nature of Business Twitter was founded on the basis that people will be able to easily communicate with their friends and family via a short message. However, as the popularity of the service grew the status messages or ‘tweets’ as they are known were updates frequently and covered a large number of topics. The most popular among these were the current events and social communication. The service quickly turned into a larger form factor than just personal status update service. People started messaging each other about trending topics and upcoming events along with current 11/30/2009 Kshitij Chaudhari P a g e |6
  7. 7. A Business Plan for Twitter affairs and news that not even possibly broadcasted across the globe via regular channels like televisions. 1. The Industry Due to the wide range of communication that occurs on Twitter it is very hard to pinpoint a specialized area for the service. The social networking aspect of the service is a big one but not the only one. The service is also a very informative form of new channel. The service is also a basic personal communication channel. Considering the numerous services provided the industry that Twitter is in can be considered as a real-time social communication. Even though it may seem that the specified industry has a broad sense of service it is necessary to define a broad industry since the last time twitter tried to define itself as a personal status update service the consumer changed it to their preference (Stone, 2009). 2. Marketplace needs When Twitter was started the consumer was unaware of power of social communication. But today it is a well established fact that Twitter renders a voice to a larger stratum of people and their voice can be easily heard world over. A good example of this the use of Twitter was the outcry that was publicized by the service after President Mahmoud Ahmadinejad's re-election in Iran (Seib, November). The consumer has now realized the power of twitter and so have the decision makers. The marketplace is familiar with the service but needs a better control and organization of the service. Finding the social circles you can be a part of, finding news that relates to the user and an ability to organize and search through all the data that the user uploads. The user needs more innovation and though it may not seem but if Twitter loses its edge in technological innovation people are bound to try new services. 3. Methods to satisfy the needs The services provided by Twitter are not exceptional but surely are simpler. And since Twitter has an open Application Programming Interface (API) (i.e. any third party developer can access Twitter functionality with the open source code provided by Twitter in their program) a lot of feature rich application can be found according to the user 11/30/2009 Kshitij Chaudhari P a g e |7
  8. 8. A Business Plan for Twitter choice. However, one thing that Twitter relies on is social acceptance which is possible if Twitter anticipates user needs before any other service does. A huge part of this can be achieved by being at the top of the innovation bandwagon. 4. Unique Competencies Twitter has grown in a huge online society. The number unique visitors for the month of March 2009 were 15 million and grew to 22 million in June 2009 (Site Profile of Twitter, 2009). That is an increase of 146% over March. The most important competency Twitter has over its competitors is its loyal base of users. All the service Twitter offers are duplicated by its competitors. Some of them even have better services than Twitter but the only reason Twitter is unshakable is due to the huge user base its has accumulated over the years. Another important aspect that keeps Twitter afloat is the technology. If Twitter was to lose out on a big innovation to a smaller competitor it is very likely that people would follow the new service. 2. Market Analysis A. Industry Description and Outlook The industry that Twitter relies on is real time social networking communication. Though this may seem as a broad classification of the industry it is necessary to realize that Twitter works on the social element of the demographics and relies on speed of communication to gain a superior edge. The real time web applications that work with the idea of speedy communication have a very simple goal. They have to be able to keep up with or rather be the first one to come up with better technologies to connect people in real time. However a major difference between instant messaging (IM) and Twitter is the form of communication they provide. Twitter works on the principle of broadcast communication and IM works on a one to one or group communication. IM’s inabilities to broadcast messages to the world make it unlikely to be considered a competitor. Twitter relies on the fact that it can broadcast people across the internet and make the messages available to a large number of people or even everyone if the user chooses to do so. This major difference requires Twitter to come up with technologies that keep the user interested 11/30/2009 Kshitij Chaudhari P a g e |8
  9. 9. A Business Plan for Twitter and hooked with the social network. If Twitter misses make sure that it keeps on adding interesting new features that connect people it is bound to lose its edge to its competitors. B. Target Market Twitter reaches a wide variety of consumers across wide range of geographical locations. Hence, it is very hard to specify a single group of people as its target market. The use of internet by everyone and the penetration of internet limit the use of Twitter. A younger generation that is on the go all the time and has very little time to keep in contact with its huge network of friends and family is an obvious target market. However, these form a very small part of the market that Twitter should aim for. A wide classification of the target market would be the people who use the internet. Twitter can cater to the needs of each and every form of demographics as well as psychographics. Twitter relies on the fact that people can connect with other people and find a social network that has similar tastes and liking in their particular subject of interest. Another feature of Twitter is communication. This makes sure that a user can keep in touch with people from his huge circle of friends or known acquaintances. A business form of Twitter is useful for sales representatives and marketing people. This is a group of people that are eager to make sure a lot of people know about what they are selling or advertising. These people also lead to a different range of demographics namely the corporations. All businesses today rely on communicating with their consumers, old or new. The best way for any corporation to gain new customers or keep the old customers updated about new service and products is to use the most popular communication channel. A few years back it was the newspaper and then it was television now it is the internet and more specifically, Twitter. Twitter can reach a wide range of customers that defies geographical limitations. A general look at the customer base that Twitter caters to gives us an idea of the wide variety of people from different demographics it is capable to reach. The target market for Twitter is wider than most of the current software industry. Like Google, Twitter can cater to almost every individual and should strive to incorporate this idea in its strategy for expansion. 11/30/2009 Kshitij Chaudhari P a g e |9
  10. 10. A Business Plan for Twitter FIGURE 2 TWITTER USER PAGE C. Competition Today a service business that relies solely on the internet has to be aware of its competition. The service industry on the internet relies solely on its ability to provide a cheaper and better technology to its consumers. Christos Cotsakos, CEO and Chairman of E*Trade, a very popular online brokerage firm said, “Two kids in a garage – that’s who we are worried about” referencing to the history between Microsoft and Google (Digital 50, 2009). This is how much a company that has significant revenues and well established still fears the threat of new competition. Today when its takes less time to switch between services on the internet the threat of substitutes is very real and significant. Twitter is a micro-blogging service which is a fairly new concept for the internet. Hence the competition is small in number. Though small the competition is fierce and the only way to establish one service as better is to build a network of users that is bigger and widespread than its competitors. Currently, among Twitter’s competitors are Jaiku, Brightkite, indenti.ca and Tumblr. Jaiku and identi.ca are very similar services to Twitter whereas Tumblr is a micro- blogging service that has a sleek interface and better user friendly design as compare to Twitter. Tumblr reported a count of 20 million unique visitors for the month of October and a retention rate of 85% (i.e. 85% of total users who register remain active users) (Wauters, 2009). This is a huge threat for Twitter. Tumblr also boasts of an incredible website interface along with a very 11/30/2009 Kshitij Chaudhari P a g e | 10
  11. 11. A Business Plan for Twitter intuitive mobile phone application allowing the user to easily post content from cell phones (Wauters, 2009). FIGURE 3 TUMBLR 11/30/2009 Kshitij Chaudhari P a g e | 11
  12. 12. A Business Plan for Twitter FIGURE 4 IDENTI.CA 11/30/2009 Kshitij Chaudhari P a g e | 12
  13. 13. A Business Plan for Twitter FIGURE 5 JAIKU 1. Strengths Twitter’s competition currently has geographical location indicators that can be used by the customer to publish his/her location along with the status update they provide. Jaiku, Brightkite and identi.ca can assess the location of the user and broadcast it to the web along with the status update if the user decides to show his location. Though Twitter has been working on the same technology, it has not been able to incorporate this into its API or web interface. Jaiku allows its users to post icons besides their updates which make them easily distinguishable. This may not seem like a big deal but when users deal with 11/30/2009 Kshitij Chaudhari P a g e | 13
  14. 14. A Business Plan for Twitter updates from friends and family that number in hundreds it is a very useful addition to distinguish the form of message in the crowd. Brightkite is a micro-blogging service that focuses on close knitting people from neighborhoods together. It uses the location detection service to show updates from people around the neighborhood. The service can let users customize the size of area from which they wish to see updates. This lets the users’ spot trends and happening places nearby. This form of networking based on locations is not available for Twitter. Identi.ca is a micro-blogging service with open source code. This allows people from the software industry to modify and use the code used in identi.ca to be used with other programs. This aspect makes it significantly popular with the software community. Tumblr is micro-blogging service that doubles as a blogging service. The main difference between Twitter and Tumblr is that Tumblr is not limited to the 140 characters limit that Twitter users have to abide by. This provides Tumblr with a unique advantage. The users can choose to either use it like regular blog or like a stream of small messages. The user interface for the website is sleek and very user friendly. Users can easily post different types updates by selecting the type of the update from a list. The blog also allows users to ‘skin’ their web page. Different types of looks for the web page keep users interested. The service can import feeds from other blogs and Twitter as well. Among all other service that Twitter competes with Tumblr is one of the most damaging. The only reason Twitter can survive its competition is the huge number of users it has currently active. 2. Weaknesses Twitter has been keeping up with technology and plans to do so according to its founders (McCarthy, 2009). To keep Twitter afloat and surpass its competition, it essential for the company to keep working with technology and come up with excellent new technological innovation for its users. It is the only edge Twitter has over its competition that helps it keep a huge base of consumer sticking to the service. Jaiku, identi.ca, Tumblr and Brightkite do have their own unique advantages but they lack in the number of people using the service. Unlike other forms of business, social networking works on the principle of crowds. The more people a social network has the more people will it attract 11/30/2009 Kshitij Chaudhari P a g e | 14
  15. 15. A Business Plan for Twitter provided that it keeps up with the innovations in the technological front. Twitter thrives by this principle and had been able to dominate its competition till now. Twitter is only second to Facebook in the number of users. Though Facebook is not exactly a competition, Facebook provides its users with a similar service called status updates. However, this service is limited to the social circle one is part of on Facebook. 3. Opportunities Twitter’s competition is keenly trying to increase their popularity and user base. The opportunities for them are limited due to the localized nature of their dominance. Brightkite banks on the fact that people living in common neighborhoods are likely to find more social connections around them. The idea is novel and seems to work on paper but is not necessarily a winning one. Jaiku banks on the fact that it provides superior real time updates and Tumblr provides even the most unlikely user with all the necessary tools and easy work space to post updates. All of the Twitter’s competitors have a unique selling point but they lack the necessary marketing for popularity. But since the marketing front for all the micro-blogging services is even keel it is very likely that in the near future Twitter may be replaced by a better service if fails to expand to a bigger user base using traditional or viral marketing. 4. Threats The biggest threat for Twitter’s competition is Twitter’s huge user community. The competition tends to target pockets of demographics whereas Twitter has captured a consumer range across all demographics and psychographics which allows it have communities that cater of almost all the different kinds of users. Another bigger threat to all the micro-blogging services is Facebook. If Facebook decides to crush all the likely competition, it can easily use its huge fan following to do so. Facebook overtook MySpace and still is growing into a huge network (Arrigton, 2009). Facebook provides its users with wide range of services and developed into a platform for web applications that can be used within Facebook. The advertisement revenue of Facebook is comparably huge and can potentially eliminate its competition if it presumes all the micro-blogging websites to be a threat. Facebook currently allows users to post to Twitter and import 11/30/2009 Kshitij Chaudhari P a g e | 15
  16. 16. A Business Plan for Twitter their update feeds from Twitter to their Facebook page (Arrigton, 2009). Since Facebook aims at social networking on a larger scale than broadcasting messages it belongs to a very different form of social web sites. But since technologies tend to converge over time it may soon be war between Facebook and Twitter. 5. Conclusion Twitter is a big name in the micro-blogging frontier and its competition is still trying to catch up with it. But Twitter cannot be ignorant to the fact that service come and go and are as uncertain as rain in Seattle. The only certain part of Twitter’s existence is to be the first one with features upgrades to its service. Twitter has to be the first with technological innovations and currently it has been following the plan with utmost sincerity (McCarthy, 2009). Though this may be a step in the right direction the problem with this strategy is that it leaves out the financial part of the business plan. The company has to realize that without a steady income and cash flow it will not be able to keep up with the technological innovation that keeps its competition at bay. On the other hand, Twitter’s competition are trying to outwit Twitter by coming up with better innovations. Being a service with large social network, Twitter can manage to stay a step behind the technology pioneers and be an early adopter instead. 11/30/2009 Kshitij Chaudhari P a g e | 16
  17. 17. A Business Plan for Twitter FIGURE 6 TECHNOLOGY CAMEL 3. Marketing and Promotion Twitter is accustomed to a word to mouth marketing format. This form of marketing has been working efficiently in Twitter’s favor, though it is not always that word of mouth marketing can be relied upon without the support of traditional marketing and/or promotion. Viral marketing has been an integral part of Twitter’s success. Viral marketing is the explosive growth in sales, or spread of product information through customer contact or referrals (Jurvetson, 2000). The term was coined by the US venture capital firm Draper- Fisher- Jurveston. Twitter has gained a huger user following and is still on a growth spurt. But soon Twitter will reach its peak and viral marketing will saturate the amount of consumers it can bring to the network. This is when it is necessary for Twitter to employ traditional form of promotion and marketing to gain a new group of customer that will propagate the viral marketing even further. According to CNET, Twitter has reached its cusp and is about to lose the trendiness (Matyszczyk, 2009). This would be the time for Twitter to start with other forms of marketing. a. Overall Marketing Strategy 11/30/2009 Kshitij Chaudhari P a g e | 17
  18. 18. A Business Plan for Twitter 1. Strategy Twitter has a very good network for viral marketing. All corporations and event managers are looking for a way to spread the word via viral marketing for their products, services or events. These can be easily be accomplished by Twitter and its social network. However, Twitter does not receive a vice versa treatment of marketing with the events. The people at such events or buying such products and services may or may not be familiar with Twitter. Twitter has to make sure that it can get a reciprocal response to viral marketing from its business partners. The people who buy products or services or attend such events should be made aware of Twitter and how it can help them use the product or service they are buying. Twitter has to use its own viral marketing partners and customer for creating its own buzz. A lot of potential customers Twitter could have are unaware of its presence. Why is that? Twitter should is widely popular in the United States but countries like India and China are still unknown to the phenomenon that is Twitter. It is essential that Twitter understands this. Twitter has to employ marketers to promote Twitter in countries like India and China where the potential for huge market is still open. Traditional form of promotions such as hoardings or billboards across cities and urban areas in developing nations could create a better awareness for Twitter. Once the Twitter buzz catches up viral marketing in these nations will follow. Another important part of Twitters business is to explain people how to use Twitter. The home page of the web site does not explain what Twitter does. When marketing to developing nations newer avenues of businesses and purpose would emerge and Twitter has to make sure that everyone can use its website. Event sponsorships and product marketing are a great way to create a buzz. Twitter needs to tap into these areas in countries other than the United States if it wants to create a customer base in newer markets. Twitter has to make sure that people and business that use its API or service or user streams notably mentions the Twitter name or logo so as to familiarize the user with the Twitter name. Currently, Twitter sports many different logos for its brand and a common aspect among all of them is the color. Twitter has to make sure that it produces a 11/30/2009 Kshitij Chaudhari P a g e | 18
  19. 19. A Business Plan for Twitter unique logo that remains constant across products, services and promotions. This would create a uniform image among the customers. 2. Communication Twitter fails to establish its name to its service. People have to associate micro- blogging with Twitter and know what it does. The best way to do so is to advertise. Twitter has to advertise with other websites. Twitter has to open people up to the possibility that blogging does not mean large one page blogs with 5000 thousand words. Twitter has to use traditional advertising channels to communicate with people about how they can change their personal and professional lives with Twitter. Twitter has to create online campaigns and slogans to make sure Twitter enter the Coca-Cola marketing universe. Televisions have been a major part of our lives and still are a potential channel of communication. Television broadcast reach people in the most unmapped of areas. Twitter has to use the power of television marketing to reach a user base that is still untouched. Television sponsored events are a good way of making sure people know about the service. Recently, Twitter came out with a device called Twitter Peek. This device lets its user customize up to five email accounts, Twitter account and other services without using the regular computer, phone line or internet (Twitter Peek, 2009). But the problem is that it is a dedicated device that does most of the things a cell phone can do today. It is not a wise to make people carry two devices to use a service which he can simply use on his cell phone. On a long term basis it is annoying to use a device solely for one or two services. This was a very bad move on the Twitter’s part. b. Ongoing Marketing Evaluation Twitter has many demographics stuffed into its target market. It is almost impossible to quantify them as a single unit. Twitter needs to understand this and realize that it caters to different sections of people in its target market. Unlike other manufacturing or service industries, online companies like Twitter can easily modify themselves to provide users of different demographics with different features in one single service. Twitter has to 11/30/2009 Kshitij Chaudhari P a g e | 19
  20. 20. A Business Plan for Twitter cater to the needs of each of its target audience. Twitter needs to anticipate what each of these target markets wants. A common form of classification for Twitter’s target market would based on the use of Twitter as in personal, business, social, marketing, etc. Once Twitter is able to classify and anticipate what each of the sections of the target market need, it can easily prioritize its goals and strategies. Twitter has to keep ahead of in knowing what its market is looking for. One way of doing so is customer feedback and targeted deployment of new features. Twitter can use customer feedback forms that users can fill in online or via the Twitter service. New features that Twitter is working on that need to be tested can be deployed on a smaller scale before a fully fledged deployment. This can ensure a sample feedback about the new features and customer profile based deployment. 4. Sales A. Customer Profile 1. Today’s Customer Today it is a common place to use email service. All of the email services we use are free of cost. We never realize that these email service have to rely on advertising as their main source of income for running the business. The advertising on the side or below our email messages is hardly noticeable to a regular user. A lot of users now use advertisement-blocking software to stop those ads from showing up or simply ignore them. A general idea we conclude from these facts is that people hate advertising even when it is forced on to them. Customers today are looking for free services without the hassle of advertising. Today’s customer is looking for faster and better service that is not problematic to use. The user is so accustomed to ease that an extra click to achieve the same result drags him away from the service. For a Twitter customer along with ease it is necessary that the service is accessible. Customers want to be able to use the service whenever and wherever possible. 2. Tomorrow’s Customer 11/30/2009 Kshitij Chaudhari P a g e | 20
  21. 21. A Business Plan for Twitter Twitter has to know what its customer will want tomorrow to start working on it today. The customer of tomorrow wants a better connectivity to service. Twitter has a hard time to keep up with huge user population. It has to make sure it can handle a large numbers of users at a single time. Twitter has been hacked once; though unharmed and untainted its customers have developed a new threat towards security breaches (SanJose Business Journal, 2009). Twitter has to make sure that all the information of the customers especially the ones connecting with family and friends are protected no matter what. Customers are gearing towards integration and it is necessary that Twitter be a part of it or it will be left out. Like other services Twitter is replaceable and it needs to modify itself to be a part of the new integrative information exchange. A worth competitor of tomorrow for Twitter can be FriendFeed. This service integrates all other services and information feeds from one user and create a single feed for that user which now can be transmitted into any other form or service application. People however, are not ready to reach the integrative phase yet but are likely to develop affinity for such services in the future. Twitter has to make sure that its users do not switch for the want of integration and hence has to provide such services at its own interface. B. Sales Strategies Like Marketing, Sales has to follow the traditional route along with the social route. The sales structure for Twitter is currently non-existent. Twitter has no revenue streams but has acquired a venture capital funding in amounts of $ 150 million (ChrunchBase, 2009). The business plan ahead follows different forms of methods that Twitter can use to produce cash flow and generate revenue for its investors. However, the sales function for this would still be depending on a traditional and a social form factor. 1. Sales Force Twitter tends to put business plan on the backburner and focuses on technology. Though sustainable for a short time every business has to rely on cash flow for it to grow into a profit based model that could provide return on investment (ROI) to its investors. Traditional sales force with a sales teams and sales managers should be employed to generate better sales leads and convert those leads into actual revenue streams. 11/30/2009 Kshitij Chaudhari P a g e | 21
  22. 22. A Business Plan for Twitter 2. Sales Activities Sales teams would have to come up with leads for corporate clients who would be willing to create an ongoing business relationship with Twitter. The user generated data and geographical tagging could invaluable information for corporate clients. Sales teams also have to make sure to generate new leads on customers. Even when the service is free sales teams have to sign up new customers to keep the Twitter base growing. As depicted earlier in social networking there is a pull-push effect with the customer network. More customers you have the more customer you’ll get and the more influence you’ll have over other services. 5. Management and Ownership a. Company Structure and Policy Twitter was started as a project and has grown into a very popular part of urban culture. The company has evolved into a modern software company. The company CEO and Co-founder Evan Williams works with other Co-founders Biz Stone, Creative Director and Jack Dorsey, Chairman. The company currently employs around 83 employees and is transforming into a modern day hierarchical management structuring (Twitter Company Profile, 2009). Twitter has had a policy of putting technology at the fore front. It is currently has started to bounce ideas about creating a solid business plan but technology still occupies the priority over business planning (McCarthy, 2009). According to Biz Stone, Co-founders of Twitter, "The idea of recognizing the difference between profit and value, and defining value...for us, value is making a great service, making a great user experience, putting out a good network, a robust network worldwide, and focusing on features and feature development, those types of things. That's value for us. And profit will come later, when those things are achieved." (McCarthy, 2009) 11/30/2009 Kshitij Chaudhari P a g e | 22
  23. 23. A Business Plan for Twitter b. Key Management and Operating Personnel Twitter is a privately held company. A lot of information about the company structure and business practices is not known. The management format is traditional with focus on innovation. Research reveals little about the management and operating personnel. FIGURE 7 TWITTER PEOPLE 6. Economics of the Business Twitter has playing with the idea of developing a business plan for its model for quite some time now. But with a failed attempt under its belt to popularize a Twitter101 business planning book for other businesses it has notably taken a back seat to the technology part of its business (Twitter 101, 2009). Twitter had been twiddling its thumbs for a while and recently has started hiring some business head honchos to propagate itself into the business world (McCarthy, 2009). But it has yet to come up with a sustainable business model for its company. The current cash inflow is almost none but Twitter has managed to secure a funding of $ 150 million in four funding series (ChrunchBase, 2009). A. Revenue Models Twitter needs to realize the huge potential of the data transmitted across different geographical locations between different strata of people. This information is a gold mine for 11/30/2009 Kshitij Chaudhari P a g e | 23
  24. 24. A Business Plan for Twitter corporations and marketing firms. This data can be computed into different statistics that can be invaluable resource for Twitter and its business partners. This data mining would fetch Twitter enough business partners to sustain and develop an unrivaled business standing on the internet. A similar idea has been proposed by Albert Kim at Denuology.com called Twitter Antenna. These ideas can be incorporated by Twitter to produce a cash flow model. For example, if a company wants to know how many people have been talking about its new product, Twitter can easily create statistics about the product as it appears in the status updates among its users across demographics, age, sex, and geographical locations. This will give the business partner an idea of how much buzz has been created about its product in what areas and across what demographics. Businesses rely on Twitter as a way to reach their clients and Twitter provides free accounts for all users. However, corporations are getting business when they use Twitter to connect with their clients and customers. Twitter can form a premium paid account model for corporate users. Corporations can afford to pay a small amount to maintain a steady communication with their client base. This could help Twitter generate a basic inflow of cash. Another important part of the Twitter service is the API. An API can be embedded into different applications than can be developed for different platforms on a Cell phone, e-book reader, computers, etc. These API are freely available to anyone who wants to develop an application with Twitter service. However, Twitter needs to come up with its own application that it can sell for a small sum of money that people can use across devices and platforms and integrate with other services. This can help Twitter generate a small but steady cash flow and open up its customers to the idea of paid services. Twitter can track products and services people talk about and link them to words. These words would be purchased by corporations to be marketed for a specific time. These words pointing to what people talk about would automatically change to links to the corporation products or services. For example, if I were to buy a new car. I ask my friends on Twitter to which car to buy. Twitter could identify my words buy and car and create a link on car that could direct me to a Twitter partner who sells cars. This could even be reduced to a localized form by selling these words on a geographical scale. A local car dealer could buy the words ‘car’ and ‘buy’. So now the word car in my tweet would link to the car dealer’s website instead of the car manufacturer. Another example would be for a book. If I were to broadcast 11/30/2009 Kshitij Chaudhari P a g e | 24
  25. 25. A Business Plan for Twitter to my friend circle that I had completed reading the ‘Da Vinci Code’. Twitter could change the link to Amazon or Barnes and Noble website for my Twitter friends to but the book there. Advertising could be a huge part of the revenue if modeled properly. Like Google, Twitter needs to find a way to produce amusing advertisements according to the customer linking. Say for instance I like gadgets and technology Twitter could target me for advertisements with latest gadgets. Twitter could come up with a plan to insert a single message in form of tweet every two hours or so for each user according to his choice of topics. This likeness based advertising could help Twitter create better advertisement revenues. Another important part of Twitter’s success is relationships or networking. Twitter has to bring people closer to create interaction and be able to implement revenue models listed above. For this Twitter has come up with a suggested user list for each individual user so that he/she can join to receive updates from people or corporations they do not know. The more communication Twitter can generate the more influence will it have in its revenue models. B. Worst Case Contingency Plan Dotcom businesses have failed now and again. The businesses online have shown us that no matter how successful they are it is always a possible that someone will replace you. Google did it to Yahoo! and Microsoft, Facebook did it to MySpace. Every once in a while no matter how good business plan you can draw for your business an unknown variable is left out. This unknown can cause the business to crumble. A general idea is to avoid unknown and have a contingency plan for the worst case. Twitter has created a huge base of users and continues to attract more. It is wise choice to invest in a business plan now and realize the plan. Biz Stone tends to focus on technology. I do not disagree but business plans are what make business not just a great idea. These two things have to go hand in hand to create a successful business. If the revenue model suggested and implemented fails to create revenues it would be a wise idea to spin off the company and its data to another potential buyer that is in the social networking communication industry. However, spin offs can gain value only when you know the company is peaking. Nobody climbs aboard a sinking ship and hence it is necessary for 11/30/2009 Kshitij Chaudhari P a g e | 25
  26. 26. A Business Plan for Twitter Twitter to realize its business plans today and check if they work because tomorrow no one will buy Twitter. 7. Conclusion Twitter has come a long way since it started. The company started with a simple communication form of ‘What are you doing?’ and reached to place where it says ‘What is happening?’ Twitter has been immensely popular in Unites States and needs to catch up with users in larger markets like India and China. Twitter current venture called Twitter Japan is a step in the right direction. Twitter still needs to realize the importance of forming a solid business plan for their business model. They have to come to an understanding that technology is what keeping them afloat is true but it is not a long term sustainable strategy. The company has to realize that technology will keep the competition at bay and is very necessary for its survival but so is a form of revenue model. Without cash inflow they cannot outlast the venture capital funding. The business model has to go hand in hand with the technological innovations. Twitter has changed how business work and communicate and collaborate. Many new changes are required for Twitter to reach a larger base of users because for Twitter ‘strength is in numbers’. Twitter has to find innovative ways to reach a demographic that is untouched and market to people that traditionally would not be a part of the target market. Once the numbers peak and growth stops others would probably catch up and Twitter would lose its edge. Twitter is an innovative form of service which requires exceptional work and innovation. 11/30/2009 Kshitij Chaudhari P a g e | 26
  27. 27. A Business Plan for Twitter Works Cited Arrigton, M. (2009, November 4). A Little Perspective (Digg, Twitter, Facebook). Retrieved November 2009, from TechChrunch: http://www.techcrunch.com/2009/11/04/a-little- perspective-digg-twitter-facebook/ ChrunchBase. (2009, Nov). Twitter Company Profile. Retrieved Nov 2009, from ChrunchBase.com: http://www.crunchbase.com/company/twitter Digital 50. (2009). Retrieved November 2009, from Time Digital Archive: http://www.time.com/time/digital/digital50/14.html Jurvetson, S. (2000, May 1). What is viral marketing. Retrieved November 2009, from Draper, Fisher and Jurvetson: http://www.dfj.com/news/article_25.shtml Matyszczyk, C. (2009, November 22). Has Twitter Peaked? Retrieved November 2009, from CNET NEWS: http://news.cnet.com/8301-17852_3-10403206- 71.html?part=rss&subj=news&tag=2547-1_3-0-20 McCarthy, C. (2009, April 14). Twitter founders: Innovation before business plan. Retrieved November 2009, from CNET NEWS: http://news.cnet.com/8301-13577_3-10218706- 36.html Milstein, S. (2009, March). Twitter 101. Retrieved October 2009, from Twitter.com: http://business.twitter.com/twitter101/starting SanJose Business Journal. (2009, July 15). Hacked Twitter business plan, other secrets surface. Retrieved November 2009, from Business Journal: http://sanjose.bizjournals.com/sanjose/stories/2009/07/13/daily47.html Schonfeld, E. (2009, April). Boom! Twitter more than doubles the unique visitors in March. Retrieved October 2009, from TechCrunch: http://www.techcrunch.com/2009/04/15/boom-twitter-more-than-doubles-unique- visitors-to-93-million-in-march/ Seib, G. F. (November, 2009). A simple idea to influence Iran. Retrieved November 2009, from Wall Street Journal: http://online.wsj.com/article/SB125928064444465721.html 11/30/2009 Kshitij Chaudhari P a g e | 27
  28. 28. A Business Plan for Twitter Site Profile of Twitter. (2009, November). Retrieved November 2009, from Compete.com: http://siteanalytics.compete.com/twitter.com/ Stone, B. (2009, November). Twitter Blog. Retrieved November 2009, from blog.twitter.com: http://blog.twitter.com/2009/11/whats-happening.html TechCrunch. (2009). Twitter company Profile. Retrieved October 2009, from CrunchBase: http://www.crunchbase.com/company/twitter Twitter 101. (2009). Retrieved November 2209, from Twitter: http://business.twitter.com/twitter101 Twitter Company Profile. (2009, November). Retrieved November 2009, from Linked In: http://www.linkedin.com/companies/96622/Twitter?trk=pp_icon&goback=.psr_*1_twitte r_*1_*1_*1_*1_*1_*1_*1_*1_Y_us_02903_*1_*1_*2_*2_*2_Y_Y_*1_Relevance Twitter Peek. (2009, November). Retrieved November 2009, from http://www.twitterpeek.com/ Wauters, R. (2009, November 14). Tumblr Shares Stats. Retrieved November 2009, from TechChrunch: http://www.techcrunch.com/2009/11/14/tumblr-shares-stats-20-million- uniques-420-million-impressions-per-month/ 11/30/2009 Kshitij Chaudhari P a g e | 28

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