There has been a lot of discussion about who Twitter should sell to and why, but according to Twitter investor Fred Wilson, the company may never end up on the block. He says that the reason Twitter said no to $500 million from Facebook last year is the same reason that the company has not found another buyer. The company may simply be better off going it alone. 

Speaking at the CM Summit in New York on Monday, venture capitalist Wilson said that Twitter CEO Evan Williams made a few key points to convince his coworkers that they didn't want the Facebook money last year.

In a memo to coworkers and investors, Williams laid out the key reasons a company should sell:

If the management team is tired and doesn’t have it in them to take it to the next level, if the offer is a life changing financial event for the management team, or if the company foresees a huge problem that it can’t solve on his own.

Wilson noted that a company like YouTube needed to sell to help figure out how to monetize its incredible popularity, but Twitter is not in the same situation. It wasn't when Facebook tried to buy the company, and it isn't now.

Wilson sees multiple ways that Twitter can monetize, but if the company sells, they risk getting sucked into something that will take away their effectiveness as a key thing that people go online to do.

He says that there are companies that manage certain functions online very well. Google handles search, Amazon covers purchases, Ebay is the place people go to put something up for sale. Twitter could easily take over the "tell the world what you’re thinking" funciton.

Wilson says that the Twitter shortcode (40404) is the most used shortcode in the country, and that the microblogging company's short message input function is so effective right now that there are 11,000 services built on top of that and growing. He says that “social media is going to be bigger than Google,” and Twitter needs to protect its position in that space:

"Google has gotten to be in its position by creating a new circulatory system for the web, and we’re coming together to create a new format that’s more powerful than that."

"Twitter has plenty of opportunity to create a sustainable business," says Wilson. The Twitter investor says that some enormous sum of money might change all that, but at the company, there is "a real bias that we should try to make Twitter independent for the long haul."

According to Wilson, Twitter's biggest strength is not its search functionality, but the "passed links phenomenon." The weakness that he perceives in Facebook — and perhaps why the company was so eager to include Twitter functionality last year — is that your network on Facebook is limited to people you actually know in real life. Says Wilson: “There are a lot of people out there who are not ‘friends’ who are really powerful recommenders."

And for Twitter, staying independent could be a huge boon: "If you don’t want to be a platform, I don’t know what you should be aspiring to be."

Federated Media chairman John Battelle, moderating the discussion for CM Summit, suggested another reason that Twitter might not want to sell: “when you sell [a company], it loses some part of its essence.” Wilson agreed.

Image: Amit Bhawani

Meghan Keane

Published 1 June, 2009 by Meghan Keane

Based in New York, Meghan Keane is US Editor of Econsultancy. You can follow her on Twitter: @keanesian.

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Comments (1)

Andrew Steel

Andrew Steel, Strategic Marketing Planner at Equator

I think Google Wave poses a pretty clear threat to Twitter and it's ability to maintain popularity and independence. It is capable of pretty much the same things, and more into the bargain.

The fact that it has the big G behind it, coupled with the aspirations they have outlined for the app, and it's bound to be.

about 9 years ago

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