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Twitter's Strategy to Survive

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I originally created this presentation as part of applying for a job at Twitter. I then presented it at BarCampSD (San Diego) in November 2008.

Publié dans : Business, Technologie
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Twitter's Strategy to Survive

  1. 2. <ul><li>Twitter strategy </li></ul><ul><ul><li>Just a starting point </li></ul></ul><ul><ul><li>Case study for internet startup strategy </li></ul></ul><ul><li>Other interests </li></ul><ul><ul><li>How screwed is Detroit and the US auto industry? </li></ul></ul><ul><ul><li>What mobile platform or strategy will win? </li></ul></ul><ul><ul><li>When and how will renewable energy be sustainable? </li></ul></ul>
  2. 4. <ul><li>Considering the results of a quick strategic analysis, what should Twitter do today to emerge as the “winner” in microblogging two years from now? </li></ul><ul><li>WINNER </li></ul><ul><li>= </li></ul><ul><li>most users </li></ul><ul><li>and </li></ul><ul><li>greatest profits </li></ul>
  3. 5. <ul><li>Partner with Facebook for deep integration of enhanced Twitter application </li></ul><ul><li>Why? </li></ul><ul><ul><li>Mutually beneficial relationship </li></ul></ul><ul><ul><ul><li>For Twitter: Access to existing ad platform, access to Fb’s huge user base, raised awareness, and further viral Twitter adoption </li></ul></ul></ul><ul><ul><ul><li>For Facebook: Satisfy user needs for microblogging social network features </li></ul></ul></ul><ul><ul><li>Risk of inaction: </li></ul></ul><ul><ul><ul><li>FB is not likely to sit out on the microblogging party </li></ul></ul></ul><ul><ul><ul><li>It could roll its own Twitter clone by enhancing the Status Updates feature </li></ul></ul></ul><ul><ul><ul><li>If this offering successfully leverage Fb’s network effects, it could pre-empt Twitter’s adoption by mainstream FB users </li></ul></ul></ul><ul><li>How? </li></ul><ul><ul><li>Features such as </li></ul></ul><ul><ul><ul><li>Two-way updates (from Fb to Twitter and vice versa) </li></ul></ul></ul><ul><ul><ul><li>Commenting/@replies shared between Fb and Twitter </li></ul></ul></ul><ul><ul><ul><li>Twitter integration with Fb groups (e.g. using unique @groupnames) </li></ul></ul></ul><ul><ul><li>Fb shares ad revenues with Twitter based on the volume of Tweets viewed in status feeds on Fb.com </li></ul></ul>
  4. 6. <ul><li>Create Twitter Enterprise service for internal usage by companies for collaboration </li></ul><ul><li>Why? </li></ul><ul><ul><li>Prevent “Microsoft effect” from boosting other microblogging players (e.g. Yammer) </li></ul></ul><ul><ul><ul><li>Software used all day at work is convenient to use at home because I already know how (a la MS Office) </li></ul></ul></ul><ul><ul><li>Businesses will pay for value-added that consumers won’t, allowing Twitter to charge for the service </li></ul></ul><ul><li>How? </li></ul><ul><ul><li>Allow for employees to start using enterprise Twitter at their company – without approval of IT managers – and build proof-is-in-the-pudding case studies </li></ul></ul><ul><ul><li>Enable easy integration of enterprise Twitter with existing business systems </li></ul></ul><ul><ul><li>Partner with universities to study benefits of microblogging for business productivity, profitability, employee loyalty, etc </li></ul></ul>
  5. 7. <ul><li>Add group functionality to Twitter </li></ul><ul><li>Why? </li></ul><ul><ul><li>Enterprise Twitter will need groups, anyway </li></ul></ul><ul><ul><li>Some customers want the feature today and might turn to a competitor to find it </li></ul></ul><ul><ul><ul><li>Provides more benefit than cost (new/retained users vs lost/deterred users ) </li></ul></ul></ul><ul><ul><li>Groups will enhance the role of Twitter in organizing and sharing amongst informal social networks </li></ul></ul><ul><li>How? </li></ul><ul><ul><li>See Japan </li></ul></ul>
  6. 8. <ul><li>Reduce competitive risk by increasing brand recognition and loyalty </li></ul><ul><li>Why? </li></ul><ul><ul><li>Brand loyalty strengthens network effects and diminishes risk of substitution for competitors </li></ul></ul><ul><ul><li>It will be much easier to keep an existing customer with Twitter than to convince someone to switch from another network they’re already using </li></ul></ul><ul><li>How? </li></ul><ul><ul><li>Work with media companies to promote the use of Twitter </li></ul></ul><ul><ul><ul><li>E.g. CNN, CurrentTV on television </li></ul></ul></ul><ul><ul><li>This use of Twitter by business is already occurring organically – let’s make it even stronger by actively supporting it </li></ul></ul>
  7. 9. <ul><li>The following slides contain </li></ul><ul><ul><li>Notes </li></ul></ul><ul><ul><li>Basic strategic analysis </li></ul></ul><ul><ul><ul><li>5 Forces Analysis </li></ul></ul></ul><ul><ul><ul><li>Scenario planning </li></ul></ul></ul>
  8. 10. <ul><li>Commercial accounts </li></ul><ul><ul><li>Premium services for businesses using Twitter to communicate with customers </li></ul></ul><ul><ul><li>Provide analysis and tracking services to provide business information </li></ul></ul><ul><li>Freemium </li></ul><ul><ul><li>Free base level service, paid premium service </li></ul></ul><ul><li>Premium API and branded clients </li></ul><ul><ul><li>Pay for access to API over certain volume of requests or for commercial purposes </li></ul></ul><ul><ul><li>Twitter-branded clients on “closed” platforms like most mobile phones </li></ul></ul><ul><ul><ul><li>Share fee or subscription revenue with mobile provider </li></ul></ul></ul><ul><li>Advertising </li></ul><ul><ul><li>Intermittent in-line tweet-ads in timeline or to SMS </li></ul></ul><ul><li>Enterprise version </li></ul><ul><ul><li>Corporate Twitter with admin controls and pay-per-user fees </li></ul></ul><ul><ul><li>Archiving, permissions, security, confidentiality, integration </li></ul></ul><ul><li>Partner with (or sell to) Facebook </li></ul><ul><ul><li>Integrate Twitter with News Feed </li></ul></ul><ul><ul><li>Share revenues from News Feed advertising </li></ul></ul><ul><li>Others? </li></ul>
  9. 11. <ul><li>Why is scenario planning a valuable tool for strategy planning at Twitter? </li></ul><ul><li>Uncertainty is high relative to executives’ ability to predict the future of the business </li></ul><ul><li>There are diverse, merit-worthy opinions regarding future strategy </li></ul><ul><li>The industry is incurring change at a significant rate </li></ul>
  10. 12. <ul><li>Scope </li></ul><ul><ul><li>Product and market: Twitter and the microblogging market </li></ul></ul><ul><ul><li>Timeframe: next two years </li></ul></ul><ul><li>Stakeholders </li></ul><ul><ul><li>Twitter, customers, suppliers, distributors, competitors </li></ul></ul><ul><li>Trends </li></ul><ul><ul><li>Continued growth of mobile as customers’ platform-of-choice </li></ul></ul><ul><ul><li>Increasing use of microblogging by businesses to interact with customers </li></ul></ul><ul><ul><li>Facebook and MySpace continue to expand user base </li></ul></ul><ul><ul><li>Increasing efforts by businesses to deploy online collaboration tools to their employees </li></ul></ul><ul><ul><li>A vast majority of microblogging consumption continues to occur through third-party clients </li></ul></ul><ul><ul><li>What else? </li></ul></ul>
  11. 13. <ul><li>Key uncertainties </li></ul><ul><ul><li>Will existing social networks add microblogging features? </li></ul></ul><ul><ul><li>Will an open source/standard microblogging format emerge? </li></ul></ul><ul><ul><li>Will businesses embrace microblogging as an enterprise tool on a wide scale? </li></ul></ul><ul><ul><li>Is advertising an effective method for monetizing microblogging? </li></ul></ul><ul><ul><li>Will consumer customers pay for microblogging services? </li></ul></ul><ul><ul><li>What portion of the population will adopt microblogging actively? </li></ul></ul><ul><ul><li>How much will microblogging products change before they become mainstream and stable? </li></ul></ul><ul><ul><li>Others? </li></ul></ul>
  12. 14. <ul><li>Slap in the Facebook World </li></ul><ul><li>Facebook continues to build mass as the hub of social networking </li></ul><ul><li>X) Facebook transforms its Status Update feature into a Twitter replacement </li></ul><ul><ul><li>Twitter adoption is co-opted by Facebook’s entry into the market </li></ul></ul><ul><li>-OR- </li></ul><ul><li>Y) Twitter builds Fb app with newfound integration or Facebook acquires Twitter </li></ul>
  13. 15. <ul><li>Twitter in the Cloud Behind the Curtain </li></ul><ul><li>Revenue through paid access to premium API </li></ul><ul><li>Distributors (mashups and social networks) do the consumer monetization (like ads) </li></ul><ul><li>Twitter runs a B2B/B2C hybrid business model </li></ul><ul><li>Twitter is deployed extensively across networks and platforms via its API </li></ul><ul><li>Hundreds or thousands of Twitter mashups are created </li></ul><ul><li>Facebook/MySpace + Twitter integration via application platforms </li></ul><ul><li>Competitors will work to make microblogging open and cheaper/free </li></ul>
  14. 16. <ul><li>Microblogging the Microsoft Way </li></ul><ul><li>Corporate adoption of a given company’s microblogging tool drives consumer usage of that same product due to shared functionality and brand recognition (a la MS Office) </li></ul><ul><li>The microblogging system with the largest corporate user base wins the consumer game </li></ul>
  15. 17. <ul><li>Open Sesame </li></ul><ul><li>Open standards and open source software for microblogging grow to lead the market </li></ul><ul><ul><li>E.g. OpenMicroBlogging/Laconica </li></ul></ul><ul><li>Network with large user base adopts standard and runs servers </li></ul><ul><ul><li>Google, Yahoo, Facebook, MySpace, Microsoft </li></ul></ul><ul><li>Adopters cut out Twitter as the “middle man” and use microblogging to drive traffic to their existing properties </li></ul><ul><li>Microblogging is not a stand alone business </li></ul><ul><ul><li>See instant messaging </li></ul></ul>
  16. 18. <ul><li>Provides a systematic analysis of market structure and competition around a given market segment, company, or industry </li></ul><ul><li>Limitations </li></ul><ul><ul><li>Assumes relatively static market structure </li></ul></ul><ul><ul><li>Does not predict changes in dynamic markets </li></ul></ul><ul><ul><ul><li>Scenario planning is useful in preparing for unpredictable future situations </li></ul></ul></ul>
  17. 19. <ul><li>Barriers to entry and economies of scale are low due to low fixed costs </li></ul><ul><ul><li>Competitors can be built with relatively little investment </li></ul></ul><ul><ul><li>Most costs are variable (bandwith and storage) </li></ul></ul><ul><li>Substitutes </li></ul><ul><ul><li>Facebook status updates, group SMS, IM, blogs, mobile social networks (Loopt) </li></ul></ul><ul><li>Brand loyalty still building </li></ul><ul><ul><li>Building brand equity via mainstream media mentions such as CNN </li></ul></ul><ul><li>Little to no intellectual property required </li></ul><ul><li>Distribution over the Internet is open to any competitor </li></ul><ul><li>Twitter does carry some weight in distribution on platforms by way of being the market leader </li></ul><ul><ul><li>If only one microblogging tool is integrated, it will be Twitter </li></ul></ul><ul><li>Switching costs vary amongst users and between consumer and enterprise markets </li></ul><ul><ul><li>It remains to be seen how much customers value their archived Tweets compared to emails and blog posts </li></ul></ul><ul><li>Currently microblogging tools are free to consumers, so no product has a price advantage </li></ul><ul><li>The product is early in its lifecycle so it will be evolving rapidly in the near future </li></ul><ul><ul><li>This increases the likelihood that one company can leapfrog another </li></ul></ul><ul><li>Network effect is single greatest strength of Twitter </li></ul>
  18. 20. <ul><li>Increase minimum efficient/effective scale </li></ul><ul><ul><li>E.g. leverage network effects to increase hurdle for competitor newcomers </li></ul></ul><ul><li>Increase brand awareness to strengthen loyalty </li></ul><ul><ul><li>E.g. partnerships with major media companies </li></ul></ul><ul><li>Patent important innovations in infrastructure </li></ul><ul><li>Create alliances with linked products/services and suppliers/distributors </li></ul><ul><ul><li>E.g. partner with Facebook, mobile networks </li></ul></ul><ul><li>Increase switching costs for customers </li></ul><ul><ul><li>E.g. emphasize value of archived conversation </li></ul></ul><ul><li>Provide unique functionality not provided by substitute products </li></ul><ul><ul><li>E.g. searchability of and mashups with timeline </li></ul></ul>
  19. 21. <ul><li>Suppliers and distributors of Twitter are usually one and the same. A supplier to Twitter provides users for the service. A distributor spreads messages from Twitter to users. </li></ul><ul><li>Examples </li></ul><ul><ul><li>FriendFeed </li></ul></ul><ul><ul><li>Clients (Twhirl, TweetDeck, etc) </li></ul></ul><ul><ul><li>Facebook, if Twitter were integrated </li></ul></ul><ul><li>Facebook has bargaining power as they control a huge base of users interested in social networking </li></ul><ul><li>Facebook can integrate forward and build its own Twitter competitor (i.e. modify Status Updates) </li></ul><ul><ul><li>Low barrier to entry to do this today </li></ul></ul><ul><ul><li>Twitter’s user base is only a fraction of Facebook’s </li></ul></ul>
  20. 22. <ul><li>Acquire the supplier/distributor </li></ul><ul><li>Increase the supplier/distributor’s dependence on Twitter </li></ul><ul><ul><li>Then start charging them </li></ul></ul><ul><li>Form exclusive partnerships with supplier/distributors </li></ul>
  21. 23. <ul><li>Switching to an alternative product is relatively simple and does not induce high costs (for consumers) </li></ul><ul><li>Consumer customers are price-sensitive because the service is not essential for doing business (aka life) </li></ul><ul><li>Business customers are price-sensitive because microblogging: </li></ul><ul><ul><li>Has not yet proven to increase profitability </li></ul></ul><ul><ul><li>Is not yet of great strategic importance </li></ul></ul><ul><li>Twitter is the only choice for customers who want immediate access to a large network of other users </li></ul>
  22. 24. <ul><li>Partner with competitors or suppliers/distributors </li></ul><ul><ul><li>E.g. distribution through mobile company like Verizon Get-It-Now </li></ul></ul><ul><ul><li>Reduces customer choices available </li></ul></ul><ul><li>Increase loyalty of customers </li></ul><ul><li>Increase incentives and value-added for customers </li></ul><ul><ul><li>i.e. make the product more useful </li></ul></ul>
  23. 25. <ul><li>Current microblogging platforms are not highly differentiated by capabilities </li></ul><ul><ul><li>However, Twitter has the largest base of API partners with clients, analysis tools, etc </li></ul></ul>
  24. 26. <ul><li>Acquire competitors </li></ul><ul><ul><li>Not likely </li></ul></ul><ul><li>Differentiate with unique features </li></ul><ul><ul><li>Does any firm have a competitive advantage in developing new features? </li></ul></ul><ul><li>Differentiate by continuing to grow user network and lead by network effect </li></ul>
  25. 27. <ul><li>Built-in short-link creation and analysis </li></ul><ul><ul><li>Shortened Twitter URL automatically created the first time a given full URL is Twittered </li></ul></ul><ul><ul><ul><li>Afterwards, the same shortened link is used for the same full URL </li></ul></ul></ul><ul><ul><ul><li>Allows for simple analysis of linking trends </li></ul></ul></ul><ul><ul><ul><li>Could create Digg-like popularity ranking </li></ul></ul></ul><ul><ul><li>Short link sent to mobile but normal URL displayed on web/desktop </li></ul></ul>