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  • Twitter Friday: Twitter is Worth a Billion and Your Site is NOT

    Many people still doubt that Twitter has value or that it will ever make money. A year ago the same people cried about Facebook growing but not being profitable. Btw, Google hasn’t been profitable from the start as well. Adwords and Adsense were introduced years after the search engine started. Now Google is the most powerful corporation on the Web, Facebook just turned profitable earlier than expected despite the recession and Twitter just has been valued at 1 billion dollars.

    Some pundits even argue that Twitter should be valued at $2.7 billion or even 5 – 10 billion dollars. Your site is NOT worth one billion or more. Why I’m telling you this? Of course it doesn’t happen that often so it’s no wonder but there is another reason why your site is not worth a million at least: You focus on profits. That sounds like an oxymoron but it isn’t.

    Google, Facebook and Twitter did not focus on profits but they succeeded.

    Focusing on profits first, especially on the Web, lowers the value of your site for users. “Focus on value first and reap the profits later” is the functioning business model nowadays.

    Google offered the best search engine, Facebook a place to meet friends you couldn’t meet in real life or you didn’t have before and Twitter, well Twitter has several uses that make sense. For us it’s mainly about disseminating information quickly and widely.

    Now most of us won’t get venture capital, only a few lucky ones will. So you could argue that it does not make sense to replicate the business model of Google, Facebook or Twitter. It does though. Everybody can do it, even without venture capital. Offer something of value for free first to get enough people to know you and then start selling.

    • You can do it with a blog.
    • You can do it giving away free ebooks or webinars.
    • You can do it offering software, Firefox add ons, WordPress plugins or iPhone apps.

    When your community reaches critical mass you’ll be able to make money. I am not talking about the Freemium model here. It’s fine as well but the Twitter model is “get the clients first and think afterwards what you can sell them”.

    So make sure your site is worth 1k, 10k, 100k or 1 million dollars, pounds or euros before trying to sell something of questionable value to an audience that does not yet exist.

    I help people with blogs, social media & search. I help you succeed on the Web. I've been online publishing for 15 years. I started back in 1997.

    4 Responses to “Twitter Friday: Twitter is Worth a Billion and Your Site is NOT”

    1. Oscar Del Santo says:

      Tad, your great post should make compulsory reading for Marketing Managers everywhere.

      It is only when companies understand that they should focus on creating and adding value first and thinking about profit later than they will be able to maximize their online presence and truly benefit from the social media and the Web 2.0

      In the end, Jesus got it right: it is all about giving first in order to receive.

      Thank you for this terrific post.

    2. James Gurd says:

      Hi Tad,
      I really like this post. The emphasis on value leading to profit is refreshing. Alas many website owners focus on profit and make decisions that lead to poor customer service, then the growth doesn’t come and you wind up in a vicious circle of “we’re not investing until we see growth but we can’t grow unless we invest”.
      However, in an economic downturn with huge commercial pressure, how many website owners are willing/able to put their neck on the block and put value ahead of profit?

    3. Tad Chef says:

      Thanks for the appreciation Oscar. Indeed I should write something about Jesus. I’m not very religious but the bible is full of wisdom.

      James: You’re right. It’s difficult to reconcile the current economic downturn with investing time, effort and money first and waiting for returns later.
      Consider the alternatives though, what many businesses practice: Cutting staff, letting go of buildings, furniture, computers. Capitalism is a highly foreseeable system. After every downturn there is another boom, the businesses that don’t fail have even a better position afterwards (less competition etc.) but losing your assets (people and infrastructure) effectively cripples your business. I’d rather let people work half a day for a while then having to find new employees you can rely later. Most businesses are very short sighted. Working like Twitter does wise long term planning.

    4. Matt Dunlap says:

      A little off topic, but I want to throw my 2 cents in on Twitter. The problem with the valuation on Twitter is that there are other new “Real Time” protocals coming on fast. PubSubHubBub and RSSCloud both make any RSS feed real time. No more limits on characters and you can send anything in your feed.

      I know that Twitter has the critical mass, but their numbers are hugely inflated due to spammers, bots, and non-users that made an account then never used it.

      As far as focusing on profits, I would have to disagree that Google, Facebook and Twitter do not focus on profits… Hell Yeah they did, whether they want to reach mass then turn profitable or go for profits right away, their plans have always included a way to make money.

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