All A-Twitter
An award-winning Ivey case explores a range of issues around Internet-based startups
The founders of Twitter, the phenomenally successful micro-blogging application, struggled to find a name for their new service when it launched in 2006. Wanting to capture the idea of buzzing a friend’s cell phone each time a message was sent, they considered the name “Twitch,” but decided it didn’t have the right feel. Co-founder Jack Dorsey describes what happened next:
“So we looked in the dictionary for words around it, and we came across the word ‘twitter’, and it was just perfect. The definition was ‘a short burst of inconsequential information,’ and ‘chirps from birds’. And that’s exactly what the product was,” he says.
From small beginnings, Twitter has grown to nearly 200 million users and a valuation of more than $8 billion. The application has been credited with helping elect Barack Obama and fuel the uprisings of the Arab Spring.
Interestingly, the company still hasn’t made any profit. That’s the puzzle at the heart of one of Ivey’s most popular cases, “The Entrepreneurs at Twitter: Building a brand, a social tool, or a tech powerhouse.” Written by Professor Simon Parker, Director of the Entrepreneurship Cross-Enterprise Centre, and case writer Ken Marks, it was one of Ivey Publishing’s top sellers in 2010-2011.
“Twitter is a much-discussed company, a media darling,” says Parker. “It’s also something of an enigma from a traditional business standpoint. It has concentrated purely on building up its user base, and for a long time seemed to set its face against any type of monetization.”
It’s a similar model to those that launched media giants Amazon, Facebook and Google. Parker decided it would make a fascinating issue for class discussion.
Marks and Parker approached Twitter about working with the company on the case, but received no response. Instead, the case is based on research in public sources. Parker says it raises a number of key issues for both students and entrepreneurs.
He begins by asking his students whether Twitter is just a bright idea, or a real business opportunity with the potential to generate revenue and profit. He also asks them to consider the record of the founders, who had created other innovative Internet-based products but never actually built a business around them. He says future entrepreneurs need to recognize the difference between a “serial inventor” and a “serial entrepreneur.” It’s also important to think about what it takes to sell a startup, close it down, or stay with it and grow it, and why they might choose one option or another.
Parker also asks his students to think about the benefits and challenges for companies looking to use Twitter internally or externally. Many organizations (including the Institute for Entrepreneurship, see sidebar) are exploring the potential of Twitter to better understand their consumers, market their products or foster collaboration among employees.
The third issue Parker raises relates to marketing. Companies like Twitter generally depend on so-called “evangelism marketing” – word-of-mouth recommendations that go viral online. But is that enough or will a new marketing strategy be needed when the company begins to offer paid services?
Finally, of course, there is the central question of whether Twitter can earn profits, and if so, how? Parker encourages his students to be creative and collaborative as they develop options for the company.
The Entrepreneurs at Twitter case illustrates a wide range of entrepreneurial issues, from serial entrepreneurship and opportunity recognition, to monetization, marketing, and information systems. In addition to earning revenue for the School, Parker says cases like this one build Ivey’s profile and brand. They also help faculty members understand the inner workings of businesses.
What makes the case so successful? Perhaps it’s partly the fact that it is still unfolding. Parker says it’s likely that Twitter is currently focusing on monetization and will soon introduce new products. He continues to update the case regularly as information emerges.
“It’s all moving very quickly,” he says. “This is definitely a case you can take your eyes off.”