Pretzel Logic – Social and Collaborative Business

Lots of strong reaction to Union Square Venture Partner Fred Wilsons comments about Twitter (his portfolio company) today.

On the issue of third party applications that leverage Twitters API, Fred commented that a lot of the apps today are filling holes in twitter instead of building substantive businesses.

Much of the early work on the Twitter Platform has been filling holes in the Twitter product. It is the kind of work General Computer was doing in Cambridge in the early 80s. Some of the most popular third party services on Twitter are like that. Mobile clients come to mind. Photo sharing services come to mind. URL shorteners come to mind. Search comes to mind. Twitter really should have had all of that when it launched or it should have built those services right into the Twitter experience.

The media jumped on it. In a post titled “Holy Cow Did Twitter’s Top Investor Drop A Bombshell On Twitter App-Makers Today”, Nicholas Carlson lays out some strong reaction from the Twitter App community.

But we talked to sources at a few Twitter apps, and one of them told us Fred’s message is loud and clear. This source heard, "[Twitter is] going to do mobile apps and URLs. [Twitter is] way playing down the role of other apps. [Twitter] desperately need somebody to do vertical/gaming stuff, since that’s what we aren’t going to do ourselves. Bit.ly (as a URL shortener), TwitPic (as a photo uploader) and Tweetie (as an iPhone app) are now considered ‘core’ to the platform. They will either be bought or competed with."

First, Twitter is infrastructure. And true to that mission, it supports the building of applications and services that sit above it. Over time, applications and services start to get commoditized and adopted widely across the ecosystem. At that point, features offered by these apps are considered infrastructure and as history has proven, get pulled into the core of the application. Phone companies provided phone lines and tele marketing businesses built a value add service on top of that. Similarly, utility companies provided juice that allowed us to go from analog to digital with many of our appliances. If you agree that Twitter is infrastructure, the same thing is happening here. Over time the economics change. AT&T now offers business services that sit on top of its phone lines. That’s natural evolution as the service gets commoditized and there’s wide appeal. The market expects it to come as part of the base package and the stability and assurances that come with such a move. And the same thing is happening here.

Second (and this did not come up in Fred’s comments), Twitters success to-date largely mirrors traditional media – its broadcast for a majority of the users. Not conversations or other kinds of synchronous activity that those of us in the early adopter community have embraced. Don’t know about you but I’ve lost count of the number of mainstream users that fully realize the value and promise of Twitter only after they use a third party client such as HootSuite or Tweetdeck. So unless your only interested in following celebrity tweets, engaging with users or discovering new users via Twitters native interface is nothing short of awful.

Twitter needs to fix that as its price of entry stuff. And so coming out with its own spiffy client is imperative. And there’s similar arguments to be made for URL shortners and mobile clients – both critical to engage in a 140 character constrained world. And critical to Twitter if its to be able to successfully haul the water in the long run.

So it may come of as a harsh warning, but it’s natural evolution.

UPDATE: And just two days after posting this, Twitter announces the purchase of Tweetie, a Twitter client built for the iPhone and the Mac. Marshall Kirkpatrick at ReadWriteWeb has some good analysis on this breaking story.