Twitter Launches Another Business It Doesn’t Make Money From: Trading Site StockTwits Raises $800,000
by Peter Kafka
Posted on December 17, 2008 at 9:44 AM PT
Twitter’s executives and investors tend to roll their eyes when people ask them when they’re going to start, you know, generating revenue. Maybe that’s because there’s a really obvious answer: Start collecting money from the many companies that are using Twitter’s infrastructure and service to create their own businesses.
Newest example: StockTwits, a Twitter-based bulletin board/chat room for individual investors. The company has raised more than $800,000 from a big group of angels that includes Roger Ehrenberg and Howard Lindzon (disclosure: Ehrenberg and Lindzon invested in my previous employer). Ehrenberg has provided a long list of investors at his blog; other notable names include Betaworks, the New York-based start-up investment company, and Todd Stottlemyre, the former Toronto Blue Jays pitcher turned investor and Twitterer.
The idea is fairly simple: Users toss off quick thoughts about trades, companies, markets, etc., using “$” or “$$” signs to identify their messages as StockTwits. The site compiles and sorts them, and will eventually start ranking users based on their following, track record, etc. The service is free, but will try to upsell users with premium products like research, etc.
You could do all this without Twitter, if you wanted to. But the service is perfect for the rapid-fire bursts of text/thought that a certain breed of investor treasures. And, of course, Twitter does all the heavy lifting for free, so why not build a business off its back?
Twitter isn’t the only Web 2.0 business to let other people build services based on its API, of course. It’s standard practice for everyone from Google (GOOG) to Facebook. But usually those businesses benefit because users end up more closely tied to their core businesses, which… is a business of some sort. Since Twitter has yet to actually generate any business, it’s just a giveaway.
That could change sooner than later: Twitter is hiring a “Business Product Manager” who is supposed to “lead the definition and execution of the products and features that will lead to monetization of the Twitter platform.” Perhaps step one will be a phone call to StockTwits and the other members of the Twitter ecosystem.
Comments
Conventional wisdom suggests that charging for API access is a non-starter.
But a multi-tier pricing model for differing degrees of access or usage may indeed be the most logical business model for Twitter, Facebook and a handful of other web services that support a wide variety of commercial activity.
Blowhards will complain about the definition of commercial activity being a slippery grey slope. The wise businessman will simply editorialize at the margin.
Posted by Jonathan Marcus at December 18th, 2008 at 8:13 pm