The TweetDeck acquisition hit the airwaves late yesterday, but has not yet been analyzed fully by the pros, so I figured there might an opening for discussion. On the face of it, TweetDeck, which raised less than $5m over the last two years getting an exit of $25-30, as reported by TechCrunch, is a big win - most likely a 3x return for the last investors in and good money for the founders. Ubermedia, Bill Gross's Twitter-app firm, has acquired TweetDeck, in what seems like an attempt to draw battle lines with Twitter itself, over who controls and can profit from the Twitter ecosystem. TweetDeck actually took the first step in that direction with the introduction of Deck.ly, which strongly encourages users to move beyond the 140 character limit and have their messages hosted independently of Twitter. To me there are three interesting areas to explore, namely what might Twitter have been thinking on this deal, what does this mean for Ubermedia, and what implications are there for the rest of the twitter community?
What is most interesting is how Twitter seems to have not cared about TweetDeck from the get-go, given that they likely had several opportunities to purchase them, and define their product trajectory. Since its introduction, TweetDeck has had several pivots - initially it aimed to the best Twitter app, then it started adding other social networks, primarily Facebook, LinkedIn, and Foursquare, then it added Deck.ly, in effect building its own independent social network. During that time, the product built a userbase of somewhere between 5-25m users (25m downloads, likely 5-10m actual users and 10% of those active).
The speculation here, mentioned by our friend Loic at Seesmic, is that Ubermedia, with Tweetdeck, originates up 20% of total Twitter volume - we'd need to assume at least 10% of Twitter volume is coming from Tweetdeck alone. That is a massive percentage and likely a sizable portion of the 'active Twitter community'. So it begs the question - with tons of cash on the books and a huge valuation (now north of $6Bn apparently), why didn't Twitter find it interesting enough to throw $25-30m at Tweetdeck, as a method of securing at least a segment of their most important, most active users?
I guess Twitter didn't see value in Tweetdeck and the network they've built, particularly in lieu of the success of the new Twitter.com and mobile apps. Alternatively, one could look at Twitter and see a more aggressive approach, particularly with app developers (as we saw on Friday with Twitter's closing of the free dev platform). It's possible that the Tweetdeck snub by Twitter is a powerplay between Twitter and the dev community, implying that the days of free API access and leverage of their protocol is coming to an abrupt end (e.g. if TweetDeck was going to die anyways, due to massive API fees, there was no reason to buy it at this point in time).
Needless to say, Twitter's silence on TweetDeck is deafening - particularly due to the acquisition by Ubermedia.
Bill Gross has built an interesting thesis around the Twitter sphere and believes that he's got a powerhouse in twitter apps, with Twitdroyd, UberTwitter, Echofon, and UberCurrent. With over 3m Twitter users, and some of the best mobile Twitter apps, Ubermedia is positioned as a major enabler of Twitter usage, but also majorly dependent. With the acquisition of Tweetdeck, Ubermedia picks up a much larger userbase, and the opportunity to siphon off users to 3rd party platforms, like Deck.ly, which are app-based and owned by Ubermedia. This threat provides Ubermedia with the chance to push Twitter around a bit, particularly in sharing the wealth on in-stream and in-app advertising.
At this point, Ubermedia has tremendous risk and opportunity in front of it, entirely based on how they dance with Twitter. While i personally find it hard to believe that Twitter is a big fan of Ubermedia properties, it is possible that they'll be embraced and maybe ultimately acquired by the behemoth. More likely however, this acquisition will be looked at as a declaration of war, the protocol (twitter) vs. the tools that users use - its almost as if a cell phone maker (apple) is waging war with the cell phone carrier (at&t) for the hearts and minds of the user.
I wonder how that will turn out and whether Ubermedia is smart enough to wage that war- if anything, Twitter has proven incredibly flexible to newcomers and innovation in the Twitterverse, although that has been slowly stopping recently.
The Twitterverse seems quite positive by another acquisition - bullish signs everywhere. Seems that firms like Seesmic, Hootsuite and others offering Twitter clients benefit from this acquisition, as they have all differentiated away from Twitter and built businesses in greenfields (think corporate) that Twitter doesn't seem to be concerned with. The outcome of this acquisition will likely mean more of the same, with maybe some additional support from Twitter in setting battle lines with Ubermedia. Wonder who might be the big winner there...
Others in the sphere have been reading the writing on the wall for some time, focusing on maximizing the push from their platforms to Twitter, as apposed to the other way around (think StockTwits, Facebook, LinkedIn, etc). This is true of all the photosharing sites/apps as well. I believe the communities who create the largest set of twitter messages (and limit their pulls from Twitter) will be in the best shape.
Folks like Klout who depend on the Twitter dataset to create a set of user influence stats, will likely need to further increase the value of 3rd party datasets outside Twitter, as well as the value of the aggregation of those stats over time.
Sites like Twittercounter / Ad.ly , that spit out Twitter API data in a different format or add adversarial ads on top of twitter, seem in trouble, but frankly they always have to me. There's just not enough value creation, and frankly, Twitter is getting there...
Firms like bit.ly and other stats oriented social media monitoring sites will likely benefit from this acquisition, as it opens the conversation for their own acquisition. Shorteners will always be needed in a 140 world, but why bit.ly or awe.sm or t.co will be the big winner is unclear. The same can be said for chartbeat and several other firms that build stats on top of twitter (why twitter didnt do this, i'll never understand). It will be interesting to see which of these firms get acquired over the next 6 months and which whither away...
We're not out of the woods yet, but i believe this is a landscape changing deal. Twitter, with its newfound business focus, might move to attack its dev community in specific areas or just embrace it - if they push too much on the former, they risk killing good will, but if they relax and follow the latter, they risk becoming a protocol with all viable businesses taken by its developer community...