Twitter’s (TWTR:NYSE) stock price took the fast route into overpriced territory yesterday, but that’s not the important story. There was a time when responsible investors would ask, “What do they make? What do they do?”
They sell very, very teeny-tiny advertising spaces, is an accurate answer, but doesn’t explain Twitter’s multi-billion dollar valuation.
While the run to $50 a share is fueled partly by the now-familiar bubble thinking that “if everyone else says it’s worth this much, it must be,” that doesn’t make Twitter the new Pets.com. Perhaps it represents something more: an attempt to put a price on an idea, an idea so dangerous governments fear it and ban it, an idea so vital people risk jail to obtain it and spread it.
The idea? That we need not be alone, that together we are greater than the sum of the parts, that we can be an irresistible force for good. For fun, for inspiration, for collaboration, cooperation, even conspiracy to overthrow a dictator.
A new path to power
What began as a way to answer your friends’ what’s-ups is now a key to brand identity, celebrity, leadership and revolution in those three areas and others. Carl Icahn can tweet about Apple and affect its stock price. Anthony Weiner can tweet a picture of his junk and end his political career.
Justin Bieber alone reportedly uses 3% of Twitter’s server resources; he also just invested $1.1 million in startup ShotsOfMe, a potential Facebook rival. If he and his rivals for Twitter #1, Lady Gaga and Katy Perry, all decide to move their fans elsewhere, that’s nearly a fourth of Twitter’s user base. That’s how vulnerable Twitter might be.
By the same token, if all three tweet even subtle support for Hillary in 2016- and Perry’s open campaigning for Obama suggests she might–Chris Christie will lose the Twitter vote. And yes, there is a Twitter vote. How do you accurately price such power?
How do you value the idea of Twitter?
If Twitter (TWTR:NYSE) the publicly traded company fails, it will be because of a failure of the revenue model, not the underlying product. Because the underlying product is us, free to share our lives and thoughts, however boring or fascinating or awful or beautiful. That product is not a commodity and cannot be commoditized. It is an essential human experience, given a new pathway.
A failure of the Twitter stock will also reflect a failure of what I call old capitalism to measure what ought to be measured.
GDP is an example of this failure to quantify properly. If a country produces a lot of criminals, that usually costs society. An ounce of weed can put away someone for years, thanks to a misguided but profitable “war on drugs.” But we don’t count that cost in our debit column any more, because our prisons are so heavily privatized that prison corporation profits help boost our GDP.
We don’t count the loss of human talent, the cost to families, the cost of turning nonviolent offenders into angry career criminals. And needless to say, the largest publicly traded prison corporations are, as Motley Fool put it, “solidly profitable.”
So what do we measure to judge a company with no profits, a technology built largely out of open-source code and easily replaced by open-source alternatives? It exists because its users not only needed it, but largely created it. It was early Twitter users who created @username, #subject, and RT retweets, out of necessity. Necessity to do what? To talk to specific people (@), about specific things (#), and to share ideas worth sharing (RT).
Twitter wasn’t a case of “if you build it, they will come.” It was more like, lay a bare foundation, and they will come and build the rest for you and for themselves. It’s like the founders cleared a patch of a cornfield, and then people came and invented baseball and a way to broadcast the games worldwide.
How do we quantify such a force? You can tweet, “Tuna sandwich for lunch. #nomnomnom.” And you can tweet, “Held grandpa’s hand for the last time. #heartbrokenandgrateful.”
You can tweet anything. Anything.
During the Rwandan genocide of 1994, a group of pastors famously wrote a letter to their leader, Pastor Elizaphan Ntakirutimana, who was later convicted of aiding the soldiers who massacred them. The letter said simply, “We Wish to Inform You That Tomorrow We Will Be Killed With Our Families.” And the next day, they were. It was 71 characters. If they’d tweeted it, who knows who else, besides the murderous pastor, would have gotten the message?
President Clinton has apologized to Rwanda for his failure to stop the genocide, so much that now he is hugely popular there. If he had faced a social media onslaught like President Obama faces today about Syria, he might have acted. Twitter gives voice to the desperately voiceless.
The activists in the Arab Spring revolts used Twitter and Facebook not only to coordinate themselves, but to tell the world what was happening. In Syria, when journalists were banned, cell phone videos, uploaded and retweeted, were the main source of breaking news. After Hosni Mubarak was overthrown, one Egyptian famously named his new baby Facebook.
Twitter is not one technology, but a powerful idea
It’s important to remember, however, that technology was not what made the difference. Much of the Tahrir Square protest was coordinated by a little-heralded woman armed with about a dozen borrowed cell phones. People who need to come together will find a way, even in the face of tyranny. Twitter happens to be a good way, right now. A decade from now, will we still be tweeting?
Probably not. So if Twitter represents just the technology by which people tweet, it’s not a good long-term investment. It may be profitable for a few years thanks to advertising, but if the ads are more of a nuisance than a source of entertainment and value, people will switch to an open-source alternative, which will be just as good. It’s the risk iOS 7 faces from Android.
We started with a simple idea: share what you’re doing, 140 characters at a time. People took that idea and strengthened it by using @names to have public conversations, #hashtags to organize movements, and Retweets to spread news around the world. Twitter represents a service shaped by the people, for the people.
The mission we serve as Twitter, Inc. is to give everyone the power to create and share ideas and information instantly without barriers. Our business and revenue will always follow that mission in ways that improve–and do not detract from–a free and global conversation.
Whether or not this specific technology or even this specific company last, the ideas Twitter (and Facebook and Google and even MIT and Harvard’s open courses and Wikileaks) represent are a genie that can’t be put back into the bottle.
All the lonely people, where do they all belong?
We worry about privacy the same way previous generations worried about letting women vote, or desegregation, or globalization. Those things are here to stay. In the same way, the generation represented by the Twitter following of Justin and Katy and Lady Gaga (and even Barack Obama, the Arab nonviolent revolutionaries, and Pope Francis), accept and expect to share their lives to a degree that older people find weird and, for lack of a better phrase, OMG, TMI!
Geography means little now. You can study, flirt, and conspire on a Google Hangout. I coach my writing students via Skype. And when I’m lonely, I can send and receive tweets to and from anywhere except a few places. Those are places like North Korea and Yemen, whose leaders, like abusive husbands, don’t want their victims to know that a better life is possible. With cell phones now as cheap as $10, we shouldn’t bomb such places. We should flood them with cheap phones that tell people, you are not alone.
And that is the simple, elegant, and transformative business model of Twitter. The problem is loneliness. The demand is for a way not to have to suffer alone, or go through joys without sharing them. The supply? A simple way to share our life and thought and not be alone.
It is a demand that won’t go away. Loneliness has always been there, but now, we expect a solution. We expect life to come with a share button. Whether we’re announcing our marriage or breakup or vacation plans or calling for justice for a rape victim in a country like India that is unused to hearing such messages, sharing is the new normal. That is something we have already invested in as a society. It’s an investment we will hold onto lifelong. And it will pay huge dividends, long into the future.