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Twitter CEO Jack Dorsey Talks About Its Business Model

In Raiders of the Lost Ark, a character asks Indiana Jones what the plan is. "I don't know. I'm making this up as I go," Indy replies. Loosely paraphrased, that's how Twitter CEO Jack Dorsey answered when I asked him what the company's business plan is.

They don't charge for membership and they don't run ads. When are they going to start bringing in revenue?

"We really want to focus right now on just building the infrastructure. We're entirely focused on making a stable, utility-class system, and nothing can interrupt that right now," Dorsey said.

One possible revenue source is the large number of commercial users who've latched on to Twitter, he said. JetBlue users Twitter to communicate status reports and marketing. Zappos has several of its team on Twitter. Dell has several employees on Twitter as well, along with direct2dell for corporate information. And InformationWeek has two feeds for the publication and several of our editors are on Twitter, too. (Follow us.)

Another possible revenue source: The Twitter API, which allows developers to build applications that access Twitter, such as Twhirl and Twitterific.

I asked Dorsey if that meant that Twitter was considering charging commercial users for the service, or charging developers for access to the API. He said no, but Twitter considers those aspects of its service to be pointers toward features that people might be willing to pay for. The company is observing how people use Twitter, and looking for clues for revenue sources from there. "We build features that way, but you can also think about business models that way," Dorsey said.

Dorsey declined to comment on usage statistics. But TechCrunch ran some estimates in March: 1 million total users, 200,000 active users per week, and 3 million messages daily.

Dorsey also declined to comment on funding. GigaOm reported that Twitter received an additional $15 million venture funding last month, for a total of $20 million.

Twitter has 16 staff. "We're quite small for the size of the product. But we're working to scale the team up to match the demand," Dorsey said. Technology skills aren't enough for new hires -- they also have to match the culture of the company. "We have three principles we build the company on: Simplicity, constraint, and craftsmanship, and we're allowing those principles to guide whatever we do," he said.

I heard Twitter co-founder Evan Williams give a talk on the subject of constraints at the Web 2.0 Summit in October. He urged developers to build applications with fewer features and more constraints.

Twitter limits users to 140-character messages. The number of characters is a historical artifact of the service's founding; it was intended to be used mainly over mobile texting. But the 140-character limit has an ongoing benefit; it requires users to get right to the point and doesn't challenge them with a limitless canvas on which to write.

In the October address, Williams rattled off a litany of successful Web 2.0 applications that were founded with strict constraints: At first, only Harvard University students could join Facebook. YouTube is limited to 10-minute videos for non-paying users. Fotolog is a photo-sharing site where users can only post one image a day. And Google came out at a time when established search engines like Yahoo had crowded, cluttered home screens; Google had just a single input box, two buttons, and a logo.

Even a small amount of added complexity can create problems; Williams said that he suddenly found it more difficult to blog when Blogger, the platform he co-founded, added the ability for users to set headlines for their posts.

New hires need to agree with the philosophy of simplicity and constraint, Dorsey said. "And they need to take a craftsmanlike approach to their work. For all 16 people in the company, this is what we love. We love this product, we have our families on it, it's the main way we communicate, the craftsmanship in making this product has to be evident. It's a labor of love and we want to show it," he said.

We talked about Twitter's competition and potential competition:

FriendFeed is a service that lets users aggregate all their social networking activity in a single place. This includes Twitter, and also Flickr, YouTube blogs, interesting links -- it supports 35 services. Because it allows users to comment on other people's posts, and to post short messages, bloggers including WinExtra see FriendFeed as a potential competitor to Twitter.

But Dorsey said, "We see FriendFeed as another way to consume and update Twitter right now. We think they're doing a fantastic job over there. Personally, I'm not all that attracted to it because I like focused elements. But it depends on the person, and the beauty is that FriendFeed is another way to view the information."

Pownce is, like Twitter, a microblogging and discussion service; unlike Twitter, it permits much longer messages, and allows users to embed video, audio, and images. "They're very close, but they have a very different focus -- the way I see Pownce is more around the filesharing than anything else," Dorsey said.

Jaiku, which Google purchased, is extremely similar to Twitter -- a messaging network designed to run over SMS. "I'm not sure what Google is doing with them," Dorsey said. "I think the guys behind Jaiku are really smart guys, and they've created a beautiful interface, I really appreciate their Nokia N95 application especially. But I'm not sure where it's going."

Dorsey's not alone in that. Jaiku, along with Grand Central and Dodgeball, are companies that Google bought, and which disappeared inside Google and stopped making progress.

We also talked about measures Twitter is taking to improve its recent, horrendous uptime and upcoming service upgrades.

Do you have a follow-up question for Jack? Leave a comment below and I'll try to get an answer.

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