Twitter Gets Bailout Money?Twitter Gets Bailout Money?
Twitter, the micro-blogging service that lets users send impromptu 140-character messages to their "followers," just received $35 million, even though it has never generated any appreciable revenue, let alone profits, and has no known plan to do either.
February 16, 2009
Twitter, the micro-blogging service that lets users send impromptu 140-character messages to their "followers," just received $35 million, even though it has never generated any appreciable revenue, let alone profits, and has no known plan to do either.It's an intriguing phenomenon when you think of it in the context of the most visible companies (like the big financial institutions and carmakers) that have recently received cash infusions, albeit from the government and not private equity firms.
Nobody has any idea how these companies are going to make any money, and the record of the past suggests there's no good reason to believe that any of them can come up with something. The banks can't tell a good loan from a stinky one. Detroit's cars are big, lumbering monsters in an era of small, fuel-efficient vehicles. Every other social media technology has either been ruined by advertising or other commercial exploitation, or simply lost its luster when users moved onto another fad. Yet the media portray the leadership of bailout companies as clueless dopes or, worse, conniving thieves. The Twitter founders, conversely, are energetic, visionary entrepreneurs, even if their greatest claim to fame (to date) is coming up with a way to give away something for free. The carmakers and banks aren't just perpetrators of failure, but at the same time they are partial victims of extenuating circumstances over which they have little control or understanding: union wages and pensions are to blame for making the U.S. auto industry uncompetitive, even as they build great vehicles; a global credit meltdown is the real culprit that made the banks and investment firms insolvent. Twitter is not only on top of the latest, coolest trends in the Universe, but it's busy coming up with better ones. You can see where I'm going with this, can't you? We've been conditioned to react to "technology" differently than we do to subjects that involve factories, products, and interaction with real people in the messy reality of, well, reality. We apply a different set of rules to technology brands. We have a different list of expectations. We cut technology brand names a lot more slack. Twitter has existed for three years, during which it has rejected every demonstrable tool for making money. This has earned it the confidence of private investors, to the tune of $35 million. GM, on the other hand, possesses 100 years of proven processes, distribution, and record of making zillions of dollars for a few generations of employees, suppliers, and dealers (not to mention satisfying zillions of customers). Yet it can't extract a dime out of public money out of the government without incurring lots of humiliation and pain. So what is it about the current technology promise -- whatever it may be, and whichever company might make it -- that qualifies the money it gets as anything other than a bailout by another name? Jonathan Salem Baskin writes the Dim Bulb blog and is the author of Branding Only Works On Cattle.
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