Monthly Archive for November, 2009

Is Twitter giving stock options to celebrities?

I’ve just watched Dick Costolo, COO at Twitter, at the Real-Time CrunchUp (on Nov 20th 2009). twitter-logo-smallMichael Arrington‘s excellent cross-examination skills and subtle pokes make it a thoroughly enjoyable interview (if not comedic) and in the process reveal some interesting challenges facing the Twitter team. The key one internally is about on-boarding, which makes me wonder: why are they incentivising celebrities and how are they doing it?

Let’s take step back first and break this down.

“On-boarding” is a Twitter management term, which is to convert a new user that signs up onto the service into a persistent and return user. With all the hype by the Ashton Kutcher/CNN race and the subsequent Oprahfication of Twitter, we’ve seen this little startup transform from an early adopter tool into a mass culture icon. The key to the transition, was the sudden onslaught of celebrities using it. And if you closely examine the Twitter documents, it’s clear there is a very strong relationship with celebrities and the management team.

Why do people start using Twitter?
I first used Twitter on April 15th 2007, which was about 4-6 weeks after I started meeting people in the tech industry. And then six weeks later, I gave it another ago and made a remark implying I didn’t get it. I subsequently starting using it because at a meetup in May 2007, Mick Liubinskas and Marty Wells both urged me to get on Twitter as everyone in tech was on it. I essentially forced myself because two people I highly respected in the industry and who held the most status, told me it was crucial for working in tech.

So that’s why I started using it. But what about my sister? She doesn’t get it. Neither does my brother. Both don’t use it. I look at my friends who have signed up and their girlfriends, and the people they follow are all celebrities. They Tweet status updates and don’t really engage in discussions which is where the real value of Twitter is. Facebook’s a much better environment to post your status with friends, which means watching the flow of Tweets is the only reason why non-techies would use it initially.

Twitter magazine
So it’s quite logical to assume the sole reason they are using it is to “stalk” these celebrities. This may be anecdotal evidence, but it surely makes sense: celebrities are key to the growth of Twitter.

Why are celebrities using Twitter?
I can understand it from a broader trend in society where many-to-many communication is how our world is evolving into. I can understand why brands are using it – what started as a defensive PR strategy is now evolving to this broader trend of personal relationships with customers ala Project VRM. But celebrities – really? Do they really want more attention?

Aren’t celebrities battling the paparazzi to give them some privacy in their lives? Of all the people who benefit from the trend that is lifestreaming, what do established celebrities have to gain from it? When Kutcher did his one million follower stunt, my Luddite sister claimed it was simply a way for him to re-emerge in the world (as pop culture she gets). But I don’t buy that – as that only explains Kutcher – something else is happening. And that something has to be a financial incentive, because giving up privacy is not something celebrities do.

So Twitter, who exactly has stock or options in your company? I know the answer to how you made yourself mainstream, but what did it cost you to get there?

Capitalism, I protest thee

I’m well schooled in the world of business, both from an undergraduate and postgraduate point of view. I’m no professor, but I’m a thinker. And having worked for some of the biggest companies in the world whilst at PwC, I’ve developed an insight into how the world works. And to put it bluntly, I think capitalism sucks. The problem though, is that I can’t think of a better system to replace it, so as I grapple to understand how we can improve it, I’m forced to participate in this game that I think is not having society achieve its optimum.

However, every now and then, I come across interesting books, articles, and have discussions that make me go “yes!”. Most recently this happened the other day, when I read insight by someone I least expected to, on a thing I’ve been thinking for years and am glad its been articulated so succinctly.

Jack Dorsey, the programmer who created Twitter – a business criticised for its lack of a revenue model but which is also disrupting the world of communications – was recently quizzed on stage, having to say words in free-association relating to a concept.

To quote the Wall Street Journal:

What about monetization? He laughed, then said, “I think of our users”, clearly avoiding more obvious Twitter territory. “I think of how people are using it, and how, based on that usage, we can build something that will sustain the company.”

Mr. Dorsey kept free-associating. “How does the network itself generate value? And what can you put on top of that to extend the network and make it an even better network”, he added. “monetization to me is just a way to sustain, and that’s the first thing I think of.”

Money, you see is just a way to sustain something. It shouldn’t be the end-goal of business, and it’s that point that fundamentally irritates me about capitalism. That being the whole focus on it being about returns on capital – not returns on humanity.

Twitter’s other co-founder and the current CEO clearly drinks the same water. As Evan Williams said several months ago:
Twitter / Evan Williams: There are basically two types of businesspeople: Those who see money as the ends and those who see money as the means

The entire premise of economics is to study how peoples needs and wants can be catered for, in the context of scarcity in resources. The implication of this, is that by satisfying our wants and needs, we are happy and by happy we have better living standards. Economics is meant to be about increasing our living standards. Yet we are so caught up on the measures that simplify our world as “earn more money, spend more, get rich and therefore you get happier”. We’ve let the economists bastardise our world in order to make their paper models work. And it’s created a consumerist society where value is placed on material goods, which may boost GDP but not necessarily happiness.

My friend and former colleague Charlie Perry, a Chartered Accountant and philosophy major at university, thinks the same thing. He recently proposed abandoning profit as a measure going forward and wrote a manifesto that had me say “yes!”. I introduced him to a book that after years of thinking about these issues, was finally articulated in a brilliant book by Clive Hamilton called “Growth Fetish“. And he now blogs regularly, with his evolving thoughts. As he says in his new about page (version 2):

I’m interested in mutualism. I think it’s the fabled third way.

In September 2009 I thought I’d invented mutualism and wrote down all my thoughts here.

Subsequently I’ve found that there is a long history of thinking around mutualism.

I think the time’s come to champion this economic theory as an alternative to the pointless to-and-fro of left-right politics. It’s time to end the sham of the liberal capitalist democracy. There’s a better way, a happier way.

We don’t need to capitalise or socialise; we need to mutualise. Let’s work together.

Don’t get me wrong – winning at the game of capitalism is awesome – making money out of air is great for the minority that have done it. But it’s an uneven distribution of the world’s wealth and it distorts the operation of our society. The Global Financial Crisis just proved this system is a joke, though I don’t think anyone has the answers. But I’m not giving up on this – I want more “yes!” moments to the point where we can evolve our society to its potential. What I do know is that it’s a mistake to make it the main way to measure our society.

I’m not advocating we abolish capitalism: far from it actually. It has some very useful concepts that can be incorporated into a new model. But just like trade unionism, too much can be a bad thing for a society (as can too little as well). While I still have issue with the way companies measure progress, I think that’s a harder problem to fix. But where we can start, is by getting our governments to change the way they view society. Wealth is currently defined by the amount people spend every year. We’ve used that for a few centuries now, and although it was a good attempt, it’s not right. There is more to wealth than proving we have capacity to acquired goods and services. And in this 21st century, things have changed too much to frame the world in a lens that was created hundreds of years ago.

So if that’s not the right answer, what is? Well let’s work backwards and think deeper about this. Let’s start with the assumption that we want everyone to be happy within themselves, not rich in material goods where we assume that is what generates happiness. If we do that, then we will have made one giant leap forward.