Twitter Doesn’t Make Any Money - So Will It Survive The Recession?

Having recently given a talk on the demise of the dot.com era and the current economic situation, a question arose: “Can a company with no product, no money, and no purpose survive the recession?” In this case, the person was asking about Twitter, but the same question was asked about many dot.com companies in the late 90’s, and the answer is, “No, it will not survive.”

If you don’t know about Twitter.com, it is a social networking site that falls somewhere between a blog and a text message. Its messages are called “tweets” and they are short (140 characters or less) updates of what someone is doing at a particular time. For instance, if you click on “John McCain”, his latest tweet of six hours ago says that he “will speak on the floor momentarily.” Prior to that, he tells us to “Turn on CBS Evening News for my interview with Katie Couric.”

My friend Andrea’s tweet, on the other hand says that she is “enjoying a triple grande non-fat with whip mocha”. As you can see, the uses of tweets are many. Some important, some not so much. Jeff’s latest tweet is that he is “going home for the weekend”. I’m sure that everyone needed to know that!

So, how can a company that sends mass text messages about nonsense survive an economic downturn where unemployment is almost at 10% and hundreds of thousands of people are getting laid off each month? How can a company such as Twitter even justify occupying an office?

The answer is, of course, that it can’t. If you look back at the pre-dot.com bubble, there were plenty of “Twitter’s”. Companies that had little purpose, too many high-paid employees, no real product, and big initial public offering died. Yes, some people made off with a lot of money, but most people – the investors – lost it all. The small investors, people who couldn’t get a piece of the IPO pie were the ones who lost everything – the insiders made off with the money and dumped the non-existent product.

Twitter may survive in the sense that it will be bought out by a larger company – AOL, Myspace, Yahoo, Google – and be incorporated into another product. But, the long-term hopes of the viability of such a completely silly, useless product are dire. Would you invest your hard-earned money in a company that sends “tweets” about what people are drinking or eating or thinking? I wouldn’t!