Microsoft, by Reid Carr
When presented with the chance to comment on the hypothetical acquisition of Twitter by someone, I jumped at the opportunity to envision Twitter as part of Microsoft. I do believe Biz Stone when he blogged, "Our goal is to build a profitable, independent company, and we're just getting started." But, I can also see a lot of value to Microsoft if it was at least on the Twitter "team" in some way. So, with that, here is my vision:
Here's why this could happen and what it would mean to Microsoft:
- First, why not Google? Well, for one, Evan Williams left Google after selling Blogger to Google. A distant outsider's perspective says that maybe it didn't go so well. Furthermore, Twitter has hired some people from Google, such as Doug Bowman, former visual design lead at Google, and now the creative director at Twitter (formerly Biz Stone's role). I can't imagine Google likes that very much. Not to mention, Google, how are YouTube and Blogger going for you?
- Microsoft already owns a piece of Facebook, and Twitter thought enough of Facebook to have a few conversations regarding a possible acquisition. It didn't go through for whatever reason, but it just seems natural that those two companies should work together.
- Microsoft also has what appears to be a pretty solid ad deal with Digg, and, after all, where is one of the first places Twitter plans to focus on making money?
- Microsoft is getting aggressive in mobile search by finally inking a deal with Verizon to be the mobile search provider for its devices. Twitter and mobile is the web equivalent of peas and carrots.
- How easy would Twitter plug in to Live?
- Twitter for business: This is an obvious play where Microsoft has a distinct advantage over everyone else. Talk about organizational knowledge retention with Twitter integrated into Sharepoint. Want to diagnose a problem with a project? Pull up the Twitter feed.
- Atlas, aQuantive (now Microsoft Advertising), DrivePM -- a lot of things to rapidly plug in to Twitter should Twitter's creative powers approve.
I think there is only one way that this could work for Twitter's founders (who aren't in this for the money, I'd say), and for the consumer: Allow Twitter to operate independently to draw out the creativity yet to come, yet draw on the vast resources of Microsoft to craft powerful partnerships and agreements with a variety of entities. For Twitter to reach its potential, it must do so quickly as well as find a way to structure a wide variety of agreements. Small, independent boutiques want to develop for the platform, while large multinational corporations intend to leverage the data produced within the platform (with myriad companies in between). Both large and small media agencies will want to interact with Twitter to purchase ads. Each has its own special needs, which differ greatly from the publishers and news entities that may rely on Twitter for breaking news.
If there is one place where Microsoft knows how to make money by squeezing every last aspect of the ecosystem, it is in licensing and partnerships. Twitter would be served well by leveraging this ability.
The current users of the platform will have to get used to the money-making engine that surrounds their content. While the creative Twitter team will produce better features, it will have to make room for ads, data feeds, analytics, multi-device formatting, plug-ins, data streams, etc. Each piece of this will have dollar signs associated with it. At the end, however, it would have to maintain the integrity of its vision, sometimes doing battle with The Machine (Microsoft), to ensure that the consumer experience remains a positive one, and one that continues to attract the broad demographic that is currently hopping on board in greater and greater quantities each month.
I believe that the main obstacle to an acquisition is simply that there are so many courters with a land-grab mentality rather than true partners who embrace the vision. Twitter is entertaining the conversations, while at the same time trying to prove something to both itself and the speculating world, which is that it doesn't need any of them.
The fact is that something has to happen. Twitter has VCs who have invested in it, and VCs want their money returned in factors of 10. Twitter is a tough sell as an independent public entity even though there are so many ways that this company can make money. I believe an acquisition is probably its best bet for immortality.
If Microsoft were to get its hands on Twitter, it would be a very long-term investment in which Microsoft is uniquely positioned to realize a return. Fortunately, along with Google, its stock actually means something (compared to Facebook, whose valuations vary widely, thanks in part to Microsoft). So, with the vast majority in stock, I could see Microsoft handing over up to $2.5 billion to keep Google's hands off of Twitter, and to capitalize on a side of Twitter that few are capable of realizing. Granted, Microsoft can easily roll with a Plan B should the price get out of control, but I doubt it would fear the big numbers for a property like this (YouTube to Google for $1.65 billion -- all stock appears way overpriced in retrospect). I do believe, however, that this is too much for the kind of short-term results that Wall Street has come to expect, and Microsoft would be widely criticized for shelling out that kind of money -- but there is often value to winning.
Reid Carr is president of Red Door Interactive. You can follow him on Twitter at www.twitter.com/icowboy and www.twitter.com/reddoor.
