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Subscribe to Portfolio magazineWhen the earth shook in Los Angeles last week, the first reports didn't come from traditional media outlets, but from Twitter, the "micro-blogging" service where users can send short, instant status updates to their friends via e-mail and mobile phone. Ten minutes before the Associated Press reported news of the tremor, a Twitter user named Caroline (Vixy) posted a simple update: "Earthquake."
Blogs and news sites buzzed the next day about how Twitter had ushered in a new era of communication. Such proclamations would have most internet entrepreneurs seeing dollar signs. But not Biz Stone, who insists Twitter's mission is simply to provide a useful, robust service and let the dollars follow later.
"At this point, given that we have plenty of money in the bank, it makes a lot more sense not to distract ourselves with trying to put the finishing touches on a revenue plan," says the 34-year-old Stone, who founded Twitter with Jack Dorsey and Evan Williams in 2006.
Stone's hesitance to "monetize" Twitter echoes that of other major Web 2.0 companies, such as Facebook and YouTube, whose founders have said they'd build their audience first and find revenue streams later. But those giants have shown that converting eyeballs into money hasn't exactly been easy; Facebook has yet to start generating meaningful profit, and Google has said on a number of occasions that it has yet to find the right business model for monetizing YouTube's considerable traffic. Twitter, despite some plans Stone has up his sleeve, may very well find itself in the same position.
Today Twitter makes a negligible amount of revenue from users that send and receive messages as SMS texts, and overall loses an undisclosed amount of money.
But Twitter's user base has undeniably skyrocketed. The service has grown to more than 2 million per month, ten times more than April 2007, according to Compete.com. As of March 2008, 200,000 active Twitter users per week sent 3 million updates per day, according to numbers obtained by TechCrunch.
Indeed, the service's growth has caught the company by surprise, and outages are not uncommon. On the heels of all this growth, Twitter announced a new round of funding in June, raising a reported $20 million in financing from V.C.'s Spark Capital and Amazon founder Jeff Bezos at a $100 million valuation.
But Stone is unconcerned about Twitter's current lack of profits or even revenues, saying too much focus on these things would be "a distraction" for Twitter. For one thing, the company is improving its infrastructure so the service doesn't keep getting overloaded.
"Unless we have a reliable service that works the way we think it should," Stone says, focusing on revenue "is really putting the cart before the horse."
Longer term, Stone, who previously worked on startups Xanga, Blogger.com, and Odeo, sees the company as a new paradigm for how people will find out about and respond to news in the future, with potential revenues to match. But one idea that Stone is considering simply capitalizes on the user behavior his network has helped to establish: real-time news.
"For over the last 200 years, you've seen big companies grow off the concept of real-time updates," he says. "If you look at media companies like Thomson Reuters or Bloomberg, or the stock exchange, people and businesses are dependent on real-time news coming in as it happens. Twitter is similar, except it's much broader than just one kind of news, like stock updates. So when you think of it that broadly as a utility, I think you can begin to imagine how big the potential is for Twitter as a commercial entity."
The most obvious solution to how Twitter can make money would be to serve advertising directly in a user's Twitter feed (or "timeline" as the company calls it), or elsewhere on the site. But Stone and his fellow execs are wary of alienating Twitter's hardcore user base, which has grown accustomed to an ad-free service.
"How would they respond to us putting ads on the site?" Stone says. "Are we going to end up pissing them off?"
Stone says the key to making advertising acceptable to the Twitter community is ensuring that users choose which commercial messages they are exposed to, a lesson Facebook failed to heed last year when it was forced to quickly abandon its disastrous Beacon marketing system. But as with other potential revenue models under consideration, Stone would not elaborate on how he'd use such an opt-in system on Twitter.
One of Twitter's most likely revenue streams is through advertisements in search results where messages could be tied to what users were searching on. Twitter recently purchased Summize, a search engine specifically designed to sift through Twitter messages, for a reported $15 million in cash and stock.
"There is a pretty obvious opportunity there," Stone says. "There is a level of intent that someone is showing when they come to a Twitter search and type in, say, 'iPhone.'"
Another possible revenue stream is corporations paying to use the service to stay in frequent contact with their customers. Several large companies, including Dell, Whole Foods, and JetBlue, have already set up corporate presences on Twitter to let customers know about special offers and even answer customer questions.
In Dell's case, the company says it's made "well over" $500,000 in sales from sending special offers from its Dell Outlet store to its Twitter group, which it began in June 2007. The group has almost 1,500 "followers" who receive its messages on a regular basis.
"This is where are our customers are going," says Bob Pearson, Dell's vice president for communities and conversations. "These folks are influencers, and they want to talk about the hottest or latest stuff going on."
Dell also answers individual user questions via its Twitter group, which is what companies like JetBlue (almost 3,500 followers) and Whole Foods (2,000-plus followers) primarily use Twitter for.
To a company like Dell, $500,000 is a relatively small amount, but it does hint at the potential windfall companies can reap from Twitter. "If you've got 1,000 people following you, something's happening," Pearson says. "The real potential is in the future when you've got 10,000 people following."
While Stone says charging corporate users for a Twitter presence is something he might consider doing, it's not at all clear that companies would be willing to pony up for it. When asked whether Dell would consider paying Twitter for, say, each user that signed up to receive its feed, Pearson says "probably not." Whole Foods and JetBlue both say it's too early to say whether they'd be willing to pay Twitter for its service.
"One of the beauties of Twitter is that anyone can go on, and it doesn't cost anything," says Pearson. "There are other ways that Twitter can monetize its site, through advertising or other means. They don't have to be charging business customers to be part of it. But that's for them to think through."
: Courtesy Michael ReaSculptor Michael Rea has a knack for building. But unlike most architects, he draws on an encyclopedic knowledge of geek culture and an eccentric sense of humor for his unique sculptures.
Rea’s movie-influenced menagerie includes electronic consoles, time machines and holy artifacts -- all fashioned from wood. He even built an eight-foot-tall prosthetic suit, equipped with swords, for physicist Stephen Hawking after seeing Quentin Tarantino’s kung fu-inspired Kill Bill.
Click through the gallery to see his geekiest creations. If you want to see them in person, Rea will be showing off his custom-made woodwork at San Francisco's Fecal Face gallery in October.
Left: This grandiose gun, nicknamed Lysistrata, after the classical Greek comedy written in 411 B.C., wows onlookers with its intricate components and larger-than-life dimensions.
The installation also comes with a helmet and a flak jacket, both crafted from wood and burlap. Attendees are encouraged to don the protective gear and slip their hand into the machine -- sort of like a biomechanical appendage. The sculpture is deliberately designed to restrict movement and freeze the participant. "It's kind of an experiment about the absurdity of violence," says Rea. "Putting your arm into [the gun] creates a weird, paralyzing bravado."
: Courtesy Michael ReaRea built this oversize computer console, as well as its complementary sculptures, Space Capsule and Space Suit, after repeated viewings of the 1983 film, The Right Stuff.
Like most of his projects, he didn't sketch or draw any plans for his wooden control-room dashboard -- Rea just began building. "I just have a knack for it," he says. "As a kid, my models looked like shit. It's easier for me just to start building [rather than follow blueprints.]"
: Courtesy Michael ReaRea wanted to recreate his own version of The Right Stuff, the 1983 film about the history of early space exploration in the United States, but settled on building props influenced by the film instead.
The Space Capsule (left) is an homage to the Mercury mission capsule piloted by American astronaut Gus Grissom. The capsule, called Liberty Bell 7, sank after splashdown in the ocean -- a complicated stunt Rea eventually elected not to recreate. "I wanted to sink a capsule in a swimming pool and escape," he says. "But I figured I'd probably die -- so I didn't do it."
: Courtesy Michael Rea"I needed a suit to go with the capsule," says Rea, whose trio of work -- Space Capsule, Mission Control and Space Suit -- pays tribute to The Right Stuff , the '80s film about NASA's early days.
As with all of his timber-based creations, Rea didn't consult any technical drawings for his piece. He simply began cutting and fitting pieces together until the final product (left) resembled the aeronautic suits worn by the astronauts in the movie.
: Courtesy Michael ReaWhile tooling around post-college in Chicago, Rea and his friends got the idea to stage pseudo musical performances. After booking a venue, Rea built an entire band's worth of equipment out of wood. While blaring tunes over a PA system, Rea and friends would "shred" on their wooden guitars. "It worked like quasi-karaoke," Rea says. "Kind of obnoxious, but we did it for free drinks."
: Courtesy Michael ReaAt first glance, this sculpture, cheekily titled A Prosthetic Suit For Stephen Hawking with Japanese Steel, might seem to be mocking the world-renowned theoretical physicist. But Rea, always a fan of Hawking's appearances on The Simspons and Futurama, decided to build the mecha-robotic body suit to honor the scientist's achievements. The 300-pound suit stands eight feet tall and is interactive -- there's a hatch in the back wide enough for a willing participant to crawl in through.
: Courtesy Michael ReaThis is the view of A Prosthetic Suit For Stephen Hawking with Japanese Steel from behind.
: Courtesy Michael ReaThis massive tank is nicknamed the Time Machine, and it functions as a counter-piece to Stephen Hawking's prosthetic suit. Rea says it represents the conflict between Hawking and noted Pulitzer Prize-winning astronomer Carl Sagan on time travel.
"I often display the two as having a showdown," says Rea, who estimates that the tank weighs in at a little less than 1,000 pounds. Like the body suit, the tank has interior room for a passenger and can be moved backwards, forwards or even sideways by his or her feet. The price tag for the beast is a hefty $16,000, Rea's most expensive piece to date.
: Courtesy Michael ReaRea was inspired to build a replica of the long-lost, legendary Ark of the Covenant after seeing the coveted artifact in popular films like the Ten Commandments and Raiders of the Lost Ark. Weighing in at 75 pounds, Rea's holy tablet-holder stands 4 feet tall and measures 6 feet wide. "My design is not biblically correct," says Rea. "My dimensions are probably off … but it looks ark-ish enough."
: Courtesy Michael ReaWhile Rea was living in Madison, Wisconsin, getting his graduate degree in art, his rate of production went through the roof. After hustling to build a multitude of his stage prop-like pieces, he thought it would be funny to create a set of pseudo-power tools. "They're along the same lines as all of my work -- suspension of disbelief and hyperbole."
Rea's collection of elegantly crafted instruments includes a chop-saw, jigsaw, two sanders and a drill. Each piece is comparable in size to its real-life counterpart but are nonoperational.
: Courtesy Michael Rea"I wanted to make something that was bitchin'," Rea says of his highly detailed, life-size wooden model of a jet ski. Rea decided to create a subversive version of a popular pastime as commentary on human leisure activities and "the illusion of the American dream." He spent a summer building the 12-foot-long watercraft vehicle by constructing a large wood rib, filling it with pink foam and then sculpting large planks of wood around the body.