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Twitter Looking To Quell Critics, Tweak Business Model

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"It's weird, because they're such similar guys, such similar product visionaries and super-hard workers," Stone said of Dorsey and Williams. "They just have slightly different approaches to things."

Board member Peter Fenton, a partner at Benchmark Capital, said he's not concerned about Twitter's public growing pains. "The principals have been able to park their egos at the door," he said. "There's no lawsuits around Twitter."

He also said the turnover is par for the course at a growing startup, noting that in the past two years, the company's payroll has shot from 25 to more than 600.

Twitter last month marked its fifth anniversary by tweeting that it had added 600,000 users just in the previous day. Traffic has doubled since January, and Costolo says that according to data harvested by Google Analytics, 400 million unique visitors used the site in June.

The most recent figures from tracking service comScore Media Metrix are more modest, yet still robust, showing that nearly 145 million people worldwide visited Twitter.com that month.

Then again, according to comScore, Facebook in June garnered 161 million visits in the United States alone.

Despite Facebook's bigger membership base, some users say Twitter gives them access to news makers they care about.

"Twitter has a meaningful impact on my life," said Jay Marcyes, a San Francisco Web entrepreneur who met his startup's co-founder when both were following tweets by the same angel investor.

Even so, "There are still aspects of the experience that are broken," acknowledged Mike Abbott, who helped create Palm's operating system before joining Twitter last summer as head of engineering.

As part of making the product more useful, Twitter recently tweaked its search function to show users more relevant results from the data stream. "Let's say you take Caltrain," Abbott said. "How do you know which accounts to follow so when there are delays, you know why?"

Suggesting whom users should follow is also part of the company's evolving advertising strategy. Another part is "promoted tweets," which lets advertisers insert product blurbs in the same 140-character-or-less format by which users communicate with each other.

While some devotees have complained about the rise of promoted tweets, Adam Bain, the company's president of global revenue, said the messages have proven far more likely than banner ads to coax viewers to click for more information.

"We get a lot of people asking why we aren't just full-on blasting users with ads," said Bain, who joined Twitter last fall from News Corp. "That's not the Twitter way."

Research firm eMarketer has estimated Twitter will reap $150 million in advertising revenues this year. Again, that's just a fraction of Facebook's projected $4 billion.

To keep users and advertisers happy, Twitter's been pumping resources into reliability. Abbott says the engineering staff has tripled since he joined and makes up more than half of the company's workers. "The Super Bowl this year was the first one in company history that everything worked great," he said.

Twitter's also doing more to beef up its network of external partners. Last month, it helped land funding for a New York startup called DataSift, which Twitter has licensed to help brand marketers better harness the firehose to target customers.

And in answer to criticism, Twitter launched a website to provide tools and support to the 750,000 developers who've created applications on the company's platform.

"They heavy-handed some of those same developers over the last six to eight months, trying to control everything, which gave them something of a bad reputation," said Mike Fauscette, a software industry analyst with International Data Corp. "It's important to their business model to be able to grow that ecosystem."

Fauscette calls Twitter "an interesting problem," noting that while it seems to be more popular than ever with users, the business model remains perplexing.

"At some point, you've gotta fish or cut bait," he said. "When can they articulate the vision that makes me go, 'Oh, I get it?'"

Stone, like others in the company, preaches patience.

"Sometimes, if you're gonna do something awesome and do it right, it takes time," he said. "I think that this team is gonna pull it off, and it's going to be one of those, 'How'd they pull it off?' moments."

Contact Peter Delevett at 408-271-3638 or pdelevett@mercurynews.com. Follow him at Twitter.com/mercwiretap.



Source: Copyright (c) 2011, San Jose Mercury News, Calif.


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