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Crazy Business Ideas That Actually Worked: Twitter

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How did the guys behind Obvious Corporation get the world hooked on "tweets"?

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There's a new cell phone plan in the works. Subscribers will get to talk less -- a lot less. Couple of sentences and you're done. No more long, tedious conversations with people you don't really want to talk to anyway. It's going to be huge.

It will, really. Just look at Twitter. If ever a communication medium proved that less is more, it's that globe-conquering brainchild of South Park, San Francisco. Four years after its debut, text updates of 140 characters or less are now being sent off at the rate of approximately 750 per second. Twitter may have been launched by the Obvious Corporation, but the idea that a messaging and social networking service based on delivering less information would become a global phenomenon was anything but predictable. Unless of course you were one of the true believers there at the start.

Dom Sagolla was one of those lucky few. In his book 140 Characters, Sagolla, who helped create Twitter, writes: "We all knew that we were going to change the world with this thing that no one else understood."

They certainly had to change something. Early in 2006, a group of employees at a struggling South Park podcasting company called Odeo Inc. held a brainstorming session. The company was being squeezed by big players like Apple (AAPL), and desperately needed a quieter market niche. Odeo's Jack Dorsey came up with the idea of a quick texting service that would allow small groups to communicate, perhaps to report that a particular nightclub was really jumping. Inspired by Flickr, they named it Twitter -- actually twttr, a five character name to conform with American SMS short codes. At first limited to internal use at Odeo, it was publicly launched in July 2006. Eventually Odeo would be folded into the newly created Obvious Corporation. Twitter became a separate company in April 2007.

Twitter's real coming-out party was the 2007 SXSW festival in Austin, Texas, where attendees kept track of each other via tweets, helped along by screens set up in public rooms and hotel corridors. Getting great buzz from an event that's dedicated to buzz proved to be a master stroke. Once the growth began, it was exponential. Three years later Twitter is central to the national conversation, the modern town crier for important bulletins and drunken outbursts alike.

Perhaps Dorsey and Co. really did foresee the spectacular popularity of their creation. Even so, Twitter has become something its inventors didn't intend -- less a social network than a broadcast news service. A Harvard Business School study revealed the remarkable fact the median lifetime number of tweets per subscriber is one. Most Twitter users, it seems, aren't using the service to keep in touch with friends. They're simply awaiting the next update from Ashton Kutcher.

The final, greatest mystery of Twitter -- the part where it makes money -- has yet to be solved. Funded with plenty of venture capital, the service has only recently begun the process of turning popularity into profits through an advertising model similar to Google's Ad Words. Twitter also faces a retention problem -- surveys calculate only 40% of subscribers stay with it. But being the established medium of choice for the nightlife updates of Shaquille O'Neal and execution announcements by the Utah Attorney General suggests that Twitter has dug its little songbird claws deep into the mainstream.

We can only hope that traditional spelling will survive.
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No positions in stocks mentioned.
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