Why Twitter’s founders need to sell up

Imagine this; a three year old company gives its products away for free but still has no revenue streams. It has no basic value proposition, no senior executive team and is having trouble servicing customers. You might call it a basket case.

But this company has just raised US$35 million in February even while the US economy was in complete collapse. And the company recently received a $255 million valuation. This basket case is expected to be sold for as much as $1 billion.

We’re talking about Twitter. But while the figures bandied about are extraordinary, Twitter is facing the same problems that beset any company with a poor value proposition.

According to a story in the Wall Street Journal most of Twitter’s employees are working extremely hard providing a service that lets people post 140 words on their site on their latest activities.

The focus on servicing customers is distracting people from working on the business model and commercialising the product. In fact the chief executive and founder Evan Williams says that for Twitter’s entire history, most of the resources have gone to managing growth.

The founders also say they don’t feel an external pressure (what nice VCs!) to change their approach. Instead they want to develop the company slowly so they can find people that fit with the culture. Apparently they interviewed business types earlier this year for potential business strategy jobs and then turned them down.

And that’s the problem.

They don’t want anything to change. But the writing is on the wall. If businesses don’t add features and services and improve not only the product but the business model, then they go out of business.

And there are already reports that Twitter users are getting bored. A good number of users apparently lose interest after trying it for a while and leave.

The only option for the founders is to sell – and sell fast. But even though they have an estimated 32 million users, it is unlikely the Rupert Murdochs of the world will be interested this time around.