VCs want traction

On the heels of news that Twitter earned some funding this week comes this reaction from venture capitalist Paul Kedrosky:

Whatever your feelings about Twitter, business plans are overrated, and profits perhaps even more so.

Why? Two reasons. First, because VCs are professional nit-pickers. Give them something to find fault with, and they’ll do it with abandon.

[…]

Profits are a different issue. Being profitable too soon gives investors, rightly or wrongly, an idea of what the margins are on the business, as opposed to what they could be in some perfect world.

There are a lot of great comments attached to that post, well worth a read.

One of them expanded on Kedrosky’s post by suggesting what is attractive about Twitter—and what makes investing in a company with no apparent profits or business plan non-trivially different than the Dot Com busts a decade ago—is the foundation of active members of their community, a population that continues to grow. That traction is something that is more difficult to get than a plan for making some money. Besides, an implied plan for many startups these days is to be acquired by giants who are more interested in expanding their user base than turning clicks into dollars.

Taking the time to develop a community is a sound investment.

Free Development
Another key benefit to having an enthralled and invested community is what happens when members also have access to the code. Twitter gets bonus marks for making their API available and encouraging a bevy of developers to discover their own interesting uses for it.

It was the community, not Twitter, creating desktop applications bring the tweet stream to you rather than forcing you to go to the content. Using Twitterrific instead of manually viewing tweets through the web site instantly changed my perception of Twitter from “That’s interesting” to “That’s vital.” Twittering doesn’t interfere with my day, nor does the application take up any screen real estate when not needed. The app makes the community useful. The Windows equivalent is Twitteroo and does much the same thing.

Now there is Tweetr, which runs on the a Adobe Integrated Runtime platform and caught the attention of Wired blogs yesterday. AIR runs equally well on Mac and Windows (and Linux), enabling desktop applications to inherit a web-like interface through use of javascript and Flash programming. Using the hip development tools doesn’t guarantee success, of course. Pownce based their desktop application on AIR, but it does little more than shrink the browser screen down to a small portable window. There is little added value not found by using Firefox.

Tweetr picks up on the life-in-place functionality of Twitterrific by including support for viewing of tweet replies and messages. Now, when Remember The Milk tells me it is someone’s birthday, I don’t have to wait for the email to show up to tell me to go look at the Twitter web site for a direct message. Other enhancements include integration with webcams to click photos and the ability to delete your own tweets. The magic isn’t without visible wires, though. The interface is a little glitchy, particularly when changing configuration options (the login box suddenly appears above the tweet stream). I prefer the now familiar chirping bird to the default Tweetr sound of aluminum hitting cement. Worst of all, the screen never goes away, which is one of the best features of Twiterrific. Still, the integration with a camera and more desktop controls of the stream are reasons to play with it while it iterates. If Tweetr connected to Pownce, I would probably use both tools more.

That is one thing Fred Wilson noticed after first trying Twitter out at SXSW last March. Now, as Victor Kiam might say, “I liked this twitter so much I bought the company.”