So Is Twitter With a Business Model Innovative Enough?

I am still trying to get out some posts out with my impressions of the startups that we have seen launched early this week at TechCrunch 50 and DEMOfall. I have not attended any of the two events but that gave me certain freedom of tracking what was going on and reading everything other bloggers and journalists had to say.

And it is very difficult to express my surprise when I saw Yammer announced as a winner of TC 50. I have actually reviewed Yammer here and thought it was not a bad idea - good enough to exist and be used by someone. Basically Yammer provides a microblogging service like Twitter (with threaded conversations and some other nice features Twitter lacks) for an enterprise customer where every company can easily arrange a private network for its employees to communicate in microblogging style using their corporate emails to sign up and join their respective networks.

But my major concern about Yammer (which I have expressed right in the initial review) is that the product only has a very limited prospective user base because those companies that need such a service and realize that need will be sure to install any open-source Twitter version on their own servers while those that could be fine with the third-party application for that probably don’t even have any idea of microblogging at all.

Let’s face it: there’s nothing innovative in Yammer. First of all, it is based on an already popular product - Twitter itself. Ok, it is a different version of Twitter - Twitter split into small corporate networks. It is simply impossible to estimate how many startups we have seen launched as some niche twitters or twitter killers or twitter analogues. Sure, we see a niche here but is a Twitter for an enterprise customer really new? Even when reviewing Yammer everyone remembered another recently launched corporate version of Twitter (or FriendFeed if you so choose) - SocialCast. What’s more, I already have a pitch in my inbox from a startup launching another corporate Twitter in a few weeks from now. And these are only two I am aware of - with supposedly many more escaping my attention.

And my main question is: is business model only about knowing what you are planning to charge your customers for? True, we have all spoken about lack of business model for Twitter and suggested dozens of ideas on how Twitter could be monetized. True, we may have shown too much interest in this issue. And also true, any startup that has a business model from the very beginning other than ad-supported one deserves some admiration already.

But knowing what to charge for does not seem like actually enough to me: knowing who to charge should be another question to ask. And if you know that you can charge people for this or that service and eventually find out that there are no people that will be willing to use your service at all - let alone pay for it - you still won’t make any money off the entire business.

And I don’t believe that 10 thousand people from 2 thousand companies signing up for an account with Yammer on the day of its launch means that there is really a demand for the service. After all, Yammer received quite a nice share of media attention for a startup launched during a big event like TechCrunch 50. Besides, pretty much anything that can be described as “twitter for something” is still sure to attract at least some attention. Yet I am sure that the vast majority of the people that signed up for their free accounts with Yammer will not continue using the service. At the most it will be used for private Twitter-like communications by small companies or even families. And remember, Yammer will only charge those companies that want to receive administrative features like removing messages and users and deciding what type of password can be used to access the service. How many of that small number of companies will decide to pay for it? This is a big question and I’m afraid the answer will be a tough one for Yammer (even though I won’t be surprised if I see the company raising a huge round of funding in the very near future - after all, this is what TechCrunch 50 is supposed to be intended for).

Honestly, the only way it could make any sense at all as a useful tool for any company was suggested by one of the commentators on TechCrunch:

Locutus, you are way off base. My app will install a small background app that will monitor everything you do on your machine and automatically Yammer exactly what you’re doing so you don’t have to type a thing:

Locutus is currently working on googling for Sarah Palin pics
Locutus is currently working on nothing for 2.34 hours
Locutus is currently working on typing a curly brace in IntelliJ
Locutus is currently working on not being a jerk

This one I can at least see managers using to track what exactly their employees are doing instead of tracking what they say they do - at the same time constantly interrupting their work to chat on Yammer with other employees. Sure, this idea is too ridiculous to be true and it is beyond any notion of privacy but at least this one could have a line of companies willing to pay money for using it (especially without employees knowing it is used).

Unfortunately, Yammer does not look to me like a brilliant innovation heading to earn millions off companies willing to distract their employees instead of implementing a decent planning and reporting system. Sorry, I love the company and their main product Geni and maybe Yammer can make sense to some very geeky companies but I would not call this an innovation of the year, really.