Twitter, Brevity, Innovation

Singapore’s Minister for Education [sic] recollects his lessons from Lee Kuan Yew:

I learned [from Lee] this [economy of effort] the hard way. Once, in response to a question, I wrote him three paragraphs. I thought I was comprehensive. Instead, he said, “I only need a one sentence answer, why did you give me three paragraphs?” I reflected long and hard on this, and realised that that was how he cut through clutter. When he was the Prime Minister, it was critical to distinguish between the strategic and the peripheral issues.

And that’s what Twitter does. It teaches brevity to millions. Academics and other professionals who face tons of information daily must love it. First, because it saves their time. Second, it prioritizes small pieces of important information.

Emails and traditional media do this badly because people can’t resist the temptation to get into “important details.” But my details are important only after you asked for them. And Twitter restrains me from writing them in advance by leaving me only 140 characters (right now, I’m over 100 words already). So, it saves two people’s time. As Winston Churchill, himself a graphomaniac, said, “The short words are the best.”

Short messages earn most interactions
Short messages earn most interactions (Source)

Like many other good ideas, this wasn’t the thing founders initially had in mind. They had to cut all messages to 140 characters to make them compatible with SMS and, thus, mobile. Later on, web services, such as Imgur, borrowed this cutoff. This time not as technical restriction, but to improve user experience. That’s an easy part.

The second part is difficult. Twitter is bad at prioritizing information. Tags and authors remain the major elements of structure. Search delivers unpleasant experience (maybe this made Twitter cooperate with Google). If you missed something in the feed, it’s gone forever.

This weak structure is partly due to initial engineering decisions. However, structuring information without user cooperation is difficult everywhere. And users won’t comply as twits should be effortless by design. It means engineers have to do more of hard work. In turn, it costs money and time. There must be strong incentives to do this. The incentive is not there because Twitter lacks competition.

Would anyone step in and fix it? Suppose, you’re taking a cheap way and ask users to be more collaborative. You can make Twitter for academics with all the important categories, links, and whatever helps researchers communicate more efficiently. This alternative will likely—if it hadn’t yet—fail to gain a critical mass of users. Even in disciplined organizations, corporate social networks die due to low activity. Individually, employees remain with what others use. The others use what everyone uses, and everyone uses what he used before. You need something like a big push to jump from the old technology.

Big pushes away from Twitter is more like science fiction now. Whatever deficiencies it has, the loss-making company priced at $30 billion dollars wins over better-designed newcomers. In the end, its 280 million users are centrally planned by Twitter’s CEO. That’s about the population of the Soviet Union by 1991.

It’s not new that big companies lock users in their ecosystems. The difference is, sometimes it’s justified, other times it’s not. For Twitter, it’s difficult to imagine any other architecture because major social media services all impose a closed architecture with third-party developers joining it on slavery-like conditions. To take the richest segment, most of iOS developers don’t break even. So, apart from technical restrictions that Twitter API has, the company doesn’t offer attractive revenue sharing options to developers that contribute to its capacities and, thus, market capitalization. For example, to address the structural limitations mentioned before.

All in all, interesting experiments in making communications more efficient end very quickly as startups reach traction. After that moment, they become conservative, careful, and closed. And this is a step backward.

Amazon Monopoly Is Better than Free Market

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Amazon’s monopoly in online retail got some attention recently. For years, Amazon restrains other online retailers with predatory pricing and covers its own losses with debt. The debt is cheap because the company enjoys a low-risk monopoly and can fix its profit margin anytime. But there’s no need to do so until lenders see this huge advantage.

That’s a bad thing about Amazon. A good thing about Amazon is that the company invests in new technologies and better service. Customers don’t have to stay 20 minutes on the line or worry about out-of-stock goods. Scale and scope of Amazon operations made this possible.

Online retail in Russia shows how the world without this kind of a monopolist looks like. Thousands of firms sell about the same stuff. Independent price search engines (of the kind Google tried to be) ensure competitive prices, hence, profit margins remain low. Low profit margins kill any chances for these small retailers to invest in service and inventories. Sellers economize on everything. In the end, customers buy stuff across dozens of shops with equally poor service and red tape, like entering all your personal information again and again.

An Amazon-type retailer isn’t emerging in Russia because the entry cost is already high and VC firms dislike investing in highly competitive markets. In turn, online retailers have no sources of capital to reach Amazon’s benefits of scale. “What about Walmart?” you may ask. It had emerged out of a competitive industry and became the largest company in the country.

It seems that Walmart appeared at the right moment. When Sam Walton opened his first shop, the United States invested heavily in new highways and railroads. Import of goods and interstate trade intensified. You need efficient logistics to keep prices down in this game. Walmart had it and became a monopolist in its segment. It entered international markets too late, as with Germany, and failed there.

Such technological revolutions rarely happen. But when they do—as with Walmart, Amazon, or Russian retailers—they shape the market for years. The sequence is important. You do want an Amazon-type monopolist to explore efficient practices in the beginning. Thousands of small firms don’t innovate like this, so low quality reigns the free market for years, which is a real loss. But after you have the monopolist that sets high standards, governments need to understand how to regulate it to revive competition.