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Thought Leaders in Cloud Computing: Ari Zilka, CTO of Terracotta (Part 6)

Posted on Saturday, Jan 7th 2012

Sramana Mitra: OK, as a follow-on question – this is a good, visceral example to illustrate what you’re talking about. Why has Twitter not been able to monetize along those same lines? It’s similar to Facebook, but Twitter has not succeeded in leveraging the big data/real time element of their infrastructure, why not?

Ari Zilka: Twitter is both big data and it’s real time. Twitter could comb through their Tweets, their end user Tweets, and look for patterns in what people are Tweeting about. That’s the hashtags, in fact, where users self-tag as part of a pattern and a trend. Twitter then looks at those hashtags and the symbols’ trends. It also does regular pattern matching on our Tweets. It also has a real-time aspect. The entire interface to Twitter is about a real-time push of data between you and me and all our friends in our networks and so on. So, your question is excellent. Why aren’t they making money?

The answer is, fundamentally, Google started in a back room now with, Let’s make a great search engine, but, Let’s make great search engine that makes money. It started on day one. They were going to charge people to advertise and for the clicks they sent them. Facebook started not necessarily to make money. It started out with, How do we get people to interact with each other and spend their entire online day on my system? And then at some point they said, we have to monetize this. We have to sell ad space like all social sites do. They realized very early on. I was there in 2004 when they said, “We’re going to build the world’s most powerful big data social graph analytics engine. It’s going to take us a while to build, but when we do, we will have the best ad platform out there.” They knew early on what they were doing. Twitter is, essentially, a way to communicate. It’s like a modern day telephone. If you put ads on this telephone call we’re having right now, like, you stopped us from hearing each other and interrupted with, “This call and this interview brought to you by Bisquick pancake mix,” neither of use would use the phone again. We’d find another way to talk to each other.

SM: No, I don’t think that’s the right analogy. There are places in the Twitter interface where you can do advertising effectively if you can figure out what to advertise in that spot.

AZ: But you have to make a decision at a strategic level. What is your go-to-market? What is your revenue-making strategy? Are you going to sell ad space like all social media does? And if you do, I agree with you, you can find a place to put ads in the user interface. For example, Tweet Deck. They bought Tweet Deck and Uber Social. These things put ads right into the stream. I’m not arguing with you at all. I agree with your point. In this day and age, entrepreneurs, especially your readership, cannot say, “I need to build a set of eyeballs. And if I bring eyeballs to the table, I could sell them ad space.” That’s maybe true, maybe not true. You have to have a fundamental – what is the compelling nature of this tool? What is the sticky nature of this tool? And where can I interject a revenue-making opportunity? The compelling aspect of Twitter and the stickiness of Twitter is that I’m talking to my friends. I’m having a conversation with my friends.

SM: No, in Facebook we’re talking to friends. In Twitter, we are broadcasting for the most part.

AZ: It depends on who we are. My wife uses Twitter to talk to her friends. Ashton Kutcher uses Twitter to broadcast. Media analysts, writers and the press use Twitter to research. And in your point lies the thing they have to do. They have to say, “I need to understand what is each user’s goal when coming to Twitter.” Facebook does this today. Facebook doesn’t throw the ads in all our faces and disrupt our use of Facebook. Facebook is very intelligent about what it’s doing. It knows when it’s time to advertise and when it’s time to leave people alone. Twitter is mostly leaving all of us alone. It has more opportunity to monetize than it’s currently taking on. It simply has to ask the question of itself. At a strategic level, people have to sit in a room, look at the data and say, “Can we tell that there’s a difference between this user and that user? Is this user just talking among his friends and his Twitter stream is locked, and no one can see him, and he’s not really broadcasting, in contrast to that guy over there who has five million followers?

To your point, who’s monetizing on Twitter? Hollywood is monetizing on Twitter … in a big, big way. Ashton Kutcher says, “I like iPhone.” Apple sends him a check for $50,000. There is absolutely a way to monetize.

SM: Twitter doesn’t get a penny of that.

AZ: No, it doesn’t.

SM: I think they are missing the big data/real time opportunity … so far. Maybe there’s something they’re building behind the scenes that’s going to eventually take advantage of it. They do have unique information that they’re not monetizing.

AZ: They released something called Fly.Twitter.com, which I’ve taken a minute to glance at. I don’t get it yet, so I can’t comment on it. But the point is that, bringing it back to Terracotta for a second, if you look at Facebook, they set out as entrepreneurs to make money. If you look at Google, they set out as entrepreneurs to make money. If you look at Terracotta, we set out to make money. We asked ourselves, What is a problem we can solve that people will pay us for? And we are in enterprise software, not in social media. We saw a data management problem in the enterprise, and we provide infrastructure to handle massive amounts of data at very high performance. People pay us for it. We give a piece of it away just like Facebook gives away their tools, and Twitter gives away their tools. But at the end of the day, I still make millions of dollars a year. Those guys at Facebook make more than $1 billion a year.

The difference between consumer and big data and enterprise and big data is that there is no difference. The only difference is consumers lead to millions or hundreds of millions of users and enterprise leads to thousands of customers and users. Which one do you pick? Do you do consumer placed? Do you do enterprise software? That’s a function of how you are wired and what you’re good at as an individual inventor. But you can solve the big data problem on both sides of the fence.

This segment is part 6 in the series : Thought Leaders in Cloud Computing: Ari Zilka, CTO of Terracotta
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