Thursday, January 6, 2011

Twitter vs. Facebook

The two are not mutually exclusive, of course, but here is why Twitter is far superior for me personally.

Twitter lets you plug in conversations and thought streams that otherwise you would have no access to. I am pretty careful in picking whom to follow and read most of what these people share. There is a lot of insightful information available, absolutely free, coming from great (I am sure) individuals, and, often, not available anywhere else. Twitter is less of a burden than "powerblogging" so the diversity of ideas is greater. Someone joked that FB is for people that you went to school with, Twitter is for people you WISH you went to school with.

Twitter users are anonymous, if they choose to be. Anonymity is conducive of freedom of speech. Freedom of expression matters a lot, and people really are hesitant to voice non-mainstream views if they perceive there might be something at stake (professional image, career, relationships). Many people probably would opt not to discuss politics if the shield were not there. In part because of political correctness, there is a growing gap between what is expressed and the actual actions. You can see the gap in dating site behavior studies (stated preferences vs. actual preferences), it sure applies elsewhere.

Twitter is an extension of your information gathering routine. It is not just following MSM twitter accounts. Great people find great things, and share the link. So if you follow great people, every day you will find great articles, underreported news, opinions and interpretations. In many ways, Twitter, when carefully managed, can be a live linkfest that can be read in addition to the "regular" linkfests one follows.

Twitter is unbeatable for instant information finds: news, sport scores in action, stock news, vote counts in progress, Gmail outages, and so on.

Twitter can be interactive and can be used for crowdsourcing ideas. Obviously, people with many followers can't reply (and some people simply view it as a one-directional promotional pipe) be but many do interact. This enables discussions like "has anyone looked at stock XYZ?" Twitter in this case makes you better at what you do (invest or trade) with great ease. Twitter is even good for grounding highfliers: a famous book author (who is not fooled by randomness) was twitting in Arabic one day, so I commented that he does not know that his twits are available to the "unwashed masses" via Google Translate. He put a few untranslatables up and wrote that Google Translate can't do this particular dialect. You win, buddy.

Facebook, obviously, is neither of these things, on top of being a huge waste of time. Surely there are people who value looking at their high school girlfriends' wedding (or beach) albums or their old neighbor's garage remodel in progress. Surely there are people looking for "the cure for boredom" as Mark Cuban said in his great Stocktwits interview. Surely there are "worthy causes" that millions can "support" effortlessly by licking "like" and forgetting about them that very instant. Surely FB enables inter- and intra-country rivalries who can "collect" more people to support soccer team A or the "annexation" of island B by country Y. Surely FB has exceptional information on who you are, where you are, what you click on (even outside of FB) and other valuable targeted ad information. But, by and large, for me personally FB is worth close to nothing. I can see some value for advertisers and social gaming, etc. companies that need network effects.

So, speaking of FB's worth and the breathless coverage it is getting, here's something very basic that I read and re-adapted from marketticker: FB has 500 mm users, and at $50 bn valuation, this means that a user is worth $100 in net income. If the average life of a user is 5 years, this is $20 per year, call it $30 pre-tax. If the pretax margins are 25%, this implies revenue per user per year of $120. That's an awful lot of ad clicks, in my humble opinion. FB really must have a stack of aces up their sleeve. Good luck to the new buyers.

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