Twitter's Huge IPO Validates Pseudonym-Friendly Strategy

Twitter's epicly successful IPO is the only thing people in tech are talking about today, and I'd like to talk about it too. My take: It validates Twitter's pseudonym-friendly strategy, which CEO Dick Costolo outlined a couple years ago:

In a recent open house at the company, CEO Dick Costolo talked about how the service doesn’t really care what your real name is — all it wants to do is connect you to the information that you care about. And if that information happens to come from a “real” person, then so be it; but if it comes from a pseudonym, then that’s fine too.

This is in stark contrast to Facebook, which defined its core value proposition as a social network for real world names, which as I've argued before, fails to understand the importance of Internet-based pseudonyms:

Facebook is contributing to its own decline in activity, as people seek places online to express who they really are, unfettered from Facebook and its restrictions on their real-life names: Outside its well-trimmed gates, the pseudonymous Internet will continue to grow and thrive -- not just on Twitter, but on all the many other online sites where pseudonyms still dominate...

And notably, Facebook IPO's was a painful mess. Of course, I'm not trying to suggest real names vs. pseudonyms were the sole driver of IPO performance in either case. However, it does show the market likes how Twitter works, and pseudonyms are a major way it does.

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Comments

[Pussycat Catnap]

I want to say "BooYah!" and cheer this on too.

But I'm not so sure there is any relation between these two things.

Maybe there is, maybe not.

Certainly twitter's anonymity has kept a few hundred thousand Iranians from getting axed by their government...

Although it has more recently caved in to the French government, over people who lets face it, I have no sympathy for. But if you have a principle you need to stick by it.

(Imagine if you lawyer sold you out because one prosecutor demanded it... you could basically kiss the entire rockbed of your justice system goodbye after that.)

I'm not sure why Twitter is doing better. Might be because it just looks less spammy.

I don't think it sells better. Can you make money off of it? Not so sure, but I haven't looked. But we do know that Facebook CLAIMS to be good for advertisers, yet the anaylitics prove it sucks... That's what made Facebook do so poorly - it claimed to be better than Google, but it was little better than the local Brownie troop selling cookies outside your grocery store...

Twitter doesn't have that kind or pretension to it. And that might be the real reason.

Pseudonyms might just be a happy accident.

[Ezra]

A huge, huge part of Twitter's success is the exact opposite of pseudonymity and anonymity: verified accounts, and people and businesses choosing not to be anonymous.

Without verified accounts and otherwise real identities, Twitter wouldn't be a trusted news source, a point of contact for customer service, a way to interact with celebrities, politicians, etc. etc.

I don't think anonymity, pseudonymity or the lack of either has anything to do with IPOs, but maybe I guess Twitter further proves there's a lot of pros and cons to letting people identify, or don't, however they please.

Let's not gloss over though how important real identities are to Twitter.

[zzpearlbottom]

I can only speak for me, i use twitter and not Facebook due to that fact, i don't want any of my rl identity mixed with my internet one!

[Arcadia Codesmith]

It's worth noting that many of those artists, writers and celebrities supposedly posting under their "real names" are doing nothing of the sort -- they're using professional pseudonyms.

[Chez Nabob]

The success of Twitter's IPO had little, if anything, to do with the fact that they allow pseudonyms. Of course, they've never turned a profit either, which you'd think would be a big driver of IPO success, but clearly wasn't in this case, so I could be wrong.

More likely, the fact that they smooched Wall Street's backside, and played the game like it's supposed to be played (unlike Facebook did with its IPO) is likely what helped push the stock to a 70%-plus gain on the first day.

The investment bankers like it when a company is as open as Twitter's executives were with their books leading up to the big day. Makes the money guys feel good about the company because its management team is "serious," unlike Captain Hoodie at Facebook.

USA Today had an analysis piece on this very topic yesterday. Here's the shortened URL:

http://usat.ly/1hnEekS

But I suspect that if Twitter doesn't figure out a way to expand its user base here in the U.S., where most of its ad revenue will come from, stop hemorrhaging cash and actually, you know, turn a profit, the novelty of the IPO will wear off. Otherwise, kiss those pseudonyms goodbye.

Facebook's long-term viability as a company is MUCH better than Twitter's, though I still wouldn't own Facebook stock either.

[Pussycat Catnap]

Yeah what Chez said about playing along with Bablyon - that gives you money, and puts their strings on your back (which is not imply anything good about Facebook).

I think for the users of Twitter there IS value in being able to be a pseudonym or known name with ease, and at user choice - without being hassled about that choice either way you make it.

Neither side of it suffers negative platform bias.

[Ciaran Laval]

Twitter have it right on pseudonymity, it's not your name that's relevant, it's your interests.

I'm not sure that had anything to do with the early success of their IPO though.

[Hamlet Au]

One example of many: Twitter's policy on pseudonyms is a major reason why the platform has become so important during social upheavals in authoritarian countries, where preserving one's personal details is literally a matter of life and death. For that reason, it's now part of Twitter's branding that the platform to drive major social change around the world.

[Pussycat Catnap]

Hamlet: yes, it helped some Iranians. But then it turned around and outed posters to the French.

Sure the people it outed were sumbags - but if you're protecting identities that's not a call you can make.

And yes, that's nice and wonderful that they value privacy when its not other white folks asking them to violate it... but there's no proof that this is why they're darlings of the IPO scene right now.

correlation / causation connection is not established.

[Hamlet Au]

I wasn't trying to establish that connection, however.

[Wolf Baginski]

I don't think the IPO is a good sign of anything.

Twitter can give advertisers a good idea of what users might be interested in, and that's worth money. But, while it know, more about its users than a newspaper does about its readers, it doesn't need to know customer names. And neither does a newspaper.

So I don't think it's a big issue.

What looks bad about the IPO is the huge jump in price and the apparent risk of buying in. That suggests there is a lot of cash floating around, looking for somewhere to go.

Here in the UK, we had an IPO a month ago which had the same behaviour. It looks a safer deal than Twitter too.

At current interest levels this secure deal paid very well. Even at the current market price, it looks good.

What Twitter seems to confirm is that there is a lot of money in the markets chasing investment opportunities, and willing to accept some pretty chancy deals. I have the feeling there is a bubble.

And that's bad news.

[sparky]

The IPO doesn't indicate anything. It was managed better, that's all. They learned their lesson from the FB flop. It was a professional open (@46), then the dummies piled in up to nearly 50 bucks. It's done nothing but go down since.