Twitter is on the prowl. Though it made its last acquisition more than a year ago, company founder Biz Stone said on Tuesday that it's looking to add to the stable. There aren't any specific targets yet -- at least none revealed -- and Twitter is keeping its options open. The likely pool of potential acquisitions consists of third-party Twitter application developers, which is largely responsible for the micro-blogging service's growth in popularity.
Stone, one of Twitter's founders, said at a Tel Aviv news conference, "As our attention is grabbed by some of these developers, we will take a hard look at them." This refers to companies that develop applications for Apple's (AAPL) iPhone and Research in Motion's (RIMM) Blackberry. It also refers to developers for the Web and desktop, such as HootSuite and TweetDeck.
In 2008, this is precisely the community to which Twitter turned to make its last acquisition, search tool Summize.
For Twitter, acquisitions in the third-party application space are a natural fit. Not only are the tools related to the core Twitter service, they could help the company recapture the 70% of its users that generally have no interaction with Twitter.com.
In Tel Aviv, Stone said that Twitter will roll out a plan early next year on how it will generate revenue. The winning business model is advertising, bringing to an end many months of speculation. Specifics as to execution weren't provided, though Stone did reveal that the approach will be "non-traditional" and that "Everyone's going to love it. It's going to be amazing."
This follows a comment Stone made in Oxford, England on Monday, "2010 is really going to be the revenue year. I don't know if we're going to be profitable, but we have plenty of time."
Though the "non-traditional" characteristics could solve the most difficult problem for an advertising-based Twitter platform, the company still faces the gap between users who come to the site and those who do not. If it can increase the percentage of users that interact with the website directly, revenue would increase under an ad-based model.
This, of course, is where the acquisitions could come in handy. If users loyal to their chosen Twitter applications aren't interested in heading to the micro-blogging website, Twitter could gain access to a wider advertising audience by snapping up third-party Twitter application developers. The user experience wouldn't have to change much, and the advertising dollars wouldn't have to be sacrificed.
For now, acquisitions would be financed with capital held by Twitter, which has "plenty of money in the bank," Stone said. And since it has "no dates when we need to break even," the company has a considerable amount of flexibility. Nonetheless, Twitter isn't ruling out a drink from the public trough, as Stone said on Monday, "We have plenty of time."
Twitter isn't rushing to an initial public offering. Stone said it's exploring alternatives to this route. "We are definitely not interested in selling the company," he said and added, "If an IPO's the only thing, then sure. But if there is some other way then that would be great too. Maybe some other new way will emerge."