Twitpic recently announced that they would be shutting down after a recent spat with Twitter over Twitpic's name. The Twitpic problem is a fairly common one, but one that can be avoided, fixed or simply enjoyed.
Twitpic is essentially a value added service provider for Twitter users, meaning that it exists to provide an extra service or make twitter easier to use. Just like any value added service provider, the problem is how to achieve symbiosis with Twitter (i.e., how to provide the value add, alert users what it is used for, and eventually sell your company to the service you depend on) and not become a hostage to Twitter. I say hostage because a successful value added reseller will eventually become the competition to the company it depends on.
Rule 1: Don't adopt your target's trademark (or change your name if you have). Find your own trademark that suggests the service you are providing and throw on a "for Twitter" or "a tool for Twitter users" as a tag line to alert users about what the service does. Twitter could not complain about this type of use because it simply describes what you do. If you find yourself on the receiving end of a nasty gram and you were not a saboteur, it is fair to ask for a transition period.
Rule 2: Keep your platform as independent as possible from your target. The more dependent you are on your target for advertising, infrastructure, revenue, etc., the more difficult it will be to stand up to and compete with your target when the day comes. And it will. The tendency is to rely on the target company because it reduces startup costs. That may be a good startup plan, but be prepared to create some distance quickly as you get traction.
Rule 3: Be ready to sell. Keep in mind that unlike an ordinary tech company, the valuation of a value added service provider is typically grounded by the cost it would take the target company to replicate and launch the same service. For example, if it would cost Twitter $10M to replicate, advertise and incorporate all of the Twitpic features as an integrated part of the Twitter service, an IPO or a $100M valuation may not be possible. Unlike ordinary tech companies, the high revenue will be in the early years before the target wakes up.
Alternative Rule 4: Have a great time and get out. You may decide that you see an opportunity to spur change in a program, make a bunch of money, improve the world and get out when the target finally wakes up. This is a great business plan, and Twitpic would be a great name for such a venture. Just be sure to stick to the plan and when the time comes, walk away like Twitpic's owner is doing. I personally don't really believe Twitpic is leaving over trademarks. They helped fix Twitter and Twitter is finally stepping up to improve its own system. It is now time to move on or just go live on a beach with the proceeds from Twitpic.
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