It was great to read about Buffer getting $400,000, even though they weren’t able to stay in the U.S. It was also great how they pulled the curtain back a little bit so you could see how it all came together for them.
I met the pre-seed round Buffer at a BizSpark sponsered event on SEO in San Jose last month. They were really nice guys. They showed me their app, gave me a tour of how their product worked, told me how their business was doing, and even gave me a tour of their admin panel and showed me their growth curve. It was truly interesting to hear them discuss their business, and hear a bit of their insight and plans. Listening to them talk, I thought to myself, this is a useful product, and I hope they succeed.
They have a very scalable architecture based on Pusher and EC2. I think they have a good first mover advantage here and are ready to become the front runners in their space.
They knew down to the dollar what their revenue should be. They knew the lingo on Pirate Metrics and why they mattered. They knew they were profitable, and exactly how profitable they were going to be. They had complete operational control. For god sakes their admin panel updated in real-time every time their system moved a muscle, and yet the data was condensed into an interface that let you see the bigger picture.
My first thought was, what the heck are these guys doing screwing around with delaying people’s tweets? Wait, what? Yes, they take Twitter’s awesome, real-time, globally distributed messaging system, and they fucking add latency. That just sounds terribly wrong to me.
They should sell their damn dashboard infrastructure to other companies, that’s what they should be doing. OK, I’m only half joking about that, but I do think it’s funny they are going through so much trouble to solve a problem that Twitter should be solving themselves.
The key value proposition of Buffer is that it gets your tweets seen when the people who you want to see them are most likely to be looking. Think about that for a bit, you can even convince yourself that there’s real money in it. If you’ve ever tweeted at odd hours, you know that timing is everything when is comes to getting your tweets seen. Currently Buffer simply spaces out tweets by dispersing them at predefined intervals to prevent flooding your followers. Over time, I would expect to see features that try to optimize when your tweets are sent, and track the impact on retweets and clickthroughs. Any algorithm that can increase views, retweets, and clickthroughs has potential to be monetized.
So what’s to stop Twitter from taking the idea, baking it into their product, charging for it, and then efficiently and rapidly (think like, Chrome development speed) building on top of it with their massive engineering resources. What the hell kind of chance does a 3 man team with $400,000 in their pockets have against that?
And that’s the one bummer about all this, is that I can’t see how they’re going to prosper, except for one thing… a United States patent.
If they were smart enough to file at least a provisional application, and if they are just lucky enough for the provisional patent not to have expired yet… then there’s a chance they could actually be worth about $10 million to Twitter right now. How I picked that number? I would do a NPV of future cash flows with the technology that is protected by the patent. Discount it by the likelihood of being able to work around the patent, and add in the inevitable cost of patent litigation with or without the workaround, and finally, the negative pain modifier, because the Buffer guys, sorta like the Punched guys, don’t have the sack to tell you to screw off if you put that kind of money on the table.
This is why I love the increasing legal power of patents. I’m even willing to put up with ever tightening copyright law as long as it leads to stronger patent laws along with it. Because the patent is the ultimate pebble in the war between David and Goliath. I could write patents all day every day because of the power they have in the marketplace. Buffer’s potential, their entire valuation, is based significantly on their ability to protect their intellectual property from copyists, through patents.