Announcing the $5 million Twitter Data App Seed Fund

On the heels of HP Labs' recent research into the data goldmine that is Twitter, the company has not announced plans for a seed fund similar to the fbFund, iPhone fund, and Salesforce fund, to spur the development of data related applications built on top of its API platform.

Yup... that's right.  They have not announced that.

I made it up.

But is it really that far fetched?  Summize search is and will be even more of a gamechanger for Twitter as they get it more integrated, making the whole application more valuable.  It was something that Twitter itself couldn't focus on without distracting its efforts just to run the rapidly growing service, so they just picked up Summize in an acquisition. 

Undoubtedly, there will be lots of opportunities for value creation that Twitter could go into, particularly around it's vast, growing, live pool of user data, but they would all be distractions--especially ones, like StockTwits, that are specific to an industry.  StockTwits leverages the community of people talking about stock symbols using the $ symbol before actual stock symbols, in order to create a rich content application--a market pulse.  Undoubtedly, they could mine that for not only news with a social filter on it, but also sentiment.

What has been built on top of Twitter so far has been, admittedly, lightweight--various interfaces, some light stats.  One notable exception, however, has been Mr. Tweet.  The recommendation service examines the people in your network, how often they tweet, whether they respond, etc. to give you a pretty thorough assessment of who you should be connecting to on Twitter.

I think the real value for building services on top of Twitter's data comes when you can leaverage a deep dive into Twitter's data to meet the needs of people in various industries.  How about marketing and branding?  If I was trying to promote some volleyball equipment, wouldn't it be good to know where the volleyballers were geographically, who were the most influential ones, and also what other kinds of brands, items, and events they talked about?  I think it would be a marketers dream for an app to ask what they wanted to market and for it to spit out the 50 people on Twitter that they absolutely needed to get this in front of, customized for the type of product.

It seems like Twitter is going to go the advertising model with it's business, leaving the data value potentially untapped.  I could see models around Twitter news, traffic, weather, product information, dating (why hasn't that one been done yet??), politics...   How about using twitter to actually power my newsreader, or go back the other way and use my RSS feeds to power Twitter user recommendations based on people who are tweeting the articles I read?

I think there's an interesting investment opportunity here--one that may be in the best interest in the company as well.  The more they support the ecology, the stronger they'll be in the center of it all.