Twitter, Groupon, and how to manage an army of clones

March 21, 2011: 12:50 PM ET

The two companies have inspired two huge networks of imitators. So why is the one you'd least expect now intent on rubbing out the competition?

By Chadwick Matlin, contributor

FORTUNE -- Another week, another Groupon clone. And this time, it's Facebook. Last week, the company confirmed to Bloomberg that it was going to start competing for coupon revenue in earnest. Mark Zuckerberg and company began putting ads for a "Facebook Deals" feature in news feeds, asking users if they wanted to sign up for exactly the kind of local offers that Groupon -- and dozens of other imitators -- email around every morning. And there's nothing that Groupon can do about it. In a way, it's a vote of confidence. These days, the most sought-after blessing in tech is from Facebook. Once it starts emulating your business, you know you've done something right. Just ask Foursquare.

Meanwhile, in an entirely different corner of tech, there was news from a different clone war: Twitter's. A week and a half ago, Twitter gave a bit of unsolicited business advice to some of the companies that use its service to create their own products. "Developers ask us if they should build client apps that mimic or reproduce the mainstream Twitter consumer client experience," Twitter's platform product manager wrote in an online discussion forum. "The answer is no." The gesture would have been sort of sweet if it weren't so aggressive. It's a warning that Twitter, the company, is determined to control the experience of twitter, the medium. Everyone else should get out of the way.

Both moves were covered ravenously in the press, with a lot of talk about how it would affect the companies' ecosystems. But "ecosystem" is a pernicious bit of techspeak, a euphemism that makes it sound like Groupon and Twitter aren't tech companies but vendors at a Brooklyn flea market, selling artisan terrariums. What we really mean to say when we talk about the companies' ecosystems is that they've spawned an entire network of other startups that rely on them.

And in the cases of Groupon and Twitter, their clones rely on them in strikingly different ways -- ways that suggest two different techniques for tech companies to create and then dominate their niches on the web.

To help explain the two systems, we're obviously going to need to trot out some questionable metaphors. So, without further ado, we present two highly scientific models of how startups create businesses today: The Drum Circle and The Tambourine.

Groupon's Drum Circle More

Current Issue
  • Give the gift of Fortune
  • Get the Fortune app
  • Subscribe
Powered by VIP.