TipJoy: Twitter Startup Fails Despite Major Blessings

There’s a seemingly infinite list of startup companies based on adding one form of value or another on top of Twitter. One called TipJoy closed its doors this week, despite a remarkable set of blessings that thousands of developers throughout the Twitter ecosystem would be wildly jealous of.

TipJoy offered a service that would let people pay small amounts of money as tips for online content, with the transaction being processed via messaging on Twitter. That wasn’t the only way TipJoy worked, but the company was very closely tied to Twitter.

TipJoy had three big advantages that we can see. The company raised money from investors, something that few Twitter-related startups are able to do. Among those investors was BetaWorks, the funding incubator that backed search engine Summize and sold it to Twitter. BetaWorks has invested in a number of other related services, including popular Twitter client Tweetdeck. Backing from BetaWorks is a big advantage for a Twitter-related startup.

Also among TipJoy’s investors was Chris Sacca, an early Google employee turned startup investor. Sacca also has money in Twitter. Twitter founder and CEO Ev Williams has more reciprocal @ conversations on Twitter with Sacca than with anyone else except his wife. Getting that guy’s money and backing on your side sounds pretty great for a Twitter-related startup, right?

Finally, TipJoy got placement in the “definitions” section in the top-right corner of Twitter.com for millions of people for some period of time. Hardly anyone gets placement there.

And still it didn’t work. What’s the takeaway? Maybe that people really don’t want to do micropayments. Maybe that close connections with Twitter investors and staff don’t always impact a Twitter-related startup as much as you might think.

Update: The next day it was reported by TechCrunch that one of the founders of TipJoy has been hired by Facebook.

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