What does $1 Billion Mean to Twitter?
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Well we all knew that it would happen at some point. We just didn’t expect it to happen like this. It was only in February that Twitter was valued at $250 million (by no means a small figure), but today the buzz is about a certain 1 billion – as in dollars. As in the value of Twitter now, thanks to the $100 million the company has raised through investments from T. Rowe Price, Insight Venture Partners, and a few other entrepreneurial heavyweights.
If you’re keeping score at home, this means that Twitter’s stock has quadrupled in just less than 7 months. It’s an astonishing feat when you think about the fact that Twitter has made no recent announcement of plans to monetize their product; which makes us wonder why all these investors are rushing to hand their wallets over to Jack, Evan and Biz.
In the past year there have been countless theories concerning how Twitter can start to turn a profit with their product, but it’s hard to tell if the Twitter brass is thinking the same way – or maybe they’ve already thought about these options and ruled them out. What’s more, a lot of the ideas people have had for monetizing Twitter call for a whole lot less capital than $1 billion. Running ads will cost them little more than what they’re already spending on developers, but it probably won’t lead to a serious payoff. Generating demographic reports and organizing groups and legions with which companies could better market themselves wouldn’t cost much, either. And neither would putting together Twitter Search Analytics systems, which Tweetizen.com’s Adarsh Pallian has suggested Twitter start doing.
But then there’s this:
Over 20 million people are using Twitter these days, a figure that pales in comparison to Facebook, which celebrated its 300 millionth member just the other day. That means that Twitter has roughly 8% the user population of Facebook, but their considered worth is 15% that of Facebook’s (Facebook is currently valued by most investors at $6.5 billion). If you look at the steady incline of Facebook’s user population, and then consider the fact that Twitter is actually easier to use and more accessible than Facebook, odds are that Twitter will experience a similar jump in population in the not-so-distant future. A jump to 300 million? It’s certainly not out of the question.
So while we probably won’t be sure of Twitter’s monetization strategy until they actually come out and announce their plans, we can take what investor Joi Ito has to say to heart:
“All the companies I’ve invested in that have gone bust, or that I’ve seen go bust, have business models and great product and pretty good teams, but they have no users. Getting users, getting distribution, getting attention, becoming viral – that’s the single most difficult thing on the internet to do. And just about every product fails because they don’t have enough users.”
Does this mean Twitter is getting a billion dollars on a leap of faith? Or do you think the brass shelling out all this dough are privy to a bit of information we in the general public have yet to discover?
1 billion dollars means fun to me
Personally I don’t get the point of twitter, Does anybody actually read other peoples tweets. Still i wouldn;t mind owning a a small % of it
I would like to see the breakdown of people who actually use Twitter ‘properly’ – not just people who sign up, make a single tweet, then proceed to ‘follow’ 000’s of people, just to try to get people to look at some crap affiliate link…..are the vast majority of people actually interested in ‘following’ other people for genuine reasons…..
People will eventually get fed up of the spammers/ fake followers, and then what??
Good luck to them though…..
I love Twitter.. But I hope users could also benefit through monetizing from ads..
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A billion dollars. For twitter.
Wow, it was only 2005 (not too long ago) when the first social networking mega site was sold for HALF a billion dollars – Myspace.com.
It forever changed the way people view websites and sharing information. I think before myspace people were using yahoo, aol, and a few other social networking sites.
Then facebook came into the market, and exploded into the widely known site it is today. You could say it’s taken over for myspace.
A short time later, twitter.
If you would have asked me, “whats twitter?”, I’d have told you, “what the heck is twitter? isn’t that a car audio equipment brand?”
It shows you how ridiculous things are nowadays. In a year or two, we’ll see a new website, another site which people will see as a necessity of life. And it will probably sell for 2 billion next time. or more.
When will this crazy trend end?
You know, probably never. You’ve got to think that social networking is here to stay, right? People are only growing more connected to the Internet, and social networking sites are only becoming more and more functional with our daily lives.
I’d imagine that the next boom for the social networking industry will draw more support from investors than Twitter and Facebook have been able to draw if they can attract a larger client base. That’s how it’s worked in the past, and with the reliance some people have with social networking sites, the best way to extend your brand is to make a splash across that medium.
By the way, when Twitter first came out, Tweeter was the first thing I thought of too. Very, very similar.