it's always easier to raise money when you don't need it.
Oi, that doesn't necessarily mean it's a good idea. What Twitter desperately need right now is a way to make money (and taking it from VC's don't count). If they want to justify a $1 BILLION valuation, they need a clear way to make a lot of money.
My prediction: they're looking to buy a company that they think will make them money. While one might hope Benchmark Capital might pass down some wisdom from AOL's botched "best acquisition EVAR" fiasco, I have a bad feeling about this. As it stands now, my feeling regarding their technical competence tells me the hypothetical merger will be tougher than anticipated, and history will see Twitter as the shining example of the "Web 2.0 bubble".
Good point. I don't get that sense about the rest of the industry (as much), but twitter seems like a good example of a company which is "breaking the heuristics" - they got wildly popular via SXSW, which has many influential minds, but also hugely inflates the growth-to-usefulness ratio. They used that bump to raise enough money to do enough PR to get Oprah and half of Hollywood on board. This let them continue growing until this coming valuation. Throughout, they've struggled technically, leaked documents, and just haven't polished their UX enough.
Facebook and Google, on the other hand, have been growing out of being useful to their users, with no comparable technical issues (I'm hoping the FriendFeed acquisition does some good things for Facebook's architecture).
Probably not. I don't particularly care about a single company, but they are not going to mark the end of a bubble. It might be the beginning, but we have yet to see sentiment and valuations that would lead me to believe that a crash in tech is coming soon.
I think a lot more people use twitter from 3rd party clients, than use facebook from 3rd party clients (As a %).
Facebook the website is a lock-in, and a place that can be easily monetized.
Twitter has the complication that for a ton of people, twitter is just the network and not the client. Monetization of a network seems pretty hard to me... far harder than monetizing a client.
What company could Twitter acquire that would make them money a couple quarters down the road?
Consider that if Twitter has a huge valuation edge over (say) Yelp, they're in a position to finance an acquisition at favorable terms. Twitter's ability to execute those acquisitions could in turn feed back into its valuation.
For Twitter to turn down Facebook's acquisition offer, they must have a damned good plan for beating them in the "status" war, because FB is on the attack and gaining ground.
Facebook wants to aggregate status between friends. Twitter wants to aggregate status between topics. This fundamental difference drives extremely different models for using micro-updates and subsequently renders Facebook and Twitter as non-competitors.
Really? It's always seemed to me that Facebook wants to own your address book and inbox, while Twitter wants to own real time news/search/intentions. But maybe that's just what you said from a different perspective.
In Twitter's case, realtime status, micro-blogging, and me-too viral spread were the hooks that drew in the masses. The business model looks to be about in creating link between local businesses and local customers. Pub-sub.
Ex: I (business/publisher) announce a special, you (customer/follower) receive the note and respond accordingly.
The problem is, I think, that Twitter has given away too much of the core value of the platform already (they had to in order to grow). I think it will be hard for them to create 'tools' to improve on this interaction and cause businesses to be willing to pay for it. I think this is why everyone is on the edge of their seats about this, because everyone thinks in the back of their minds that it can possibly happen but no one can easily connect the dots. From our perspective, if they do pull it off, it will seem somewhat miraculous.
A $50MM round at a $1 billion valuation means that the VC's are collectively getting 5% of the company for their investment. Does anyone else think that's an unusually tiny share?
It probably says a lot about the dogshit alternatives VCs are looking at as the inflated dot com leftover VC industry is about to come crashing down - acquisition market dried up, no IPOs in sight... buying a piece of twitter at a gagillion dollar valuation would look pretty good to most VCs.
But personally, I think its a good investment because I think twitter is disruptive.
Early-stage VCs look for 5-10X returns. Investors in this round are growth equity investors. They use IRR metrics. 30% IRR is generally considered a huge success.
But surely they need a pretty high tolerance for risk. Twitter still has a reasonable chance of just fizzling out. It could just be a fad and it could just fail to find a business model.
People are building more and more onto the platform and relying on it more and more, this is ultimate lock-in at the moment. Whenever they want they can start charging companies for API access, search access, access to the data, access to the live stream, etc.
I think they are just biding their time (they have the money) to grow it as much as possible and then either sell it off or start flipping the switches.
I think they are just biding their time (they have the money) to grow it as much as possible and then either sell it off or start flipping the switches.
And I think they are just cashing out before the bubble pops and have absolutely no idea where twitter could be going nor why people are throwing money after them in metric kiloton bundles. Ofcourse they have to keep pulling bullshit like "realtime search" outta their rears because the "stake"holders want to hear something. But all I have seen in that direction was, at best, feel-good babble and not any remotely tangible vision.
"Flipping switches" is not an option either because people would simply flip their own switches - towards the next best clone.
Yeah, like everyone switched away from Windows the minute they started milking their platform. Or how everyone switched off Gasoline when it hit $4/gallon. Or how everyone stopped paying for Cable when the cable companies jacked up the prices even more. Once they own the network that everyone is using it will be almost impossible for imitators to take it away.
You're not seriously comparing twitter to these things, are you?
What will they do when a competitor offers to "keep your account in sync with twitter" (tweets and followers)? Forbid it in their TOS ofcourse - and that's the beginning of the end.
Also get over the "everyone is using" myth. Last time I checked the number of twitter accounts was in the ballpark of 0,1% of the internet population. Based on their publicized, inflated figures mind you - likely including all dead and double accounts.
Well, maybe like how people switched from ICQ to MSN to gTalk to Skype, or from Slashdot to Digg to Reddit to HN. Opening a user account on a competing website is much easier than changing OS or car engine.
Perhaps if they start bleeding due to bandwidth and maintenance costs, they've got some serious bank set aside until someone figures out a way to make Twitter a highly profitable venture? Okay, maybe not. But I'd like to see the break down on what exactly their dropping $30 mil on. That's a lot of money for a such a simple idea that is already a household name with no real competition.
> If they still have 30 million in the bank of the 55 million, why are they raising more money?
Answer: it's always easier to raise money when you don't need it.