48 thoughts on “How Much Is Twitter Worth? Less Than You Think”

  1. Ummm… We forgot about an old bloke who went to Harvard and was a US Senator. Well, he also became the President of the United States. Remains one of the top followed Twitter users, however his ID can said to ghost-maintained now. Presidency sure takes a toll on twitter users! haha! Specially if you are Barack Obama 🙂

  2. All due respect to Mike, but his hypothetical valuation math is based solely on his/their conjecture on A) What revenue streams will be available to Twitter, B) When those streams will kick in, and C) How much those streams might eventually be worth. And if as you suggest Om, that they have omitted the “firehose fees” from the search giants, then their estimated valuation would be off (undervalued) by a factor.

    Their attempts to apply a discounted cash flow model to their “finger in the air” revenue guesstimates at this point in Twitter’s evolution is entertaining. But good for them, NeXt Up gets some free press for playing the skeptic by pointing out that Twitter currently lacks revenue – brilliant.

    1. Jeff

      From what i understand – the firehose deals are going to become a major part of their revenue stream. Even if they are charging a couple of million $$s a month, that adds up to a pretty substantial revenue stream for Twitter. Say $1.5 M a month each from Google or Microsoft = $36 million or so every year. Nothing to sneeze at. Okay I have no clue how much they are getting paid, but I am assuming Twitter is making high seven digits in order to jutify giving away their prized asset.

      On NEXTup being skeptical: actually it is refreshing to think that way, though I agree their reasons are all wrong. My view is valuation for start-ups is essentially how much someone will pay for it, rationality be damned. 🙂

  3. Imagine twitter shuts down for a day…
    Another view – how different (in terms of soundness) are the business models of twitter vis-a-vis youtube (prior to google acquisition)?

  4. Value at this point is completely determined by what investors are willing to pay, but there was an interesting debate kicked off by Scoble a couple of months ago about this – http://bit.ly/11j30S. My thoughts today remain roughly the same in terms of the value that Twitter brings to small businesses that we work with:

    * It is so open that it is possible to use it to listen to the real-time conversations that are unfolding on the web and leverage it to connect with people who are potential customers or partners for your business (especially with tools that make it easier than the native Twitter site).
    * the great APIs have enabled tool developers like CloudProfile to help build business specific applications that unlock the power of Twitter and then help to draw prospects and customers into deeper, more meaningful interactions.

    So it’s not that Twitter is the be-all-end-all tool. It’s just that it is the constantly in motion “front line” of where your business (or your individual) interests can connect with other relevant people in the world who you are not yet connected to. Backed by a powerful platform for then connecting with those people more deeply, it can be a tremendous source of ideas, leads, and fun for you.

    And that is super valuable.

    1. The number of Billion dollar companies that “big valley vc’s” have passed on is numerous and legendary. There’s very little to infer from their decision not to fund Twitter. In addition, VC fund size and eventual success of early-stage portfolio investments are not well correlated.

  5. The decision to postpone a business model allows Twitter to claim valuation tied to the effects of Twittering rather than basic technical functionality of micro blogging. Twitter is in a business analogous to a company that builds roads. The road building business is far less interesting than the businesses and activities that roads enable. Twitter will not escaped getting valued old school on revenue growth and profit margin. Any attempt to profit from the indirect effects of Twitter (extracting a toll from businesses built along the road) provides an opening for a competitor.

  6. With Twitter’s future plans to become more location aware of it’s users and their tweets, Twitter may be able to position itself well to the mobile advertising market. Users may be able to follow brands and in turn brands may be able to, for a fee, send their followers a direct message welcoming them to an area near their retail locations, as established by the brands. For instance, if you follow a ski resort or casino brand, you may be notified at specific points when traveling to via road or when arriving at an airport, “Welcome to Lake Tahoe! This weekend, Harrah’s features a poker tournament & Big Bad Voodoo Daddy in the South Shore Room. More: bit.ly/…” etc… In addition, users may be able to opt-in to receive advertising messages in their feed, maybe limited to once daily, and/or only when they travel outside their home area. Twitter would send the message to the highest bidding advertiser and a marketplace would develop. Advertisers may be able to determine how much their willing to bid based on the time of day, day of the week, etc. to ensure they are only advertising during their business hours, and allowing businesses to promote specific events. iPhone apps like Twitterrific already earn revenue from displaying ad messages in user’s feeds. Perhaps Twitter could develop their own, official Apps for iPhone, Android, etc. giving them more control of the user experience like Apple.

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