Is Twitter Worth $1 Billion?

25 09 2009

Twitter TThe news this morning is that Insight Venture Partners (venture capital) and T. Rowe Price (mutual fund) are close to investing $100 million in Twitter, which would suggest a market valuation of $1 Billion for the service.  Not bad at all for a company that is still in the “Pre-Revenue” stage.  So, today’s question is: is Twitter really worth a Billion?

Yes, Twitter is Worth At Least $1 Billion

  • Size: Twitter is in “The Tornado” of hyper-growth and in this stage of their lifecycle  it is all about maximizing market share right now.  They are doing a great job with 54 million unique visitor per month (ComScore)
  • Growth: Twitter has that too.  From Feb 2008 to Feb 2009 it grew 1,374%.  In May, the WSJ reported that Twitter had 32 million unique visitors for the month.  This month it is 54 million according to ComScore.
  • Experience: Evan Williams, the CEO, built and sold Blogger to Google back in 2003. He knows what he is doing.
  • Investors: Do you think Insight and T. Rowe Price put their money down without seeing some sort of plan to generate revenue?  Not likely.
  • Advertising: Twitter says it can easily add advertising but has no plans to do so before 2010.

No, a $1 Billion Valuation on Twitter is Highly Questionable

  • Differentiation: What is Twitter’s market differentiation relative to Facebook?  The gap narrows daily as Facebook adds Twitter-like functionality to their service.
  • Market Leadership: Facebook has 300 million unique visitors per month and it’s functionality is a superset of Twitter’s, although I would give Twitter a slight edge in mobility.
  • Monetization Hurdle:  Facebook has experienced strong user backlash from rumors of planning to charge for parts of its service.  While changes may be technically easy to implement, they can be punishing culturally.
  • Monetization Again: Mark Andreesen was quoted as saying Facebook would make $500 million (profit) and be valued at “billions” in a couple of years. Where is the Twitter plan?
  • Experience: The Twitter people have good technology and an excellent growth plan, but no previous track record of monetizing a service.

Twitter has said it wants to be the “pulse of the planet.”  It is going to be very interesting to watch both Twitter and Facebook for the next few years.  This story has a long way to go before it plays out.

Recent stories have said that Twitter has turned down offers from both Google and Facebook.  They must have something in mind, but so far they aren’t telling.

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3 responses

25 09 2009
Twitter Trackbacks for Is Twitter Worth $1 Billion? « Enterprise Social Media Marketing [rbnolan.wordpress.com] on Topsy.com

[…] Is Twitter Worth $1 Billion? « Enterprise Social Media Marketing rbnolan.wordpress.com/2009/09/25/is-twitter-worth-1-billion – view page – cached The news this morning is that Insight Venture Partners (venture capital) and T. Rowe Price (mutual fund) are close to investing $100 million in Twitter, which would suggest a market valuation of $1… (Read more)The news this morning is that Insight Venture Partners (venture capital) and T. Rowe Price (mutual fund) are close to investing $100 million in Twitter, which would suggest a market valuation of $1 Billion for the service. Not bad at all for a company that is still in the “Pre-Revenue” stage. So, today’s question is: is Twitter really worth a Billion? (Read less) — From the page […]

26 09 2009
moonwink

Twitter “worth” $1 billion? The lunatics are truly running the asylum! See http://moonwink.wordpress.com/2009/09/25/twitter-worth-1bn-are-the-lunatics-running-the-asylum-again/

29 09 2009
DoublePositve = 1 Billion

[…] can read more about it here, here, here, here, here, here, here, or […]

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