What Are Twitter and Facebook Worth?

Assuming they were for sale that is.  The San Francisco Chronicle quotes sources giving a wide range of valuations on these two companies:

• Facebook:  From $5 Billion to $35 Billion
• Twitter:  From $656 Million to $1.5 Billion

Why the wide range in valuations?

First, you look at the more traditional methods of valuation:

• Current and projected revenue streams.
• Current and projected profit streams.
• Market share.  Let’s face it, if you aren’t #1 or #2 in a “network effect” business, you are no place at all in your market.
• Growth.  Especially such that it would move the company to a #1 or #2 position at some point in the future.

Then, you get into the more interesting area: Synergy.  Synergy is probably the most abused term in the history of corporate acquisitions.  Surveys show that planned synergies between companies rarely happen.  The vision has to turn into execution and that is where the ball often gets dropped.

When Synergy Fails

• GM and Hummer.  GM has failed to sell of this business and is now quietly shutting it down – at great loss.
• AOL and Bebo.  AOL paid $850 million for social networking site Bebo.   AOL has been discretely shopping the business and may shut it down in the next month.
• The Grandaddy of Them All:  AOL and Time Warner.  Stockholders lost more market value on this “merger” than on any other in the history of the universe!

When Synergy Actually Works

• YouTube and Google.  When Google bought YouTube, most “experts” said they overpaid.  See Blog.    Does anybody think this was a bad move today?

• Cisco does an amazing job of acquiring young companies and integrating them into their strategy.  The Flip acquisition looked like a head-scratcher, but is key to their strategy of communications, collaboration and video today.

Google was able to integrate its intelligent advertising business with YouTube and to monetize the huge audience YouTube that brought to them.  If you think of YouTube as a video search engine, then they were probably the second biggest search engine (to Google itself) at the time of acquisition.

AOL and Time Warner on the other hand were culturally at war from day one, never integrated their businesses in any meaningful way, and the rest looks like something from a disaster flic.

Is Twitter Worth $1 Billion?

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?

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.

Twitter for B2B Business

Is It Really Useful?

Yes.  Here are 8 B2B Marketing things you can do with Twitter right now:

• Listen.  Marketers say they want to listen to customers.  People want to be listened to. Here is your chance to prove that you do listen.  And act on what you hear.
• Invite customers and prospects to events
• Notify customers and prospects of new publications (documents, podcasts, video).  The URL shortening services such as TinyURL have made this useful and possible.
• Post quick news items (140 characters max, right?)
• Support: Listen for customer issues and address them quickly.  Wouldn’t it be great to be out ahead of issues before they spin out of control?  This is at the heart of Reputation Management.
• Monitor trends, feedback comments, competitor moves.
• Offer helpful tips and insights.  Contribute to the community.
• Engage customers in deeper discussions about the future product,service, etc.

The Problem with Twitter Today: Clutter, clutter, clutter…

I signed up to follow a well-known, Silicon Valley, evangelist / entrepreneur.  The next day he had filled my entire Twitter window with garbage news tid-bits.  This guy was syndicating all the news he saw.  Not useful.  I dropped that “follow” immediately.  The sad thing is that he has a lot of interesting and useful stuff to say.  I just was not willing to wade through the clutter to find it.

The bad news is that I clear clutter the way a lot of people do now: I stop following that source.

If you are doing some of  the 8 things listed above, how do you know your message (which is useful to the recipient) isn’t being lost in the deluge of chatter?

Some Hope for the Future

1. Twitter has open interfaces for software developers.  API info That means that third parties like Seesmic and WeFollow can add value easily to the basic Twitter platform.  Developers out there  have to be hearing the clutter problem.
2. Something I would like to see: Separate window panes or tabs for my different interests.  I don’t want my professional interests mashed up with my photography, sports and other interests.  Seperate views please.
3. My6sense is working on an app to filter your tweets so that the most relevant to your interests “float to the top.”  It is supposed to be a couple of months away.  I can’t wait. TechCrunch article.

There has been a lot of talk about a “Semantic Web” where the Web understands what is of interest to you and finds what you want without you asking for it.  Interesting, but it requires a common data format that computers can understand.  That could take a while.  We have standards bodies involved.  Sigh.

Twitter, on the other hand, is simple enough that computers can understand it right now.  We may see the first instantiations of the Semantic Web-like stuff here.  I hope so.  It could not come too soon.

What would you like to see Twitter do to improve its usefullness for B2B marketing?