Is Twitter Worth a Billion Dollars?

By  |  Thursday, September 24, 2009 at 4:41 pm

FailbucksTwitter, the micro-blogging company with no fully-disclosed revenue model, has reportedly raised around $100 million in private equity from T. Rowe Price and Insight Venture Partners, placing its total valuation at about one billion dollars. It’s Twitter’s responsibility to share its business plan with investors, but I see nothing but a new manifestation of the dot-com bubble. Call it a microbubble.

Board the hype machine and rewind back to 1996 when a hot start up company called Mirabilis revolutionized how people communicated with a technology known as “instant messaging,” compelling AOL to acquire it for $407 million. What payback did AOL receive on that bubble investment?

While it’s true that Twitter is not ICQ, and there is no doubt that it is under more pressure than ever to find a business model, it still hasn’t shown how it will pull in revenue. This week, executives ruled out running advertisements for the remainder of the year. What other rabbit is in its hat?

On the bright side, Twitter is a small company without high expenses, and its messaging platform is hugely popular (even though many of its users are sleepers). Maybe its management is more visionary than I am.

Also, Twitter would not receive financing if it did not have plans to spend it. I’m sure that AOL had grandiose plans for ICQ too. Instant messaging became a generic technology, and nothing has convinced me that the same thing will not happen to Twitter.

There are open source alternatives cropping up, as well as start-ups like eSwarm that have applied micro-blogging to solve different problems. Facebook has also invested more to soup up its Twitter-like events stream.

Twitter is looking far less distinctive than it did a year ago. Does anyone disagree?

 
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5 Comments For This Post

  1. Matt Sharpe Says:

    Twitter is massively, massively overhyped.

  2. bugfaceuk Says:

    I’ve never felt it was distinctive, but I’m not sure it is over-hyped at all. If the commenter means that it gets far more attention than the technology alone deserves… I can see the point. However, the level of attention is enormous and as such I don’t think Twitter is hyped at all. It simply is.

    Personally, I don’t get it but there’s no doubt it had a significant audience and if a buyer were (allowed?) to strike now they would be buying a real, and growing audience.

  3. Jake Says:

    Twitter is not even worth one cent! its point less it should just die like frendster did, who uses frendster any ways?

  4. Tom Says:

    Eswarm is twitter with a purpose. Yes!

  5. HowtoMakeaBillionDollars Says:

    Is Twitter worth $1 billion?

    Only if they can find a way to make $40 out of every one of their 25 milion-or-so users. So I’d go with ‘no’.

2 Trackbacks For This Post

  1. Twitter, It’s Time to Fix Short URLs | Technologizer Says:

    [...] Is Twitter Worth a Billion Dollars? [...]

  2. Twitter plateaus and after the sugar rush of funding Says:

    [...] As David Worthington at Technologizer noted  Also, Twitter would not receive financing if it did not have plans to spend it. I’m sure that AOL had grandiose plans for ICQ too. Instant messaging became a generic technology, and nothing has convinced me that the same thing will not happen to Twitter. [...]