Is Twitter Worth It?

April 28, 2008

Rumor has it that Twitter raised yet another round of funding, putting its valuation anywhere from $60 to $150 million. Is it worth that much?

I return to the whole adage: something is merely worth as much as someone is willing to pay for it – even if that amount seems retarded. In this case, I still believe Twitter will be acquired this year, for a surprising amount that everyone will shake their head in disbelief.

Granted, there’s been much talk about Twitter’s lack of a business model: absolutely no monetization strategy other than the possibility of ads in the feeds which will likely piss users off, and limited mainstream awareness / appeal.

I suggest recalling the iffy-at-the-time YouTube acquisition. Back in 2006, they had zip as a monetization strategy, just tons of traffic. So much traffic to serve up video, that people wondered if they would be done in by high bandwidth fees. Others worried that copyright issues would destroy the company. They didn’t have a clear road to profitability. Just before the acquisition, it was either get more funding, sell to a company with bigger resources, or go under. Luckily Google came in at the last minute and bought YouTube. They still don’t have a killer monetization strategy.

Anyhow, my point is: I don’t think any of Twitter’s recent woes like prohibitive down time our ousting employees will matter. They will be purchased by someone focused on the hockey-stick growth and rabid user base. A large acquiring company may also provide resources to improve their scaling issues.

And as for Twitter as a service? I first checked it out about a year ago and thought it was intriguing. It’s so easy a chimp could do it, so I feel it has much potential to go mainstream. It’s also one of the few Web 2.0 sites I still use on a daily basis (the other being FriendFeed). And last I checked the user base doesn’t consist of chimpanzees.

Comments

  1. Mike says:

    Hey, I forgot about pre-Google YouTube. Certainly, monetizing YouTube sounds easier now than it did back then, though. If media companies like NBC didn't balk at Apple and Google and create Hulu, YouTube would have already had it made.

    Essentially, Hulu is only a YouTube clone, anyway, just owned and operated by the media conglomerates. No user-created stuff alongside LOST and The Office. Apparently, NBC, FOX, etc. are all too good for the stage that everyone else uses.

    Google bought Jaiku, so I can't see them buying Twitter, too. I suppose Google could combine Jaiku and GrandCentral into something interesting, but who knows what's going on over there…

    Putting such a ludicrous price on Twitter is still insane, just like it was on Facebook. Maybe they think that by putting such a high price on their service, they'll find a buyer who's foolish enough to assume the numbers weren't pulled out of nowhere? I don't know.

    As it stands, you're right – they're not making much money on their own, and they don't seem to have a clear plan to change that.

  2. Mike says:

    Also, I've fallen behind on my feeds again, but I want to say – excellent work on the site design, dude. It looks great!

  3. webomatica says:

    Yeah I keep going back and forth between adding a lot of stuff and then stripping it out. Right now I'm contemplating how I can reduce file size to get it to load faster.