Twitter Gets Their Venture Round
by Michael Arrington on July 26, 2007

twitter.pngTwitter has raised a round of financing, led by Union Square Ventures. The size of the round has not been disclosed (yet), but additional investors include Charles River Ventures, Marc Andreessen, Dick Costolo, Ron Conway, and Naval Ravikant.

The service, which has around 300,000 users, has grown rapidly in recent months. Pownce, Kyte and others are competitors.

See Duncan Riley’s interview with founder Biz Stone here.

Update: It sounds like the company had a strong talk with investors about not disclosing the size of the round or any other particulars. No one’s talking, other than to narrow it down to betwen $1 - $5 million.

Comments

 

Mike - don’t you think you should have Twitter’ed this?

(this might be my funniest comment ever!)

 

Good for them. They deserve it.

 

Not surprising with the amount of attention they’ve been receiving recently. Seems they are nearly as hot as Facebook (okay, that’s hyperbole).

 

Twitter is a worthless app for the most self-absorbed among us. There is no money involved and it will be extremely hard to insert any sort of advertising. A pay model won’t fly either because the mobile networks will just launch an application themselves if Twitter tries that path.

Furthermore, most blogs are really boring (perhaps even my own). Twits are even worse. “I ate a cheese sandwich.” Yawn. Fail.

http://livinginfirstlife.wordp.....-pass-gas/

 

While I love Twitter, it disturbs me that they still don’t have a business model worked out they are willing to discuss.

Where’s the money going? infrastructure and code improvements.

Where’s the money coming from? unknown.

 

To say there is no way to monetize it is quite wrong. I would point out how Pownce has done a great job of setting up a way to monetize, who is to say that Twitter won’t do the same? I don’t find pownce’s adverts obtrusive either.

 

#6
After the example google set, VCs have become more confident in letting entrepreneurs figure out how to make the $s or an exit after getting serious traction.

I don’t know if it’s a bad idea–I don’t know any *market leader* in the last five years that has gone defunct because they could not monetize.

 

I just don’t see Twitter solving a big problem. I think it’s going to have a hard time penetrating into the mass market, which I’m sure is necessary for it to be successful.

 

@ 8 Zaid

Not everyone (perhaps not anyone since Googlesque start-ups happen every few years, not on an annual basis) can just say “get big and figure out a model later”. That’s already proven to be a failure. Google solved a problem that had a great way to monetize. Maybe Twitter will blow us all away with a strategy to do so. Facebook still hasn’t figured one out and they have a lot of smart people working on the issue. I think it’s silly to assume that just because you have a lot of users, you can make money on them. There are some models that inherently don’t allow you to make money.

@ 9 MMT - I totally agree.

Twitter solves a far smaller problem than FeedBurner did. FeedBurner sold for a nice sum - $100 MM with a Series A and Series B.

 

#10
Funny you are passing a judgement on facebook when a year from now you might be looking at your post in embarrasment.

I don’t know one really bad example of a company having lots of users and not being able to monetize. The *best* example you may cite is YouTube(with all its mounting bandwidth costs) and even they had a pretty decent 1.6b exit, no?

 

@ 11 Doodle

Yeah, funny that I am willing to take a stand and be wrong. Most fanboys just think everything will succeed.

How many YouTube wannabes are there that will never exit because YouTube is already in the hands of Google and will never monetize? Thousands of which probably a good 30+ are VC funded. That’s a lot of money down the toilet.

It’s easy to pick out one example and say “Oh but what about Google?” Yes, Google came from behind and became a really big winner. Yes, Google has done some amazing things. Chances are, Twitter and 99% of other boneheaded start-ups are not the next Google.

If “acquisition” is the only strategy, then your only buyers are:

- Google
- Yahoo
- Microsoft
- eBay (maybe)
- if you’re very lucky, a major large media conglomerate (CBS - Last.fm)

Overall, there is a minefield of me-toos and coulda-woulda products. Twitter is one of them.

 

I’m looking at the investors and there are some really smart folks investing…but with no tested business model worked out does it really make sense?

The most obvious way to monetize Twitter (without charging users) is to provide targeted advertising - but how much of an advertising message can you pack into 140 characters?

Getting bought is not a revenue model!

 

I am still trying to figure out why anyone would care about Twitter. Yawn!

I don’t give a flying f&^% about what we people are doing every minute of their lives. If I am interested, I will e-mail or call them.

 

too bad you can not short this … on the other hand I finally have a way to let strangers know that I parked my bicycle at the curbside tree.

 

i have really gotten into twitter as i’m exploring the best uses of mobile to web, for the youth, to organize cause-related movement building with. it’s a great tool. and when the power outages hit sf, i knew which neighborhoods were getting hit. i can obviously see the use in disaster situations.

i logged onto pownce today. couldn’t figure out how to post from the phone. though i like the concept (from what i hear) their interface is _not_ n00b friendly, imo. i would love to have one place to post voice, video and the like with the social aspect built in. the syndication factor is critical. (obviously.)

anyway.

i’m glad that the tweets will continue on while we work out the details.

can someone built in the filters and multi feed support plz .?.!.
i’ve been begging.

love this site.
~ handy

 

@ bdb

Sure, having 300,000 users does indicate something. Remember the original “social networking” site? SixDegrees. They had millions of members but failed to get anywhere. Just having numbers doesn’t mean that you’re going to go somewhere. Twitter’s usage is even more limited than Digg. You cannot build a mass market business around early adopter, 20-something males in the 415 and 650 area code. That’s not sustainable because they will jump to the next “shiny” thing - e.g. Pownce.

Also, you need to lay off on ChandraB and others. They aren’t copying my arguments. There are other people who share my views.

 

A mobile phone company will buy twitter. this is the business model. Do you know how much money they make off twitters. VZ will buy them in no time. This is the exit. Good bet. Good investment. TC got some dumb readers.

 

I actually listened to a podcast (I think it was this Net@Night) where Evan hinted that they had already received rather large offers to purchase Twitter and had turned them down because they have a long term vision.

@Jay (Living in First Life): “Facebook still hasn’t figured one out and they have a lot of smart people working on the issue.”

I’m just curious, do you think the Twitter guys aren’t smart? Or working on the same issue as Facebook?

Personally, though I don’t use Twitter, I could see the application being licensed in schools, universities, or anywhere with large classrooms or meetings where you wouldn’t have to raise your hand to ask a question you could just twitter it to the professor. There are tons of different things like that that Twitter could be good for.

One man’s treasure is another man’s trash, just because some people don’t like Twitter, doesn’t mean everyone hates it…-Metagg

 

For people who don’t get Twitter (like Jason McMinn who said “I don’t give a flying f&^% about what we people are doing every minute of their lives”) take a look at this quote:

“Who would pay for a message sent to no one in particular?”
Associates of David Sarnoff responding to the latter’s call for investment in the radio in 1921.

Twitter is a phenomenon and we can’t quite grasp how useful it will become. But it is not something to be discarded…

 

I’m skeptical about Twitter because there’s very little preventing Facebook, MySpace or any other social network from adding Twitter-like functionality.

Their service would be far more interesting if it were able to simulcast(-receive) tweets from all of the social networks that I belonged to. Like Social Network Glue. Rather than receiving email updates about changes to Facebook, MySpace, Virb, among others, I could route all of that traffic through Twitter.

How to monetize? With chaser messages. If you and your friends are having a conversation about what to do after tonight’s concert, Twitter could then send a chaser SMS message to everyone notifying you that a near-by restaurant is having a happy hour before the concert.

There are obviously privacy concerns but perhaps people would see value in low-volume, highly-targeted, contextually relevant ads.

 

Correction, I meant to write:

How to monetize? With chaser messages. If you and your friends are having a conversation about what to do after tonight’s concert, Twitter could then send a chaser SMS message to everyone notifying you that a near-by restaurant is having a late night happy hour *after* the concert.

 

Congrats to Biz, Ev, Union Square, and Charles River Ventures. I was real skeptic when it first came out, and I’ll admit I’m not the perfect use case for the service.

But recently I’ve seen first hand how useful and different Twitter is from IM and Email. I see it adding real value not as a way to spread missives like, “I just had a peanut butter sandwich” - but instead as a way to keep highly mobile, loosely joined, close friends in contact with each other (like, say, the way I was in college).

 

to number 11 - YouTube’s mounting bandwidth costs? As far as I am aware they pay virtually nothing in b/w charges. They peer with T2 and T3 telcos, and to be honest they could charge Telcos (less than transit price) for their content if they tried.

 

..but on the subject of Twitter - is it becoming a brand in the States? I’m stuck somewhere miles away, so don’t know. But I think its value is based around being a brand. A brand is v. difficult to create but easy to monetize long term.

 

Boris - comparing Radio to Twitter is like . . . well there is no comparison. I don’t discount the text messages value to a carrier, but they will never truly get to a mass market. Sure maybe kids have time to send a text message every 10 minutes because they think people care what they are doing, but no one else does. Use IM and e-mail. Next.

 

Ah I smell some Google money in the deal. Mr Costolo (Dick) made his fortune from FeedBurner acquisition and now he is chilling out investing. Good move Dick, atleast you’re not gonna loose any money - Twitter will give you something back…

 

Twitter could become the next (Facebook) Platform — but for mobile — if they play their cards right. See http://www.techquilashots.com/.....or-mobile/

 

Twitter is useless.

Funding doesn’t mean anything! Self claimed visionaries (with lots of ego) have time to type messages such as,

- I woke up
- Brushing teeth
- The next one .. You don’t want to know what I am doing now (no, we don’t want to know)
- blow drying

??

The fad will go away in few months. Sure, some clueless company may buy them before that.

 

I am amazed at everyone’s ability to extrapolate their opinion to the world’s: “I don’t want to use Twitter, therefore nobody does.” What do you suppose the margin of error is on a statistical sample of one?

 

@useless twitter - do you have a daughter aged 12-18? You pretty much described her daily existence. I’m skeptical Twitter will find a big revenue model on its own, but its got to be attractive to mobile providers.

 

Well if nothing else some of tha adds are cute

 

It’s funny to see the awful grammar/intelligence of the Twitter fans. Some classic examples:

#21 Andrew - looks like he can’t speak outside of “Twitter speak”

#35 Jim Gregory - “some of tha adds are cute”. I’m sure your mother finds it cute that her son spells like a 4 year old.

There are some of you who make decent points, but why would a specific mobile carrier purchase Twitter? By not being independent, it would get cut off by the other players and they’d launch their own. It can only survive as an independent. This locks out a number of potential acquisition opportunities.

To those of you who think the nay-sayers are a statistical sample of one, I would argue that the adoption of Twitter at 300,000 is really low. Not just that, but the actual usage of those 300,000 is even lower. Many people have signed up, tried it out, and left it because it’s such a worthless service.

If you have real things to communicate with people, you use email or a phone. Twitter is for twits (users, investors, management, etc.).

Welcome to the Emperor’s New Clothes 2.0 baby!

 

We tried Twitter and found it to not be terribly useful. Cute gizmo but I don’t see a huge future

http://www.bizorigin.com/2007/.....rp-louder/

 

Maybe venture capitalists are getting into the “business” of charity now:

http://livinginfirstlife.wordp.....a-charity/

 

I don’t frequently use twitter but I’ve been on the site a few times, I think they were on to something with the global connectivity, but I honestly just don’t see the value in the site! It isn’t 95 again or anything but the big deals that have been getting done is enough to make any greedy VC lick their chops at the numbers these sites have been exiting for, so I think that’s why your seeing alot of companies receiving funding.

 

I guess each site will have its audience, but I clicked around a few times on the twittster, it did not have much substance to keep me…because I really don’t care what my pal did this morning…and I don’t have the time to keep up…, but I guess it will be popular amongst newbies…or teenies…I think they will graduate from the site as soon as they get used to it…not long after…all the best to them…

 

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