Yesterday CNET’s Charles Cooper reported that Twitter had signed a term sheet to raise $15 – $20 million in a new round of venture funding
It’s fairly well known that they are out talking to VCs (it’s hard to keep that quiet), but our sources are saying no deal is imminent, and that Twitter is still meeting with potential suitors.
The company has received a number of term sheets, according to one source. Valuations range from $60 million on the low end to more than $150 million on the high end. There is, clearly, a bit of salivating going on around Twitter.
One reason for all the attention: growth rates suggest that it is now just a matter of when, not if, Twitter usage will go mainstream. Twitter usage has “exploded” in the last couple of months, says our source (this is supported by Comscore, which shows total page view doubling from 10 to 20 million between February and March, although it is nearly impossible to guess at total Twitter usage since there are no many access points other than the Twitter website, via the API).
The company may not take the highest valuation offered – it limits potential exits and makes hiring harder. But it seems likely that the round will be done at a valuation above $60 million.
Twitter now has 17 or so employees. Their biggest non-payroll expense is supposedly SMS fees, although they have hit a ceiling and no longer pay a marginal fee per message as the company grows.
I think the potential here is that Twitter has a real chance of going mainstream because it’s actually useful to normal people who want to chat with each other.
Forget all the other apps that are just for tech geeks.
Once Pownce goes SMS, I think they will catch up to Twitter.
“Their biggest non-payroll expense is supposedly SMS fees, although they have hit a ceiling and no longer pay a marginal fee per message as the company grows.”
That must be a freakish amount of text messages, and I wonder why the phone companies allow it.
Michael,
You are addicted my friend.
Get off the Twitter reporting for a week.
Just one week… please, for your own good.
If you don’t you’ll be giving bjs for twitter news on the streets before you know it.
Regards,
Max
What does twitter really offer that mainstream users can’t get from facebook?
Everyones now addicted to twitter.
Even me.
Twitter definitely worths 60 M.
@3 Why wouldn’t they allow it? The phone company makes $0.10-$0.15 per message sent or received by the users. Twitter’s sending mass amounts of cash their way!
@5 Simplicity.
Stupid question : how much revenue has twitter ?
twitter isn’t going to be doing so hot when gas costs $15 a gallon and nobody can afford to buy food anymore, and everyone cancels their $60 a month cell phone subscription….is what the doom and gloom people would say.
What mainstream traction do you see that makes you think Twitter will be a mainstream hit? The digerati like it (and the wannabes), people who don’t know who Robert Scoble is (most of them), don’t see the point.
We’ll leave monetization for another day.
$60M – $150M only? That’s cheap — seriously.
I just wonder where the monetization is. I love Twitter, but how can you leverage it to actually make any money?
That’s the $64 (or $60 million+) question, I guess
Nothing.
Twitter is full of spam. I get 4 to 5 new spammers following me each day, that’s about it.
Mainstream how? Nobody outside of the tech sector even cares
Mike,
The real issue here is not what they are “worth”, rather the issues are how will they use the money to develop a more reliable infrastructure & monetization model.
Twitter is rapidly becoming a communication utility for many. The third party services that are leveraging the API are also straining their infrastructure.
How do they monetize is the 60-150 million dollar question. I am sure they could offer a tiered service but they have opened Pandora’s box by opening their API in many ways.
Twhirl and many other services are built on the twitter API. What happens if twitter cuts them off to preserve costs? Or starts to charge per API hit? Just something to ponder.
Rodney Rumford
http://twitter.com/rumford
Twitter is a great toy, but I agree with @5 (Andrew).
@7 (ceejayoz) Simplicity is a subjective term. To mainstream consumers, Facebook is simple because it offers a wide-range of services in one spot. And don’t rely on the techies to support Twitter, because they will jump ship to the next best thing in a year.
echo @15
I recently had to get a new mobile plan in the LA metro area, and the cheapest I could find was this one at $24.95:
http://www.virg.../rates/month.do
Metro PCS, Verizon and Sprint have out of control monthly fees.
Forget texting. Am I going to pay $10 a month extra to use Twitter? Oh hell no. I was on Fido with my RAZR until I moved here and was paying $20 a month for mobile access. The iPhone AT&T plan is over $100.
Twitter will go mainstream when texting isn’t a nickle and dime business, and when there is a twitter button on the phone. Plus twitter is annoying.
If you sign up a new user, look at the rss ID, and subtract the last digit. Pretty sure that is the total number of users on twitter. Pretty sure they had a digit to the end of the count.
How many people use the Seesmic button on this wordpress blog now that the initial buzz from Arrington has died down? The same goes to Twitter. People that use it, use it just to say they’re using it. It’s not a totally useful service like MySpace was in 2003 to connect to long lost friends.
It will never jump. The investment valuations are purely speculative in nature.
Who has time to give updates . Twitter is good, but not that great. TechCrunch is full of Twitter news, 3-4 in a day.
Michael,
You are addicted my friend.
Get off the Twitter reporting for a week.
Just one week… please, for your own good.
If you don’t you’ll be giving bjs for twitter news on the streets before you know it.
Regards,
Max
“Once Pownce goes SMS, I think they will catch up to Twitter.”
That’s a joke. Twitter had an 18 month head start, and when the mainstream explosion hits, Pownce will be left in the dust.
==
“It’s not a totally useful service like MySpace was in 2003 to connect to long lost friends.”
Someone apparently hasn’t “got” twitter yet.
==
@Cavenger – Umm.. that’s what this post is about, “when” twitter will go mainstream. The growth patterns show it is going to expand beyond the tech sector soon. My gf uses it to tweet with her friends, local radio stations use it, a couple NBA players have begun using it. Everyone points to the moment Paris Hilton signs up as the moment Twitter will explode.
==
@Andrew – Twitter replaced Facebook as my social network of choice. I want rapid communication, and twitter is so simple that it does that perfectly. Facebook is still tied to the desktop (in the way 99% of the people use it).
Twit Crunch…this is getting sad.
The normal way to value a business is through free cash flows…
Based on this, I suspect Twitter is worth -$30 mil or so…
Twitter really owes Mike Arrington and the folks at Techcrunch a lot of $$, if they ever make it to a successful exit round (IPO or aquisition).
The amount of free advertising and promotion they get form here is honestly quite staggering.
I just don’t get these valuations. So many companies getting millions pumped into them without having a solid monetization model and making barely any revenue. I think that companies are only worth as much as the revenue they can potentially bring in. With Twitter, Facebook, MySpace and the solid collection of companies collecting alot of hype these days this potential revenue is still not clear.
@7 My question was more why the phone companies capped the number of messages they billed Twitter for, seems they would just keep billing.
facebook should buy twitter – its all about the connecting people and sharing info – not such a clear fit with others, except maybe yahoo’s new social/open strategy they announced last week.
@techcrunch – what do you think of possible acquires?
I’m surprised it took this long for Twitter to start garnering this kind of attention. As smart phone technology improves (the iPhone when it goes 3G will be a big driver for growth) Twitter will be mainstream. It will be interesting to see which big media company will ultimately snap them up.
Its just so easy to monetize this service, just make some premiun features, like photo uploads, super stats, lauyot customization, for i dont know 5 dolars per month, just like fotolog.com does. The rest of the people see normal advertise. If it really goes mainstream the cash will just fly in the air.
/agree @15 – And some of us in the tech field have a life and/or don’t want to tell people what we’re doing.
Main stream? Maybe, but not how it’s done now. I talk to people in the main stream and 100% said that is stupid or again, why would I want to tell people what I am doing and why would they care?
I think what some people forget is, most people have a lives, but maybe their’s a market out there, I mean I’m here replying.
I would pay… one Million DOLLARS!!
Its good for them. twitter makes a lot of sense
if I were Twitter, I would cancel sms. Nobody needs it… But everyone needs Twitter…
twitter is great though it has a lot of slow/down time. this and the new rounds of funding just might convince a few entrepreneurs to make more and improved twitter clones. some will be successful and twitter wont be alone for much longer.
I will give them $50 for their code (and a few million for their network of users). Actually, scrap that, I won’t give em a nickle for their code, flaky piece of @#!$
They better take whatever money they can get now. As flavor of the month and a novelty at best, if they don’t find a way to monetize the service quickly they’ll soon be nothing more than yesterday’s news.
It is appearing that my initial assessment was wrong. (See link.) I was initially pessimistic about Twitter’s viability, but was assured (via a Twitter direct message) that things looked better at Twitter than I initially imagined. I also received a public comment from Charlie Anzman that was equally positive.
So I guess the question now is, what next?
This might be a dumb question but as I recall it, the nature of an investment is to help a company cover expenses and grow revenue. With 17 employees and SMS fees as their biggest expenses…how on earth is Twitter going to spend all this money?
Twitter is about as mainstream as Seesmic… Nuff said.
Always wondered – why and who? Saw a great “how to” video at http://commoncraft.com/Twitter coutesy of http://www.communityguy.com/ – Jake McKee. Now I know the answer to both
Twitter is addictive but is also just a nice social app. Where are they getting their revenues and how may they get more money other than through investments? Another thing, why need more investments? Greater technology and bandwidth? It’s just a status alert company that should turn into other avenues of social networks
This much
*makes ‘Subway’ footlong hand gesture*
its worth the amount the tels bring in for txt msgs.
I thought true worth is based on revenue, gross profit and net profit. Speculative worth, why not say a billion. Real worth 17 salaries, oh but then you’d need to add a decent system architect to that.
Worth is also based on what the service gives to its users.
Right now Twitter doesn’t even enforce its own Terms of Service. I’m not the only person who has basically been told to deal with it. Why does Twitter even bother with the facade of a TOS that they only expect their users to follow? The way i read their TOS is that its two way. They expect certain actions from us and we expect them to uphold the TOS. Or am I way off base?
Read about my experiences here http://blog.wir...n-tos-isnt-tos/
How worth is twitter? there are a couple of facts to consider, like for example how easy is to clone it, how much is used all around the world (A lot for sure), if there are any competitors, how strong they are, and how many money they gain in a year… Considering those and other many factors you can understand how much is worth. In my opinion we talk about Millions of Dollars… but for sure not Hundreds of Millions of dollars…
Were some postings deleted here? A question that I posted a couple of weeks ago is gone.
There are some companies saying they’re worth a Billion dollars. It’s all really hyped up. Their value will only go up once they are able to break even and make a profit.
I like Twitter but isn’t that great like the media,propaganda says. Even down here in south america Newspapers show every week news about Twitter.