The stakes just got raised in the venture business and the ‘real time’ web world. TechCrunch is reporting that Twitter ($twit ) has raised $50 million on a $1 billion valuation .
Twitter’s great timing is great for Twitter and a few smart/lucky/hard working people focused on the real time web, but the pressure only goes up with each big raise and bump in valuation.
Twitter is actually in great shape. They now have oodles of cash and can handpick the talent needed to grow into their market cap. Most of the investor’s have been in for a long time so even if they upped the ante at the ‘rumored’ $1 billion, their average cost is MUCH lower.
The raise could be for many reasons like posturing to force an acquisition or to let Facebook and Google know they are in it for the long haul.
BUT, the raise makes it harder to value related businesses and much like Google completely mucking up the video landscape with their YouTube acquisition, the tables are being set for impossible expectations to be met.
Much like you should not be chasing stocks 66 percent above their march ‘Generational Lows’, you should not be chasing dreams in the ‘real time’ web because of Twitter and Facebook valuations. The pressure and urge to be in the Twitter jet stream just went to all-time highs and beyond….
If Twitter were a public company, this would be more fun for us all. In a liquid market, ‘real time’ web stocks would be racing around on the news. As someone who loves to overpay for highly liquid securities and be cheap as hell for illiquid securities , I can tell you from experience that this one deal benefiting the few will lead to major pain for the many.
There are huge air pockets between the top few and the best of the rest so be careful.
Disclosure – I am an investor in Twitter through my hedge fund’s investment in Betaworks
Great post Howard. The real opportunity, and why I believe they needed a new $50 mil raise and in turn $1bil valuation, is the potential monetization model within the entire Twitter ecosystem. Twitter has the opportunity to now offer a whole host of applications built off their network, with a higher earning potential then say inserting Google Adsense. For example, why not help StockTwits with some distribution deals for a rev share?
While I feel that the “ante” has been upped for many web start-ups, the funding by some groups into other 3rd party Twitter applications has to be questioned when Twitter themselves has not publically made comments regarding which ones they see value in (Co-Tweet?)& which ones they can theoretically copy if they wanted to (insert any Adobe Air App)
It will be interesting to watch the growth. They certainly have enough cash to turn the real-time web in their favor. There is a 300 million user gorilla that is turning into real-time as well.
Great post Howard. The real opportunity, and why I believe they needed a new $50 mil raise and in turn $1bil valuation, is the potential monetization model within the entire Twitter ecosystem. Twitter has the opportunity to now offer a whole host of applications built off their network, with a higher earning potential then say inserting Google Adsense. For example, why not help StockTwits with some distribution deals for a rev share?
While I feel that the “ante” has been upped for many web start-ups, the funding by some groups into other 3rd party Twitter applications has to be questioned when Twitter themselves has not publically made comments regarding which ones they see value in (Co-Tweet?)& which ones they can theoretically copy if they wanted to (insert any Adobe Air App)
It will be interesting to watch the growth. They certainly have enough cash to turn the real-time web in their favor. There is a 300 million user gorilla that is turning into real-time as well.
i still think that there are dreams to be chased within the real time web. moderating, monitoring, and filtering content are going to be big businesses.
Of course, but they are scarce and don’t create many jobs.
The real time web hasn’t created many jobs. Twitter probably has less than 50 employees.
Exactly my pooint. Obviouslty it will increase commerce but at what cannibalization. Good for amazon, dell but not for overall employment outlook
Employment is not synonymous with opportunity or profit.
Employment is not synonymous with opportunity or profit.
Exactly my pooint. Obviouslty it will increase commerce but at what cannibalization. Good for amazon, dell but not for overall employment outlook
The real time web hasn’t created many jobs. Twitter probably has less than 50 employees.
Of course, but they are scarce and don’t create many jobs.
i still think that there are dreams to be chased within the real time web. moderating, monitoring, and filtering content are going to be big businesses.
Great post Howard. The real opportunity, and why I believe they needed a new $50 mil raise and in turn $1bil valuation, is the potential monetization model within the entire Twitter ecosystem. Twitter has the opportunity to now offer a whole host of applications built off their network, with a higher earning potential then say inserting Google Adsense. For example, why not help StockTwits with some distribution deals for a rev share?
While I feel that the “ante” has been upped for many web start-ups, the funding by some groups into other 3rd party Twitter applications has to be questioned when Twitter themselves has not publically made comments regarding which ones they see value in (Co-Tweet?)& which ones they can theoretically copy if they wanted to (insert any Adobe Air App)
It will be interesting to watch the growth. They certainly have enough cash to turn the real-time web in their favor. There is a 300 million user gorilla that is turning into real-time as well.
i still think that there are dreams to be chased within the real time web. moderating, monitoring, and filtering content are going to be big businesses.
The world has gone f’n mad.
The world has gone f’n mad.
Of course, but they are scarce and don't create many jobs.
The real time web hasn't created many jobs. Twitter probably has less than 50 employees.
The world has gone f'n mad.
Exactly my pooint. Obviouslty it will increase commerce but at what cannibalization. Good for amazon, dell but not for overall employment outlook
Employment is not synonymous with opportunity or profit.
I'm glad i am part of the jet stream
i like that one
I’m glad i am part of the jet stream
i like that one
i like that one
I’m glad i am part of the jet stream
Great post and commentary. Could be wrong, but isn’t this what they call a “tuck in” late round VC investment to help out some buddies in the community prior to a [pending] purchase. Better to get 20-30% payback in <12 months with some of those dollars sitting in LY's fund, right?
Great post and commentary. Could be wrong, but isn’t this what they call a “tuck in” late round VC investment to help out some buddies in the community prior to a [pending] purchase. Better to get 20-30% payback in <12 months with some of those dollars sitting in LY's fund, right?
Great post and commentary. Could be wrong, but isn't this what they call a “tuck in” late round VC investment to help out some buddies in the community prior to a [pending] purchase. Better to get 20-30% payback in <12 months with some of those dollars sitting in LY's fund, right?
Web shit – OVER RATED ad over priced “1’s and o’s”
Web shit – OVER RATED ad over priced “1’s and o’s”
Web shit – OVER RATED ad over priced “1's and o's”
Agreed, it’s nearly complete insanity to try to swoop in and compete with the likes of Twitter and Facebook. That’s certainly not to say many won’t try it, with a (very, very) few likely to at least receive honorable mention along the way. An even smaller portion will actually rise above at some point, but that’s basically a lottery ticket play.
I think it’s much more sane to take the approach of 37signals and cater to DHH’s “Fortune 5 Million”. There are thousands of niche opportunities out there to make really good money as opposed to insane piles of cash. The pay-off potential definitely isn’t as high, but the odds of success are much, much greater. You’re also have the opportunity to stay much more under the radar and be able to build yourself a nice little empire without much of anyone really noticing. Granted, competition is certainly good, but there’s something to be said for sucking up a big portion of some niche market before that happens.
Definitely, congrats to you, Howard, for getting in on the Twitter run-up. But for my lowly self, I’ll happily take a relatively sure-thing $1 million idea over trying to discover the next $1 billion idea.
Me too. Cathing big ideas is all a mystery. Like hot chicks :)
Me too. Cathing big ideas is all a mystery. Like hot chicks :)
Me too. Cathing big ideas is all a mystery. Like hot chicks :)
Me too. Cathing big ideas is all a mystery. Like hot chicks :)
Agreed, it’s nearly complete insanity to try to swoop in and compete with the likes of Twitter and Facebook. That’s certainly not to say many won’t try it, with a (very, very) few likely to at least receive honorable mention along the way. An even smaller portion will actually rise above at some point, but that’s basically a lottery ticket play.
I think it’s much more sane to take the approach of 37signals and cater to DHH’s “Fortune 5 Million”. There are thousands of niche opportunities out there to make really good money as opposed to insane piles of cash. The pay-off potential definitely isn’t as high, but the odds of success are much, much greater. You’re also have the opportunity to stay much more under the radar and be able to build yourself a nice little empire without much of anyone really noticing. Granted, competition is certainly good, but there’s something to be said for sucking up a big portion of some niche market before that happens.
Definitely, congrats to you, Howard, for getting in on the Twitter run-up. But for my lowly self, I’ll happily take a relatively sure-thing $1 million idea over trying to discover the next $1 billion idea.
Agreed, it's nearly complete insanity to try to swoop in and compete with the likes of Twitter and Facebook. That's certainly not to say many won't try it, with a (very, very) few likely to at least receive honorable mention along the way. An even smaller portion will actually rise above at some point, but that's basically a lottery ticket play.
I think it's much more sane to take the approach of 37signals and cater to DHH's “Fortune 5 Million”. There are thousands of niche opportunities out there to make really good money as opposed to insane piles of cash. The pay-off potential definitely isn't as high, but the odds of success are much, much greater. You're also have the opportunity to stay much more under the radar and be able to build yourself a nice little empire without much of anyone really noticing. Granted, competition is certainly good, but there's something to be said for sucking up a big portion of some niche market before that happens.
Definitely, congrats to you, Howard, for getting in on the Twitter run-up. But for my lowly self, I'll happily take a relatively sure-thing $1 million idea over trying to discover the next $1 billion idea.
Me too. Cathing big ideas is all a mystery. Like hot chicks :)
Agreed, it's nearly complete insanity to try to swoop in and compete with the likes of Twitter and Facebook. That's certainly not to say many won't try it, with a (very, very) few likely to at least receive honorable mention along the way. An even smaller portion will actually rise above at some point, but that's basically a lottery ticket play.
I think it's much more sane to take the approach of 37signals and cater to DHH's “Fortune 5 Million”. There are thousands of niche opportunities out there to make really good money as opposed to insane piles of cash. The pay-off potential definitely isn't as high, but the odds of success are much, much greater. You're also have the opportunity to stay much more under the radar and be able to build yourself a nice little empire without much of anyone really noticing. Granted, competition is certainly good, but there's something to be said for sucking up a big portion of some niche market before that happens.
Definitely, congrats to you, Howard, for getting in on the Twitter run-up. But for my lowly self, I'll happily take a relatively sure-thing $1 million idea over trying to discover the next $1 billion idea.
Me too. Cathing big ideas is all a mystery. Like hot chicks :)