« SKYPE: Cheap.Com Just Isn't Interesting...Especially if Not an RFB | Main | On Yom Hazikoron, It Hits Home »

May 04, 2008



I did not see the value of Twitter a few months ago. But after using it for the last month my feelings have completely changed. It reduces the communication barrier because you can only say a few words. Thus, sharing things like Starbucks was slow, Iron Chef was great tonight, become easy. That in turn makes social interaction easy and very different from the current ways in a meaningful way.

Checkout how people are using it now to talk about the new "Dark Knight" trailer: http://summize.com/search?q=Dark+Knight

There is something to this Twitter...

Brad Feld

The good news is that I plan to keep blogging. The bad news is that I plan to keep twittering - at least for a little while longer.

Peter Cranstone

How do you (as a VC) put a value on Twitter?
That would be an interesting posting.

Here's my thought (I'm an entrepreneur). Twitter has a million users - of those, roughly 200,000 are active users.

Let's be reasonable and say you can convert 3% of the 200,000 to "fare paying" customers. That's 6,000 paying customers. Lets then say that number will triple in the next 3 years.

New total is now 18,000 paying customers. Next problem to figure out is "what are they paying for?"

Lets take a stab at a business model. Say those 18,000 active users want 99.999 up time from their account and that is worth $100 a year to them.

That's $600,000 per annum in revenues. Over three years that's now $1.8m

Cost of revenues now has to factored in. So far they've consumed $5.4 million and change with another $15m on the way.

Total investment is now $20.4 million with max possible revenue at $1.8m

Which then leads me to ask you (the VC) the second question. Based on either my math or your math (hopefully you will post something) what and who is your exit strategy.

You can't go public with $1.8m in revenues, so that leaves Zombie status or M&A.

Who then is the possible buyer and what's the imaginary exit price?


5o9 Inc.


Semi geek early adopters:




It's a mad world


fantastically realistic post. twitter is very in and very unlikely to be monetized.

David Nordell

I completely agree with your analysis, in spite of enjoying the serice itself. I wouldn't call myself an early adopter, since I only started using Twitter a month or two ago, but it has turned out to be a very useful way of creating contacts with high-visibility bloggers (as opposed to specialised low-visibility ones like myself) who will be useful in the future. It's also given me a chance to see how inane the 10 Downing Street tweets are, which is entertaining in itself. But as you say between the lines, Scoble and other users who follow thousands of other users can't possibly keep up with the traffic: their brains don't have enough bandwidth.
More to the point, I can't begin to see the long-term business model, unless they manage to convert enough users to paying real money, at a minimum of $50/year. This probably demands some kind of premium service, such as being able to segment your outgoing tweets to specific groups of other users in order to push premium content, at which point it would become a glorified group MMS-over-internet. Let's wait and see if it's still alive in another year.

The comments to this entry are closed.