Don’t get me wrong, Twitter is a cool company. But how can it be worth 1 Billion Dollars without generating a cent of revenue? I happen to be a fan of Twitter and see its unbelievable, gamechanging value as social tool. In fact, I will go so far as to say that search.twitter is the most important website on the Internet. Want proof? Look no further than Facebook, Microsoft and Google, who have all made huge strides in Real Time Search (RTS) since Twitter came along. Facebook went so far as to redesign its whole site to closely parallel Twitter and Google proclaimed that RTS is its biggest challenge this year. When a start-up [like Twitter] scares the big boys, you know it’s doing something right.
Now that I’ve praised it, let’s get through why I don’t think Twitter is worth a billion dollars. Let’s not even get in to the absurdity of giving any company a valuation that doesn’t have a business plan (seriously). But for now we’ll assume that the valuations for Twitter were based on number of uniques. The trouble is that one of Twitter’s greatest assets – comprehensiveness – is also its greatest weakness. The fact that you can post and read the twitter stream outside of its site via third party programs like Twidroid and Tweetdeck means that quite simply to use Twitter you never have to go to Twitter.
So, if you can’t count uniques how can you value the uses on the site? We know there is a value in the stream of conversation it creates but how do they plan to monetize? Licensing you say? Sounds good…for now. With Bing and Google currently making RTS a top priority, both both companies have been in talks with Twitter and have the R&D and money to figure it out…
(http://uk.techcrunch.com/2009/05/19/larry-page-twitter-made-google-focus-on-realtime-search/).
For Twitter, none of the glaring flaws seem to to matter. Twitter has no intention of selling ads on the site – EVER. And even if they did, remember that Google AdSense is useful because it delivers relevant ads that are being served by a complex algorithm created by a dedicated staff that has been perfecting this very thing for many years. So Twitter doesn’t plan on accurately counting uniques, deliver ads or, I guess, monetize in a traditional sense.
So where does that leave Twitter? They undeniably offer a tremendous value for companies and in turn for consumers. We’re seeing more and more companies cashing in on the virtues of micro-blogging. Recently, Southwest used Twitter to find and convert consumers from competitors. By targeting stranded Tweeters at competitor’s terminals, they quickly directed them to go to the nearest Southwest gate for a cheap flight out. Not only did they gain a consumer for a day, but also their ability to respond quickly created a long time customer.
So is Twitter valuable. Unquestionably. Has its real-time search literally changed the game and forced the big boys to stand up and take notice. Unquestionably. Unfortunately for Twitter changing the game and being important are independent of value. I suppose only time will tell how Twitter will evolve and whether the competitors will aim to beat them or join them. We’ll all be watching… and Tweeting.
