Twitter is going public. What is the value of the company and can it learn from Facebook and LinkedIn?
The fact that anyone reading this will not need an explanation of what Twitter is bears testament to it s ubiquit y. Even Marc Ashton and Bruce Whitfield are frequent tweeters – so literally everyone is doing it. Now Twitter has announced its intention to publicly list the company, making it possibly the most incredible IPO to date.
Imagine if you had told someone 10 years ago that a service that allows people to post SMS-length messages to each other would one day be a public company. Oh, by the way, it’s making some money but still f iguring out exactly what the revenue model should look like.
You would’ve been laughed out of the milkshake queue.
If you then explained how Twitter had disintermediated professional news reporters overnight and was now the primary place where many people went for information you may be taken semiseriously.
And as you sipped on your doublethick chocolate milkshake you could then tell people about another two social networking IPOs.
Facebook, where people put pictures of cats and small children for other people to look at, would one day be worth $100bn. LinkedIn, where you find out what someone did for a living before their current job, would quadruple its share price on the first day of listing.
Crazy stuff, and yet here we are. GSV Capital Corp – a VC firm with a stake in Twitter – has valued it at $10bn. The big- gest valuation I’ve seen was $15bn. The company will generate $600m in revenue this year, we’re told, but it’s not clear how profitable the company is.
Twitter has several challenges to consider, beyond how to push revenue to the next level. It also needs to think about weary investors who burned their fingers on Facebook or, even worse, Zynga and Groupon. LinkedIn has been a success, however, with a ‘freemium’ revenue model. Perhaps Twitter should be thinking more about premium services and less about advertising.
We certainly won’t be picking up Twitter shares at launch, unless something extraordinary happens between now and then. But we will be watching in fascination as another social network takes f light.