So, what would a Google-Twitter baby look like? Or a Facebook-Twitter child?
As Internet valuations climb and bankers and would-be buyers circle Silicon Valley in an increasingly frothy tech market, many eyes are on one particularly desirable, if still enigmatic, target: Twitter. Discussions with at least some potential suitors have produced an estimated valuation of $8 billion to $10 billion.
Twitter, which started selling ads last spring against its business of allowing users to send messages of no more than 140 characters, is just one of many tech targets being batted about as valuations climb. In December, when it got $200 million in new venture capital, Twitter was valued at $3.7 billion.
But since then Facebook raised $1.5 billion in a financing that valued the social network at $50 billion, up from $10 billion in mid 2009. Online-coupon provider Groupon Inc. rebuffed a $6 billion takeover offer from Google and set plans for a 2011 public offering—a prospect that had bankers rushing to Groupon’s Chicago headquarters in recent weeks to make pitches. And just this week, AOL Inc. agreed to pay $315 million to buy the Huffington Post—about 10 times the news and commentary website’s 2010 revenue.
There is growing consensus Google would be the more appropriate match. The search engine has struggled to find its place in the Web 2.0 era. Buying Twitter would give Google a real-time social information service and considerable amounts of data. With its demonstrated ad platform, Google may also be in the better position to leverage the value of Twitter’s data.
Snubbing Google or Facebook would put Twitter in risky territory. The company has struggled to find a proven business model. Despite its $45 million in reported revenues last year, Twitter is said to have lost money hiring engineers and buying data centers. Its current annual revenue forecast is reported to be between $100 and $110 million, with the majority of that flowing from Promoted Tweets. With such a large exit opportunity on the table, investors will now demand a better product roadmap and specific plans to generate profits upwards of these acquisition offers in the future.
Since Twitter launched in 2006, it has grown considerably, especially in the past year. It now has nearly 200 million registered users. In December, the company confirmed that it has tripled the number of employees it had just 12 months ago. With a staff of about 350, the company is reportedlysearching for a new office, potentially outside of its native San Francisco.
The talks with Facebook and Google aren’t new, the Journal said. Communication has been ongoing and open, with both companies expressing a “latent interest” in Twitter.
Not for the first time, the internet needs to stop being so bloody hysterical.
The reason I can’t muster any outrage over a possible Twitter acquisition is that I’ve seen this movie a dozen times before. Spoiler alert: everything’s going to be fine.
For one thing, this is Silicon Valley. Everyone here is in acquisition talks with Google and Facebook. Twitter certainly is; Quora probably is; Foursquare, Tumblr, Instagram, Instapaper – they’re all likely sitting round a Mountain View conference table at this very moment, pens poised. They’ll all deny it of course. They’re in it for the long haul – they have no interest in selling. Until they do.
The only problem with the independence v acquisition, good v evil narrative is that – well – it’s bullshit. You know who refused to sell out to the man? Facebook. Mark Zuckerberg is famous for having turned down multiple acquisition offers – including one from Google. The payoff? Facebook grew so big that it ended up being an evil acquirer itself. Google also turned down multiple suitors, before swelling into a public company with a market cap of almost $200bn. The “don’t be evil” kids are now so powerful that even the Chinese government is scared of them.
Here’s what happens next: either Twitter is acquired, it goes public or it continues to grow until it’s as big as Facebook. In the meantime, someone invents an even shinier, newer service for us to root for. Like Twitter, that new thing will change the way we communicate, it’ll revolutionise commerce and – who knows – it might even kick-start a revolution. “We’ll never sell out!” the founders will cry. And we’ll all believe them. Until one day they do – possibly even to big, evil old Twitter.