Thoughts on Twitter’s valuation

The chattering class is chattering about Twitter’s current valuation. While the WSJ may be speculation, the reality is that Twitter’s value cannot simply be derived by extrapolating from current revenues. I couldn’t believe how many tech journalists peddled that line of thinking. Here’s briefly how I think about Twitter’s valuation:

  • Brand: Twitter is a global brand. It’s easy to use and there are many ways to use it.
  • Mobile: Tweets are basically SMS linked, powerful via text, voice, etc.
  • Search: There’s a huge untapped opportunity to better cull and harvest tweets for search.
  • Analytics: Twitter could offer a bouquet of robust dashboard analytics to heavy users, brands, institutions.
  • Location: Because Twitter is so mobile, they know a lot about user’s location.
  • Talent: 400 very smart, savvy, connected people work there.
  • Infrastructure: Even though Twitter seems so simple on the outside, it takes 200 engineers and lots of money to build and maintain.

So, does this all add up to $8b or more? I’ll take the HUGE upside bet here, and remember, as the clock ticks for Google, and as Facebook continues to surge, Google may just need to buy Twitter, and Facebook here has the incentive to drive up the price for its main rival. Finally, my hope would be that Twitter remains independent, but there opportunity is so big and across so many different lines, that it may take too long to figure out, and may be better to have Google come in and harvest all the upside as it arms itself for the next war.