Last week I wrote that I think that Twitter is not worth the $1 billion valuation that it received last month in its latest round of funding. That analysis was based on the simple fundamental of top line revenue… and Twitter’s complete lack of it today and apparent lack of it any time in the near future.
Evan, Biz and the entire Twitter executive team know this. T. Rowe Price and especially the original VCs know this. So how did these smart folks decide to invest $100 billion (yes, of other people’s money, I know) into this business and why would the execs have turned down the rumored $500 million offers from Google and Facebook?
140 words or less
I wish I could say that I have internal Twitter documents of the investor presentation. As I don’t, I am going to have to make this up…
Here is the entire presentation made to investors in the form of a tweet:
@ev: GOOG & Bing need realtime search. $$$ in bank. GOOG overpaid $1BB 4 YouTube. 2010 sale 4 $2BB+
There you have it. I predict that Twitter will sell (most likely to Google) for $2 billion or more in 2010 and will have no revenue earned at the time of the sale. There will be a bidding war with Microsoft. Facebook may join in. No one else will.
This is about search, not microblogging. Google has enough services that it doesn’t make any money from directly. Twitter would be a nice addition to the stable.
Why, you ask?
Google is getting better at real-time search. Google has been following trends for years. Google has smart engineers. What Google can’t do is have Googlebot be everywhere at once. Today it is impossible to crawl every page on the Internet every second or even minute. What’s your site’s crawl rate in Google Webmaster Tools?
Imagine what Google (or possibly Bing) can do to tweak algorithms, crawlers, search suggestion tools, news, etc. with instantaneous data. The minute something trends in Google’s Twitter, search results and the rest kick into action.
SPAM, you say? Google is teeming with fraud squad teams for search (organic and paid), e-mail, news, blogs, etc. who know how this works and have algorithm that can be modified to work for microblogging.
Exclusivity
The remaining question is, does Google (yeah, or Bing) need this and can it be protected? TweetMeme is a great service. There are others like it. They search Twitter better than Twitter. Can Google use the Twitter API to get every tweet as it is tweeted without spending billions?
If Google buys Twitter, can it limit the API so Bing (and other websites and apps) can’t get the instant search gratification?
New Year’s Resolution
For 2010, I resolve to come up with a business that will never make a penny and can sell to a search engine for billions of dollars.
