January 26, 2009
Micro-blogging site gets "significant round" from long list of investors
Twitter, the popular micro-blogging site, officially confirmed on Friday that it closed a new round of financing. Evan Williams, CEO of Twitter publically announced the investors including, Insight Venture Partners, T. Rowe Price, Institutional Venture Partners, Spark Capital and Benchmark Capital. Williams commented, "It was important to us that we find investment partners who share our vision for building a company of enduring value. "
Financial details of the round were not disclosed in the blog entry, although Williams did describe the financing as, "a significant round." According to several published reports, Twitter raised somewhere around $100 million and is now valued at $1 billion, a massive leap compared to its $250 million valuation earlier this year.
Despite offers from the likes of Facebook, this round could serve to help Twitter stay independent among the other social networking giants across the Web. It's team consists of around 60 employees, Williams stated, "Twitter's journey has just begun and we are committed to building the best product, technology, and company possible. I'm proud of the team we've built so far and I'm confident in the future we'll build together."
Earlier this year, San Francisco-based Twitter raised $35 million from Benchmark Capital and Institutional Venture Partners. This new round brings Twitter's total financing to $155 million.
As for business model, Twitter has yet to actually find one. Some possibilities the startup has said it is working on include monetizing off of its new search engine through targeted advertising, similar to the likes of Google. Another has to do with content deals - as Twitter has rapidly become a form of mainstream communication, television and other media outlets are looking at Twitter as a way to interact and create a two-way experience with its viewers. Finally, Twitter could sell premium accounts to businesses looking to use the 140 character Tweets as a marketing tool.
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What is Twitter?
Twitter is an online information network that allows anyone with an account to post 140 character messages, called tweets. It is free to sign up. Users then follow other accounts which they are interested in, and view the tweets of everyone they follow in their "timeline." Most Twitter accounts are public, where one does not need to approve a request to follow, or need to follow back. This makes Twitter a powerful "one to many" broadcast platform where individuals, companies or organizations can reach millions of followers with a single message. Twitter is accessible from Twitter.com, our mobile website, SMS, our mobile apps for iPhone, Android, Blackberry, our iPad application, or 3rd party clients built by outside developers using our API. Twitter accounts can also be private, where the owner must approve follower requests.
Where did the idea for Twitter come from?
Twitter started as an internal project within the podcasting company Odeo. Jack Dorsey, and engineer, had long been interested in status updates. Jack developed the idea, along with Biz Stone, and the first prototype was built in two weeks in March 2006 and launched publicly in August of 2006. The service grew popular very quickly and it soon made sense for Twitter to move outside of Odea. In May 2007, Twitter Inc was founded.
How is Twitter built?
Our engineering team works with a web application framework called Ruby on Rails. We all work on Apple computers except for testing purposes.
We built Twitter using Ruby on Rails because it allows us to work quickly and easily--our team likes to deploy features and changes multiple times per day. Rails provides skeleton code frameworks so we don't have to re-invent the wheel every time we want to add something simple like a sign in form or a picture upload feature.
How do you make money from Twitter?
There are a few ways that Twitter makes money. We have licensing deals in place with Google, Yahoo!, and Microsoft's Bing to give them access to the "firehose" - a stream of tweets so that they can more easily incorporate those tweets into their search results.
In Summer 2010, we launched our Promoted Tweets product. Promoted Tweets are a special kind of tweet which appear at the top of search results within Twitter.com, if a company has bid on that keyword. Unlike search results in search engines, Promoted Tweets are normal tweets from a business, so they are as interactive as any other tweet - you can @reply, favorite or retweet a Promoted Tweet.
At the same time, we launched Promoted Trends, where companies can place a trend (clearly marked Promoted) within Twitter's Trending Topics. These are especially effective for upcoming launches, like a movie or album release.
Lastly, we started a Twitter account called @earlybird where we partner with other companies to provide users with a special, short-term deal. For example, we partnered with Virgin America for a special day of fares on Virginamerica.com that were only accessible through the link in the @earlybird tweet.
What's next for Twitter?
We continue to focus on building a product that provides value for users.
We're building Twitter, Inc into a successful, revenue-generating company that attracts world-class talent with an inspiring culture and attitude towards doing business.
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