Twitter closing $800 million at $8B valuation?

Ronny Kerr · July 21, 2011 · Short URL: https://vator.tv/n/1d04

Half of the new money would be allotted to cashing out current employees and investors

The rumor mill runs on and on.

Twitter might be just a couple weeks away from closing a two-part financing deal totaling $800 million, according to sources close to the transaction. (via All Things Digital)

Around half of the total funds would be used to cash out current Twitter investors and employees, who can’t yet easily (or legally) benefit monetarily from their private stock in the company. Though many tech companies have started going public and despite expectations to see Facebook do so by next year, Twitter’s IPO is still a distant thought.

The other $400 million would be added directly to the company’s coffers.

Twitter in December raised $200 million in a round led by Kleiner Perkins Caufield & Byers. While it’s likely that some of that cash is still around, more funding couldn’t hurt. Especially when you’re dropping up to $50 million on a Twitter client developed by a third party.

This new report follows one from two weeks ago that said Twitter was in the process of raising hundreds of millions of dollars valuing the microblogging darling at $7 billion. Now, they’re saying the company’s valuation has swelled to $8 million, or more than double the $3.7 billion valuation Kleiner Perkins pegged the site at.

Twitter does not comment on speculation.

There’s no telling how much growth is still being seen by microblogging/social network hybrid Google+ as it approaches its month-old milestone, but either way it would do well for Twitter to defend itself financially against the potential competitor. Many first compared Google+ to Facebook, but then a report emerged citing Google’s +1 button as more heavily adopted than Twitter’s much older sharing plugins.

In general, no social site is safe from emerging competition, no matter how strong the network seems.

Other news in the Twitter world today says four key product managers--Kevin Cheng, Josh Elman, Anamitra Banerji and Jean-Paul Cozzatti--have been ousted from their positions, in an overhaul led by product lead Jack Dorsey, also the CEO of Square.

Ronny Kerr

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Joined Vator on April 9, 2008

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.