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Multiple unnamed sources close to new Twitter funding talks say John Doerr will get what he wants
Remember when it was a big deal to see rumors that Twitter was raising a $50 million round at a $1 billion valuation? Or better yet, when they were valued at $250 million?
Rumors swirled Wednesday that a new giant funding round is about to go down, valuing the not-so-fledgling microblogging site at $4 billion.
The startup’s supposed valuation had already soared to about $3 billion in the last few weeks, when there was talk that high-stakes investor Digital Sky Technologies (DST), also an investor in Facebook, Groupon and Zynga, was about to inject one its traditionally massive rounds into Twitter.
Now, reports indicate that another high-profile venture capital firm, Kleiner Perkins Caufield & Byer, is set to win the bidding by valuing Twitter at $4 billion.
Key Kleiner Perkins investor John Doerr is reportedly directly involved with the potential deal.
“Doerr wants to own part of Twitter, and Doerr generally gets what he wants,” said one source close to the deal.
Doerr has helped restore Kleiner Perkins to the limelight with new and influential investment funds iFund and sFund, targeting startups building on the iOS and Facebook platforms, respectively. Most recently, Doerr helped his firm pick up Mary Meeker, one of the early Internet Gurus and veteran Morgan Stanley research analyst, as a new partner.
We’ve contacted Twitter for comment but have not yet heard any response, though no parties involved in the current deal seem at all willing to speak.
Things got a little tense at Web 2.0 Summit a couple weeks ago when Federated Media Publishing founder John Battelle pressed both DST CEO Yuri Milner and Twitter co-founder Evan Williams, in separate on-stage interviews, to talk about a potential funding round in the works.
“We have a lot of money in the bank,” was Williams’ only response.
Milner remained absolutely mum.
Twitter’s last big funding was a $100 million round raised from Insight Venture Partners, T. Rowe Price, Institutional Venture Partners, Spark Capital and Benchmark Capital. That round, which closed about a year ago, valued Twitter at $1 billion.
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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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Zynga is the largest social gaming company with 8.5 million daily users and 45 million monthly users. Zynga’s games are available on Facebook, MySpace, Bebo, Hi5, Friendster, Yahoo! and the iPhone, and include Texas Hold’Em Poker, Mafia Wars, YoVille, Vampires, Street Racing, Scramble and Word Twist. The company is funded by Kleiner Perkins Caufield & Byers, IVP, Union Square Ventures, Foundry Group, Avalon Ventures, Pilot Group, Reid Hoffman and Peter Thiel. Zynga is headquartered at the Chip Factory in San Francisco. For more information, please visit www.zynga.com.