The company also entered into an exclusive licensing agreement with StanfordRead more...
Venture capital firm Andreessen Horowitz gets a piece of the microblogging site via secondary market
The spokesperson would not disclose any further details, like whether the money came from Andreessen’s $650 million fund, which just closed in November.
Twitter doesn’t get any of the cash, but that’s not problem for the company since it just raised a $200 million round led by Kleiner Perkins Caufield & Byers less than a couple months ago. That round closed valuing the microblogging company at $3.7 billion, but there’s no telling what valuation Andreessen traded shares at.
Services like SecondMarket allow people to trade alternative investments, like bankruptcy claims, whole loans and, the most popular for tech investors lately, private company stock. Facebook was the big star on SecondMarket most recently, flaunting a secondary market valuation that ballooned from $30 million to $50 million in less than a month, thanks to investments from firms as prominent as Accel Partners.
Anything but shabby, Andreessen’s portfolio includes most of the most famous tech darlings, including Facebook, Foursquare, Zynga and Skype. Most recently, the firm contributed to Groupon’s monstrous $950 million round. With Twitter just added to the heap, it’s almost scary to see the kinds of returns Andreessen could see over the next couple years. Except for Foursquare, opinion seems to be in agreement that many of these companies could easily IPO this year or the next.
If anything, Twitter is the odd man out. Though the social blogging site is so often cited in the same sentence as Facebook, there’s a big difference between the two: revenue. Though Twitter’s advertising revenue could triple to $150 million in 2011, according to eMarketer, Facebook could see as much as $4 billion. And those are only estimates. Twitter just started toying with revenue models last year, via its Promoted Products suite, and we have still yet to hear solid numbers affirming their success.
In spite of how popular Twitter may seem today, Andreessen is still doing what VC firms do best: taking a risk.
Support VatorNews by Donating
Read more from our "Trends and news" series
Partners in the Amputation Prevention Alliance include Podimetrics and AbbottRead more...
The company's smart cushion can analyze pressure points in real-time and redistribute pressureRead more...
Related Companies, Investors, and Entrepreneurs
Joined Vator on
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.