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On Wednesday, Twitter
announced
that it will receive $200 million in funding financed by venture
capital firm Kleiner Perkins Caufield & Byers and existing
investors. The deal puts the value of the social-networking site at $3.7
billion, above the $1.7 billion
April valuation of Groupon (this was before Google
tried to buy it
for $6 billion) but still far below the $45 billion estimated value of Facebook.
The site, through its official
blog, also announced two new members to
Twitter's board of directors: Mike McCue, CEO of the app
Flipboard,
and DoubleClick CEO David Rosenblatt. Although the infusion of funds
signals the growth of a company and increased ability to maintain its
servers (without the "
endless fail whales"), reporters aren't certain about it's overarching business strategy:
- Twitter Is Essentially Declaring It's Not For Sale, writes Kara Swisher
at All Things Digital, who was the first to report the announcement.
"A big slug of cash will surely help the start-up's expansion
efforts and essentially declares it is not for sale to bigger companies
such as Google (quite yet, that is)," Swisher notes. The firm Kleiner
Perkins had been "pushing hard" to fund the social networking site,
"beating out Russia's DST Global." Past investors of the company include
names such as Benchmark Capital, Union Square Ventures and Spark
Capital.
- The More Money It Raises, the More Pressure It Has To Show a Profit, figures Austin Carr
at Fast Company. With so many new accounts being opened, the site has
been drowning in its "fail whales," indicating that the servers have
been drowned in traffic. But while this new infusion of capital is
necessary, the company "can't ride the heels of funding rounds
forever--nor be valued in the billions--if it can't prove a steady
revenue stream," Carr observes. "Leaked financial documents
show Twitter projects revenues of $150 million in 2010 and $1.54
billion by 2013. Will Twitter reach these goals?" And a lighter
question: "Since an estimated 3% of all Twitter traffic is Justin Bieber-related tweets, how much of this $200 million is going toward Bieber fan upkeep?"
- Why Mike McCue Joined Twitter's Board of Directors Pascal-Emmanuel Gobry at Business Insider summarizes the insights that tech blogger Robert Scoble
shares about his conversation with Mike McCue and offers up his own
rationale why Twitter signed on the founder of the iPad app Flipboard
to it's board of directors. "To sum it up, it's all about media, and
therefore advertising ... Focusing on its media assets might help Twitter
establish itself firmly in the mainstream, which it is struggling to do,
and attract more brand advertising," Gobry writes. Scoble's background
with Flipboard helps because, "in a sense, Twitter and Flipboard are
doing the same thing, albeit in very different ways: aggregating a bunch
of online and social media and trying to invent a new advertising model
around it." Another natural reason why McCue was chosen may also be
because he's been "involved for over a decade with Twitter's latest
investor, Kleiner Perkins, which doesn't have a seat on the board."
- This Is About Kleiner Perkins Regaining Its Cachet as an investor in "hot" tech properties, notes Om Malik
at Giga Om. "There was a time when white-shoe venture capital firm
Kleiner Perkins Caufield & Byers was the first money in hot new
start-ups that defined categories," finds Malik, citing the firm's
involvement with Netscape, Amazon, Google and @Home Networks. Now
the "best" it can do is pay a "massive" premium to snatch up four to
five percent of Twitter. "KPCB is taking a sharp hairpin turn at a high
speed as it tries to shift its investment momentum away
from clean tech to Internet and digital media investments," observes
the writer. He, too, notes that Twitter can use the funds, as "it hasn't quite
figured out where its sales (and profits) are going to come from."
- Is This Just the Latest Sign of Another Tech Bubble? Patricio Robles,
a tech reporter at Econsultancy, hedges on that question. "In my
opinion, we do have a bubble, but it's not like the .com bubble that
formed in the late 1990s. That bubble was fueled by premature and
unrealistic expectations about what the internet was capable of at the
time, and which business models would win out," Robles writes. Yes, some
investors are "probably overpaying" for their investments, but many
still recognize "the importance of the trends that have powered the rise
of the Twitters, Groupons and Facebooks of the world." And on Twitter's
latest valuation? It may have "a steep hill to climb to create a
business model," but "there can be no doubt that the type of
communications platform it has built is impacting the way consumers and
brands interact online."
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