Seemingly out of nowhere, Twitter has turned into a huge phenomenon. I hear about it all the time. In fact, it's an extremely easy service -- basically, think of it as public instant messaging.
Oh, and there's something else: Twitter doesn't make any money.
But hey, it doesn't so much matter (at least now). You see, the company has raised $35 million from Benchmark, Union Square Ventures and Spark Capital Institutional Venture Partners. It's the company's third round of funding. Moreover, the rumor is that the valuation is now at $200 million to $250 million.
Even though many VCs are showing restraint, Twitter is an outlier. Simply put, the website is growing at a torrid rate and is even making top-tier networks nervous, such as MySpace and Facebook (actually, the company tried to buy Twitter).
Twitter is also highly scalable. Bear in mind that the website has a mere 29 employees.
However, Twitter realizes it needs to build out a business model. And given the loyalty of the user base, I think this shouldn't be particularly difficult.
According to a blog from post Twitter's cofounder Biz Stone:
"We are now positioned extremely well to support the accelerating growth of our service, further enable the robust ecosystem sprouting up around Twitter, and yes, to begin building revenue-generating products. Throughout this year and beyond, our small team will grow much bigger to meet the challenges and opportunities ahead."
Tom Taulli is the author of various books, including The Complete M&A Handbook and The Streetsmart Guide to Short Selling: Techniques the Pros Use to Profit in Any Market. He is also the founder of BizEquity, a free online business valuation tool for small businesses.