Tweet this: Twitter is worth $1 billion

Posted Sep 17th 2009 12:40PM by Tom Taulli
Filed under: Google (GOOG), Private Equity, Next Big Thing, Entrepreneurs

Evan Williams has a knack for creating the "next big thing." Back in the late 1990s, he developed the prototype for blogging, which became Blogger.com. Williams sold it to Google (NASDAQ: GOOG) in 2004.

A few years later, Williams struck gold again: he started Twitter.

And, it looks like this one is going to be a mega blockbuster. According to a report in Techcrunch, it appears that Twitter is raising $50 million -- at a whopping $1 billion valuation. The company's last round came in February, at a valuation of $250 million.

Keep in mind: So far, there is little revenue coming in. If anything, it's far from clear if there really is a business model.

This is certainly in stark contrast with Facebook, which has been growing revenues at a rapid clip. Actually, the website recently became cash-flow positive.

OK, so why the frothy valuation for Twitter? Perhaps the key reason is the global brand. It seems that with any news event, Twitter is the preferred vehicle of communications.

Next, as Twitter keeps building more and more users (44.5 million visitors in June), the scale will inevitably allow for more revenue opportunities. True, they may not be as plentiful as Google's -- or even Skype's -- but they will be meaningful.

And finally: never underestimate the excitement of venture capitalists. Yes, they love red-hot deals and never seem to have a problem paying nose-bleed valuations for them. It's like having a nice trophy on the mantel.

Tom Taulli is the author of various books, including The Complete M&A Handbook.

Tags: Evan Williams, Facebook, featured, GOOG, Google, inthenews, Twitter