scobleizer’s posterous

How much money is in this "Twitter Pro" service you mention?

Is is as much as is in Facebook's revolutionary targeted ad strategy? I don't think so.

Most people (not business) still dont find reasons to use twitter. Unless that happens....

Even if it is undervalued, 5 to 10bn dollars is just amazing for something that doesn't actually produce anything of its own, and that doesn't actually make peoples lives any better,and has no business model - are they actually making any revenue?

I do Twitter for Business seminars across Australia and the buzz is strong... something I haven't noticed since the early days of seminars for business on the web.. Small to medium businesses really get value from Twitter.

Companies are prepared to pay SIGNIFICANT sums to learn how to create strong follower groups targeted by location or industry. Twitter makes this easy and has so few "rules" that you can build your base quickly, and with great certainty.

Only issue I have with twitter is in the indiscriminate "suspended due to unusual activity" and no warning, request for explanation or similar. Then, they takes weeks to respond to genuine requests... this is not a business friendly model.. many times tickets go unanswered and then are "closed" saying "we have fixed similar issues yours should be fixed.." - FAIL -

Many social media networks have failed in regard early adopters - LinkedIn had similar issues with people like Vincent Wright who was their Number 1 fan but he was booted in the guts when "$$'s" became an issue. I agree that the "sexiness" of celebrity has changed the influence of people like you Robert

Interesting that Robert says the value is $4 billion - a billion isnt what it used to be LOL

Glad to have you back making meaningful critique for Twitter owners... get it back on track mate!

I do not think you're wrong, but I'd love to see some napkin math about how charging businesses would generate enough revenue before I buy into the $5B figure. Twitter's certainly a part of our collective consciousness now, but are that many companies ready to buy in with actual cash money? Is Twitter anywhere near building analytical tools with the level of sophistication and ease of use for the customer to be a compelling sell to Average Co., Inc?

" Is Twitter anywhere near building analytical tools with the level of sophistication and ease of use for the customer to be a compelling sell to Average Co., Inc?"
Why would they develop such analytical tools if they have a price tag on them? Twitter itself is worth next to nothing, the competition that twitter brings to the huge social networking and internet buzz companies is what would make them such an expensive purchase. If Twitter doesn't get bought by another company and fall under their umbrella it will become its own huge entity, a google or yahoo of 09 (or 07, whatever) if you would

Wow.. I completely disagree!! Yes it is good for the duration of a tweet and maybe even the duration of it's search (two weeks), but the entire world doesn't think/work within such a limited window. Yes the twitter environment is successful, but where would twitter be without all the layers and add-ons that actually make it easy to use? You can't (fully) figure that into twitter's value/price because they don't actually own it. Twitter has a HUGE following, that is it's value, period. Technically the "twitter core" is replaceable and when someone comes up with an easier to use general solution (for the common user) without @ RT, # and 140 character limit.. I think it's Twitter that better watch out!! BTW I also think Facebook stole FF for $50M.

Scoble, You're the biggest idiot if ever there was one. Your "deep analysis" and blah blah doesn't mean anything. Idiot is as idiot does and that's what you're proving.

Agree that FB needs to divide and conquer on personal and enterprise fronts. What exactly is FB anyway? I created a second, personal account on FB but do not really have the time to maintain two FB accounts. 250M uniques is, well, an opportunity - but one that will evade enterprise growth strategy w/o a concerted, segmented effort.

When I read the title I had this image of Scoble with a Dr. Evil (Austin Powers) voice over.. "Twitter is worth ... 5 BILLION dollars"!!

I think Twitter is just misunderstood - something I've opined on here: http://bit.ly/41amO. Keep in mind, it's still early days for Twitter, and everyone, including Twitter itself, is still trying to get a handle on what it's going to be. Twitter could become e-mail or Facebook or Friendster; time will tell.

“They are unable to implement their own technology.”—biggest putdown in the tech sector. Describes the intractable problems that several microblogging platforms are grappling with.

The suggestions above for Twabook sound simple - but may prove too difficult to implement quickly. Twitter in particular lacks the wetware to commercialize analytics in-house. Simply getting O-Auth right is consuming a lot of mindshare and constipating their ecosystem.

Option 1: Competitors could license Status.net – fill in the holes (enable filtering out of @replies) rebrand it and instantly have a strong competitor. Google, Amazon, MS or even Frank Shilling and Kevin Hamm could do this.

Option 2: A FF clone could be created to function as a better Twitter/FB client than either service could provide on their own. Add a commercial/in-house business gateway with social messaging federation capabilities, and it’s a whole new competitive landscape.

Scoble’s valuation is spot on, but so is the prospect that such glories may be fleeting if a competitor is hungry enough and has the skills to implement in Internet time. These are still early days and I’m ready for competition. I’m ready for a fight.

The normal people get it. That is the one major key. 'We' like the stuff because we get excited by it. Others think of us as weird. Twitter has changed that. People never interested in anything I am interested in are catching up and jumping years ahead. As you said, many never travel the world (they shoulod to get some of the differences and no, London with english as the language does not really count ;)).

Germany as a market is as good as an island of the unknown as it gets and even here, people and businesses are flocking to twitter in a way never seen before. I'm currently working on the second edition of my german twitter book and while last year I had to use a lot of international expamples, this time I could make one of twitter stories just from Germany.
To twitter in one year also made it into the german equivilent of merriam webster.

It is a huge shift.And even if Twitter the company screws up, more than enough people are now hooked on twittering, in the same sense they are hooked on being online.

My only disagreement is that London, New York, Boulder, Seattle, Hollywood, Los Angeles, Indianapolis, San Antonio aren't the entire world. It seems tech bloggers tend to confuse this very frequently, universalizing their experience to the entire world very easely. I cannot discuss Twitter has become a highly adopted service in the developed world, but assuming that only because of that Twitter has taken over the world is naive. Maybe, as you say after in the post it has taken over the bussiness world in the north. But I guess that other services like Facebook have a more widespread usage in the entire world. I doubt Twitter will become as mainstream as Facebook.

Nicolas: Twitter will get there if the majority of the businesses people interact with are on Twitter. It seems like lately every time I go to a restaurant there's a little advertisement for Twitter there. By the way, I might not have gone to lots of different countries lately, but I do have lots of friends there and they report the same thing happening around the world. The Fiat team I'm hanging out with is Italian, by the way.

The commercial appeal of directly accessing customers is undeniable, both in measuring their tastes and as an extension of services. It has become an integral part of commercial web presence -- though I'm surprised you even bothered to compare it with Facebook. They are both social networking tools, to be sure, but FB starts to look like a traffic vacuum, whereas Twitter's sole purpose seems to be as a social web portal.

It's obvious that Twitter is big, big in Billions.

I like the Hollywood example, people have limited time and twitter is so easy to use, that's the power, simplicity!

There's still still problem where everybody is talking about, how to monetize it? And it's interesting that already a lot of companies are making lots of money with it. Nice example is that Microsoft aks a fee to enable Twitter on their game console.

I think the strategy of Twitter is pretty good, first make it big, really big and then we'll see.

One way to monetize is to ask the users for a usage fee. This would also solve the spammer problem and the fake accounts and the marketing idiots. But as I would pay I'm sure that a lot of users that wouldn't pay, so that would kill it a bit..

Twitter isn't worth that much at the moment because they're not yet offering any of the services you say would make them money. Future worth is not current worth. I also think @ev and @biz are being dragged into business services kicking and screaming, which means they aren't doing their company any favors. I respect the product they've built, but it's barely changed in three years. As I've said elsewhere, they're letting third parties do all the innovative stuff with their product.

I do completely agree that Twitter is more useful/valuable to businesses and other influencers. All the more reason for Twitter to get off their asses and cater to that crowd, but I don't see them doing that any time soon.

I said it in march 09, twitter is a billion dollar business http://bit.ly/3aUAqN and I've identified way more biz models now

I love Twitter and encourage it to friends and business owners but becareful, bubbles pop

What so many people don't get about twitter, and that businesses have figured out, is that twitter is the equivelent of the office water cooler. Want to know what your employees really think? Listen in to their conversations around the water cooler. Some of it will be mindless drivel about the weekend football game, but some of it will be pure gold. They'll discuss why they think the latest XYZ policy sucks - something they'll never say in the staff meeting. The same is true for your customers. On twitter, you'll hear what they really think of your latest product or marketing campaign. The smart companies get this and are using the instant feedback to improve their products and their messaging.

nice post... nice comments... nice that it is on posterous! ;)

Twitter enables the opportunity to interact with people who you would otherwise have no platform of communication to reach. Traditional news broadcasts and advertising are often singular communications.

However, Twitter permits a public rebroadcast of the information. Those rebroadcasts ripple through sets of demographics that traditional mediums never reach. The initial broadcast via twitter might be in the thousands, however, the rebroadcast from second hand, third hand, forth hand, ect can easily be over the hundred-thousand to million views of unique views.

One of the hardest things to do in your personal life is to meet and interact with people outside of your confined region or discipline. Twitter puts you in an arms reach within everyone.

Where Twitter is failing is that, to actually get to that person within arms reach, they have to have the a poweruser and a power consumer of Twitter. There is so much communication, it is a very difficult community to continually consume. Imagine swimming upstream in a river. The more popular you get the faster the river flows. It is only a matter of time before you are swept away in the volume of information.

Once Twitter develops tools to enable the consumption and analysis of information, and effectively "twittersenses" the market, their cashflow for individual consumers (both business and personal), will skyrocket. Just set your countdown clock, because this has already been happening.

I think twitter will eventually get bought out -- for a very large sum. Possibly in the range you are discussing.

I agree that twitter provides a unique stream for businesses to post short news announcements. The fact that twitter has become the standard for such announcements is quite valuable. It's hard to see Facebook replacing that function any time soon, or any other twitter clone.

However, I do disagree that the revenue model will come easily. Other companies are already proving ancillary services and they do not appear to have significant revenue traction. Hard to really charge one class of users and not another. And while I would pay for a facebook account at this point, I think charging a fee for the service twitter currently offers would not work.

What we are left with is a hugely exciting company which is in the center of today's communication, but will be very challenged when it comes to producing revenue. I think the real value for twitter is as part of a larger entity. If I were yahoo, I would seriously consider a very aggressive offer -- and realign my existing business around twitter. Google, Microsoft and Facebook all come to mind as acquirers as well.

Permanence of tweets certainly would add value in search. It is frustrating not to be able to find even recent commentary. It woudl be expensive in storage perhaps, but definitely worth it as a search option. You are right, too, FB is a disaster in this area.

Robert I love Twitter and it started the game for me but realistically if Zuckerberg decides to take you up on your free consultancy and implemented those seemingly minor but hugely significant changes.

How would that affect your Twitter valuation then?

Personally I think (excl. the branding issues) FaceBook is making the moves to be 'the one' for businesses and if they do then hold on to your hats!

Scoble thinks Twitter is UNDERhyped? I know of no product more hyped by the media! Other than that, smart observations in this post.

I like the thought behind this post, and especially how your 'research' is different from that of many tech bloggers. However, the businesses you meet with and get excited about are going to tend to be those that use Twitter, not those that don't - and then you extrapolate from that. Sure, there's a Bob Evans somewhere that uses Twitter, that's cool. I'll show you 50 that don't. And while it's true that I see nightclubs, socialite bloggers, beauty salons and so forth "using Twitter" that doesn't mean they're using it well, or it's a priority, or it's making them money or generating word of mouth. Whether they'd pay $100 or so a month for business analytic services is doubtful, and whether they'd pay for it for say 36 months in a row is even more doubtful. The real question for a business is, Would you commit to a two-year contract with Twitter, just like a mobile phone contract?

I completely agree - the APIs have made possible for companies like us at CloudProfile begin to unlock the combined power of Twitter (and Facebook) for small businesses. Our interface is far from perfect, but you can see with our Twitter Radar which is automatically tied to business keywords just what the power of Twitter as a conversational platform for businesses can be. We have seen a breakthrough with very non-techy users in just a few weeks (e.g. http://fourfirkins.cloudprofile.com) who weren't understanding Twitter before, but now "get it" and have begun to find and engage with customers using it after which they draw them into deeper discussions on their profile, FB pages, etc.

It's going to be a super interesting year....

Meh, this is a little silly Robert -- just because Twitter's the site du jour means nothing. Two years ago all you guys talked about was MySpace. Celebs used Myspace in droves before and they'll use other social networks in the future. I do a ton of business in Hollywood directly and can say that's not true -- marketing side, Twitter's just another place message needs to get out, everybody on the talent side understands it's just another place a message can get out, etc. Most execs doing business aren't on it and don't want to be. It just varies.

Twitter's valuable because it's a smart play towards the direction two way communication is going online, and run by smart people.

More thoughts on my comment above here - http://bit.ly/11j30S

Isn't part of the ROI for biz Twitter use the fact that the service is essentially free? It takes 20 seconds to bang out 140 characters about the sale on widgets and costs nothing to post the message. If you get only one sale from your tweet your ROI is astronomical. If the model changes so that businesses now have to buy into analytical tools, that'll depress the ROI quite a bit I'd imagine.

Yes, Mr. Scoble, you are correct.

You see what you want to see. This summer I've been to:
Portland
San Diego
New Orleans
Houston
Austin
Detroit
Baltimore
Naples
New York
Boston
Chicago
Birmingham
and a few other places I'm sure I'm forgetting. In every one of these cities I'm involved in several business meetings, eat at various restaurants and attend other events. Twitter visibility seems to be relatively low from what I've witnessed. In fact I've generally been more shocked when I see a person or business who IS on Twitter and doing something even half worthy with their account.

Of course, all the media people I talk to are aware or Twitter, and Twitter overall seems to be trending more towards a media/marketeer self-promotion stroke fest. Most of the marketing people I talk to are convinced that Twitter is taking over the world. Everyone else I talk to says "Twit, huh?"

The bigger issue for Twitter is that the online world seems to be highly adapted to the freemium model, emphasis on the "free" part. As soon as Twitter starts charging enough for business accounts to actually make money, someone else will come along with a couple of EC2 accounts, a ruby script, and an all-new-and-still-free adaptation of Twitter. We've seen this over the years... Geocities, Myspace, etc.

You are talking about the habits of "trenders", media people, celebrities, hip bars and clubs. None of this group likes to be on anything stale and outmoded for very long. 5 years from now Twitter is going to be the same wasteland as Myspace.

There is no disputing the fact that Twitter growth and adoption are very exciting and generating a tremendous amount of innovation.
But Facebook and Twitter are different, despite some overlap. The risk for Twitter is if we try to make it do too much, un-natural acts of sorts. Reality is- Twitter doesn't replace the web, but adds to it.

First off I wanted to tell you that I am glad to see you still using Posterous. Its interesting to note that one of the reasons you cited about celebrities not using Facebook as much as they use Twitter also applies for Posterous. Ease of use.

I think the guys at Twitter have evolved their business in a much better way than Facebook. Twitter started out much in the same way that Facebook started, a good way to keep in touch with your friends. Twitter soon realized they had a much more important tool in front of them, the heartbeat of the planet, and they quickly adapted to meet this new goal as evidenced by the home page redesign that focuses on search.

Facebook not so much. They are really stuck between a rock and a hard place. On one hand you have 300 million people who love their service and on the other they can see where the dollars are, courting and servicing businesses. As peoples FB profiles evolve they will want to start separating their personal world from their business world. A local CEO in Nashville just went through this exercise because he wanted to get back to just friends on his personal profile so he created a fan page for his business side. The problem I see with this is that just a "fan" will not feel the personal attachment that they may have felt when they were his "friend".

Twitter has a lot of work to do so I wouldn't value them between 5 - 10 billion just yet. But if they can put everything together, watch out.

Great post!

I think you're on to something. I've been trying to convince a couple of relatives with businesses. Twitter shows your attentiveness and it builds trust better than facebook, because it is in real time and you're interacting with so many people who are in the room at the same time. I actually can sit and watch the screen and see discussions. Even when you're at a party that is hard to do. With facebook: too many distractions: pictures on the wall, family talk, "meitis" disease. With twitter you've got to work the room and show you have somthing for everyone. I'm hoping that twitter doesn't evolve to the point where everything is on "autopilot", because that's not a discussion but on the contrary "pure advertising". At some point I think twitter will develop side rooms where the discussions can continue with "like minded people": I'm thinking something like a connection to the application "meetup" would be a nice complement. The other thing about twitter is you can make some great headway in a 4 hour morning in conversing; but with facebook you have to wait for a reaction; even the people with facebook twitter like applications are talking to people who may be detracted with so many other applications while online. So I'm liking twitter and encouraging my business friends to get online. In the meantime until I start a business of my own, I think you can start building followers who may be interested once you do a business startup. So twitter is a great way to do your own public relations to achieve your future and current goals. Lovin twitter and community building.
Sandy

There's no other so overhyped product than Twitter thanks to the media. I honestly get a lot more value from businesses on Facebook and they get a lot more from me there, too. It will be just a matter of time when businesses understand that Facebook gives me so much more than Twitter due to the rich media capabilities and the demographics and analytics data from their fans. Not to mention user base size, growth, and engagement.

4 Reason Why You're Wrong:

1. When your proof points involve books written by people like Chris and Shel.

2. When 60% of people who join twitter abandon it - per Nielsen

3. When in reality, companies don't want to change the way they do business. You need only look at the Delta Airlines of the world to see what I mean.

4. When your site/tool/platform can't scale and can't innovate alone. All of the major enhancements to twitter come from the outside. Take twitter search, they bought summize and royally screwed it up. The fact I have to use Friendfeed's search to look at tweets older than 30 days shows you that the folks at twitter can't scale and don't understand what a business wants. Business leaders will want trend lines over longer periods of time than 30 days.

Facebook is more valuable for a variety of reasons. For one the "connections" made on Facebook are more legit. Think about it. I have Darth Vader following me on twitter and I'm following Holy God. Yeah, that'll work. Facebook Lexicon shows a glimpse at the possibilities of what Facebook can do with the data.

Personally, I've started to loathe twitter. The spam, lack of accountability, zero measurement tools, etc. all have me looking elsewhere.

There was a time when smart people thought 'search' was not worth much. Today, there are smart people who think Twitter is not worth much.

Use of Twitter is developing in new and unchartered directions. It is becoming a 'platform' - a very important web platform and owning such a platform is a big deal - a very big deal.

The money is in the bigger picture - not in one's personal experience of Twitter or whether 'teens' engage with Twitter or whether paid advertising will work across Twitter.

Scoble is on the money. Twitter is in the money.

(note the irony of me using facebook to comment)

I've been to San Antonio, Hong Kong and China
No mention of Twitter.

What is $5 billion? Where do people get these numbers?

Robert, not only are you wrong, Twitter will be like Friendster or MySpace in 5 years.

1) Businesses have not adopted Twitter. Some have, but I'd be amazed if even 1% of all businesses in the US have a Twitter account, let alone use it well. You live in a bubble, so you are only seeing and talking to companies in that bubble that are active on Twitter. Drive away from Silicon Valley and start talking to companies outside of technology/media.

2) Given that Facebook is growing by a Twitter every few months, I'd say that Twitter is definitely over hyped. In fact, Twitter growth has now flatlined and most of the growth has been hollow. An enormous percentage of Twitter accounts are inactive and most Twitter users abandon the service after they sign up. Most activity on Twitter is by a small core of users.

3) So there are an unknown companies who are seeing an ROI on Twitter? I'm sure there are companies who see an ROI on MySpace. In fact, I bet there are more on MySpace than on Twitter. You are cherry picking examples, in this case anonymous examples. Because a racing team is using Twitter doesn't mean anything. How many racing teams are on Facebook? There needs to be some sort of comparison to put Twitter in perspective.

4) You are confusing Tweeting with Twitter. Microblogging I agree is here to stay, but that doesn't mean Twitter will be the winner. The early companies in the Social Networking space (Friendster, MySpace) aren't the leaders today. Things can shift. Twitter has been horrible at adapting and changing. They can barely keep up with the system they have. Facebook has changed more and shown more innovation with its Fan Pages this year than Twitter has since it launched. I have more faith that Facebook will make the necessary changes in the next year than I do in Twitter's ability to adapt.

5) You are totally wrong about celebrities using Facebook. Check out the fan page for Vin Diesel. He has 6m fans on Facebook, compared to 3m for Ashton Kutcher on Twitter, and most of Ashton Kutcher's follower are a result of being on the suggested list. I'd guess his followers outside of the suggested list would be 1/3 the size. Roger Federer has 2.8m fans. Oprah didn't Tweet for a month, yet her Facebook page is very active.

6) I can't speak for other bloggers/businesses, but I get much higher conversion rate from Facebook than I do on Twitter. Yes, it isn't quite the same experience right now and I wouldn't use Facebook as a Twitter replacement as of today, but that isn't necessarily a bad thing. I'm sure Facebook will launch something in the next 6 months which will be a very direct shot across the bow of Twitter.

I think the future does not look good for Twitter. Facebook has numbers Twitter will never approach. No business in their right mind will pass up the opportunity to target the enormous user base of Facebook compared to the small one of Twitter, assuming they can provide a someone comparable service. If Facebook is smart enough to create a way import the people you follow from Twitter into Facebook, the conversion will be painless, and you wont have to worry about the system crashing.

Twitter is slow to adapt, full of spam, too reliant of third party tools, has too many technical problems. It might lead the microblogging space today, but that means nothing for tomorrow.

@Scobleizer is right about the business potential of a premium Twitter analytics service. Ironically it seems that 3rd-parties are more on the ball with this than Twitter itself. Twitter is a disruptive technology that is quickly making Google's Page Rank irrelevant and obsolete. Sure, Google SEO dominates the marketing strategies right now. But the bottom-line ROI of a Google-centric strategy is eroding and will continue to plummet. When the $$ talk, people listen. Google should be worried, but everyone else should be glad.

How did you come up with 5-10 billion? Why not 20-40 billion while we are at it?

While it's a good overview discussion there's really no business case being made here. I suspect some companies are keeping secret exactly how they've used it for competitive advantage purposes.

But there's a lack of qualitative data for a valuation; especially one that is a free service and as yet unmonetized.

Jury's out for me, but some good anecdotal points herein.

when did robert scoble start using posterous to blog?

Twitter has created something akin to 'search' but they currently have a business model reminiscent of Yahoo! playing in Search before Yahoo! bought all of the unrelated little business segments and forgot that they were a 'search' company.

Twitter hasn't made that buy to grow mistake yet, but at the same time they have the same problem that Yahoo! did. They have NO business model that includes revenue functioning. They didn't build it in from scratch, its not in the foundation, and anything they add will be more likely to be parasitical as opposed to complimentary or something that builds synergy.

Facebook does not have this fundamental flaw as they have followed the google path of advertising their way to profits. The lack of an ability to add @ tag searches in Facebook is far less difficult than trying to build in a profit stream.

Plus, through twitter's API they have essentially allowed other companies to tap in to their system and offer up the business solutions described in this article. That's spawned a lot of development, but all those connections also made Twitter extremely susceptible to attacks, attacks that also destabilized sites that are connected to twitter. Without the firewall built around their system, they are open, susceptible and from a business perspective, if they charge for business services, they might just make themselves liable for damages, downtime, lost business and more.

Any valuation model or valuation WAG needs to WAG a large chunk of liability into the mix, and then also WAG down the potential revenue lost due to a lack of synergy.

This was always Yahoo!'s problem. They could add things, even businesses that were profitable as a component of revenue input, but due to the lack of synergy, due to the parasitical nature of using legos that don't fit well and legos that destabilize the castle, the response from those inputs is less than complete.

So instead of a healthy upward profit curve, you get a line that is weak trending towards flat, and dipping into the red whenever a problem comes up. Murphy's law guarantees that will happen. I don't doubt that twitter will be around for years, if not decades, but their influence will be more likely to track along a path like AOL or Yahoo!

Robert...

You must have been listening to "Party like its 1999" when you wrote this one.

BD

Underhyped? It's overhyped and due to that business and people don't give it a chance, listening at the opinions of others.

It certainly has major potential, because it fits the hyperconnective and responsive society we live in.

Best regards,
Gianluigi Cuccureddu

Couldn't agree more Steve. I suspect the balance will be redressed in the long term as real time living compromises quality of life for many, but Titter is creating the architecture of monstrous ownership of our future. Thanks for the great post.
Simon Mainwaring

Brilliant post. Because the more you think about it the more you realize how overhyped Twitter is.

The simple statement here is that $fbook and $twit are only worth what someone is willing to pay.

your key point in IMHO is that facebook is meant to be private while twitter is meant to be public. That is a very big distinction. If you are going for the personal habits of people then facebook is the spot (assuming of course that they want to let you in). Twitter is meant to be open to the public, if you are participating you recognize the problems and likely have a solution on how to deal with said problems. While I agree that their valuation is higher than 500 million I wouldn't put it near as high as you have.

That said having celebrities and businesses adopt your platform is pretty strong.

we tried to tell you this, but you were all "friendfeed blah blah blah"

:'D

so is this the new scobleizer site, an experiment, or... ?

Some quick math - it would take 420,000 companies paying $100 every month for 10 years to reach 5 billion. Considering twitter currently has no one paying anything, how about you stop with the link-baiting nonsense side of this article?

since February my 1-man software consultancy has garnered customers from Europe, Canada and many of the other 49 states I am not in by using free Twitter ad-ons. These are customers my top-rated Google web site would not have otherwise attracted. Now I can find them, not vice versa.

My website cost $2000 to develop. My Twitter account $0.00. Does this make Twitter worth more than $0.00 to a buy-out? I don't know. But my personal ROI is parabolic.

Can some new service come along and make Twitter so 2009? Probably. But while its here I will make the most of it.

Human nature will always seek out the free and new and trendy. Then it tires of it and moves on. It's the Circle of Life thing, don'tcha know?

lot of great thoughts on both sides, thanks for them!

$5,000,000,000 eh? That money put into a 10 year treasury would yield $172,500,000 a year, risk free!. Please tell me how Twitter is going to make $172 million a year, every year? Banner ads? Adsense? What? And what stops Microsoft, Google, Yahoo launching their own over-glorified RSS feed viewer?

1.) Twitter isn't actually "worth" anything right now because it is not traded on a public market. Its only value is that assigned by its investors.
2.) Twitter isn't making money and doesn't have public, fleshed-out business plans to make money right now because it is in growth mode. Its investors and executive team seem confident for now. As such it is not possible to factor any assumed usage model fees and the current subscriber base to try to get a valuation.
3.) Twitter is worth a lot more as a communication namespace, or a variant on "dial tone" for future communications. This could be worth a lot more than people are giving it credit for based on current usage (140 character, one-to-many messaging) and the freemium model.
4.) $5 billion? Maybe, IF Twitter becomes an underlying communication architecture for business services, AND it becomes an independent public company.

However I dispute Scoble's assumption that Twitter is already everywhere and that corporate America is taking notice. I do think it will happen, but, Robert, I think you are seeing a selective audience of connected techies and projecting well ahead of the actual adoption curve (outside geek circles). You may be right, but I think you will be optimistic on the time frame.

Scott,
Good post/points...if I walked around where I live, Galveston TX, talking about Twitter, I'd bet that *less* than 10% of the pop. would know what I'm talking about (1% is probably more like it).
Twitter is underhyped....that's just laughable ;)

I have to say, after only a day or so of using Facebook, I'm already ready to go back to Twitter. Twitter exemplifies the phrase "elegant in its simplicity." 140 characters and boom, I'm done. I'm not spammed with people's game progress reports, or invitations to games I have no interest in. It's simple and uncluttered, and I like that.

I'm not going to close my FB account or anything, but I think it's probably going to end up being more of a mirror for my Tweets and LiveJournal posts than something I do for its own sake.

Though I have been wrong before…

I don’t agree.

If Facebook stopped growing and Twitter continued to grow at its current rate it would take them 20+ years to catch them. Although Twitter is growing @ 1200 odd % per annum Facebook still enjoys 6 times the number of unique visits and is growing @ 250+ % off that number per annum.

Facebook stores amazing amounts of information about their user’s interaction with not only rich content but their community interests and how each of us interact with each other.

As a business owner Facebook allows me to engage in both brand marketing and performance in one. It’s an end to end solution. I can use Facebook fan pages to build a wide audience under my brand. I then segment that audience into groups and or events. I can place specific social adds on pages of users who I know have engage at any level throughout my own sales funnel.

The fact I can set my own permissions protects me from aggressive marketers. This only serves to engender better quality relationships between good social marketers and their consumers.

I can generate both demand for products and services as well as being able to target customers who need specific solutions to their problems through performance advertising in Facebook.

All in all Twitter’s ease of use seems to be their only advantage over Facebook. This has its setbacks for them as well as benefits. Low barriers to entry devalue a large percentage of their audience in terms of noise.

P.S. I don’t visit Twitter any more. I feed my Twitter audience direct from my Facebook fan pages. Facebook have at least 15 years head start to work out ways of overcoming any competitive advantage Twitter has.

Twitter valuation = 1 billion tops.

For business use we really see the right path being a mix of Facebook and Twitter together, using the best attributes of both in appropriate ways.

As I said in a post (http://bit.ly/gpfF6) earlier tonight - "We see it with our customers regularly - they identify and form new relationships with Twitter, but often those relationship flow through to their CloudProfile and then end up with deeper engagement occurring on one or more Facebook Pages. See http://fourfirkins.cloudprofile.com for a case in point. Use the Follow button on the upper left of their profile to see the posts flowing through to Twitter and look for very basic engagement there. Then look at the very same posts flowing through to their Facebook Page - lots of engagement with Fans on almost every post that is flowing through."

Thanks for the sensational news. How in the world did you calculate or come up with this number? Beats me! I just think this is another bit of sensationalism to promote your blog. Good try. Next time, when you make such claims, and if you are as good as you claim, please do some number crunching, and also do show us the maths.

Robert, your observations re: FB and Twitter, in my opinion, are SPOT on. Facebook = where I go to share stuff with family & friends and the model is built around advertising. I deal with it and understand that is who the service pays for itself. They will find other ways longer-term to monetize their service. I've joined a few fan pages but the experience is nothing spectacular to say the least. It isn't engaging like Twitter is or can be.

Twitter is networking on steroids. They need to clobber out spam better but I think the brunt of that should fall on the users. If someone is worthless unfollow them and if they load you up with DMs then block them and let Twitter figure out what to do with them.

Robert, you would have a much better idea on this one....I agree re: businesses paying for analytics but how about # of tweets per day? Anything > 600 per month = $x per month > 1200 = $xx per month. That would cause people to really think about the value in their tweets and perhaps reduce noise dramatically. It would force businesses/users to provide value in their tweets or shift towards monetizing their tweets better. Could it reduce the load on the network?

Now, on the subject of the $5 billion valuation. I think you should have taken a sleeping pill and thought about putting that number out there when your head was clearer. Could they eventually be worth that? Possibly. Probability? Tough to say....

Without any REAL justification/numerical facts you don't get a $5 billion valuation. Valuations are based on CASH flows, NPVs and I don't see the cash flow coming in yet so you just pulled a random number out of thin air. It takes a REAL business model to justify a $5 billion valuation when the number of banks and overall liquidity in the worldwide economy is shrinking dramatically right now. This financial problem is just starting.....Most experts say another 2 to 3 years of pain is still to be felt in the system so lets not get "too irrational." Is this a "social media bubble" not based on any REAL $$$. You think Murdoch is happy re: all the $$$ he spent on MySpace given the recent layoffs?

http://money.cnn.com/2009/08/27/news/overbanked.fortune/index.htm?postversion=2009082803

http://money.cnn.com/2009/08/28/news/economy/bank_failure/index.htm?postversion=2009082821

After Twitter forms a "real business model" then they have to EXECUTE it. That is where the rubber meets the road and they have taken a public FLOGGING in that department with the "FAIL WHALE" becoming satirical material. Then we need to discuss how many businesses want to pay for a service that can't seem to stay up for more than 3-4 days at a time.....

Just my 2 cents

Dan Ross
@BetterBizIdeas

$5B. Really? I just don't see it. They don't have the cashflow, revenue growth, etc. Popularity != value without a business model behind it.

Twitter has immense potential not only due to the scope of its uses but also from the value derived from consumers and businesses from 'mom and pop's' stores to multinationals. The growth and applicability of Twitter has reached a point where its too big to fail unless someone makes disastrous mistakes.

Yes it may be worrying that there is no business model in operation as yet but again opportunities are endless. i.e. freemium models for business and power users, revenue sharing with mobile telephony operators and vendors, SaaS offerings for businesses e.g. Twitter based customer service channels e.t.c.

Entrepreneurs are already making money on Twitter and the value of the Twitter economy goes up by the second. Money is there to be made, the only question is when will the 'mother ship' want to make money.

'Every business in the world'? You obviously haven't been to the Middle East. Aside from some businesses in Dubai, and the more enlightened regional clients I work with, it can be a tough sell making them understand the value of Twitter. But then, it's like any developing region, it takes time, but eventually they fall in line...

10 years ago everybody wondered how Google will ever make money.

Dear Robert,

Thank you for your posting!

IMHO, the core value of twitter is its global early warning capability that had the telegraph 150 years ago! Such an early warning tool is very precious.

Take the Iranian elections where you could be informed through twitter in a way that wasn't possible every before.

Yesterday, I looked the German elections and was updated earlier than any other mainstream news media, thanks to twitter.

On the business side, twitter innovates with its business twitter101 (http://business.twitter.com/twitter101).

>

What would be the price of the twitter shares if it were on NASDAQ?

Perhaps more than ten billion dollars?

Thank you for your excellent blog!

Best

Lucas

Here ya go, buddy.
http://sobchak.posterous.com/

Let's assume you're right, and Twitter starts charging subscribing companies $100 a month for premium services. Let's also assume that there's 0% overhead associated with this, so it's 100% profit, and let's assume that Twitter can keep this business going for the next ten years. Both of these assumptions are unrealistically optimistic, but let's just pretend we value Twitter this way, just for the sake of argument.

You'd still need an average of 415 thousand subscribing companies every month to get a $5B valuation based on that business model. Add a more realistic useful lifetime for the service (before Twitter's competition pops up and dominates the market, which might be ten years from now, or it might be in six months), realistic overhead, and taxes, and you're quickly over the threshold of 1.5M average monthly business subscribers to have this valuation.

Is it possible for Twitter to get that many business subscribers at $1,200 a year? Well, it's **possible**, but not likely. According to the US Census Bureau (this data is from 2004, so it may be a little outdated, but the difference is probably not drastic) there are about 25M businesses in the US. Out of those, approximately 20M are self-employed persons and companies with no payroll. Do you think Joe the Plumber or Barry the Lawyer are going to get more business if they shell out $1,200 for twitter services? NO! Most of these businesses are constrained to small geographical areas. They get a much better return from their investment by taking an add in the local paper and advertising on the yellow pages.

Likewise, a lot of small businesses among those with a payroll probably wouldn't benefit too much from Twitter. In fact, the only geographically very limited small businesses likely to benefit from using Twitter subscription services are those located in large urban centers, where Twitter has enough penetration in sheer numbers to make it profitable.

So let's say there's a ballpark of 5M potential customers for Twitter subscription services in the US based on the Census data. Let's assume optimistically that Twitter has a potential worldwide client base that's ten times that. Do you think that Twitter is going to bring 3% of those into the fold for $1,200 a year and retain them? Well, again, it's **possible**, but not likely. Remember, we're assuming that all of these businesses can afford to pay $1,200 a year for business statistics. Fifty million potential customers is an optimistic number. That figure of $5B is probably inflated, with $1.2-$2 billion probably being a much more reasonable number.

Irresponsible thinking like "Wow! This website is really famous, it must be worth [insert big number here] at least!" is what caused the dot-com bubble the first time around. Websites don't pull money out of a magical pot of gold at the end of the rainbow. They make money the same way every other business does: from their customers. It's irresponsible and a recipe for disaster to throw around big numbers without trying to understand who the customers are and how much they're willing to pay.

-Arnaldo

how do you throw out $5B number with no justification to it. other than businesses like it. where is any kind of math or analytics behind that? i think the intent here is eyeballs and not a real valuation exercise.

I think you are on to something here. Separately, I'm curious why Friendfeed sold out so early in the game when they were ahead in regard to real-time features which was driving explosion of usage. $50 million, or whatever number was, was a pittance compared to down the road.

Here's my question. How many of you came to this blog due to a tweet? In fact, how many blogs and articles do you read because of a tweet? What's the value of Twitter? Nobody knows because nobody can define it. There are stats out there that try, but have no depth (and are typically outdated). But everytime we turn around, somebody somewhere is talking about it. Twitter has likely created one of the most powerful global brands in its few short years of existence.

Sorry, I feel like Twitter is to what Myspace was. An umbrella but not the killer app. Time will tell of course.

You not wrong, you dead right, except for one thing, the recession... (oh, I said it, the "r" word). Right now, I don't think any company will "venture" that amount of money on a site that currently isn't generating revenue and can't maintain server capacity/availability on a consistent basis, especially when every other company is tiptoeing on their bottom line... I'd say it would have been $5 bil if this were a good economy, right now, it's more like $2 billion (give or take a billions).

You're not wrong, you're dead right, except for one thing, the recession... (oh, I said it, the "r" word). Right now, I don't think any company will "venture" that amount of money on a site that currently isn't generating revenue and can't maintain server capacity/availability on a consistent basis, especially when every other company is tiptoeing on their bottom line... I'd say it would have been $5 bil if this were a good economy, right now, it's more like $2 billion (give or take a billion).

Very interesting post, certainly fired the conversation.
While I'm certainly not a valuations guru, I think it's pretty easy to recognize there is tremendous utility, and also value in Twitter.
My only question is why the focus on a premium model? I think Google has done it best, and I suspect a vibrant Twitter Search Model combined with a Twitter Marketplace for ads/placement is the direction Twitter will assume - the "golden triangle" in 140 characters or less.
Additionally I believe that if opportunities to provide link/banner ads were allowed many business would jump at the chance, starting with the desire to protect their own accounts, but quickly scaling outward to jump on all those new accounts that are active for 30 days which we all keep reading about in addition to all the active accounts.
Okay, so I need a number to be official - I peg Twitter's valuation in Q1 2010 at $10B...

Twitter is not worth $5-$10 billion dollars, not even close. If for no other reason that it's full of useless information, http://www.pearanalytics.com/2009/twitter-study-reveals-interesting-results-40-percent-pointless-babble/. The service provides nothing of any substantive value to anyone using it. They also seem to be completely missing the most important demographic in social media, which is teens. We've all read the Morgan Stanley study that detailed why teens don't use twitter. I hope the fail whale floats to the deadpool.

I don't disagree with anything you said, Robert. In fact, I use Twitter far more than any of the other services you reference. There is, though, a hitch in your reasoning best summed up by something I heard from a client recently. It went something like this: "Most people I know, when the first see Twitter, either don't get it or they're confused by it. But when my grandmother first saw Facebook, she instantly said, 'I get this.'" The public use of Facebook, the amount of content shared there, the number of minutes spent there, the total population (equivalent to the fourth-largest country in the world) suggest it isn't screwed any time soon.

There's always room for innovation.Twitter isn't perfect. Facebook isn't screwed. It's these types of discussions that will get product managers and developers thinking. I think the two can go hand in hand. We can build relationships with brands and celebrities with Twitter and then brag to our friends and family and colleagues about those relationships and brands. There's benefits to both of them and I believe they are both going to continue to evolve.

Thank you for coming into Scotty's after your day of Moto GP events for the #tweetup. Great blog. Hope to meet you in person next time. All the best. -Scotty (owner)

Meine Rede ...

I 100% disagree that twitter is underhyped and worth $5 billion. It is a broadcast service. Kind of like a transponder that allows you to change the message for each pulse. And if you have 1000 beacons pulsing at you none of the beacons will be heard. And that is twitter. It is a neat niche technology but surely not something that can be monetized the way everyone expects.

Social networks are like people's bedrooms. They don't want to be invaded with ads. So until Twitter shows a method that separates it from email (don;t forget we all get a ton from brands, causes etc that we are not opening at all, what makes this different?

Facebook too is way over valued. I am the fan of about 100 different subjects from brands to music. I never go to any of their pages. The front home page with people's twitter like update...if you do not get on that first page I do not see you...EVER! I don't even go to my profile page to see my wall.

So again social media can be the best way to advertise (pure word of mouth from friends to friends), to a waste of time (traditional push advertising), to a brands worst enemy (rumors, hate, bad PR). So really it needs to be monitored. But we see time and again that these supposed holy grails for advertisers that know so much about us.....deliver so little in reality. Last numbers I saw were 20 click throughs per 10,000 page views on the web. And 3 to 10 click throughs per 10,000 page views for social media. And tweeting to phones is worse than to normal web based screens. You can see so few tweets at once. And if someone gets 100 per day your swamped.

I rest my case.

Disclaimer: I'm the founder and CEO of www.postling.com.

We built Postling because we believe that focusing on just Twitter or just Facebook is missing the bigger picture: businesses are adopting social media at an amazing rate, and a successful social media strategy means using the complete portfolio of tools - blogging, twitter, facebook, flickr, youtube, etc. While early adopters might be comfortable with logging into 5 different websites every day, real businesses are too busy and too overwhelmed. And we've found that consolidating all of your social media activities into one place can turn 20 minute tasks into 2 minute tasks. And consolidating all of this activity through one platform has some really amazing benefits...

So the real question here isn't about how much Twitter is worth, it's how much is social media worth? How much money is generated as a direct or indirect result of all social media? How quickly is that growing?

Disclaimer: I founded & co-host TWTRCON, the conference dedicated to Twitter as a business tool.

And I 100% agree with Robert. Twitter is under-hyped as a BUSINESS tool. Amidst all of the celebrity hoopla, companies have been building very strategic marketing, customer service, sales and research applications on the platform.

I also agree that Twitter itself doesn't really understand how their customers are using the tool. This is probably the biggest risk to the company achieving these kinds of valuations.

I am seeing a lot of nonsense about how the math doesn't add up from just a fraction of the user base paying for "pro" accounts. Of course not, that's not the point.

@Keith Driscoll said "10 years ago everybody wondered how Google will ever make money." Exactly. The early-years Google was not a billion dollar business. But the Google that build an advertising platform for monetize attention is currently a $150 billion company.

@steve_dodd said "How many of you came to this blog due to a tweet?" That's what Twitter now has an opportunity to monetize. Twitter has your attention. I bet you follow several tweeted links a day. People are talking about stuff and pointing to stuff on Twitter. There's gold to be mined from that data and the attention paid to it.

I don't mean to imply that will are certain to succeed. But they do certainly have the potential. And it's not from paid user accounts. It's from as-yet-undiscovered monetization of all that data and attention. That's Twitter's challenge and opportunity.

I don't question your following remarks about Twitter's impact; I only question your initial inference from your own experience to the public (and by extension, a public valuation) at large. By definition, anyone who meets with you (Mr. Tech Evangelist) is interested in technology, but said businesspeople (regardless of location) may or may not be representative of the business community at large.

Secondly, and along the same lines, you noticing mentions of Twitter may reflect a true sea change, but conversely, it also sounds like an instance of perception bias, where you're particularly attuned to such appearances because of your interest in technology. Or to adapt the old maxim, when all you have is a cool API, everything starts to look like a tweet.

Good points. The only thing missing is Twitter's flakiness. It just is not scalable. Microblogging is too big for one company (read that somewhere). I'm very curious to see what FB does with FriendFeed. It seems they could go the direction of FB being more secure and FF being public. I think FB is better positioned to handle the masses.

Something important to bear in mind: Twitter does not just have a US audience. It is very big in Japan, big in other English language speaking countries, and big in many non-English language speaking countries.

Of course, first mover advantage doesn't guarantee success. But it does help. A lot.

First of all, congratulations for a well-rounded article.

In my opinion the title should have been better and less arguable if it was "why I BELIEVE Twitter is worth several billion dollars". Just like several economists among the commentators had already written they were not into making estimates not having / seeing numerical and commercial samples at their hands. I'm also seconding the same answer; either Twitter does not currently possess intentional commercial activities, nor they don't plan making their hidden-agendas transparent to public. In either case, I'm not able to make appraising.

However lack of commercial services or marketing activities doesn't mean that they are out of value, as in some downwards comments suggested. Among whom have left comments here, Fred Krugger, already had a very rational suggestive saying that someone like Yahoo! in the middle of communication industry and other markets might be able to raise more money than possibly most investors and venture-capitalists today.

In my opinion, one stronger asset of Twitter in comparison to Facebook, though, a site that I have never ever got involved, is that its genuine mobile compatibility makes Twitter far-more usable and this genuine usability makes it becoming much more wide-spread, then, prevalent, thus, a lot more business-compatible!

This mobility comes with the advent of last-generation hand-held devices. Unlike Facebook and "zillions" of others, Twitter is not based on a social network; instead, just like that in the RSS feeds, it is based on DATA SHARING, which eventually makes it more suitable for ANNOUNCEMENTS and Business-to-Consumer interactions.

Lastly, I do think that the Twitter people has their own team of professional advisers and making their own agendas; no matter how unlikely might it be looking from now, these people will eventually end up with facing billions of dollars as of the introduction of their business models, analytical tools and any such relevant background services.

best regards;
kunter ilalan, designer & front-end web developer
http://twitter.com/kunter/
http://kunterilalan.com/

First of all, congratulations for a well-rounded article.

In my opinion the title should have been better and less arguable if it was "why I BELIEVE Twitter is worth several billion dollars". Just like several economists among the commentators had already written that they were not into making estimates for not having or seeing numerical and commercial samples at their hands. I also have to second this same answer; which is, either Twitter does not currently possess intentional commercial activities, or they don't plan making their hidden-agendas transparent to the public. In either case, I'm not able to make any appraising.

Nevertheless, lack of commercial services or marketing activities doesn't mean that they are out of value, as in some downwards - and aggrassive - comments already suggested. Among whom have left comments here, Fred Krugger, had a very reasonable and a probable suggestion in saying that someone like Yahoo! right in the midst of communication industry and constantly in close vicinity to the other markets might be able to raise more money than most other investors or venture-capitalists today.

In my opinion, one stronger asset of Twitter in comparison to Facebook is that its genuine mobile compatibility makes Twitter far-more usable and this genuine usability makes it becoming much more wide-spread, and then, prevalent, thus consequently, a lot more business-compatible!

If something is this easier and more business compatible, then there's a good chance that it is a lot more BUSINESS APPEALING.

Most probably, this mobility comes with the advent of last-generation hand-held devices and people's seemingly unstoppable enthusiasm to own one. Unlike Facebook and "zillions" of others, Twitter is not based on a social network; instead, similar to the RSS feeds, it is based on activity logging and DATA SHARING, which eventually makes it more suitable for ANNOUNCEMENTS and Business-to-Consumer interactions.

Lastly, I do think that the Twitter people has their own team of professional advisers and making their own agendas; no matter how unlikely might it be looking from now, these people will eventually end up with facing billions of dollars as of the introduction of their business models, analytical tools and any such relevant background services.

best regards;
kunter ilalan, designer & front-end web developer
http://twitter.com/kunter/
http://kunterilalan.com/

Disclaimer: I'm SMM at Spiral16:

Loki1967 disagreed with the idea that Twitter is worth that much saying that it "is a broadcast service." It may be true, but I believe people will get more savvy about tuning out the tweets they don't want, just as we program out the TV stations we don't want on our remote control.

As the business model changes, the users are changing Twitter too. I believe it will evolve organically and continue to thrive.

without a doubt, now is the time for Twitter to take in some capital....as long as they maintain control and autonomy.

nothing new: open wins again.

Hi Robert - brilliant article, fully agree. But just saw this interesting post on the FB search topic http://news.cnet.com/8301-19882_3-10306901-250.html - obviously they started to implement the search feature you (and a lot of us) were missing...

I am not sure, if Twitter really is that much more relevant for business than say ... Facebook. Twitter is 'simple' Thats the most important reason people adopt - and love - it; like I do. Text messaging is simple, too, and people love it - for many years in Europe now. Texting is not too succesfull in Business, though

Without additional tools it is very easy to lose focus in Twitter. And adding tools is not 'simple' anymore. Facebook is hard at work making their own stuff simpler, just check the new iPhone app. I am not sure if they really have that much reason to worry - especially as they watch Twitter closely, obviously, and seem to learn fast! ;-)

I recently came across your blog and have been reading along. I thought I would leave my first comment. I don't know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.

Margaret

http://businesseshome.net

I recently came across your blog and have been reading along. I thought I would leave my first comment. I don't know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.

Margaret

http://businesseshome.net

Sorry Scoble, you're just seeing the glass as half full when it's mostly empty. Your analysis is thin and not supported by speaking with dozens of small businesses each month, like I do (due to my business, natch.)

Yes, the small biz owner may have 300 or 500 or 2,000 followers. Why don't you ask them what results they're seeing? In the words of one donut shop owner I spoke with on Friday, it's "miniscul-ly low" - in fact it's a "big time sink" according to another one for "i have no idea what value I'm getting."

Like other tech, this is in the HYPE period and will settle into the TROUGH of disillusionment, then finally fulfill some role somewhere of I'm sure, decent value, in the internet eco-system. I'm not a luddite, I'm a valley CEO and I enjoy using Twitter professionally. Yet I would guess today, however, than 95 of 100 typical small businesses are wasting their efforts when less than 1% of their customers are active daily twitter users.