It’s got no revenue, it’s never earned a profit, and it’s principal product seems incapable of being a money maker.
SAN FRANCISCO — Twitter has trained people to compress their thoughts into 140 characters and given a public stage to both dissidents in Iran and voluble stars like Shaquille O’Neal.
Now the start-up appears to have chalked up another achievement. Twitter, which has no discernible revenue, is set to raise about $100 million of new funding that would value the company at around $1 billion, a person briefed on the company’s plans said Thursday.
For context, that is almost double the market capitalization of Domino’s Pizza, which has 10,500 employees and had $1.4 billion in sales last year. Twitter has some 60 employees, and although it is experimenting with running advertisements on its Web site, Biz Stone, a Twitter founder, said this week at an industry conference that the company had no plans to begin widely running ads until 2010.
But Twitter’s cash infusion and exospheric valuation are not easily reduced to the level of the blind bets of past dot-com bubbles. In its three and a half years, Twitter has become a magnet for media attention, and its Web site now attracts 54 million visitors a month, according to comScore, the tracking firm. Along with Facebook, it is helping to remake the Web as a forum for the perpetual sharing of even the most trivial bits of information about people’s lives.
“There have probably been less than five examples of companies that have grown like Twitter has,” said John Borthwick, the chief executive of Betaworks, which created the link-shortening service Bit.ly. (Betaworks also invested in Summize, a Twitter search engine that Twitter acquired last year, and it now owns a small stake in the company.)
Mr. Borthwick lists Google and Facebook as other examples. Twitter “represents a next layer of innovation on the Internet,” he said. “This investment is happening because it represents a shift.”
Where it’s going is unclear, but what’s really interesting is that the company doesn’t seem to be in a rush to get to profitability:
[C]lose followers of Twitter do not sense that the company is in any great rush to prove itself as a profitable venture.
“It would be trivially easy for them to turn on a revenue source today,” said Steve Broback, founder of the Parnassus Group, which runs conferences on Twitter and other business topics. “I don’t see that they are in a big hurry to start generating revenues, mostly because they want to minimize any sort of negative effect on their community.”
Which is part of the problem, of course.
At the same time, all this money has people behind it who are going to want a return on their investment. Soon.