Holy Crap, Twitter Made Money in 2009?!
This one's a surprise. Twitter will have turned a profit in 2009, a BusinessWeek report claims, citing sources. What happened? Search deals with Google and Microsoft brought in a nice chunk of cash for the company, which has raised well over $100 million in venture capital and has a paper valuation floating somewhere around $1 billion.
Considering the company has not yet put forth a long-term revenue strategy, this would be one of those Christmas miracles along the lines of a neurotic mom getting home to her stranded eight-year-old by fortuitously hitching a ride with a polka band fronted by John Candy.
So let's look at the details. Sources told BusinessWeek's Spencer Ante that Twitter's search deals with Google and Microsoft's Bing brought in $15 million and $10 million respectively, and that Twitter has managed to cut some of the high costs related to text-message functionality. (These costs were so exorbitant that Twitter temporarily had to restrict some international SMS codes.) OK, cool. Those numbers are decently plausible, and Twitter's strategic hire of a mobile business-development dude early this year likely had something to do with it. And Ante's article makes it clear that while sources have told him that Twitter will end 2009 on a profitable note, that doesn't mean it's going to be profitable next year.
Bloomberg is a bit skeptical about Twitter's valuation moving forward and without an IPO on the horizon, JDA has to agree (via NYT):
Twitter, which started in 2006, has raised about $155 million in venture capital. A round in September for $100 million valued the company at $1 billion, according to a person familiar with the deal. The size of the valuation, along with Twitter’s lack of a revenue plan, was reminiscent of the dot-com era, David Garrity, principal at GVA Research LLC in New York, said at the time.
Since then, Twitter has given more details about how it plans to make money. In addition to the search deals, it’s planning an advertising program for early next year. The company also will charge for commercial Twitter accounts, which would let businesses analyze tweet traffic.
Chief Operating Officer Dick Costolo, who joined Twitter in September, was key to getting the search-engine deals done, one person familiar with the matter said. Costolo helped found FeedBurner and worked at Google as an ad product manager after his company was acquired.
At FeedBurner, Costolo worked on selling ads on Web news feeds. The goal at Twitter now is to add advertising without disrupting the way Twitter works, Costolo said last month at a conference.
“We want to do something that’s organic and in the flow of the way people already use Twitter -- and not, ‘Here’s the tweets and here are the ads,’” he said.
Don't fuck this up, Twitter, you've got one hell of a .com if you play this right.
Speaking of Twitter, you can find yours truly a-tweeting away @adrigonzo. Follow me, you know you want to, you little JDA stalkers, you. Tweet me, bitches.