Wednesday, December 23, 2009

Is Twitter Ready for Buy Out?

San Francisco’s hot startup - Twitter just celebrated its third B'day and people have started discussing if it is ready for buyout? Well the answer probably depends on whom you go and ask. I am a firm believer that everything has a price and has a buyer. So Twitter shouldn’t be an exception. Even though the company has not started generating meaningful revenue but it is extremely popular with roughly 8 million unique US users monthly. Though number of unique hits is not the only criteria for popularity but here is a comparison of increasing popularity of Twitter. This real-time short messaging service company raised $35 million this February to fuel its growth.
Ever wonder why should Twitter investors sell it now? Twitter is pegged at 250 million today and if a buyer offers 3-4 times its current worth, I am sure investors will be smart enough to take that money unlike Digg that failed to sell itself at peak.

Who can buy Twitter? Google, Microsoft, Facebook etc are few names that click my mind. While these companies may have different rationale to buy Twitter’s messaging infrastructure. I would peg my bet on Eric Schmidt for multiple reasons:

  • To continue the growth momentum, Google needs a growth engine and Twitter may be steal deal for Eric before it becomes lot more expensive

  • Google main search technology and Twitter’s messaging infrastructure can marry and result in “real time search”. Think it the other way round, Twitter hasn't figured out how to make money from real time search but it has potential to threaten Google’s cash - Search

  • Eric can go for twitter just to keep it out of Microsoft or facebook hands. After all $750 M – $1B is not hell lot of money today compared to what Google paid for YouTube in 2006 ($1.65 B in 2006)

So Twitter is worth buying for Google after 3 years even though it is not generating any money today.


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