Another interesting post about Twitter out looking for money. Again I refer to my post on Build Value - i.e. satisfy a customer want AND then build measurable, sustainable, profitable revenue from volume.
Here's what fascinates me - Twitter is free and has no discernable revenue stream. It has raised $5.4 million in two rounds and is now out looking for $15m at a $60m valuation.
Ignoring cap tables and dilution for a moment, what's the exit? It's not an IPO which leaves merger or Zombie on the table. Let's ignore Zombie and focus on M&A. How do you value something that doesn't have measurable, sustainable, profitable revenue from volume? I don't know. But lets say you can - just doing a simple 3x return on a $60m valuation puts Twitter at $180m exit.
That's really hard to figure out - simply because if you can't monetize the customers there is little value for someone.
On a side not I was told yesterday that for VC's to get interested in a Series A round you need to have a $1m a year revenue run rate. Twitter is going for a C round with no revenue run rate and having already burned through probably a reasonable chunk of the $5.4m
I guess beauty is all in the eye of the beholder - I just can't see Warren Buffet taking their phone call though.