Just had a thought about Twitter and Value (Satisfying a customer need or want).
There are lots of posts in the blogsphere about people using twitter as a networking/marketing tool. Comcast and Read Write Web come to mind.
By all accounts people are find that twitter offers them value - even if they laughed at it in the beginning.
So here's the simple question - if it solves peoples problems and offers them value would they be willing to pay for that service?
Is this one of those freemium plays where you give it away and then convert 1% of your user base to fare paying customers?
If it is then the VC's will/might put more money in. Is Twitter really worth a $160m dollar exit? I seriously doubt it, however the VC liquidation preference will take care of the downside risk.
It's probably a $75m dollar exit.(Assumes you can find a buyer) - the VC's will have put in $20m and change - the liquidation preference assures them that they get at least a 1x preference in the event of a sale. After that they can choose to convert if the exit price is high enough.
So just think of it as parking the cash and earning a few bob on it while we wait for Twitter to figure out how to capture the value that everyone is talking about.