I find it astonishing that what is basically a short message broadcast service can generate billions of dollars of revenue. So I think that they have to be doing something very right. Perhaps everyone is anticipating the inevitable next hot thing a little bit too hard.
Basically a short message service? That's naive. Twitter is a marketing platform with 300m people signed up to receive marketing materials, people who also readily provide the platform with the details of what they like/would likely click on/spend money on, where they are in the world, what age they are, what gender they are and more. Of course it's extremely valuable.
"a government surveillance operation run by gullible volunteers, a Stasi for the Angry Birds generation”
http://www.theonion.com/video/cias-facebook-program-dramatic...
The idea that social networks are useful for surveillance and the joke that the users are just useful idiots, massively predates the onion sketch as well though.
These details can only be extracted with very complex natural language processing techniques.
> where they are in the world
The vast majority of Twitter users have no structured geographic location.
> what age they are, what gender they are
Twitter doesn't even have fields to enter age and data. It's all inferred, which makes it difficult to extract accurately (if at all).
valuation typically comes from:
profit X magic multiplier
where your magic multiplier is functionally a premium based on twitter's future profit potential
they're a publicly traded company, and last I remember they report their earnings publicly to shareholders
according to http://www.cnbc.com/id/102573751 their earnings were
$436 million
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I've noticed more and more ads on twitter: in their android widget, on their apps, on their site.
I'm constantly getting emails asking me to use a twitter ads coupon or read about new ads features.
Twitter is in danger of pulling a Myspace. At Myspace, revenue went down, ad density was raised to compensate, usage went down, ad density was increased to compensate, then usage crashed. For a publicly held ad-based growth company, a down quarter is a disaster. The valuation as a growth company ends and the company starts to be valued based on its operations and earnings. Twitter currently has negative earnings.
Investors are now asking why Twitter costs so much money to run. Their revenue is $1.3 billion a year, yet they're losing money. They don't pay for content, their basic product isn't that complicated, and bulk compute and network costs are declining. Something is wrong there.
It's not just a short message broadcast service.....it's a short message broadcast service with 300,000,000 users.