Is Twitter worth $1bn or nothing at all?
I read those two articles yesterday and to be honest I'm still a bit of a fence sitter on this debate.
On the one hand Twitter have built a hugely compelling user and developer proposition. Simple interaction with your friends, audience and web services via IM and SMS is a killer app. Because of that they are amassing a significant user and developer base. If the both of these continue to grow and they figure out a way to monetize all of that traffic then $1bn might be achievable.
On the other hand there are the service issues and downtime. Twitter's downtime is legendary. What started off as something users could forgive the playful little startup has become a genuine threat to user happiness and retention. If all those wonderful tweets migrate to some new platform then that valuation comes down a whole lot.
For me the value created by web services is all underpinned by the technology. There's no doubt that building a user base and traffic is valuable, but the long term defendable advantage on the web is in solving a technical problem better than anyone else. Have Twitter done this? Partly, but the downtime is a real worry - not just because it pisses off their users, but because it points to a real weakness in their technology.
Let's hope that they are using their recent infusion of cash to re-architect the service from the ground up. If they are then a big payday is surely somewhere in their future. If not, then...well the field will be wide open for someone else to come storming in.
