Wednesday, September 30, 2009

MEDIAPOST: What’s Worth a Billion Dollars?

What’s worth a billion dollars?

A billion dollars is a lot of money. Last week Twitter raised more than just some eyebrows by raising money based on a $1 billion valuation; they also raised expectations for digital businesses and they raised the hopes of thousands of entrepreneurs everywhere who are looking to make a splash. The news was somewhat expected as the rumors had been flying for a couple of weeks now, but the news was still shocking. I for one thought those days of high valuations were gone, or at least on hold for a bit, so I feel I need to be the person to ask the simple question of what could possibly be worth a billion dollars? What could one do with a billion dollars and how does that compare to the eventual worth of a company like Twitter?

I understand that Twitter is an important company and that they are effectively changing the landscape of the internet as a result of the impact they’ve made on communication, conversational media and real time search, but I have trouble with that valuation. For $1billion you could buy 37million copies of the book “How to Make Money Online with eBay, Yahoo and Google” in paperback on Amazon. With a billion dollars you could teach 37million people how to make money, but Twitter still doesn’t have a revenue model.

For $1billion dollars you could also buy…

· Approximately 5 million iPhones. These devices allow you to communicate with anyone anywhere in the world, and they are not limited to 140 characters. Plus, as a bonus, you can actually use Twitter on them, so that could increase the user volume quickly!

· You could rent office space in downtown San Francisco to house about 30 people for about 14,000 months. That is far longer than the life expectancy of any company that I can think of, regardless of what area of technology they’re in. I wonder if Twitter will be in business that long?

· I could build a site and sign up for an affiliate program, most likely turn that billion dollars into something more positive, possibly with as much as a 30% positive ROI. As the saying goes, “It takes money to make money” and with a billion dollars I think I could make a lot of money! Maybe Twitter should just sign up for a bunch of affiliate programs and start promoting the ads in 140 character ad units throughout the platform!

· You could give 33 million people a foot massage. That would translate to a lot of very relaxed, really happy people. I don’t know if you can truly put a dollar value on that, but I think it would surpass giving $1billion to Twitter. At least all of those people would be happy and maybe that would translate to them doing better jobs at work!

All in all, I hope this valuation proves to be worth it for a number of reasons. If the valuation holds up, then we could continue to see value in technology that may even drive the economy further out of the depths of recession. Also, for more selfish reasons, if Twitter becomes as valuable as they would like then more people will need to know how to use the platform as a marketing tool, which means I get to keep working!

So, a toast to Twitter and may your future be as bright as the dollar signs on those checks!

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