Google Offered To Buy Twitter For $2.5-$4 Billion | Hacker News Reader

Google Offered To Buy Twitter For $2.5-$4 Billion

finance.yahoo.com

65 pointsvyrotek36 comments

Is Twitter actually making any money?

I find these billion dollar valuations pretty crazy if the company in question is not actually making any money.

Sure, Microsoft and Google have their strategies and would spare no pains (money) to score each other off, but this overvaluation of companies is just not healthy for the tech industry. It just feeds the next big bubble.

During a conversation I had last week a colleague who's dealt with Twitter told me that they make $100M-$200M each year licensing the firehose.

So they have a 20 - 40x valuation? wow

Valuation is not the same as "yearly income". Not anywhere close to that. If you sell a company for 1 year's worth of income, you're a fool.

Unless it's a y2k bug company, and it's October 1999.

I thought normal valuation was 5 - 7x revenue, not 20 - 40x.

Twitter is arguably not a normal company. They have mindshare that is worth a lot more than Random Internet Startup.

How many customers do they have though.

If they're 'licensing' the firehose to Google and MS, that's pretty unreliable income.

Publicly their firehose customers include Google, MS, and ~10-12 startups whose names I don't know.

Soon they'll begin seeing revenue from the new half/10% hose plans announced last week.

We know they make at least 100K each day (per market?) for Promoted Trends, which Ev said they were out of stock on. That doesn't count promoted tweets. We also know the firehose access they gave to MS + Google cost millions of dollars each. Which is separate from the access they gave Gnip. The screenshots of the business-friendly analytics tool they have coming out soon seems like it could be a "pro" tool, though I won't full on guess they will charge for it.

Both sources speculate that Microsoft may have made an offer too. This makes sense to us. One reason Google would buy Twitter is to keep it out of Microsoft's hands.The logic goes the other way, too.

This M&A/portfolio game seems so silly. The companies bought up by the goliaths to use against each other seem to rarely have a successful life post-acquisition.

>The companies bought up by the goliaths to use against each other seem to rarely have a successful life post-acquisition.

Can you give some examples?

Sun? Depends on what you mean by successful of course.

I disagree, I think that most companies acquired by Google have had a very successful life post acquisition. Sure there are a few notable exceptions (Dodgeball), but generally Google doesn't acquire a company unless they plan to keep it alive for something.

http://en.wikipedia.org/wiki/List_of_acquisitions_by_Google

I was referring less to overall acquisitions than companies/startups acquired as a part of a "portfolio" or to compete with another goliath company.

For example, Yahoo or Microsoft's attempt to acquire Facebook to get into "social". Can you imagine what Facebook would be like today if that had happened?

Microsoft in particular has a horrible record with acquisitions work.

There are exceptions of course. Hotmail worked out well, and back in 1999 they bought my startup for $60M, and it worked out great. But eight years later, when I left, we were still being used as the rare example of when it actually worked out. Almost all the other much bigger deals since then had foundered badly, killed by politics or the NIH syndrome or management incompetence.

Google's had some successes, most obviously YouTube, and they're probably a better cultural match for Twitter. I can see why Twitter turned down the $2.5B but it seems like a fair offer.

Why is google a better match for twitter than microsoft? Google appears to have tried to "become social" a few more times than redmond and failed regularly.

from the outside, Twitter seems to have more of the Valley-style engineering culture, and shares Google's API-oriented philosophy. Also there are some former Googlers in key roles there.

It's a good point about Google not getting social. Then again, Microsoft's also tried and failed to go social multiple times -- Windows Live Spaces, QnA, Groove, Hailstorm, and 3° are a few fairly-high-profile examples that leap to mind.

Twitter has become a platform. Google is far better at web-platforms than Microsoft.

I think Microsoft gets less credit than Google for acquisitions because they're actually better (note: I didn't say good) at rolling acquisitions into the company and moving forward with a product. Most people don't think of successful Microsoft products like SQL Server 7+, Kinect, Foxpro, Visio, and Dynamics as acquisitions. Sure, there are notable failures like Danger/Kin, but there are a lot of successes.

Meanwhile, it breaks my heart every time one of my favorite services is acquired by Google. FeedBurner, GrandCentral, and Etherpad are all services that I'd have much rather paid to use on their previous innovation trajectory, rather than watch them stagnate while rewriting for Google's infrastructure (or killed, in Etherpad's case) and be saddled with the clunky GWT interface.

SQL Server was an acquisition? I thought they bought source code from Sybase?

That's correct. And they abandoned that code base and did a complete rewrite.

Dynamics and Kinect are two good recent examples of success. FoxPro and Visio are also excellent examples although that was a heck of a long time ago.

Is twitter really that unique? I know mindshare wise, it has front-of-the-bus valuation, but the technology behind it is quite simple (and should be written up as a RFC).

The technology behind twitter is trivial in the abstract. At scale it's decidedly non-trivial. See also: paypal.

Google has solved many of the hard problems that would render twitter a trivial. I am not declaring a 150 line python script would duplicate it, but that Google could easily build a similar service. Now mindshare is a different story.

Yes, but no. Google's systems are tuned to google's apps, twitter is similar but also different in some fundamental ways. The complexity of rendering every individual twitter feed is pretty significant compared to, say, gmail, and the same optimizations do not always make sense. Moreover, the complexity of the SMS back-end should not be dismissed. While google certainly has the chops to handle all of these problems, including SMS, it's still a bit much to say that google engineers could reinvent twitter better and faster with little effort.

The biggest piece of evidence that this is the case is the simple fact that they haven't yet. Despite trying (see: buzz).

Twitter is a network that is used by 150 million people. It is embedded deeply into thousands of software systems. Millions of people consider it an important part of daily life - maybe more important than things like newspaper and cable TV. Every day, Twitter publishes (and collects) something like 50m tweets, and their database contains maybe the best record of what's happened in the digital world in the last few years.

That's unique.

I never thought I'd say it but Google paying up to $4 or 5b for Twitter kind of makes sense.

Google badly wants a "social media" win.

Twitter, for better or for worse, is the cheapest household brand name of social media.

I've personally found much value from searching archived Tweets via twitter & google which suggests that Google could monetize that asset, as they've done with YouTube, and turn this into a huge win since selling ads is such a core competency.

On the other hand, Google's biggest aquisition win - YouTube - they got for a relative "steal" at ~$1.65b in an ALL stock transaction, which you know isn't going to happen with Twitter.

http://mashable.com/2010/07/09/google-social-media-attempts/ - Google's history of social media attempts

I think twitter would fit with google because they can leap any privacy concerns. After the buzz fiasco and the reaction to the facebook privacy changes a public social network like twitter might be more valuable than it seems.

I remember back in the day, 3 or 4 years ago now, when Yahoo tried to buy Twitter for $25 million, and twitter demanded $100 million. They couldn't come to an agreement, and the deal fell through. Funny how the longer they wait, the more pricey Twitter becomes.

Why is that funny? By definition, as a good business grows it will be worth more. It's not like Twitter has been standing still for 3 years.

totally not surprised. Twitter seemed like a great fit for Google.

I think Twitter would be very bad fit for any tech company, but it would also be very surprising to me if they can achieve valuation of anything above $5bn post-IPO...

Agree. I think it's more likely someone like newscorp would buy it.

Don't even joke about that :( FoxTwitter cringe

It would be surprising for me if they IPO at all.

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