Twitter is raising new money in an effort that would assign a value of $1 billion to the company. This, for a company that seems remarkably unconcerned about beating a path to any realistic business model.
What does such a valuation mean? As the NY Times reported today:
For context, that is almost double the market capitalization of Domino’s Pizza, which has 10,500 employees and had $1.4 billion in sales last year. Twitter has some 60 employees, and although it is experimenting with running advertisements on its Web site, Biz Stone, a Twitter founder, said this week at an industry conference that the company had no plans to begin widely running ads until 2010... In its three and a half years, Twitter has become a magnet for media attention
To me there is no clearer demonstration about the sheer value of buzz and media coverage - not that there is not intrinsic value in Twitter and it service. The value from a bottom line business standpoint is based on the intangible good will of enthusiastic users - a community that growths with every article, news mention and celebrity Tweet.
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