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Twitter Cuts Overhead, Raises Money

Posted by Nick O'Neill on April 25th, 2008 2:00 PM

Silicon Alley Insider is reporting that Twitter is closing in on a Series C round. The valuation? Apparently $60 million up from a previous round at a $20 million valuation. So Twitter, one of the hottest startups in Silicon Valley is worth $60 million and Slide is worth $500 million? Apparently!

The biggest challenge to Twitter is figuring out how they are going to make money. Twitter could attract over 100 million people and theoretically shut off the system because they couldn’t afford to keep it up and running. Would people start paying for the site if it ends up going down? Given the amount of time I spend on the site, I’d be willing to pay $5 a month to keep it up and running.

This round of funding comes days after two lead developers have left the company. There are still few details about why the developers left but given the slow pace of innovation at the company due to their overwhelming focus on scaling, a few extra dollars in the bank will definitely be useful for attracting new talent and also protecting against and downturn.

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This entry was posted on Friday, April 25th, 2008 at 2:00 pm and is filed under News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Viewing 5 Comments

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    I really don't see how Twitter could go to a pay model and continue with the same atmosphere. By excluding people that don't want to pay, you'd lose a lot of the chatter. Granted, a lot of that chatter is noise, but there's still a lot of good out there too. Most of the people I follow wouldn't be willing to pay, and I've picked up a lot from them that I'd miss in a pay system. Also, as soon as Twitter went to a pay model, I think people would just find another service, or another free one would come along. Part of Twitter's appeal is the ability for anyone and everyone to use it.
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    Posed the question "Would you pay for twitter?" to a coworker after I said I would definitely shell out some $$ for it, but his response was that there are too many free options out there to justify any expense. Then I realized he was right...and if twitter starts charging, it is likely that a huge flock will move from twitter to Pownce or Jaiku.

    And twitter does not independently offer me anything special...except an audience to both listen to and to talk to. So while I would pay for access to that audience, I will likely just follow them wherever they go rather than get left behind in a big empty room all by myself.
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    twitter hasn't crossed the chasm yet. a twitter pro option (with what features?) would work, but everyone-must-pay would screw it up. twitter is a growing company and its management should prioritize its eternal soul over the need to make quick ROI.
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    You have to wonder if people don't want to pay for Twitter, and then go to a free service, how long can that free service keep going without a business model. Is Twitter going to run into the same problem as XM/Sirius where there is no profit in sight, but the attention and interest is there?

    I think Twitter should go to some sort of an ad solution, keep it free for users, and allow the corporations to market their brand and help to save Twitter. Imagine how hardcore Twitter users would feel about the "hero corp." saving Twitter!

    I'm sure someone or some company will step up and keep Twitter going before anyone has to pay $5-10/month for the service.

    This also reminds me a bit of Wikipedia where they were almost going to shut down. I think it's good that people are aware of problems like these, because a solution is always just around the corner.
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    I'm sure there is an ad solution in there somewhere whether its co-branding or some form of integrated advertising. And I would disagree that Twitter hasn't crossed the chasm - their product is on main street, however, they aren't charging for it.

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