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| Twitter's cast of characters see few limits to profits as IPO approaches | |
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| The Twitter co-founder Jack Dorsey looks likely to add between $300m and $450m to his fortune when the social-media company goes public. | The Twitter co-founder Jack Dorsey looks likely to add between $300m and $450m to his fortune when the social-media company goes public. |
| Dorsey is already said to be worth $1bn, thanks mostly to his 25% stake in Square, an online payment system. His reported 3% stake in Twitter would be worth more than third of a billion dollars if the company achieves the $10bn-$15bn-plus valuation now being ascribed to it by analysts. | Dorsey is already said to be worth $1bn, thanks mostly to his 25% stake in Square, an online payment system. His reported 3% stake in Twitter would be worth more than third of a billion dollars if the company achieves the $10bn-$15bn-plus valuation now being ascribed to it by analysts. |
| He will not be the only tech mogul to realise another huge payday from the IPO, which was announced via Twitter last Thursday. The company has the backing of a galaxy of Silicon Valley's top investors, including the Amazon founder Jeff Bezos and the Netscape co-founder Marc Andreessen. Chief executive Dick Costolo is an investor too, as are Dorsey's fellow co-founders, Biz Stone and Ev Williams. It is unclear, for now, how much each will benefit. | He will not be the only tech mogul to realise another huge payday from the IPO, which was announced via Twitter last Thursday. The company has the backing of a galaxy of Silicon Valley's top investors, including the Amazon founder Jeff Bezos and the Netscape co-founder Marc Andreessen. Chief executive Dick Costolo is an investor too, as are Dorsey's fellow co-founders, Biz Stone and Ev Williams. It is unclear, for now, how much each will benefit. |
| Twitter is taking advantage of new rules to start its initial public offering (IPO) under the radar. But as with Facebook, the last big tech IPO, the tech establishment looks set to make a killing. The Facebook share sale proved controversial and costly as early investors cashed out, ahead of an embarrassing collapse in the share price. Twitter will no doubt be keen to avoid the same mistake. | Twitter is taking advantage of new rules to start its initial public offering (IPO) under the radar. But as with Facebook, the last big tech IPO, the tech establishment looks set to make a killing. The Facebook share sale proved controversial and costly as early investors cashed out, ahead of an embarrassing collapse in the share price. Twitter will no doubt be keen to avoid the same mistake. |
| If the sale goes smoothly, Twitter could come to market at the end of this year and be worth as much $15bn, according to PrivCo, which gathers information on private companies. | If the sale goes smoothly, Twitter could come to market at the end of this year and be worth as much $15bn, according to PrivCo, which gathers information on private companies. |
| "Twitter will learn from Facebook's flawed playbook and do the opposite," said PrivCo's chief executive, Sam Hamadeh. "Unlike Facebook, which waited too long to IPO (until its growth rate decelerated), Twitter will IPO at just the right inflection point: while revenue grows in triple digits." | "Twitter will learn from Facebook's flawed playbook and do the opposite," said PrivCo's chief executive, Sam Hamadeh. "Unlike Facebook, which waited too long to IPO (until its growth rate decelerated), Twitter will IPO at just the right inflection point: while revenue grows in triple digits." |
| Twitter has told staff that it is sometimes profitable but it is likely that the company is still loss-making most of the time. The company is spending to drive growth. Earlier this week it paid a reported $300m for MoPub, a mobile ad technology firm, the eighth company it has acquired this year. | Twitter has told staff that it is sometimes profitable but it is likely that the company is still loss-making most of the time. The company is spending to drive growth. Earlier this week it paid a reported $300m for MoPub, a mobile ad technology firm, the eighth company it has acquired this year. |
| Going public will give Twitter another currency, its shares, with which to finance new deals. But how much money it will raise, and how much money it is making, remains a mystery. Twitter has filed for a confidential initial public offering under the Jumpstart Our Business Startups (JOBS) Act. The act allows Twitter to consult privately with regulators ahead of the share sale, outside the glare of publicity the IPO would otherwise receive. | Going public will give Twitter another currency, its shares, with which to finance new deals. But how much money it will raise, and how much money it is making, remains a mystery. Twitter has filed for a confidential initial public offering under the Jumpstart Our Business Startups (JOBS) Act. The act allows Twitter to consult privately with regulators ahead of the share sale, outside the glare of publicity the IPO would otherwise receive. |
| PrivCo believes the float will be "conservatively priced" at 20 to 30 times revenue. With 2013 revenues expected to exceed $500m, this would make Twitter worth between $10bn and $15bn. | PrivCo believes the float will be "conservatively priced" at 20 to 30 times revenue. With 2013 revenues expected to exceed $500m, this would make Twitter worth between $10bn and $15bn. |
| Alan Patrick, founder of the Broadsight consultancy, said that at $14bn Twitter was valuing its users at about $58 each, about half the ratio Facebook had at its IPO. "Yes it's hyped but it's not as stupidly hyped as Facebook was," he said. | Alan Patrick, founder of the Broadsight consultancy, said that at $14bn Twitter was valuing its users at about $58 each, about half the ratio Facebook had at its IPO. "Yes it's hyped but it's not as stupidly hyped as Facebook was," he said. |
| Patrick added that there appeared to be plenty of room for growth at Twitter: "I actually see Twitter as a communications system rather than a social network. I think there are other things that can be done with it. With 240m users there's more room to grow, whereas Facebook with one billion users had less room for growth." | Patrick added that there appeared to be plenty of room for growth at Twitter: "I actually see Twitter as a communications system rather than a social network. I think there are other things that can be done with it. With 240m users there's more room to grow, whereas Facebook with one billion users had less room for growth." |
| Facebook has recovered from its disastrous IPO last May and its shares hit an all time high this week, driven up by positive signs for mobile revenues. This may be good news for Twitter, whose early forays into advertising have been a success, particularly on the increasingly important small screen of the smartphone. Twitter is expected to earn $582.8m in global ad revenue this year, according to eMarketer, before growing to nearly a billion in 2014. More than half of the company's ad revenues are expected to come from mobile ad revenue this year, both in the US and globally. | Facebook has recovered from its disastrous IPO last May and its shares hit an all time high this week, driven up by positive signs for mobile revenues. This may be good news for Twitter, whose early forays into advertising have been a success, particularly on the increasingly important small screen of the smartphone. Twitter is expected to earn $582.8m in global ad revenue this year, according to eMarketer, before growing to nearly a billion in 2014. More than half of the company's ad revenues are expected to come from mobile ad revenue this year, both in the US and globally. |
| Patrick's one concern is management. Facebook put together a steely management team that has stood it in good stead as it fought back from its IPO pratfall. Twitter has, until recently, appeared somewhat less focused. | Patrick's one concern is management. Facebook put together a steely management team that has stood it in good stead as it fought back from its IPO pratfall. Twitter has, until recently, appeared somewhat less focused. |
| As the IPOs of Groupon, Zynga and Facebook have shown in recent years, hot tech companies do not necessarily make great share sales. It is too early to say whether Twitter's will be any different. But it will undoubtedly be one of the most closely watched IPO's for years – 140 characters at a time. | As the IPOs of Groupon, Zynga and Facebook have shown in recent years, hot tech companies do not necessarily make great share sales. It is too early to say whether Twitter's will be any different. But it will undoubtedly be one of the most closely watched IPO's for years – 140 characters at a time. |