Twitter: Venture Capitalist’s new Infatuation

By abhishek at 28 September, 2009, 10:51 am

Twitter

Not very long ago, Marc Andreessen, the hungry and ambitions founder of Netscape Communications was remembered more for his being a casualty of the dot com era than for earning the first billion dollars on the Internet. His quick shot to success and the sudden realization that gravity is not a myth confirmed that not all Silicon Valley stories have a fairy tale ending. Today, the 38 year old, Marc is a venture capitalist and a serial entrepreneur who has gambled with his ideas rather successfully (he is a multi millionaire again) after losing his first hand as a 22 year old back in 1993 against the might of Microsoft. After investing in Ning, Digg, Facebook, eBay, Skype and a string of other companies, the George Soros of the Internet industry is betting big on Twitter. And when Andreessen puts his money where his mouth is, Silicon Valley takes notice. What’s the big deal with Twitter? Is it only adding to the social networking fatigue? Where is it going to make money from? These are few of the questions that many are wondering.

Twitter is a Short messaging service on the internet where you tell people what you are up to. ‘But you get only 140 characters to tell your story - a proof that Twitter was founded by a man; a woman would have provided for more’, read a “tweet”. Surely, the VCs have not invested millions of dollars to read such messages without knowing how they will earn from it.

So, where will the dough come from? Advertising? Surely. You give out invaluable information as a “Tweeter” by messaging to your friends on the latest movie that you liked or the eventful vacation that you had in the Caribbean or Ladakh. This is invaluable dope for the advertisers like say a cleartrip.com or a Netflix who can send you targeted messages as tweets which you may choose to click on. But advertising will only contribute a speck.

The mullah lies in Location based services. Let’s say you are traveling to Pune for some office related work and your cell phone beeps at 1:00 pm that your school friends, Alok and Pooja whom you haven’t met for four years happen to be around 5 Km radius from where you are. You can catch up with them for lunch. Or if you like reading books, the service can track the nearest Crossword or Landmark store which you can choose to visit.

…But how will that help make money? This is a question that John Doerr, partner, Kleiner Perkins, the hot shot VC firm faced with when he invested in Google back in 1998. When his colleague asked him where would Google make money from, Doerr had curtly replied, ‘These kids (Brin and Page) are solving the single most important problem on the web – Search. If we can’t figure out how to make money from it, then we shouldn’t be in this business.’ Marc Andreessen and the bevy of VCs who have invested in Twitter share the same sentiment - ‘If you make meaning, money will follow.’ Also, for the ones who enjoy talking numbers, according to a Business Week article, ABI Research predicts that LBS will generate revenue of more than $14 billion in 2014, from about $2.6 billion this year.

Evan Williams, the co-founder of Twitter wrote in his blog post that they had secured another round of funding from five investment firms. Twitter is solving the primal need in every human being to connect. That explains the ejaculation of mobile phone technology in countries like Africa, Uganda and Kenya where a onetime meal is a luxury. Twitter plans to piggy back this wave. The future is not the Internet. It’s mobile phones which will soon become the single point for making your banking transactions, paying your rickshaw driver the two rupee change that you do not have with you and of course the Internet housed in that tiny device.

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Categories : Technology