So Twitter, which has basically nothing in the way of revenue — at least nothing that I can see — is managing to raise $100 million dollars from venture capitalists who are betting that they can find a way to turn Twitter users into cash flow.
Does this remind anyone of the tech bubble at all, here?
Anyway, these investors are committing $100 million, and they are offering a “valuation” of Twitter that’s in about $1 billion. Which means their $100 million buys them about 10% of Twitter. Good for them.
But, this is problematic, because who is out there with hundreds of millions of dollars, clamouring to buy the other 90% of Twitter?
Or, to take the tack that 37signals is taking:
37signals is now a $100 billion dollar company, according to a group of investors who have agreed to purchase 0.000000001% of the company in exchange for $1.
…
In order to increase the value of the company, 37signals has decided to stop generating revenues. “When it comes to valuation, making money is a real obstacle. Our profitability has been a real drag on our valuation,” said Mr. Fried. “Once you have profits, it’s impossible to just make stuff up. That’s why we’re switching to a ‘freeconomics’ model. We’ll give away everything for free and let the market speculate about how much money we could make if we wanted to make money. That way, the sky’s the limit!”
Too funny.
So, who wants to make Absurd Intellectual an absolutely absurd valuation? After all, if you give me just a single, flat dime in exhange for 0.00000000000000000000000000000000000000000000000000000000000000001% of the blog, then I’ll be the richest damn person ever. On paper, anyway.
They need to stop making money, in order to make money?
Nice to see the lessons of the barely-one-year-old economic collapse have not been forgotten.
Those who forget history are doomed to something-something.
Boy, Twitter does seem to bring out the twit in people, doesn’t it.