Well, couldn't that same argument have been made about Friendster, or MySpace, or Digg etc.?
I don't know what the odds are, but surely there's at least a 25% chance that twitter will fizzle out. So it's 25% chance of nothing, and 75% chance of, say, a 3x exit. I dunno, that seems crazy risky to me.
Someone commented below about the secondary market - that actually makes a lot of sense I think. I guess when you're investing in twitter there's enough liquidity in the secondary market that you can probably get out if you need to.
MySpace's exit was $580MM. They had an estimated revenue of $300-$400MM in 2009. They might not be Facebook, and may never have a very high valuation, but the exit was very profitable for those involved.
Twitter can just as easily be great for it's stakeholders and fizzle out as a service.
yeah, but their 'exit' is similar to twitter's current round: it's a measure of how much somebody thought they could/would be worth. I'm asking how much they are worth now!
Comments
Well, couldn't that same argument have been made about Friendster, or MySpace, or Digg etc.?
I don't know what the odds are, but surely there's at least a 25% chance that twitter will fizzle out. So it's 25% chance of nothing, and 75% chance of, say, a 3x exit. I dunno, that seems crazy risky to me.
Someone commented below about the secondary market - that actually makes a lot of sense I think. I guess when you're investing in twitter there's enough liquidity in the secondary market that you can probably get out if you need to.
"25% chance of nothing, and 75% chance of, say, a 3x exit. I dunno, that seems crazy risky to me"
If these are the odds, the expected outcome would be that you more then double your money. 25%0+75%3=2.25
1) Even if twitter fizzles it won't be worth $0. 2) It's possible that the investors in this round have a preference to get their money out first.
So 25% chance of nothing is almost certainly wrong.
are you sure? How much is MySpace worth, given that they probably are losing money? (not to mention, members)
MySpace's exit was $580MM. They had an estimated revenue of $300-$400MM in 2009. They might not be Facebook, and may never have a very high valuation, but the exit was very profitable for those involved.
Twitter can just as easily be great for it's stakeholders and fizzle out as a service.
yeah, but their 'exit' is similar to twitter's current round: it's a measure of how much somebody thought they could/would be worth. I'm asking how much they are worth now!
Still somewhere greater then $0, probably still several million from contracts and traffic alone