Putting a Value on Community
Two of the challenges people often talk about with “web2.0″*, are
- How do they make money
- How do you value a company that makes no money
(* much as we all hate that word, it is here and people use it)
These startups are funded by venture capital. Guys who know where and how to invest. Other than IPO and exit plans, do they actually believe there is value there? The VCs can often make their cash back by selling to a bigger concern, but how often is that the startup equivalent of grifters selling bits of the Golden Gate Bridge?
To give one example, did you see the talk of Twitter raising funds? Much as I love Twitter, I wonder if some of the expectations of the service are artificially high.
Michael Arrington asks How Much Is Twitter Worth?
Valuations range from $60 million on the low end to more than $150 million on the high end. There is, clearly, a bit of salivating going on around Twitter.
I have drunk enough of the social media kool aid to appreciate the benefits of an engaged audience combined with owning the platform and plumbing. I get that.
Some estimates put Twitter at around 1 million users. We must be looking at future growth as a means to estimate the company value. While I would be happy to pay, Flickr style, a small amount for guaranteed service and to avoid ads, how many users doing the same would it take to make that kind of valuation?
Could Twitter make money selling API access to services built on top of their infrastructure? How much?
My worry is we are still valuing eyeballs, which harks back to the dotcom bust. In the current climate is banking on advertising revenue a good business plan? How tolerant will Twitter users be of being targeted with even contextual advertising?
Related posts:
- Is Google Toolbar Hijacking 404 Pages?
- Where is the Excel community?
- Joy and APIness
- Top 5 Community Building WordPress Plugins
- Secrets and Paranoia at Wikipedia
Posted on April 29, 2008 by Chris Garrett
Filed Under Web 2.0
Comments
2 Responses to “Putting a Value on Community”
Leave a Reply
- Using Mind Maps for Creativity, Note-Taking and Productivity
- Announcing the Creative Commons PDF Converter
- The Freelancer's Toolset: 100 Web Apps for Everything You Will Possibly Need
- Announcing PostWisdom for FireFox: Your Personal Blog Writing Coach
- Adobe
- Blogging
- Cogniview
- Collaboration
- Content Licensing
- Copywriting
- Creative Commons
- Enterprise 2.0
- Excel
- Excel Template
- Excel Tips
- Funny
- IT
- Methodology
- Microsoft
- Office 2.0
- Productivity
- Sad
- Series
- Uncategorized
- Video Tutorials
- Web 2.0
-
Keep this site going
Subscribe with RSS
Twitter’s business model always confused me. I can’t see how they could make any revenue unless they opt for licensing etc.,
A lot of the web 2.0 services seem to be revelling in self-centred hype. It would be nice to see companies producing products or services that they wanted to run as opposed to setting them up to be acquired by Google / Yahoo / $largercompany
Cynically yours
Michele
It certainly seems to be the way, make a big splash, get noticed bu Google, get bought, ka-ching …