To no one’s surprise, the Twitter IPO is garnering a tremendous amount of hype, from people calling it the savior of the tech markets v.2 or the biggest ripoff since Ponzi himself. Facebook was v.1 and we saw how that turned out, at least in the short term.
Since there has not been an SEC filing yet, no one is in a position to comment on their profitability.
We expect that we will be looking closely at the filings for clients, but there are industry-wide forces that will impact Twitter as they are impacting other online services.
We believe that this IPO will further emphasize the ongoing fundamental shift in the eCommerce/online services industry, which is the shift in the consumption of online services such as Twitter from desktop to mobile.
This shift is already having profound implications for online services and eCommerce. The big question is how these companies can monetize mobile use or capture mobile business, which has been a substantial business and technical challenge for these companies.
As a result, the ability to monetize mobile use is critical to Twitter’s revenues and the viability of the business in general. Since we believe investors have begun to recognize this, and since Twitter will be the highest profile tech IPO for a long time, the Twitter IPO will demonstrate that the ability to create and implement a profitable mobile strategy will be key for online services to raise capital and conduct their businesses. In Twitter’s case, many people assume their path to revenue is through advertising. Advertising has been a substantial problem for services that do not directly sell products or services to consumers. However, for many companies, direct purchases through mobile devices will be their challenge as well.
Facebook is the most prominent example of a company whose mobile strategy caused a great deal of heartburn when dealing with the public markets. LinkedIn, Pandora and AOL are other recent prominent examples of companies that are struggling with this shift or at least trying to adapt.