Most of the challenges Twitter has come from its inability to monetize
Per Crunchbase Twitter has had 8 rounds of funding for a total 1.16 BILLION dollars. Twitter actually did figure out how to monetize, they monetized an extremely small population (VCs) for an extremely large amount of money. Anything they'll get from consumers and brands will be peanuts unless you are looking at horizon much further out than any of those VCs wanted to be in on the deal. Sponsored tweets are going to be feeding the operating expenses monkey.
Looking at the FB/ZNGA/GRPN prices Twitter won't IPO so barring a deus ex machina in the form of an Apple purchase VCs are going to have to accept that they were the monetization vehicle, but nobody will want to talk about it publicly because it doesn't fit the standard narrative.
Seriously? Getting VC funding isn't monetizing. That's not profit, it's an investment. I don't know if this needs to be spelled out, but generally when people make investments they expect the investment to be returned with additional profits on top. Or do you think the VCs are in the business of giving money away?
Breaking even on sponsored tweets is not a sustainable business model just because they got VC funding. If they can't start turning actual profits, that VC money will be pulled out faster than you can type a 140 character message about it.
I think jbigelow76 is talking about 'monetizing' for the founders and early investors with tongue in cheek, and the fact that twitter doesn't have an obvious income stream. Obviously this is not the intended outcome for the VCs.
1. Monetization does not equal profit. Plenty of businesses monetize at a net loss, they just aren't around long term.
2. How investments work does not need to be spelled out, but maybe sarcasm does ;)
3. How do you see VCs (that weren't liquidated out from subsequent rounds) "pulling out" money? Are they going to ask employees to return paychecks, reverse bill AWS or wherever their infrastructure costs are incurred? There maybe money in the bank for operating costs and runway but from the VC's perspective that money is effectively gone.
VC funding is not investing, its speculation. VC money gets burned way faster than it gets pulled out. And generally they aren't looking to earn "actual profits" in the sustainable long haul. Just to generate enough hype to increase valuation for subsequent rounds when they can take their gains by cashing out early on SecondMarket.
Looking at the FB/ZNGA/GRPN prices Twitter won't IPO so barring a deus ex machina in the form of an Apple purchase VCs are going to have to accept that they were the monetization vehicle, but nobody will want to talk about it publicly because it doesn't fit the standard narrative.