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Saudi prince invests $300 million in Twitter (google.com)
82 points by pastr on Dec 19, 2011 | hide | past | web | favorite | 45 comments

Very interesting, but it really makes me wonder.

If Twitter is making money, why dilute the shares with investment like this?

I'm sure one response is 'so they can grow the company', but that seems like a bit of a hard sell at this point.

How big does a company like Twitter really need to grow in order to be successful enough that they don't need to take $300 million investment deals? I mean, they are already the #1 provider of 140 character communication.

What is next?

I am not certain but it is possible that this was a secondary market purchase. The fact that it was announced by the Prince and not announced as a funding round by Twitter suggests a secondary market purchase.

In other words, the Saudi Prince may have bought the stake from an existing Twitter investor.

I think this is a direct investment at least according to WSJ, "Twitter spokesman Matt Graves confirmed the investment" http://online.wsj.com/article/SB1000142405297020479110457710...

That is a good find but it is not dispositive. For various legal reasons many people want secondary market transactions in securities that are not registered to happen through the company. So this may still be a secondary market transaction, but I am sure we will find out soon enough.

They just burning money, it'll collapse before 2015. Probably trying to bloat the cost of the company for the successful exit.

I'd be surprised if a lot of the $300M doesn't go towards existing shareholders cashing out.

They won't get higher prices for their stock that what people like this are willing to pay. They need a killer business model or a lot more scale to have revenues large enough to justify their valuation.

Taking this kind of money keeps them in business long enough to build real revenues (or fail).

I was trying to be subtle, but still say that I find it amazing that Twitter hasn't figured out a business model yet. Anyone I've talked with any bit of knowledge has always said that they are raking in the cash selling data analysis and things like promoted tweets.

That said, as other people have commented, maybe Twitter didn't have a choice in this matter. If so, that would have been an interesting phone call to listen in on.

Assume you have $300 million worth of Twitter stock that you can sell. Imagine getting a phone call along the lines of: "The Saudi prince is calling, and he'd like to buy all your stock for $300 million." I'd be sh*tting bricks and trying to figure out if there are any new Gunboat 90's [1] available to purchase. ;-)

[1] http://www.gunboat.com/90-gallery.php

What I've heard people say is that if you can get money, get it. (on your terms of course)

There's not much that Twitter has done in improving their product (been 5 years)..which is something I don't really understand too much.

> "If Twitter is making money..."

Is it? Doesn't seem very likely at all that it is.

I've always wondered. On the one side you get the naysayers who don't think Twitter is significantly monetizable at all.

On the other side you've got the people who think the Firehose is the greatest thing since sliced bread and is pretty much a golden ticket.

I don't think I get Twitter - I've never found the service to be at all useful, and I find the 140-char limit quaint and out of touch with how users want to use the service (see: URL shorteners, tweet expanders, Twitter-speak shorthand, etc). However, I am willing to accept that there's a social network I totally don't get that nevertheless rakes in some serious money (like WoW!)

But what exactly is the value of Twitter's data? Unlike Facebook, Twitter doesn't even remotely approach having a representative sample of the population. My parents are on Facebook, my uncles and aunts are on Facebook, along with everyone from my generation - Facebook has meaningful demographic data. What data does Twitter have that isn't almost exclusively limited to "young, urban, tech-savvy"?

As a marketer or data miner, what is so good about Twitter's data that would compel me to pay The Big Bucks(tm) for such a feed? Maybe I'm missing something, but it seems like Twitter's biggest proponents believe that the company can justify a multi-billion dollar valuation by providing glimpses into the thoughts of a tiny sliver of the population at large.

More of my immediate family is on Twitter than on Facebook.

I have no idea what value the Twitter data feed has, but the value proposition of the service is compelling: reach interested people with minimal effort, build follower relationships to retain them.

My butcher, for instance, periodically twerps when he's got some oddball piece of beef to offload.

I used Twitter to enroll multiple cryptography classes. I had plans to use Facebook and email as well, but the response I got from a couple twerps filled my classes.

ChiSec, our local meetup for infosec people in Chicago, is scheduled and promoted entirely through Twitter. I use Crowdbooster's scheduled-twerp feature to post consistent reminders. It's miraculously effective.

This "people only use it to track celebrities" thing is a load of crap. Just as many celebs brag about their Facebook likes, but nobody says people go to Facebook for the celebs. The fact is that Twitter has a different, lower-drag interaction model than Facebook (which requires me to decide whether someone I want to talk to gets to see my kid's pictures). It's better optimized to broadcasting than Facebook is.

I'm not an expert on this but here's my hypothesis. People seem to use twitter for interacting with the outside world: celebs, political causes, trends, memes, etc. People use Facebook for interacting with their friends. Could it be that twitter's data is easier to mine for useful marketing information because people make tend to make more explicit connections to brands, causes etc?

I don't see how it matters whether they have a representative sample or not, it just reduces the potential market for their data, it doesn't invalidate it completely.

Twitter data is real-time + are mostly status updates which are usually indicative of intent or state of mind of a person. Besides lead generation, Twitter paints a different facet of a person where instead of social relationship (FB) its more of interests and current needs/intent. All these characteristics are great for marketers.

From what I've seen twitter isn't really a social network. The majority on twitter are just consumers for the "celebrities".

Hearing news like this, I can't help wondering what will happen to twitter if/when the Arab Spring spreads to Saudi Arabia.

Presumably users would switch to alternatives in case of intervention, which would be a big hit to this prince's investment.

I doubt there'll be cases (like during the last Iranian Presidental election) where Twitter postpones upgrades to help the protesters.


Anybody know if this was a direct investment, or through a secondary market?

"Invests $300 million in Twitter" means "not secondary market."

How do you figure? The Saudi Prince is "investing" regardless of how the equity is purchased. The question is if this is an "investment" from twitter's perspective. Signs seem to point to no.

The word "in" means "in", which means "not secondary market."

I find it interesting that a government which allegedly funds terrorism [1] also funds a company which is supposed to be the shining beacon of transparency and a tool which has been crucial to the Arab Spring movements.

Wonder how much of an influence this will have on Twitter's self-censorship.

[1] http://www.guardian.co.uk/world/2010/dec/05/wikileaks-cables...

How much of Twitter does that get him?

Using the $8 Billion valuation, around 3.75% of Twitter.

This concerns me about my investment as a user in Twitter. Even if it's only 3.75% of Twitter the company now owns, I don't necessarily want to support the venture of a Saudi billionaire. Maybe if they are really proponents freedom of speech and the press, it isn't such a bad thing.

I'm sure you don't drive a car, either.

Yes, and here's to hoping he doesn't do any business with Citibank, directly or indirectly.

Or uses any Apple products. Or Owns a car or truck from GM. The prince has huge stakes in each

Ah, thanks. I suppose I'm a bit of a fool for not just looking up Twitter's valuation.

3.75% doesn't sound so bad, even if you assume bad intent. 300M had me thinking it had to be a really significant minority share, like 40%... not keeping up with the times, I guess.

Good time to reduce holdings if you're an insider or early investor.

To those wondering if this is a secondary purchase, the keyword I see here is 'Invests'. It is very different from "Saudi Prince buys $300m worth of Twitter shares".

Buying $300m worth of Twitter stock would be an investment.

In any reasonable scenario, he is purchasing shares of stock in a company on the hopes their value will rise. Doesn't matter who he is purchasing them from, it's still an investment.

I wouldn't take such nuances for granted in a random headline.

If SOPA passes, surely this will be a regrettable decision...

He was originally looking to splash money on a football (soccer in the US) club, but could not find one to buy, so... ;-)

Feeling pwnage right now.

FYI this is a secondary purchase (ie it was not an investment in twitter directly, but rather he purchased shares from other investors): http://finance.fortune.cnn.com/2011/12/19/saudi-prince-deal-...

Smart investment. Twitter has really changed news and personal broadcasting in ways many of us don't appreciate. And Twitter has some of the smartest people dispersing pearls of wisdom and knowledge like nowhere else.

Again, Twitter is a smart investment - in more ways than just money.

"And Twitter has some of the smartest people dispersing pearls of wisdom and knowledge like nowhere else"

You should check out the library.

Twitter is easy to mock, but I suggest you compile a list of your favorite thought leaders on twitter, then have the list emailed to you via a service like tweetymail.

Then you'll start to get a glimpse of how potent twitter can be.

Who is mocking? I use Twitter regularly. But I'm not the one claiming that it's the greatest source of wisdom and knowledge on the planet. It's an interesting and useful form of media, but it's not even clear whether there's a viable business model in there.

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