1. The average Twitter user has 126 followers;
2. 20% of its traffic comes through the Twitter website;
3. it doesn't make any money.
Near as I can tell, this is the greatest business plan in history. They overstate follower numbers (#1), they over-imply the promise of advertising value (#2), and they can't come up with a business plan to produce a revenue stream(#3).
All that adds up to a valuation, by an outside source, of $1 Billion. Anyone here remember the dot-com bust of 2000?
Breaking down the boast
I'll break this down one at a time.
#1 - Over-stated followers
A few spin doctors on the Twitter staff have released numbers to us stating that the average Twitter user has 126 followers. How many followers do you have?
Chances are the number is close to 6.
According to this fantastic little study, the top 10% of Twitter users have so many followers as to render the rest of us useless. The top 0.1% of Twitter users has some 18,000 followers. The top 10% has over 450.
Do the math - 0.1% of 54.7 million users (in August 2009) gives us 54,700 users with over 18,000 followers. I'm going to go out on a limb and say that these people are skewing the numbers.
After all, in order to get into this study, you must be deemed an "Active" user. The mind-boggling criteria to be deemed "Active" you might ask?
..."users with at least five followers, five friends, or five updates."
#2 - Over-Stated Advertising Potential
If 20% of traffic is going through the website, then 80% is not. That means 80% of all the traffic runs through a non-advertising portal such as a smart phone.
How long do you think it will take for the 20% to shrink to 0% once advertising pros start gumming up the Twitter website with banner ads?
Haven't you ever stopped to think why there aren't any ads on that site yet? Please...
#3 - It doesn't make any money
They don't make any money. This simple truth is why we know that Twitter has been valued at $1B. It's because they are running out of venture capital. Because they don't make any money.
Twitter is great
Please don't misinterpret my ramblings to say that Twitter isn't a fantastic social media tool. It is. In fact, it's the meaning of life for many a Twitter user and that must be worth something.
But let's not get carried away here...
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