GSV Capital: Twitter

Investment Portfolio
Twitter

Why we like Twitter

Percent of GSV Portfolio: 20%

About

Twitter is the largest instant communication platform in the world with more than 500 million users. Twitter is emerging as the primary source for real time, user generated information for all global media and news agencies. Unlike other social networking sites that are primarily used on a PC or laptop, Twitter is easily accessible and increasingly used on portable devices - tablets, smart phones, "dumb" phones.

Thesis

Twitter has a dynamic model with its gigantic network effects and high engagement. The integration into Apple's iOS has accelerated usage and engagement rates.

People

Jack Dorsey is one of the co-founders and current Chairman. He served as CEO in 2008 and stepped down, but returned in March 2011. Dick Costolo has served as CEO since October 2010 and was previously the company's COO. Prior to Twitter he was Group Product Manager at Google.

Key Board Members:

Peter Fenton
Ron Conway
Mike McCue
Peter Curie

Management Team

Mike Gupta, COO: Previously Treasurer at Zynga
Ali Rowghani, COO: Previously CFO at Pixar Animation Studios
Brent Hill, Director of Sales: Previously Head of Financial Services at Google

Product

A free to use micro-blogging platform (140 characters). Followers of a person receive his or her updates in real time via SMS or over the web. Unlike other networks, the follower doesn't have to know or be a "friend" of the sender. Twitter is very effective for direct marketers, with the cost of a message being significantly lower (estimated at $0.50) compared to other approaches such as telemarketing or emailing.

Potential

With a large and increasing share of the global population gaining access to mobile devices, and Twitter being designed to operate on any type of mobile device, there is real potential for accelerating user growth in the next 2-3 years. Targeted advertising and the inclusion into the new iOS platform will open new revenue streams over the near-term.

Megatrends

Internet
Knowledge
Social
Globalization
Brands
Convergence

How Big Can This Be?

Can reach 1 billion users in the next three years and grow its revenue per user significantly.

Predictability

Model becomes more visible as user growth accelerates; inclusion into the new iOS also strengthens the confidence level for sustainable growth. Tweets per day are more than 340 million as of March 2012. Monthly active users are at 140 million.

Risks

Still at relatively low monetization levels.

Learn more about GSV's Four Ps Growth Investing Framework

% of GSV figures are based upon the fair value of each holding as of March 31, 2013, or the cost basis of the holding (exclusive of transaction costs) if the investment closed subsequent to March 31, 2013. In either case, these values are divided by the net assets of GSV Capital as of March 31, 2013.

Twitter News

May 2, 2013

NEW YORK TIMES: Buffett Speaks and Tweets

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May 2, 2013

NEW YORK TIMES: Egyptian Activist Defends Anti-Israel Tweets

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