Fred Wilson had a blog post recently talking about business models, and how that operating costs are as important as revenue.
As part of his argument, Fred cited some of Union Square’s portfolio companies, and how few employees they employ. This included Twitter, which has 20 people on the payroll.
Now, if you take 20 people and multiply it by $100,000/employees (pretty standard back of the napkin operating cost estimates), we’re talking about $2-million/year. So, what I’m curious to know is how and where Twitter is spending all the venture capital it has raised.
This is a company that raised $15-million in May 2008, and apparently looking to raise another $20-million.
How is Twitter spending so much money given its payroll is relatively modest? Is it server costs? Development costs?
It’s hard to believe that Twitter is burning through that much cash given there doesn’t seem to much, if any, spending on marketing, for example.
More: The San Francisco Chronicle has an article looking at how Twitter is going to unveil a revenue model soon. I’ll see it when I believe it.
Technorati Tags: twitter, venture capital
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Everyone in the tech/social media arena is eager to see how the execs plan on monetizing Twitter. Unless it’s a revolutionary business model, I think we’ll see an uproar throughout the blogosphere. My bet is on a subscription service for heavy users, companies, etc.
What in the world could they spending so much money on? Paying celebrities to endorse their service? Expensive schmoozing? Steak and lobster dinners twice/day? Private jets on a daily basis? Or maybe they just want lots of cash on hand to weather this bad, potentially long-term recession?
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