Business

The Twitter IPO and its impending Silicon Valley domino effect

Image Credit: Illustration by Tom Cheredar

One year ago, every early-stage social startup I knew was having problems raising their next round, including my own. It wasn’t that these were copycat companies, many of them were very good ideas that had their own unique angle.

Why do you suppose this was happening? Facebook.

I blame Facebook, and so do countless others who either had to find some way to survive, close, or firesale themselves into acquisition. What investor wants to simply get them their money back? They want returns, and ideally big returns!

The next big tech IPO

Now that Facebook stock prices have recovered, social – and for that matter, technology is heating up again.

So now it’s Twitter’s turn, they’ve file their “confidential” S-1 with the SEC.

The key difference for Twitter is they’ve filed their S-1 under the new JOBS Act, which allows companies with less $1 billion in revenue to file. The significance here is Twitter won’t be scrutinized as heavily as when Facebook was when they filed. This gives Twitter a year or so to figure out their story before attempting to woo investors.

That’s really good news. However, one year is a long time in the world of technology.

A lot can happen, and one thing that could easily gum up the IPO (Initial Public Offering) machine would be Facebook missing their numbers. Less sophisticated Wall Street types are going to view Facebook’s success as analogous indicators to Twitter’s success. If Facebook falters at any point running up to Twitter’s IPO, it could be a huge blow not only to Twitter’s opening bell, but to many of the upcoming Silicon Valley IPO darlings.

Levie, Houston, and Dorsey may be fast-tracking their respective IPO runs for Box, Dropbox, Square — but will it be in time to escape the scrutiny that would come from a foiled Twitter IPO? And let’s not forget the fates of other soon to be IPO contenders; Hubspot, Palantir, SurveyMonkey, SugarCRM, Tableau, Zendesk, Gilt, Atlassian, and possibly Eventbrite one day.

All of these companies stand to gain from a momentous and successful Twitter IPO. Should the bull market come out to play, expect a successful Twitter IPO to kick off a domino effect for other Silicon Valley tech companies – and well beyond.

A Facebook comeback gives Twitter a headstart

Still, Facebook is the linchpin. Should Facebook faceplant this year, it’ll be difficult to convince investors in the market that tweets are a safe bet.

That said, I predict investors will be happier with Twitter regardless.

Unlike Facebook, Twitter seemed to always know where it was going: an incredibly powerful channel for marketing and delivering content.

Twitter is the first to break the news. It’s #hashtags have become a constant presence of TV screens. It’s reshaped politics, and unleashed torrents of commentary. This role as a breaking news/marketing/media play drives Twitter’s sales and will sustain their growth as a public company.

This is Twitter’s largest differentiator from Facebook, which is — and always will be — an ad play. Only advertisers like advertising. Producers, marketers, politicians and consumers will continue to love and leverage their Twitter channels.

Dominos photo via Shutterstock

Marcus Nelson headshotMarcus Nelson has founded five successful startups. He is now the founder and chief executive officer at Addvocate, which helps companies humanize their brand experience by enabling all employees to engage with customers. A recognized leader is social media marketing, Marcus holds a patent for technology that determines someone’s brand influence, wrote the original specifications and helped build the prototype of Salesforce Chatter, and is an expert in user-experience design. Follow Marcus on Twitter: @addvocate


VB's working with marketing expert Scott Brinker to understand the new digital marketing organization. Help us out by answering a few questions, and we'll help you out with the data.
blog comments powered by Disqus