Twitter = $80 Million Valuation

To me this is a little hard to understand.  I have just been writing off Twitter’s recent reliability issues and poor service to lack of funding, growing pains, and Ruby on Rails in general, but after reading how easily these guys have been able to secure investors and financing it makes me wonder if it’s just a matter of super-crazy growing pains or maybe Ruby on Rails?  My guess is it’s a combination of both.  If it’s growing pains, investors will likely be pretty happy because these things tend to fix themselves over time and hopefully the large user base won’t go away completely to a similar but more reliable platform, but if the underlying reason for Twitters reliability is that it is built on Ruby (which is rumored to not be as scalable as once thought), investors might find themselves having to back away at some point.  Don’t get me wrong, I am not a ROR (Ruby on Rails) Hater, or a Twitter hater for that matter, but if Twitter doesn’t start showing some reliability in their software, folks will start dropping like flies…

Given the obsession with all things Twitter, this has been one of the most anticipated and hotly discussed fundings in a while: Om reports that after much jostling, the micro-blogging/messaging company has nailed down a $15 million second round, bringing its total raise to around $20 million. The pre-money valuation is said to be $80 million. Past backer USV participated as well as an unspecified lead investor.

Pretty much every discussion about Twitter has to revolve around (at least) one of three things: reliability, mainstream adoption and business model. The new round comes amidst a particularly bad stretch at the company, which has been suffering blackouts on a daily basis as of late. While there’s hope that the new funding could help solve some of these woes, it’s not clear that the problem is something that will just go away with more money thrown at it. A recent post on the company’s blog basically states that the crux of the problem is unknown. As it wrestles with this issue the company has had some turnover among its key engineers. Still, it’s not obvious what long-term effects Twitter’s downtime will have on the company. Faithful customers are obviously frustrated by it, but not necessarily to the point where they’ll stop using it. Growth, meanwhile, has been off the chart.

Of course the business model remains a bit of a mystery, and perhaps more than anything, this new round is about buying the company time to figure that out without resorting to something cheap and obvious like banner ads across the site.

• Twitter’s Summer Funding: $4.8 Million of a $5.4 Million Round
• Twitter Raises First Round From Union Square Ventures, Angels

Twitter Gets $15 Million Second Round; $80 Million Valuation: Report | paidContent.org