Twitter: Where’s the pony?

Make no mistake: I love Twitter. I blogged about it here. Since then I have used Twitter religiously on my BlackBerry, via Web clients, and on my laptop through FaceBook. It’s fun, stimulating, and informative.

With marginal revenue and no apparent business model, Twitter recently sought a $150 million valuation (that's "pre-money"), but seems to have settled for $60 million. According to several well-placed sources, that was good enough to get the company another another $15 million in a third round of VC funding. Last summer it raised $5 million on a $20 million valuation.

So where is the pony from a enterprise value and VC point of view? That remains to be seen, especially given Twitter's considerable challenges with revenue generation such as online advertising. Still, some VCs see gold in them thar hills, believing that Twitter's buzz will turn into bucks sometime in the near future.

For a few more thoughts about valuing Twitter, see here, here, here, and here. Some analysts talking about Twitter have resorted to arguing that business plans and early profitability are overrated. Maybe it's just me, but that sounds suspiciously similar to the arguments dotcom investors made around 1999. And just how many of their beloved Web startups are still around in 2008?