The Tweet heard round the world
CNBC’s Julia Boorstin reveals some of the early Twitter investors positioned to make big money on its IPO. CNBC’s Kayla Tausche provides a look at some of the bankers involved. Also, Carly Fiorina, former HP chairman & CEO, discusses how the social media company’s IPO will impact the rest of the the tech sector, and why Michael Dell has less than five years to prove his strategy of going private is working.
first up, the tweet heard ’round the world. twitter announcing via twitter, of course, it’s filed for its longawaited ipo. who are the early investors that might be making some big money? julia boorstin has more outside twitter headquarters in sanfrancisco. good morning, julia. good morning, carl. twitter has raised about $1.2 billion from a range of high-profile individuals and vc funds. twitter’s three co-founders are likely to hold significant stakes. that’s chairman jack dorsey, who’s also ceo of mobile payments company square, plus evan williams and biz stone, both of whom no longer work at twitter. twitter’s ceo invested in the company’s first investment round back in 2007.that’s two years before he joined the company as chiefoperating officer. legendary vc mark andreesen also got into the first round of funding, coming in the next year, jeff bezos, the expedition fund, as well as ron conway, known as the godfather of silicon father, and tim ferris, known for writing the four hourwork week. it’s not just american investors. saudi arabia prince alal invested in twitter in 2001. he didn’t buy the shares directly from twitter but through the secondary market. that’s how he made the purchase. the vcs and institutions who invested who are a hodge who’s list of the heaviest hitters in silicon valley. sv angel could see a huge payday as they got into the first round of investing. spark capital, charles river, benchmark also participated in several rounds. t. rowe price and morgan stanley snapped up a piece back in 2009. coming in later with bigger checks, but twitter had a higher valuation, silicon valley giants cliner perkins and draper fisher jerveson, as well as dst global. now, the investors’ paydays hinges on what the s-1 reveals about the company’s financials. e-marketer estimates there’s about $580 million in revenue this year, about half of that coming from mobile. both of those numbers are, of course, expected to grow. the one factor analysts point out in terms of twitter’s growth prospects, the fact it has only 240, 240 million daily active users. compared to facebook, it’s not that much, which means there is significant growth potential. carl? thank you very much, julia boorstin, in san francisco right outside twitter’s headquarters with that fancy sign. meantime, kayla has some more on the bankers involved in the ipo. good morning, kayla. good morning, kayla — you’re not care la. i’m kayla. i go buy kayla, too. sometimes you do. it’s friday. we’ve all had a long week. carl, it seems like it’s bankers singular. we don’t know much about the contents of the s-1, but we know it won’t contain the full slate of banks. the lead underwriter, the onlyone with a confirmed role is goldman sachs. they’ll be the oracle and providing advice in how to structure the deal.goldman sachs has raised the most for clients in ipos, some5.2 billion in proceeds, according to renaissance capital.followed by jpmorgan and then tech powerhouse morgan stanley. wall street expects most if not all of the banks to have a role in the deal, just not exactly the top decision-making power.and it may have surprised someone not to see morgan stanley in that seat, even after its role in facebook’s debacle. that hasn’t really had a material impact on morgan stanley’s ipo business.on one hand, twitter is said to want to avoid the optics its ipocould go the way of facebook’s. on the other hand, there wasalso a very real conflict of interest for morgan stanley in advising on the ipo of twitter’s biggest competitor. buy side investors, carl, say they expect twitter to be priced conservatively, even if it means leaving money on the table. they say the company will have a better shot of keeping the reputation intact during therocky road of being public if there is guaranteed upside. of course, we’re looking for more information and we’d love to get a lock at that s-1. carl, that’s the latest for now. that’s a lot of information, kayla. you brought a lot of it to us first, thanks a lot.for more on how a twitter ipo would impact the rest of the tech sector, let’s bring in carly fiorina on the news line. carly, good to talk to you again. nice to be with you, carl. thanks for having me. kayla mentions keeping expectations low. how many lessons did we learn from facebook? well, you will remember,carl, you and i had this conversation many times and simon and your other hosts, as well, that overhype destroys an ipo every time. and facebook was overhyped from the beginning. let us hope that twitter learned the lesson of that. it’s hard, though. it’s hard to dampen excitement when an ipo has been anticipatedfor this long. yeah. you know want to obviously keep your head about you. on the other hand, you do want to build some excitement, right? i mean, you do want there to be an appetite on day one. you think at the very least it’s important that they establish a valuation. explain what you mean. well, look, who knows whether twitter will stay a public company for the long term. i mean, the story of tech is that smaller companies come up with the great innovations that ultimately scale is necessary to truly capitalize on them. so, of course, twitter’s goal is to remain a public company, but perhaps a larger company willbuy them at some point. the only real way to establish avaluation is to go through an ipo process, and so, that’s whatthey’re doing. of course, they have investors, i’m sure, looking for a way to cash in at this point. you made the point, the techsector for a long time, got the reputation for being a fail-safebet. i got to imagine, carly, after a pretty wide spectrum ofperformance of various ipos, we’re looking at some socialnames right now, zynga down 70, but zillow up 400. maybe that fail-safe bet notion has been discounted somewhat, right?well, i hope so. and i think the examples you gave — zynga is a classic. i was amazed for a while that people seemed to have forgotten the dot-com bust so completely, where, you know, so many people just got wiped out. but, look, we need to remember tech is inherently risky. there are many innovations that are great but can’t scale, and don’t go anywhere. that’s why venture capital is so important. but let’s hope this is thesuccess. i do think that it’s important to remember that twitter has a lot of growing competition, and i think it’s also important to remember that consumers are actually getting kind of sick ofall of the ads interfering with their wonderful experience. you know, there are pieces of hardware around now, like ad trap, which is able to clean all of the ads off the internet feed. i think that will be interesting to watch, how these companies really can — yeah, carly, want to get your reaction to our interview thismorning, an exclusive with michael dell. let’s take a quick listen. we think the pc and tablets and virtual clients actuallycontinue to have a very important role in productivity. and, you know, consolidating industries, you know, leading companies can do just fine. dell will participate in tablets and all sorts of, you know, client devices. we’re not — you know, not getting in the mobile phone business. we do resell some other — someother, you know, leading mobile phone products. but really, our main business is helping our customers secure, protect their data, and access it from any device they want to. carly, i want to know what you make of — you know, whether or not some believe he’s calling it the world’s biggest start-up. others are saying michael dell’s the dog