Investment as Signal: Bezos Funding Twitter Is a Green Light

Twitter announced today that it picked up more funding, which I first heard through Marshall Kirkpatrick’s tweet. He has a nice post up on ReadWriteWeb.

Investments provide three benefits:

1. Cash
2. Signal the broader market about the company’s prospects
3. The investor provides advice, ideas and introductions

Jeff Bezos, founder of Amazon.com, is one of the investors. His investment hits all three benefits listed above.

Let’s look at what Bezos has done while at Amazon.com:

• Established the preeminent brand for online retail
• Built a platform for small merchants to sell on
• Integrated user ratings as a key element of the sales process
• Pioneered affiliate marketing
• Developed Amazon’s highly successful recommendation engine (35% of sales)
• Created a vibrant cloud services offering
• Gambled on Kindle, which is showing some promise despite skepticism

Clearly, the guy has a good eye for things that can be successful.

Now he’s put his own money into Twitter.

What are the two biggest things Twitter needs?

1. Reliable, scalable architecture
2. Monetization strategy

Amazon.com processes how many transactions per hour? I imagine the number is huge. Amazon Web Services are all about scalability, with the need to process millions of transactions reliably. If you can’t scalability master Google or its executives to invest in you, I’d say having the founder of Amazon.com qualifies as the next best choice.

Monetization is the other question for Twitter. Amazon has had success in its affiliate marketing (relevance drives the clicks, distributed advertising program), its recommendations (35% of sales, driven by relevance) and in its fee-based Amazon Web Services. Ads, incremental revenue, web services fees. You think in that mix there is a solid revenue model for Twitter? I’d bet on it.

I really like this investment by Bezos in Twitter. Good for Twitter, and I hope it portends success for them in the months ahead.

*****

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