Twitter Quietly Building Toward a Loud IPO

While much of the IPO buzz is about Zynga, Groupon and Facebook, another
company is also prepping for a mega-offering: Twitter. The process has been
mostly quiet, but we are starting to see some signs of the process. For example,
last week, Twitter's early board members Fred Wilson and Bijan Sabet
resigned from their posts. Even the chief scientist, Abdur Chowdhury, is
leaving. In short: Twitter is going through a major transition in its management
and governance structure. That is, the team is morphing from start-up people to
those who have public-company backgrounds. In a way, Twitter already has had a
sort of quasi-IPO. After all, it recently raised $800 million in funding. Funny
enough, this is larger than most IPOs for 2011. So in light of all this, it
makes sense to start acting like a public company. This kind of approach has
been critical for the success of recent IPOs, such as LinkedIn (NASDAQ: LNKD )
and Zillow (NASDAQ: Z ). Yet there are risks. If Twitter becomes too corporate,
there's a possibility the company will lose its competitive edge. Consider
that co-founders Evan Williams and Biz Stone already have left the company to
pursue other opportunities. Despite all this, it looks like Twitter has done a
fairly good job at navigating the issues. One key move was the hiring of Dick
Costolo. Keep in mind that he founded FeedBurner, which he sold to Google
(NASDAQ: GOOG ). As a result, he got strong managerial experience with the
search giant. Twitter also brought back Jack Dorsey to help with product
development. No doubt, this should be an important boost. It also helps that
Twitter has enough cash in the treasury to make the kinds of long-term
investments to remain competitive. And growth continues at a hefty clip, with
about 100 million active users combining to post about 230 million tweets per
day. So when might we expect a Twitter IPO? Such things are almost impossible to
predict. But it looks like there is no rush. If anything, it could easily happen
in 2013, after Facebook hits the market (its IPO is now pegged for the second
half of 2012). This probably is the right move. As seen with other great
companies like Microsoft (NASDAQ: MSFT ) and Oracle (NASDAQ: ORCL ) the smart
idea is to be patient when pulling off an IPO. Tom Taulli is the author of
"All About Short Selling" and "All About Commodities." You can also find
him at Twitter account @ttaulli. He does not own a position in any of the stocks
named here.