http://online.wsj.com/article/SB10001424052702304803104576428020830361278.html?mod=WSJ_hp_LEFTTopStories

Well, it is about time; a company that is not rushing to go IPO. Wow, who is Twitter’s financial advisor. I distrust analysts who tout high valuations based on the “sexy” investment story and the “cool factor”. Throughout the 1990s and the early 2000s, I heard enough blarney to last a lifetime. What amazed me more than anything during those years, is how little analysts actually focused on the business plan, the execution plan, execution feasibility, and revenue model. Today, investors are wiser and now ask those questions to the horror of analysts.

Many folks have been questioning how Twitter was going to rationally support the high valuations most analysts have been espousing. Valuation exercises are unusual things. You can establish a corporate valuation based on financials – current and past data. You can establish a corporate evaluation based on past and current data coupled with projections about the future. This latter method is key to establishing a strategic based valuation rather than a financially based valuation.

Up until now, I simply thought all of the talk about multi-billion dollar valuations of Twitter was the usual analyst hype one normally hears prior to an IPO. Up until now, analysts have been hyping the number of users there are throughout the world. The numbers are impressive but the company has generated no revenue of significance (i.e., advertising revenue) to warrant a multi-billion dollar valuation. However, if the talk about Twitter trying to build a real grown-up and experienced management team is true, then I may be able to believe in the hype about a multi-billion dollar valuation.

I have not seen the business plan, the execution plan, execution feasibility, and revenue model. Therefore, my hope is that a company that focuses on developing competent management actually understands that it needs to understand or modify those things on my list. It is a hope and not a certainty.

Bottom line it appears Twitter is taking the appropriate steps to building a solid management team.  The management team will be expected to develop and execute a revenue model that will generate significant ad based revenues within no more than 6 Quarters of their arrival.

Passion from the founders is nice but it is never going to be enough.