Reality check: Twitter is not worth $1 billion

So the venture capitalists have finally settled on a proper valuation for Twitter of $1 billion. This is based on a product with zero revenue and a history of struggles in figuring out how to generate revenue. I attribute this in part to the historic ambivalence of company founder and chief tech guy Evan Williams toward making money, which goes back to his days at weblog software firm Blogger before it was acquired. His heart never seemed to be in it. Neither does Twitter's collective heart seem to be into cashing in, let alone hitting the $1 billion dinger.

The catalyst for this speculative what-is-Twitter-worth frenzy was a $100 million investment by three funds. T. Rowe Price (TROW), Spark Capital and Institutional Venture Partners joined the round, which will increase Twitter's capital raised to $150 million. Naturally, when someone invests a lot of money in something, they expect returns. What sort of real returns can we expect from Twitter? I believe, contrary to the opinion of my esteemed colleague Peter Cohan, Twitter will never be a huge revenue home run. Here's why.