One Thing Twitter’s Outgoing CEO Got Done: Acquisitions (40 Deals In 5 Years)

Outgoing Twitter CEO Dick Costolo has been a magnet for criticism over the past year or so. The critics say Twitter’s leadership sat on its hands under Costolo, not doing enough to improve the service and grow its audience more effectively.

But besides the facts that Costolo led Twitter to its IPO, made major hires, and championed its international expansion, there’s another counterpoint to that argument: acquisitions.

We used CB Insights data to analyze Twitter’s acquisitions since 2008 in the charts below. Under Costolo, Twitter revved up its acquisitions and became an aggressive deal-maker, snapping up 40 companies in the nearly 5 years Costolo has served as CEO.

(Costolo will step down and transfer leadership to interim CEO and Twitter founder Jack Dorsey on July 1.)

Costolo was promoted from COO to CEO in October 2010, after which acquisitions picked up significantly and never flagged.

And Twitter got the deals done despite the fact that they are relatively short on cash (and/or stock value) compared to other aggressive acquirers, including Google, Amazon, Facebook, Apple, and others.

Below is a look at Twitter acquisitions by year. 2014 was the top year for acquisitions by Twitter with 11, and 2015 could end up equaling or surpassing 2014 by number of deals. There have been 5 so far, with more than 6 months left in the year.

Below are Twitter’s top five deals by the target’s valuation. We included only those companies for which valuations were disclosed at the time of the acquisition. Note: Crashlytics’ valuation is based on a post-Twitter IPO estimate.

Were the deals successful for Twitter? The verdict is still out for most. But here are some early deal notes on some of the more prominent deals:

• TellApart: This deal, announced April 28, raised eyebrows because of Dick Costolo’s participation as an angel investor in TellApart (he was excluded from board decisions on the acquisition). According to CB Insights data on private-company valuations, Twitter paid a 5.3x multiple for TellApart, significantly higher than the 2.2x paid by The Rubicon Project for ad-targeter Chango, and the current 2.9x trailing 12-month price/sales ratio for public ad-retargeting company Criteo. Meanwhile, prominent Twitter investor Chris Sacca described TellApart as a “strong acquisition.”
• MoPub: Twitter filings revealed that MoPub had only generated $6.5M in revenue during the first half of 2013 prior to being acquired by Twitter. That was a disappointment because in May 2013 MoPub CEO Jim Payne had written that the company was on a $100M revenue run rate. But ad-tech industry executives confusingly tend to refer to gross revenue figures that track total ad spend passing through the company, rather than net figures. Using the $100M gross revenue run-rate number and other publicly revealed figures Suntrust equity analyst Bob Peck has estimated that MoPub would generate $56M in full-year 2014 net revenue for Twitter. Twitter has had some trouble integrating MoPub’s leadership: Payne left his day-to-day role at Twitter in late 2014, amid reports of growing frustration among MoPub’s leadership with all the executive turmoil at Twitter.
• Vine: The micro video-focused social network has seen impressive traction. It now has 100M people viewing videos on the platform every month. Earlier this year, Twitter also acquired another Vine-related property, Niche Project, for a reported $60M. Niche is a kind of talent agency for Vine personalities, and will help Twitter monetize the platform’s videos through brand sponsorships.
• Periscope: Twitter investor Chris Sacca wrote that “Periscope may prove to be the most important deal Twitter has ever done,” in an 8,500-word open letter published earlier this month that mostly focused on Twitter’s missteps. He included the Periscope and TellApart acquisitions in a short section titled, “What is going well at Twitter?” It remains to be seen whether live-video broadcasting from a smartphone app will become a major consumer trend, but Periscope has at least seemed to beat back direct competitor and early favorite, Meerkat.
• Gnip: This acquisition meant Twitter would have direct control over a social-data vendor with access to Twitter’s “firehose,” i.e. every tweet and action taken. But as Twitter terminated data-licensing agreements with other data vendors, it also became clear that Twitter wanted to consolidate its hold over social-data and Twitter-firehose providers, period. This created some ill-will among DataSift and other ecosystem players. While Twitter’s overall plans to grow data-licensing are interesting, the verdict is still out on the benefits of a closed vs. open approach.

For more details on Twitter’s acquisitions strategy, including industry focus and company stage, have a look at our September 2014 report on Twitter M&A: “Twitter M&A Hits High in 2014. How Has Their Focus Shifted Post-IPO?.”

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Image credit: Joi Ito, Creative Commons Generic 2.0 Attribution License.