Twitter is doing really well. The company can't stop adding users, and its revenue generating products look very promising. It is currently rumored to be raising money at a $4 billion valuation.
And DST is, of course, the Russian investment fund that recently went public and bought big stakes in hot, fast-growing startups like Facebook, Zynga and Groupon.
Investing in Twitter, which is innovative, huge and fast-growing, seems like right up DST's alley. But the main investor in the running for Twitter seems to be Kleiner Perkins. And while DST partners sometimes act suspiciously coy about Twitter, we're not hearing that the Russian investment fund is seriously in the running.
Some people usually point to the fact that Twitter's revenue engine hasn't really grown to the same scale as these other companies', and that's probably a factor. But we think there's another, bigger factor at play here.
There's another thing that Facebook, Zynga and Groupon have that Twitter doesn't have: a Founder who has remained CEO throughout the life of the company.
Even though they wouldn't say so, to keep their options open and to avoid looking like they're criticizing other companies, we think that's part of DST's investment criteria. It's not just that the most successful tech companies (Apple, Microsoft, Amazon...) often follow this pattern. It's that one of the things that sets apart what's now called a "DST deal" from other late-stage funding rounds is that they don't ask for any form of control over the company -- not even a board seat.
If you're going to invest massive amounts of money in a startup that's huge but still risky, and have zero control over your investment, then you want to really, really trust that company's CEO. And the CEOs who have the best, strongest incentives to make a business thrive and go for a huge win (as opposed to, say, a $6 billion offer from Google) are Founder CEOs, because they have an emotional attachment to the business. Especially after that Founder CEO has taken money off the table so they can focus on the grand vision of the company, which is another feature of a "DST deal".
We think Twitter is an amazing product and company and will build a successful business that has good chances of going public one day. But if we had to guess, we'd say DST probably won't do its signature type of deal with Twitter because of its rotating CEOs.
