The 25 Documents You Need Before You Die!
It isn't enough simply to sign a bunch of papers establishing an estate plan and other end-of-life instructions. You also have to make your heirs aware of them and leave the documents where they can find them.
Consider: At least 10 states have been investigating whether some of the country's largest insurers are failing to pay out unclaimed life policies to beneficiaries. California and Florida have held public hearings on the issue in recent weeks.
Insurers say they are behaving lawfully. Under policy contracts, they aren't required to take steps to determine if a policyholder is still alive, but instead pay a claim when beneficiaries come forward.
You can avoid such problems by securing important documents and telling your family where they are stored.
Jean Parr is grateful that her mother obsessed about the subject. "I really didn't want to think about it," says Ms. Parr, 54 years old, a manager at the American Chemical Society in Washington. But when her mom died in 2005, she knew exactly where to look for the will, the key to a safe-deposit box and documents indicating her mother had paid and arranged for her own funeral.
The financial consequences of failing to keep your documents in order can be significant. According to the National Association of Unclaimed Property Administrators, state treasurers currently hold $32.9 billion in unclaimed bank accounts and other assets. (You can search for unclaimed assets at MissingMoney.com .)
Most experts recommend creating a comprehensive folder of documents that family members can access in case of an emergency, so they aren't left scrambling to find and organize a hodgepodge of disparate bank accounts, insurance policies and brokerage accounts.
You can store the documents with your attorney, lock them away in a safe-deposit box or keep them at home in a fireproof safe that someone else knows the combination to.
That isn't to say you should keep everything. Sometimes people hold onto so many papers that loved ones can't find the important ones easily.
How to Manage Important Documents
How to Write a Will
How to Choose Beneficiaries
In 2008, Jane Bissler, a counselor in Kent, Ohio, approached her then-87-year-old mother about organizing her documents. Because her mom was a widow with relatively simple finances and two homes, Ms. Bissler, 57, says she figured it would be a relatively simple task.
Instead, it took an entire year for Ms. Bissler and her mother to go through all of her papers, which included documents from eight bank accounts, utility bills from the 1950s and reams of canceled checks.
The two of them pared down the stash from four four-drawer filing cabinets to one two-drawer cabinet, shredding anything extraneous. Ms. Bissler and her mother visited banks and brokerages to ensure she was listed on all of her mother's accounts. Her mother died in May 2009.
"It would have been a total nightmare if we hadn't gone through it all with her," Ms. Bissler says. "It was that Depression-era stuff where you keep everything and hide other things." Ms. Bissler estimates that having the documents organized ahead of time spared them from ordering an additional 15 copies of the death certificate and "years" of time.
Here is a rundown of the most important documents you'll need to have signed, sealed and delivered. You should start collecting these as soon as possible and update them every few years to reflect changes in assets and preferences. Some—such as copies of tax returns or recent child-support payments—need to be updated more often than others.
The Essentials
An original will is the most important document to keep on file.
A will allows you to dictate who inherits your assets and, if your children are underage, their guardians. Dying without a will means losing control of how your assets are distributed. Instead, state law will determine what happens.
Wills are subject to probate—legal proceedings that take inventory, make appraisals of property, settle outstanding debt and distribute remaining assets. Not having an original document means this already-onerous process could be much more of an ordeal, since family members can challenge a copy of a will in court.
Rick Law, founder of estate-planning firm Law ElderLaw LLP in Aurora, Ill., says estate planners increasingly recommend revocable trusts in addition to wills, since they are more private and harder to dispute. "Every will is like a compass that points toward the closest courthouse," he says.
A revocable living trust can be changed anytime during your lifetime. After you transfer ownership of various assets to the trust, you can serve as the trustee on behalf of beneficiaries you designate. Provided you do so, there aren't any ongoing fees.
If your family can't find the original trust documents, you are "basically setting your estate up for litigation," says Duncan Moseley, vice president of Sanders Financial Management in Atlanta.
A "letter of instruction" can be a useful supplement to a will, though it doesn't hold legal weight. It is a good way to make sure your executor has the names and contact information of your attorneys, accountants and financial advisers. While the will should be stored with your attorney or in a courthouse, the letter of instruction should be more readily accessible, particularly if it contains instructions on funeral arrangements.
Also, make sure your heirs have access to a durable financial power-of-attorney form. Without it, no one can make financial decisions on your behalf in the event that you are incapacitated.
Proof of Ownership
You should keep documentation of housing and land ownership, cemetery plots, vehicles, stock certificates and savings bonds; any partnership or corporate operating agreements; and a list of brokerage and escrow mortgage accounts.
If you don't tell your family that you own such assets, there is a chance they never will find out. Mr. Moseley says in such an event, clients must perform their own detective work, watching the mail for real-estate tax bills or combing bank accounts for interest payments, for example.
File any documents that list loans you have made to others, since they could be included as assets in an estate. Similarly, keep a list of any debts you owe to avoid surprising your family. Wills and living trusts generally are drafted to include provisions for how debts should be settled, and creditors have a stipulated period of time in which to file a claim against the estate.
Make the most recent three years of tax returns available, too. "Looking at last year's returns offers a snapshot of what assets we should be looking for this year," says Lesley Moss Mamdouhi, a principal at estate-law firm Oram & Moss in Chevy Chase, Md. This also will help your personal representative file a final income-tax and estate return and, if necessary, a revocable-trust return.
Bank Accounts
Mr. Law recommends sharing a list of all accounts and online log-in information with your family so they can notify the bank of your death. "If nobody ever takes any more out or puts money in, it becomes a dormant account and then becomes the property of the state," he says.
Be sure to list any safe-deposit boxes you own, register your spouse or child's name with the bank and ask them to sign the registration document so they can have access without securing a court order.
Health-Care Confidential
Possibly the most important health-care document to fill out in advance is a durable health-care power-of-attorney form. This allows your designee to make health-care decisions on your behalf if you are incapacitated. The document should be compliant with federal health-information privacy laws, so that doctors, hospitals and insurance companies can speak with your designee. You may also need to fill out an Authorization to Release Protected Healthcare Information form.
If you are incapacitated and your family can't locate a health-care power of attorney, they will have to go to court to get a guardian appointed.
Porter Storey, executive vice president of the American Academy of Hospice and Palliative Medicine in Glenview, Ill., says it isn't enough to establish a health-care power of attorney unless you have explained to your designee how you would like to be treated in case of incapacity. He also recommends writing a living will detailing your wishes.
After Diane Dimond's mother had a series of strokes in 2006, Ms. Dimond knew there was a signed living will tucked away in a safe at home. Ms. Dimond, 58 and living in New York, recalls the Sunday she watched her mother in a coma and was able to fulfill her wishes never to be kept on external life support. "It was gut-wrenching," she says, "but I took the physician aside and said, 'I want to take her home.'" Having her mother's living will enabled Ms. Dimond to do just that.
The living will and the power of attorney constitute what are called "advance directives"; some states consolidate these into a single form. (AARP offers a state-by-state listing of advance-directive forms on its website.) Terminally ill patients may wish to have their doctors sign a do-not-resuscitate order.
Certain companies, such as Advance Choice Inc.'s DocuBank, will keep copies of health-care documents for a fee. Subscribers get a wallet-sized card and, in case of an emergency, a hospital will call DocuBank, which will fax over the information.
Life Insurance and Retirement Accounts
Copies of life-insurance policies are among the most important documents for your family to have. Family members need to know the name of the carrier, the policy number and the agent associated with the policy.
Be especially careful with life-insurance policies granted by an employer upon your retirement, since those are the kind that financial planners most often miss, says David Peterson, CEO of Denver-based Peak Capital Investment Services. New York state alone is holding more than $400 million in life-insurance-related payments that have gone unclaimed since 2000, according to the state comptroller's office.
Estate planners also recommend that you draw up a list of pensions, annuities, individual retirement accounts and 401(k)s for your spouse and children.
An IRA is considered dormant or unclaimed if no withdrawal has been made by age 70½. According to the National Association of Unclaimed Property Administrators, tens of millions of dollars languish in unclaimed IRAs every year.
If your heirs don't know about these accounts, they won't be able to lay claim to them, and the money could languish. The U.S. Department of Labor estimates that each year tens of thousands of workers fail to claim or roll over $850 million in 401(k) assets. You can track unclaimed pensions, 401(k)s and IRAs at Unclaimed.com.
Marriage and Divorce
Ensure your spouse knows where you have stored your marriage license. Mary Cay Corr, now 74 and living in Raleigh-Durham, N.C., couldn't locate hers when her husband died. "I had to write to New York, where we got married, and pay for a new marriage license to prove that I had been married to my husband before I could claim anything," she says.
For divorced people, it is important to leave behind the divorce judgment and decree or, if the case was settled without going to court, the stipulation agreement, says Linda Lea Viken, president of the American Academy of Matrimonial Lawyers in Chicago. These documents lay out child support, alimony and property settlements, and also may list the division of investment and retirement accounts.
Include the distribution sheet listing bank-account numbers that accompanied the settlement to avoid disputes about ownership or payments due. Also include a copy of the most recent child-support payment order. In the majority of states, the obligation to pay child support still exists after death.
Ms. Viken also recommends filing copies of any life-insurance papers. In many states if you have a policy that benefits your children, it can be set off against the ongoing child support.
You also should include a copy of the "qualified domestic-relations order," which can prove your spouse received a share of your retirement accounts.
Wednesday, July 6, 2011
The Federal Trade Commission is reviewing Internet messaging-service Twitter Inc. and its interactions with at least one other company that builds programs using Twitter data, according to a person familiar with the matter.
The precise focus of the review isn't clear, but representatives of the FTC's antitrust arm have requested information from a company called UberMedia Inc., which owns applications that let people read and send "tweets," or messages, broadcast by Twitter users, this person said.
Antitrust regulators are reviewing messaging-service Twitter and its interactions with a company that builds programs using Twitter data. Jen Valentino reports on digits.
UberMedia's chief marketing officer said in a statement on Thursday that the company was contacted by the agency and "we intend to fully comply with their request for information."
Twitter considers UberMedia to be a potential competitor, people familiar with the matter have said.
The review is "narrow" in scope and won't impact Twitter's fledgling advertising business, said the person familiar with the FTC review.
Spokesmen for Twitter and the FTC declined to comment. The agency's interest in Twitter was reported earlier Thursday by the Business Insider blog.
The FTC routinely examines companies to determine whether they are involved in anticompetitive behavior, often after receiving allegations from rivals. Often the reviews don't result in any legal action or penalty against the companies.
Twitter, which has more than 200 million registered accounts, lets people broadcast tweets of up to 140 characters in length and read tweets from other users. For much of Twitter's history, many users accessed the service through desktop and mobile-device applications developed by other companies rather than through Twitter.com.
Twitter has allowed those companies to access "tweets" generated by Twitter users, and those programs were vital to Twitter's growth because they helped people sort through, organize, and search for "tweets" in a way that Twitter couldn't.
But over the past year or so Twitter has looked to exert greater control over its user base as it has introduced advertising on its site. Twitter acquired some of those application companies, including TweetDeck, and developed its own services that rendered some other third-party companies obsolete.
UberMedia also tried to purchase TweetDeck, people familiar with the matter have said.
In February UberMedia, which owns Twidroyd and other applications that let people access and send tweets, said Twitter shut off its access to tweets because it believed UberMedia had violated "several provisions of their terms of service."
UberMedia said it worked with Twitter to resolve the issues, and service to those applications was restored.
At a recent conference, a Twitter employee noted that "with more people joining Twitter and accessing the service in multiple ways, a consistent user experience is more crucial than ever." The employee asked that app developers create apps that don't mimic Twitter's own mobile-device applications or Twitter.com.
The precise focus of the review isn't clear, but representatives of the FTC's antitrust arm have requested information from a company called UberMedia Inc., which owns applications that let people read and send "tweets," or messages, broadcast by Twitter users, this person said.
Antitrust regulators are reviewing messaging-service Twitter and its interactions with a company that builds programs using Twitter data. Jen Valentino reports on digits.
UberMedia's chief marketing officer said in a statement on Thursday that the company was contacted by the agency and "we intend to fully comply with their request for information."
Twitter considers UberMedia to be a potential competitor, people familiar with the matter have said.
The review is "narrow" in scope and won't impact Twitter's fledgling advertising business, said the person familiar with the FTC review.
Spokesmen for Twitter and the FTC declined to comment. The agency's interest in Twitter was reported earlier Thursday by the Business Insider blog.
The FTC routinely examines companies to determine whether they are involved in anticompetitive behavior, often after receiving allegations from rivals. Often the reviews don't result in any legal action or penalty against the companies.
Twitter, which has more than 200 million registered accounts, lets people broadcast tweets of up to 140 characters in length and read tweets from other users. For much of Twitter's history, many users accessed the service through desktop and mobile-device applications developed by other companies rather than through Twitter.com.
Twitter has allowed those companies to access "tweets" generated by Twitter users, and those programs were vital to Twitter's growth because they helped people sort through, organize, and search for "tweets" in a way that Twitter couldn't.
But over the past year or so Twitter has looked to exert greater control over its user base as it has introduced advertising on its site. Twitter acquired some of those application companies, including TweetDeck, and developed its own services that rendered some other third-party companies obsolete.
UberMedia also tried to purchase TweetDeck, people familiar with the matter have said.
In February UberMedia, which owns Twidroyd and other applications that let people access and send tweets, said Twitter shut off its access to tweets because it believed UberMedia had violated "several provisions of their terms of service."
UberMedia said it worked with Twitter to resolve the issues, and service to those applications was restored.
At a recent conference, a Twitter employee noted that "with more people joining Twitter and accessing the service in multiple ways, a consistent user experience is more crucial than ever." The employee asked that app developers create apps that don't mimic Twitter's own mobile-device applications or Twitter.com.
Twitter Inc., trying to put recent management changes behind it and build its business, is taking steps to broaden the appeal of the well-known messaging service.
Twitter is making a concerted effort to educate its users about what, exactly, it is. WSJ's Amir Efrati explains why to Stacey Delo.
The San Francisco company, which lets users broadcast and view short messages, wants to make it easier for new users to navigate the service and help longtime users find interesting content.
While Twitter has more than 200 million registered accounts, it doesn't say how many are active users. Users discuss a variety of topics, but some people—especially adults—view the service as a vehicle for celebrities to broadcast their thoughts online.
Twitter wants to show how the service works to first-time users by highlighting tweets from people in their geographic regions, such as local politicians and musicians, when they first sign on, people familiar with the matter said.
Jonathan Strauss, chief executive of Awe.sm, which tracks marketing campaigns on Twitter and Facebook Inc., argues that Twitter needs to attract more mainstream Internet users if it wants to justify its multibillion-dollar valuation. "Most people understand Twitter exists, but they don't understand what Twitter is and how they can participate," he said.
For more experienced users, Twitter is developing ways to create a narrower stream of the most relevant tweets rather than requiring users to wade through messages in chronological order.
As it looks to add tools for power users, Twitter is also in advanced talks to purchase a program used by many Twitter users to view and manage tweets, Tweetdeck, for around $50 million, people familiar with the matter said.
Jack Dorsey, a Twitter founder, recently returned as its product chief. He has become more active advising the company.
It is unclear when the changes will be introduced or how Twitter may use Tweetdeck. A spokesman for Twitter, which has made seven small acquisitions to date, declined to comment. TweetDeck Inc.'s chief executive, Iain Dodsworth, couldn't be reached.
The moves come as Jack Dorsey, the founding chief executive of the four-year-old company, formally returned as product chief three weeks ago after being pushed out by the board two-and-a-half years ago.
Mr. Dorsey remained chairman of Twitter's board after his ouster, and also leads a mobile-payments company named Square Inc. Mr. Dorsey has been laying out his vision for Twitter to its executives, said a person familiar with the matter.
Twitter allows users to post messages of up to 140 characters in length, and those messages can be viewed by other users. People log on—often through their mobile phones—to track everything from sporting events to transportation delays to natural disasters. Egyptians, for example, used the service to organize revolutionary protests earlier this year.
The company has been slower to build a business around its popularity than some other Web players, such as Facebook. The research firm eMarketer puts Twitter 2010 ad revenue at $45 million and expects ad revenue to reach $150 million this year.
Yet Twitter investors are buying up shares of the privately held company on secondary exchanges or through individual middlemen. Twitter completed a financing at the end of last year that valued the company at around $4 billion, though it has argued for higher valuations in low-level talks with potential acquirers, including Google Inc., people familiar with the matter have said.
The company this year will try to make the breadth of its content more visible to first-time visitors, helping them quickly discover information about stocks, sports and other organizations and individuals they care about, the people familiar with the matter said.
One possibility is showcasing tweets by well-known people or organizations located in the user's region, or from certain types of users, such as athletes or musicians.
Twitter users already have created thousands of "lists" in which such content on specific topics is grouped together, and Twitter is looking at ways to promote such lists, said a person familiar with the matter.
Twitter is also exploring concepts similar to a Facebook technology called "EdgeRank" that highlights posts by a user's closest friends—an effort that is being aided by Ashish Goel, a Twitter research fellow and Stanford University professor, these people said.
"Most of the time what people want is the most relevant and important information, and without filtering its content for individual users that's difficult for Twitter to satisfy," said Awe.sm's Mr. Strauss.
Twitter is making a concerted effort to educate its users about what, exactly, it is. WSJ's Amir Efrati explains why to Stacey Delo.
The San Francisco company, which lets users broadcast and view short messages, wants to make it easier for new users to navigate the service and help longtime users find interesting content.
While Twitter has more than 200 million registered accounts, it doesn't say how many are active users. Users discuss a variety of topics, but some people—especially adults—view the service as a vehicle for celebrities to broadcast their thoughts online.
Twitter wants to show how the service works to first-time users by highlighting tweets from people in their geographic regions, such as local politicians and musicians, when they first sign on, people familiar with the matter said.
Jonathan Strauss, chief executive of Awe.sm, which tracks marketing campaigns on Twitter and Facebook Inc., argues that Twitter needs to attract more mainstream Internet users if it wants to justify its multibillion-dollar valuation. "Most people understand Twitter exists, but they don't understand what Twitter is and how they can participate," he said.
For more experienced users, Twitter is developing ways to create a narrower stream of the most relevant tweets rather than requiring users to wade through messages in chronological order.
As it looks to add tools for power users, Twitter is also in advanced talks to purchase a program used by many Twitter users to view and manage tweets, Tweetdeck, for around $50 million, people familiar with the matter said.
Jack Dorsey, a Twitter founder, recently returned as its product chief. He has become more active advising the company.
It is unclear when the changes will be introduced or how Twitter may use Tweetdeck. A spokesman for Twitter, which has made seven small acquisitions to date, declined to comment. TweetDeck Inc.'s chief executive, Iain Dodsworth, couldn't be reached.
The moves come as Jack Dorsey, the founding chief executive of the four-year-old company, formally returned as product chief three weeks ago after being pushed out by the board two-and-a-half years ago.
Mr. Dorsey remained chairman of Twitter's board after his ouster, and also leads a mobile-payments company named Square Inc. Mr. Dorsey has been laying out his vision for Twitter to its executives, said a person familiar with the matter.
Twitter allows users to post messages of up to 140 characters in length, and those messages can be viewed by other users. People log on—often through their mobile phones—to track everything from sporting events to transportation delays to natural disasters. Egyptians, for example, used the service to organize revolutionary protests earlier this year.
The company has been slower to build a business around its popularity than some other Web players, such as Facebook. The research firm eMarketer puts Twitter 2010 ad revenue at $45 million and expects ad revenue to reach $150 million this year.
Yet Twitter investors are buying up shares of the privately held company on secondary exchanges or through individual middlemen. Twitter completed a financing at the end of last year that valued the company at around $4 billion, though it has argued for higher valuations in low-level talks with potential acquirers, including Google Inc., people familiar with the matter have said.
The company this year will try to make the breadth of its content more visible to first-time visitors, helping them quickly discover information about stocks, sports and other organizations and individuals they care about, the people familiar with the matter said.
One possibility is showcasing tweets by well-known people or organizations located in the user's region, or from certain types of users, such as athletes or musicians.
Twitter users already have created thousands of "lists" in which such content on specific topics is grouped together, and Twitter is looking at ways to promote such lists, said a person familiar with the matter.
Twitter is also exploring concepts similar to a Facebook technology called "EdgeRank" that highlights posts by a user's closest friends—an effort that is being aided by Ashish Goel, a Twitter research fellow and Stanford University professor, these people said.
"Most of the time what people want is the most relevant and important information, and without filtering its content for individual users that's difficult for Twitter to satisfy," said Awe.sm's Mr. Strauss.
Twitter Seeks $7 Billion Valuation
As Peers Pursue Bigger IPOs, Messaging Service Sticks to Private Backing; Still Searching for the Right Business Model
Even as Internet companies such as Zynga Inc. and Groupon Inc. file to go public, Twitter Inc. is taking a different route: It is continuing to tap private investors.
Twitter, the Internet-messaging service, is privately raising hundreds of millions of dollars in a new financing round that values the company at as high as $7 billion. Emir Afrati has details.
The fast-growing Internet messaging service is currently in discussions to raise a new round of private financing, said people familiar with the matter. The round could yield hundreds of millions of dollars and value Twitter as high as $7 billion, one of these people said. It is unclear which investors are participating in the new round.
The talks come seven months after Twitter, which lets people broadcast and read messages called "tweets," raised $200 million in a financing led by venture-capital firm Kleiner Perkins Caufield & Byers that valued the company at $3.7 billion.
A Twitter spokesman declined to comment on the San Francisco company's finances.
Twitter's new valuation underscores the soaring price tags for some Web companies. Over the last month, daily deals site Groupon and online gaming start-up Zynga have filed for initial public offerings, in moves that some estimate would value those companies at around $20 billion each upon their stock market debuts.
By trying to raise a large slug of money, Twitter buys itself more time to develop an advertising-based business that is relatively immature compared to its peers. Though Twitter has a growing user base, its ad system remains fledgling and it isn't generating as much revenue as Groupon or Zynga.
Twitter is also much smaller than some of its peers, counting just over 500 employees, and until recently its executive ranks were thin. Chief Executive Dick Costolo, who took over last fall, has been working on building out the company's executive team and advertising business.
"Twitter is still evolving its business model," said Tony Florence, a partner with venture capital firm New Enterprise Associates. "Staying private while you are figuring out your model makes a lot of sense."
Twitter, which was created in 2006 and has more than 200 million registered user accounts, is currently on track to produce about $150 million in ad revenue this year, according to research firm eMarketer, up from $45 million last year.
Chief Tweeter: CEO Dick Costolo has revamped Twitter's executive team and slowly built its advertising business.
Mr. Costolo has said that the company has purposely limited the availability of ad space to "make sure we get it right."
In contrast, Zynga reported net income of $91 million on revenue of $597 million last year, according to its filing. Groupon, in its filing, revealed its revenue surged to $644.7 million in this year's first quarter, though it was unprofitable.
Today, Twitter's main advertising unit is called a "promoted tweet," which looks like a regular tweet—a message of 140 characters or less—and shows up in some users' Twitter accounts or when any Twitter user executes a search on Twitter.com. People log on to Twitter to track everything from global conflicts to sporting events and natural disasters.
Twitter is currently working on a plan to regularly incorporate promoted tweets prominently in users' accounts, the company has said. The move could significantly accelerate revenue growth by increasing the number of ads it can sell.
Twitter is also working on ways to create a new ad offering of the sort that made Google Inc. a Web-search advertising powerhouse, said a person familiar with the matter. The new ad type would differ from those that are currently available, this person said.
Much of the push to build out Twitter's business comes from 47-year-old Mr. Costolo. The former management consultant and Google product manager, who has won over many Twitter employees with his self-deprecating humor, has also been busy building out the company's executive bench.
Mr. Costolo has been credited with carefully managing the exits of two of the company's co-founders: Evan Williams, who was Twitter CEO between 2008 and last fall, and Biz Stone, Twitter's evangelist and spokesman on talk-show circuits. Mr. Williams remains on Twitter's board of directors.
In March, Mr. Costolo brought back Jack Dorsey, Twitter's creator and CEO of mobile-payments company Square Inc., to help oversee the company's product initiatives.
Around April, Mr. Costolo also brought on Satya Patel, a former Google product manager, to help lead product initiatives with Mr. Dorsey. The two are now working on ways to make the breadth of Twitter content more visible to first-time visitors, helping them quickly discover information about stocks, sports and other topics and people they care about, people familiar with the matter have said. They are also exploring concepts similar to a Facebook Inc. technology that highlights posts by a user's closest friends, these people said.
Mr. Costolo has made several other key hires, including from Facebook and News Corp., and is close to hiring a chief marketing officer, people familiar with the matter said.
Twitter's Valuation, By the Numbers
The CEO had a coup last month when Apple Inc. said that starting this fall, users of Apple mobile devices such as the iPhone will be able to publish photos, links to websites or broadcast their current location on Twitter with the tap of a button while using the device's camera and Web browser, among other things. Twitter believes the partnership could significantly help it attract new users and increase the amount of information that people contribute to the service, people familiar with the matter said.
Twitter is continuing to grow quickly. According to comScore Inc., Twitter.com in May saw 139 million unique visitors globally, up from 90 million a year earlier. Growth in the U.S. has been slower than internationally, with the site hitting 27 million unique U.S. visitors in May, up from 23.8 million in 2010. "We're growing like a weed," Mr. Costolo said at a conference last month.
On Tuesday, Twitter also said it has acquired a small firm called BackType Labs that helps companies understand their impact on the Web via social media sites, including Twitter.
As Peers Pursue Bigger IPOs, Messaging Service Sticks to Private Backing; Still Searching for the Right Business Model
Even as Internet companies such as Zynga Inc. and Groupon Inc. file to go public, Twitter Inc. is taking a different route: It is continuing to tap private investors.
Twitter, the Internet-messaging service, is privately raising hundreds of millions of dollars in a new financing round that values the company at as high as $7 billion. Emir Afrati has details.
The fast-growing Internet messaging service is currently in discussions to raise a new round of private financing, said people familiar with the matter. The round could yield hundreds of millions of dollars and value Twitter as high as $7 billion, one of these people said. It is unclear which investors are participating in the new round.
The talks come seven months after Twitter, which lets people broadcast and read messages called "tweets," raised $200 million in a financing led by venture-capital firm Kleiner Perkins Caufield & Byers that valued the company at $3.7 billion.
A Twitter spokesman declined to comment on the San Francisco company's finances.
Twitter's new valuation underscores the soaring price tags for some Web companies. Over the last month, daily deals site Groupon and online gaming start-up Zynga have filed for initial public offerings, in moves that some estimate would value those companies at around $20 billion each upon their stock market debuts.
By trying to raise a large slug of money, Twitter buys itself more time to develop an advertising-based business that is relatively immature compared to its peers. Though Twitter has a growing user base, its ad system remains fledgling and it isn't generating as much revenue as Groupon or Zynga.
Twitter is also much smaller than some of its peers, counting just over 500 employees, and until recently its executive ranks were thin. Chief Executive Dick Costolo, who took over last fall, has been working on building out the company's executive team and advertising business.
"Twitter is still evolving its business model," said Tony Florence, a partner with venture capital firm New Enterprise Associates. "Staying private while you are figuring out your model makes a lot of sense."
Twitter, which was created in 2006 and has more than 200 million registered user accounts, is currently on track to produce about $150 million in ad revenue this year, according to research firm eMarketer, up from $45 million last year.
Chief Tweeter: CEO Dick Costolo has revamped Twitter's executive team and slowly built its advertising business.
Mr. Costolo has said that the company has purposely limited the availability of ad space to "make sure we get it right."
In contrast, Zynga reported net income of $91 million on revenue of $597 million last year, according to its filing. Groupon, in its filing, revealed its revenue surged to $644.7 million in this year's first quarter, though it was unprofitable.
Today, Twitter's main advertising unit is called a "promoted tweet," which looks like a regular tweet—a message of 140 characters or less—and shows up in some users' Twitter accounts or when any Twitter user executes a search on Twitter.com. People log on to Twitter to track everything from global conflicts to sporting events and natural disasters.
Twitter is currently working on a plan to regularly incorporate promoted tweets prominently in users' accounts, the company has said. The move could significantly accelerate revenue growth by increasing the number of ads it can sell.
Twitter is also working on ways to create a new ad offering of the sort that made Google Inc. a Web-search advertising powerhouse, said a person familiar with the matter. The new ad type would differ from those that are currently available, this person said.
Much of the push to build out Twitter's business comes from 47-year-old Mr. Costolo. The former management consultant and Google product manager, who has won over many Twitter employees with his self-deprecating humor, has also been busy building out the company's executive bench.
Mr. Costolo has been credited with carefully managing the exits of two of the company's co-founders: Evan Williams, who was Twitter CEO between 2008 and last fall, and Biz Stone, Twitter's evangelist and spokesman on talk-show circuits. Mr. Williams remains on Twitter's board of directors.
In March, Mr. Costolo brought back Jack Dorsey, Twitter's creator and CEO of mobile-payments company Square Inc., to help oversee the company's product initiatives.
Around April, Mr. Costolo also brought on Satya Patel, a former Google product manager, to help lead product initiatives with Mr. Dorsey. The two are now working on ways to make the breadth of Twitter content more visible to first-time visitors, helping them quickly discover information about stocks, sports and other topics and people they care about, people familiar with the matter have said. They are also exploring concepts similar to a Facebook Inc. technology that highlights posts by a user's closest friends, these people said.
Mr. Costolo has made several other key hires, including from Facebook and News Corp., and is close to hiring a chief marketing officer, people familiar with the matter said.
Twitter's Valuation, By the Numbers
The CEO had a coup last month when Apple Inc. said that starting this fall, users of Apple mobile devices such as the iPhone will be able to publish photos, links to websites or broadcast their current location on Twitter with the tap of a button while using the device's camera and Web browser, among other things. Twitter believes the partnership could significantly help it attract new users and increase the amount of information that people contribute to the service, people familiar with the matter said.
Twitter is continuing to grow quickly. According to comScore Inc., Twitter.com in May saw 139 million unique visitors globally, up from 90 million a year earlier. Growth in the U.S. has been slower than internationally, with the site hitting 27 million unique U.S. visitors in May, up from 23.8 million in 2010. "We're growing like a weed," Mr. Costolo said at a conference last month.
On Tuesday, Twitter also said it has acquired a small firm called BackType Labs that helps companies understand their impact on the Web via social media sites, including Twitter.
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