A little blue bird made a pretty big deal last week in Boulder.
Twitter Inc., the San Francisco-based social networking company that built a $25 billion market cap off tweets of 140 characters or less, snapped up Boulder-based Gnip Inc., a longtime partner that provides social media data to a variety of firms.
The acquisition — which potentially carried a nine-digit price tag — has significant implications not only for Twitter and the growing realm of "big data," but also for Boulder, a startup-laden city that has seen big tech players such as Google and Microsoft acquire locally bred firms and eventually stay and maintain growing offices.
"We're never going to be Silicon Valley, and we don't want to be," said Sean Maher, director of Downtown Boulder Inc., an organization that represents businesses — including firms like Gnip — that are based in the city's heart
"But I think we have room for growth in the tech scene without impacting our quality of life and the great things about Boulder that make it so special."
Big move for big data
Early Tuesday morning, Twitter and Gnip announced the transaction that sent the social web and financial media abuzz.
Specific terms have not been disclosed, but investors fawned over the move, causing shares of Twitter (NYSE: TWTR) to soar nearly 11.4 percent on heavy volume.
It was Twitter's largest daily stock gain since the company's market debut last November.
Since its founding in 2008, Gnip raised about $6.6 million through equity finance rounds. Investors in the firm included Boulder's Foundry Group, SoftTech VC and First Round Capital.
In 2010, Gnip was the first company granted access to Twitter's "firehose," the complete stream of its public social data. Gnip has similar firehose agreements with sites such as Foursquare, Tumblr and WordPress.
Gnip also provides access to data from dozens of other companies, including Facebook, Flickr, Google+, Reddit and YouTube. Gnip's technology can help companies filter the information to better identify trends.
Gnip's customers — who hail from an assortment of industries such as advertising, financial services and retail — can use the trove of real-time and historical data to help determine how people are responding to a new brand, where a company's stock might be heading, and what people thought about a Super Bowl ad.
'Only begun to scratch the surface'
In a blog post on Tuesday, Twitter's Jana Messerschmidt, vice president of global business development and platform, wrote that bringing Gnip into the fold would help Twitter provide data directly to its customers.
Gnip, she wrote, "has only begun to scratch the surface."
"Together we plan to offer more sophisticated data sets and better data enrichments, so that even more developers and businesses big and small around the world can drive innovation using the unique content that is shared on Twitter," she wrote. "We will continue making our data available to Gnip's growing customer base. And with the help of Gnip's Boulder-based team, we will be extending our data platform — through Gnip and our existing public (application programming interfaces) — even further."
The Gnip deal comes on the heels of Apple's acquisition of Topsy Labs, a social media analytics firm that is one of the four companies with access to Twitter's firehose, for a reported $200 million.
Walter Knapp, CEO of the newly formed Sovrn, a Boulder-based firm that uses data to drive online advertising buys, said the Gnip and Twitter deal puts a clear lens on the value of organization of big data.
"It's a tough business to process and make sense of the massive flows of this consumer-generated data," he wrote in an e-mail to the Camera. "Moves like this further highlight the value of those sorts of businesses."
While Sovrn "plays in the middle of this big data paradigm," Knapp said that his biggest concerns of the rise of big data relate to privacy.
"As data becomes the currency of modern businesses, we need to make sure the collection, storage and access to this data are understandable and transparent to the consumer and ensure that consumers have the ability to opt-out of this collection," he said.
The acquisition of Gnip came on the same day as ad exchange marketplace MoPub — which Twitter acquired in September for a reported $350 million — entered into an agreement with Oracle Corp.
The two deals show that Twitter is placing greater importance on the provision, aggregation and use of data to drive its business forward, said Brian Wieser, a senior analyst with Pivotal Research Group LLC.
Weighing factors such as employee count, revenue projections, size of peer companies and comparable transactions, Wieser estimated Gnip sold for "several hundred million dollars."
"It's a field that Twitter has never developed internal competencies around, yet they know that there is money to be made with their data," Wieser said in an interview with the Daily Camera.
Twitter generated $70.3 million in "data licensing and other revenue" during 2013. Revenue in the category, which consists of data licenses and mobile advertising exchange services, increased 48 percent from the year before and accounted for roughly 10.5 percent of Twitter's total sales last year, according to Securities and Exchange Commission filings.
In its most recent annual filing with the SEC, Twitter disclosed that 72 percent of its data licensing revenue was generated by its top five data partners, and that expectations were for that category's revenue as a percentage of overall sales would continue to decrease over time.
"There are billions of dollars spent on data ... the field's wide open," Wieser said. "Where it gets interesting is to the degree that Twitter can use these competencies in an amount that's synergistic."
It remains to be seen how Twitter will integrate Gnip and what the relationship will mean to existing Twitter customers such as Topsy and Datasift, and Gnip clients, Wieser said.
He added that he expects to glean more information when Twitter reports earnings on April 29.
Twitter, which is in a quiet period prior to that earnings release, could not be reached for comment.
Officials for Gnip and its local investors declined to comment.
Big move for Boulder
Until that time, a couple ways to predict how the acquisition will play out at Gnip's 85-person office at 1050 Walnut St. in downtown Boulder is to look at how Twitter treated similar transactions and how past suitors of local tech firms have acted.
In the seven months since acquiring MoPub, Twitter has pretty much left alone the New York-based firm, Wieser said.
"They're kind of running it as a separate business," he said.
Noting Bluefin Labs, a Boston-area social analytics startup that Twitter acquired for reportedly $90 million, and the purchase of Cambridge, Mass., startup Crashlytics, Twitter's Boston presence essentially has turned into an East Coast headquarters, he added.
"They end up with tons of satellite offices because they need talent wherever that talent is," he said.
Downtown Boulder Inc.'s Maher said he is under the impression that Gnip's executive team and employees are happy in Boulder and are settled here.
"When you buy a tech company, you're buying the brains that are part of the company and the talent that is part of that company," he said.
In 2006, Google Inc. acquired Boulder's @Last Software, a startup known for its 3-D design tool SketchUp. Days later, Microsoft Corp. announced plans to acquire Boulder-based Vexcel Corp., a company developing remote-sensing technologies.
Both Google and Microsoft maintained and eventually expanded their operations in Boulder, relocating other services here in the process.
AppDirect, a San Francisco-based cloud service marketplace firm, acquired Boulder's Standing Cloud last year. Since that time, AppDirect has moved forward on plans to double the 12-person workforce and further integrate the Boulder office with its companywide operations.
"I think what draws us so much to Boulder is the great startup entrepreneurial vibe," said Daniel Saks, AppDirect's chairman and co-chief executive officer. "San Francisco brews a certain kind of energy and we think it's important to have diversity. We think that Boulder is an interesting other hub that can be extremely creative."
It also was easier to hire out of Boulder, he added.
The "continued startup ecosystem" should only continue that, he said.
'A great company with awesome culture'
When Gnip applied for and received a flexible rebate incentive of $45,000 from the city of Boulder in 2012, the company's officials expressed their desire to stay downtown, said Liz Hanson, the city's economic vitality coordinator. Hanson's office has remained in contact with Gnip as part of the city's overall primary employers retention efforts.
"The larger company recognizes the benefits of the workforce being in Boulder, how employees wanted to be in Boulder and then kept their presence here," she said.
Ingrid Alongi, CEO of Boulder-based Quick Left's consulting business, said she believes Gnip's expertise in infrastructure could help Twitter expand its services.
While one of the biggest concerns in any acquisition is the preservation of culture, Alongi, a former Gnip employee who was laid off from the firm in 2009, said she thinks Gnip's current direction can be maintained.
"Will the Boulder office still have the same vibe and fun feel, or will the acquisition change things? Will upper management's roles change in a way that makes them less accessible to the people that are used to having access to them?" she wrote in an e-mail to the Camera. "These are likely some of the concerns that people have.
"But I am confident the leadership team at Gnip will be able to continue creating a great company with awesome culture."
Contact Camera Business Writer Alicia Wallace at 303-473-1332 or firstname.lastname@example.org