Flaws and feuds helped Twitter fly the nest

Hours before Twitter published its much-anticipated prospectus to shareholders earlier this month, officially beginning the process of going public, its three best-known co-founders shared a sofa onstage at its San Francisco headquarters.

Jack Dorsey, Ev Williams and Biz Stone – or @jack, @ev and @biz as they are known to their millions of followers – were reunited at the company’s “tea time” gathering, speaking about where they thought Twitter might be in 10 years’ time and if they ever imagined the company would get to this point.

For Mr Williams and Mr Dorsey, it almost did not. They both sit on Twitter’s board and remain among its largest shareholders. But after a personal rivalry that saw each man win and lose the position of chief executive, neither is involved in the company on a day-to-day basis any more.

Many of the boardroom machinations and internal squabbling of Twitter’s early years stemmed from its accidental origins and rapid growth. “They built a bottle rocket that went into space,” says one employee.

Now, under the leadership of chief executive Dick Costolo, Twitter has finally made it to the brink of an initial public offering that could value it at up to $13.9bn, according to a price range set this week.

Mr Dorsey first sketched out the idea for a rapid-fire messaging service in May 2000. Six years later, while working as an engineer at Odeo, a struggling podcasting company, Mr Dorsey and a colleague, Noah Glass, developed this idea into Twitter. According to Mr Glass’s blog, the pair spent several hours sheltering from the rain in a car, after a vodka-fuelled night in a San Francisco club. Mr Glass named the product Twitter after flicking through a dictionary, which defined it as “a light chirping sound made by certain birds” and “agitation or excitement”.

Today, Twitter has 2,300 employees but back in 2007, when it was spun out from Odeo as its own company, it had little more than a dozen. It was an idealistic group who were “not motivated by money or equity, but by building a communication platform”, according to one early employee.

Just as Twitter’s 140-character brevity encourages wisecracks, many employees were also unusually witty. “We hire for funny,” said Mr Stone at an event hosted by the Hult business school last year. A sense of humour was useful when a barrage of celebrities, world leaders and brands leapt on to the service – or when it crashed, which it did frequently.

Behind the banter and lofty ambition, however, tensions were starting to emerge. Tweets could not flow if the service’s infrastructure was breaking. In 2008, Mr Williams persuaded Twitter’s board that, after founding several companies, he had more experience growing and managing a business than Mr Dorsey. He was installed as chief executive and a bitter Mr Dorsey was forced aside, becoming chairman in a largely nominal role.

Two years later, Mr Williams had sustained Twitter’s growth but it still was not making money and costs were rising fast. He was reluctant to introduce advertising to the site, instead preferring the idea of charging businesses for extra features and behind-the-scenes analysis tools.

“The only thing he was talking about was how to keep the service alive, so they couldn’t think about new product features or more existential things like team building,” says one friend of Mr Williams at the time.

By autumn 2010, Twitter’s board had become restless with Mr Williams’ pace of hiring and revenue generation. Goaded on behind the scenes by Mr Dorsey, the board began to look for an alternative.

Dick Costolo’s first tweet after being hired, in September 2009, joked: “First full day as Twitter COO tomorrow. Task #1: undermine CEO, consolidate power.” A year later, he did indeed find himself taking the place of Mr Williams, who had hired him after the two worked together at Google.

It was presented publicly as an amicable transition but Mr Williams had fought the changes. He wanted to stay on to pick a successor but was eventually forced out, according to people familiar with the events.

In spring 2011, shortly after Mr Williams had officially left Twitter to start a new company, Mr Costolo invited Mr Dorsey to return. While also remaining chief executive of his new payments start-up Square, he steered a complete redesign of Twitter’s products. Then in 2012, he quietly gave up his day-to-day duties at Twitter again.

Some former Twitter employees question Mr Dorsey’s “folk hero” reputation, saying that his big-picture visions were rarely backed up by specifics. But others say that while his self-reinvention and mythologising of Twitter’s origins was radical, recent criticism has gone too far the other way to undermine his role.

“He did his best to ride through all the team and business model twists and turns,” says Mike McCue, a former Twitter board member and now chief executive of Flipboard. “Through it all, his grounding force was the product.”

Accounts of these dramas have captivated Silicon Valley in recent weeks, but it remains unclear how far they will concern Twitter’s putative public shareholders.

Jeffrey Pfeffer, professor of organisational behaviour at the Stanford Graduate School of Business, said that such sagas were “quite typical” in small, fast-growing companies. “I cannot believe that this interesting history of power dynamics in start-ups would be of much concern to current investors,” Prof Pfeffer says.

Mr Williams and Mr Dorsey remain on the board together and their feud is said to have died down with the passage of time. Some analysts say that the years of management turmoil actually helped to make Twitter what it is today.

“If Twitter was a properly run company, would it have worked?” asks Benedict Evans of Enders Analysis. “Twitter can be whatever you want it to be. It’s not constrained by a vision and a set of execution issues. If they don’t screw it up, it may have a unique kind of value.”

After their reappearance at Twitter’s headquarters, @jack, @ev and @biz were again reunited on Friday to introduce a video presentation to potential investors, ahead of its roadshow.

“There was a series of moments, there was no one big moment,” says Mr Williams of Twitter’s founding, as the video shows famous tweets from the Hudson River plane crash and Egypt’s Tahrir Square protests.

“We just never thought it would go this way and I honestly think that’s part of the reason why we succeeded,” adds Mr Stone. “It’s such a simple tool yet people have done so many amazing things with it.”