How Jack Dorsey started Twitter with Evan Williams and Biz Stone
How Jack Dorsey started Twitter with Evan Williams and Biz Stone –
In five short years, Twitter grew—and grew—into a tool that revolutionized global communications. It became so ubiquitous that using it became a verb: to tweet. The brief status updates of Twitter would change the way news is reported, governments are toppled, and charitable donations are solicited. But Twitter is almost as famous for what it hasn’t done: turn a profit.
Despite attracting a huge audience and raising over $1 billion in venture capital, Twitter continues to struggle to find a business model that will let it cash in on its popularity.
Three geek dropouts and how they grew
As a teenager growing up in St. Louis, Missouri, Jack Dorsey created software that helped taxi and ambulance dispatchers locate their vehicles. Jack attended Missouri University of Science and Technology, then transferred to New York University before dropping out in 1999.
He moved west, taking up residence inside the former Sunshine Biscuit Factory in Oakland, California, and he began working on a Web-based dispatch startup idea. In July 2000, inspired by the Web-posting service LiveJournal, he got an idea for a simple, real-time update service—a more “live” LiveJournal.
He sketched the idea on a sheet of wide-ruled notebook paper. There would be a small box for writing what you were doing, room for a bit of contact information, and a search bar for finding others on the service. That was it. Jack wanted to call it Stat.us.
Evan Williams grew up on a farm in Clarks, Nebraska. He lasted a year and a half at the University of Nebraska before dropping out in favor of a string of tech jobs. In 1996 he moved to Sebastopol, California, to work for technology publisher Tim O’Reilly and his O’Reilly Media. He began in marketing but floundered as a staffer and switched to writing code as an independent contractor. “I was bad at working for people,” Evan would later say.
In 1999 he co-founded Pyra Labs with ex-girlfriend Meg Hourihan. Pyra’s hit product was a simple, early Web-logging platform called Blogger, a term Evan coined.
Blogger lacked a business model—the platform was free. Evan wanted to focus on improving the user experience and building the audience first, then figure out how to make money.
Unsurprisingly, funds soon ran out. The small staff continued without pay for weeks but eventually staged a mass walkout that included Hourihan. Evan ran the company solo until securing an investment from VisiCalc creator Dan Bricklin in April 2001, after Bricklin learned of Blogger’s woes from a post on Evan’s blog, Evhead. The staff was rehired, and Blogger’s software was rewritten so that it could be licensed to other companies.
In 2002, Evan’s next-door neighbor Noah Glass introduced himself after spotting the Blogger logo on Evan’s computer monitor. Noah’s startup, Listen Lab, was working on a way to post audio recordings on Blogger, a feature Evan added as Audioblogger.
Google acquired Blogger for an undisclosed sum in 2003. Evan spent about a year overseeing Blogger at Google before leaving in 2004 to create a new startup with Noah.
Biz Stone studied writing at Northeastern University and the arts at the University of Massachusetts Boston, near his hometown of Wellesley, but he lasted just a year at each institution before dropping out. He worked as a designer for publisher Little, Brown and Company for three years before getting the entrepreneurial urge.
He launched the free journaling service Xanga in 1999. When Blogger’s paid version came out, Xanga licensed it and Evan and Biz formed a long-distance friendship. In 2001, Biz left Xanga (which continues to operate today), and when Google purchased Blogger, he was recruited by Evan.
Hello, Odeo, goodbye
Evan and Noah saw how difficult it was to find and organize podcasts. In early 2005, they launched a startup designed to solve this problem. They called it Odeo.
Evan’s Blogger success made it easy to find investors. Odeo quickly raised $5 million from Charles River Ventures and an A-list of angel investors including Evan’s former boss Tim O’Reilly and Google investor Ron Conway.
Two early Odeo hires were Biz and Jack. Unfortunately, there was soon a rather large fly in Odeo’s ointment: in March 2006, Apple’s iTunes podcasting service launched and appeared certain to dominate the market. Moreover, Odeo’s technology proved difficult to execute. The 14- member team became demoralized.
Meetings were needed to discuss Odeo’s next move. Since software developers tend to work remotely and keep odd hours, getting together wasn’t always easy. Staffers were constantly being messaged or emailed to ask: “What are you doing?” This problem rang a bell with Jack. He dug out his old sketch of Stat.us.
The birth of twttr
At a playground near Odeo’s offices in San Francisco’s South Park neighborhood, Jack pitched the Odeo execs. They debated the merits of a Web-based communication platform that would bring together email, instant messaging, and mobile-phone texting.
“He came to us with this idea: ‘What if you could share your status with your friends really easily, so that they know what you’re doing?’” Biz later recalled.
Giving himself the handle @jack, Jack created the first post on March 21, 2006: “just setting up my twttr.” The first-ever tweet.
A team of four got the go-ahead to work on Jack’s idea. Jack, Noah, Biz and Florian Weber—a Berlin-based expert in the emerging, open source Web development framework Ruby on Rails—worked for two weeks to create a prototype. To enable the service to work with text messaging’s 160-character limit, they set a 140-character update limit. At first, it ran on Noah’s IBM Thinkpad laptop.
The team brainstormed for a name, as Stat.us was taken. “Jitter” and “Twitch” were nominees. Noah finally came up with the name Twitter, which was originally written “twttr.”
Odeo’s meeting-schedule problem was solved. More significantly, everyone found twttr fascinating and couldn’t resist sharing it with friends. By the end of the first day, there were 20 users.
In short order, everyone at Odeo spent more time working on and using twttr than they spent on Odeo. A change was clearly in order. But Odeo had raised money for a podcasting product, and twttr was a textbased service. Also, twttr was an unknown quantity: “It’s too early to tell what’s there,” Evan wrote on his blog.
Being a punchline
The original twttr site—which boasted a green-and-white color scheme —was replaced in the fall with a blue color scheme and revamped name: Twitter. A year after it was created, in March 2007, Twitter had 20,000 users.
“For the first nine months, everyone thought we were fools. People would say,
‘That’s the most ridiculous thing we’ve ever heard of.’”
Following Evan’s Blogger model, Twitter was free for users. The company philosophy: build value before seeking profit. All energy went to keeping the site running and users happy. The company supported two important features created by Twitter users: the hashtag (#), enabling users to track popular or “trending” topics, and the forwarding “retweet” button.
Rocking Austin, Texas
To grow its subscriber base, the Twitter team made plans to attend the Austin music and technology conference South by Southwest (better known as SXSW). The previous year, a competing mobile-texting service —Google-owned Dodgeball—had won Best Product of SXSW. In a risky move, Evan and Biz would face down their better-funded competitor before SXSW’s tech-savvy audience of more than 100,000.
Twitter’s marketing plan was to install two large, high-definition plasmascreen monitors in the Austin Convention Center hallways and display attendees’ Twitter updates. There would also be T-shirts emblazoned with the faux status update “wearing my twitter shirt.”
Initially, the monitors didn’t work, and Biz and Evan sweated through much of Friday night fixing them. Saturday morning, Twitter’s server in San Francisco crashed. Then, finally, the screens worked. Attendees stopped to gawk at the message scroll—then chose which sessions to attend based on what they read. Many presenters began their sessions by announcing their Twitter handles. Attendees live-tweeted about what they heard.
But Twitter made its biggest impact at night. Crowds turned like a flock of birds in the Austin streets as mobile-phone users read tweets directing them to the hottest venues and away from dull events.
Twitter was doing exactly what Evan envisioned. “It was the first time people were able to coordinate in real time,” Biz recalled later. “This was spine-tingling stuff for us.”
Twitter won Best New Product of SXSW 2007 and users tripled to 60,000. The team returned home to spin Twitter out of Obvious and incorporate it as Twitter Inc. By year-end, Twitter had 200,000 users. Twitter also captured the attention of the media and influential tech bloggers
A whale is born
After SXSW, Twitter would experience the hockey-stick-shaped, straightup growth curve that is the dream of every startup entrepreneur. In March 2008, when Twitter hit 400,000 users, the company set out to completely rebuild Twitter’s technology to support the skyrocketing user base.
It didn’t work. Twitter would be down, sometimes for three days straight.
“When your product is so popular your servers are crashing every day,” Stirman says, “that’s the sort of thing venture capitalists salivate over.”
In May 2008, Twitter would raise another $15 million from Union Square, Amazon founder Jeff Bezos’s Bezos Expeditions, Spark Capital, Digg founder Kevin Rose, and social media author Timothy Ferriss.
Twitter’s lack of a business plan made it the butt of jokes around Silicon Valley. Entrepreneurs created and compared lists of possible Twitter monetization schemes.
Despite this, the founders resisted the idea of simply slapping ads on the site and searched for less-obnoxious revenue ideas. Meanwhile, big companies began experimenting with Twitter.
At the same time, other entrepreneurs were building businesses on Twitter’s back. The company’s open source platform let developers use Twitter’s code to create related services. Hundreds of thousands of Twitter apps would be built, including the Twitter scheduler Tweetdeck, which became so popular that Twitter would later acquire it for $40 million.
Rise of the Twitterati
Twitter had a big problem with covert imitators. As celebrities and prominent politicians began to show an interest in Twitter, other users were setting up accounts, pretending to be a popular film actor or rock musician, and sending out messages that embarrassed the star. To encourage celebrity participation and eliminate these spoofers, Twitter created a Verified Accounts program.
One late-2007 adopter was then-presidential hopeful Barack Obama, who cannily used social media to rally voters. In 2009, Oprah, Lady Gaga and Ashton Kutcher joined, with Kutcher becoming the first person to gain a million Twitter followers. The celebrities were a promotional bonanza for Twitter—each drawing press coverage and masses of followers, many of whom joined to connect with their idol. Oprah created a 43 percent traffic spike when she joined live on her talk show in April 2009.
The celebrity sparkle helped skyrocket Twitter’s audience to five million users by the end of 2008, and to over 71 million in 2009. With just 50 employees in 2008, Twitter struggled to keep up.
“It’s like we’re on a rocket ship that we’re just painting and suddenly it took off and we’re holding on to the ship with our fingernails,” Biz told the New York Times.
A business model is born
As Twitter struggled to find a way to earn revenue, its leadership changed repeatedly. Evan had taken the reins from Jack in 2008, while Jack left to found the mobile-payments startup Square.
In fall 2009 Evan brought on investor and friend Dick Costolo as chief operating officer. When Evan stepped down as CEO in October 2010, Costolo became the new CEO.
After some testing in late 2009 with half a dozen corporate advertisers, several revenue-generating programs officially debuted in summer 2010. Companies could buy “promoted” tweets—at $100,000 a day—and hashtagged “trending” topics. (If a promoted tweet isn’t clicked on, a “resonance algorithm” detects this and removes it from view.) Local ads were announced as a coming option, but at the end of 2011 had yet to materialize.
Twitter reports that its promoted tweets get click rates of 3–5 percent, which is roughly 100 times better than typical click-through rates for online ads. In 2011, promoted tweets began appearing at the top of users’ search results.
In early 2011, Jack returned to Twitter as executive chairman while continuing as CEO at Square. Evan left Twitter, and Biz would follow Evan out the door to the re-formed Obvious Corp. For his part, Noah Glass’s Twitter bio reads, “i started this.”
In November 2011, Twitter had more than 100 million monthly users and 250 million tweets were posted daily. The company’s valuation was estimated at up to $10 billion.
Hiring finally sped up in 2011, with 500 new hires added for 800 employees total (100 of them in ad sales). Most notably, 2,400 companies were advertising on Twitter.
The huge amount of venture capital invested—including a mammoth $800 million funding round in 2011—means a cash-generating event will likely come soon. Both Facebook and Google are rumoured to have made offers.
How Jack Dorsey started Twitter with Evan Williams and Biz Stone
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