#GrowthS­tall

Twit­ter turns 10. Jack Dorsey has a plan to get it to 20

Bloomberg Businessweek (Asia) - - FRONT PAGE - With Brad Stone

Jack Dorsey, co - founder and chief ex­ec­u­tive of­fi­cer of Twit­ter, was star­ing at a pud­dle. It was shaped like Green­land and stretched across a busy side­walk in the English city of New­cas­tle upon Tyne. Some em­ploy­ees at a nearby ad agency had no­ticed the pud­dle and for some rea­son de­cided to broad­cast a live video stream of the mi­nor havoc it was caus­ing pedes­tri­ans. They did so us­ing a smart­phone stuck to a win­dow and a free mo­bile app called Periscope, which is owned by Twit­ter.

Thou­sands of miles away, at his home in San Fran­cisco, Dorsey sat watch­ing passers-by con­front the pud­dle. Some sim­ply walked through it. Oth­ers made a run­ning leap. A few cir­cum­nav­i­gated it, lung­ing at a rail­ing for bal­ance. As word of the live pud­dle cov­er­age spread on­line, an au­di­ence of 20,000 gath­ered on Periscope. Soon, the peo­ple of New­cas­tle were in on it. Some­one ar­rived at the pud­dle with a surf­board. A pizza was de­liv­ered to it. And thou­sands of peo­ple took to Twit­ter to con­sider the pud­dle.

That was in Jan­uary. In mid-March, Dorsey still has the pud­dle on his mind. “It wasn’t that we were watch­ing a pud­dle,” he says at Twit­ter’s of­fices in San Fran­cisco. “It was that we were watch­ing a pud­dle to­gether.

“I was con­nected to the au­di­ence, and I could ac­tu­ally talk with them,” he says. “I could say, ‘Isn’t this ridicu­lous? We’re watch­ing a pud­dle.’ And then, ‘Oh, is that woman go­ing to walk around it? Is she go­ing to get wet? Like, what’s go­ing to hap­pen?’ And it was just so cool to see how this lit­tle tiny thing be­came an event. But that’s been our his­tory for 10 years.”

Mon­day, March 21, is the 10th an­niver­sary of the first tweet, sent by Dorsey. (For the record: “just set­ting up my twttr.”) Since emerg­ing from the San Fran­cisco startup scene, Twit­ter has grown into the place where much of the world’s chat­ter­ing class gath­ers. On Twit­ter, any­one can say any­thing to any­body—as long as they keep it un­der 140 char­ac­ters. That con­straint, once mocked, has given rise to a la­conic, new form of mass com­mu­ni­ca­tion.

Dorsey be­lieves the next decade will be even more grand for Twit­ter. Last year the com­pany ac­quired Periscope, along with an­other startup called Niche, for a to­tal of $86 mil­lion. Dorsey is par­tic­u­larly high on Periscope’s po­ten­tial to fa­cil­i­tate so­cial con­ver­sa­tions around live video streams of ev­ery­day events, big and small. He sees the app as yet an­other way that Twit­ter will serve, in the years ahead, as the big­gest, most en­liven­ing wa­ter­ing hole ever de­vised.

But even as Twit­ter’s an­nual rev­enue soared last year from $1.4 bil­lion to $2.2 bil­lion, the com­pany lost $507 mil­lion. Its user base has stalled at roughly 320 mil­lion monthly ac­tive users. That’s a big au­di­ence, but nowhere near as big as the fol­low­ing of some im­por­tant com­peti­tors—Face­book, for ex­am­ple, has 1.6 bil­lion users. In the weeks af­ter Twit­ter’s ini­tial pub­lic of­fer­ing in 2013, shares reached $73.71. Now the stock is at $17.03. “Their ad model and their ad­ver­tis­ing is not the prob­lem. It’s the growth of new users,” says Car­rie Seifer, pres­i­dent of dig­i­tal, data, and tech­nol­ogy at Me­di­avest USA, an ad buy­ing agency. “Fresh cus­tomers are ex­tremely im­por­tant.”

Dorsey says he has a plan to get Twit­ter’s au­di­ence grow­ing again. “There’s a whole dis­cus­sion about vir­tual re­al­ity and aug­mented re­al­ity, and Twit­ter has been aug­ment­ing re­al­ity for 10 years,” he says. “You watch any game, you watch any live event, you watch any political de­bate, Twit­ter makes it more in­ter­est­ing, fun­nier, and more en­ter­tain­ing.”

Twit­ter’s first decade has been full of near-death ex­pe­ri­ences. It’s had con­stant ex­ec­u­tive turnover, and it’s never made money. Its tech­nol­ogy was no­to­ri­ous for crash­ing. And it con­tin­u­ally gen­er­ates con­tro­ver­sies in­volv­ing user ha­rass­ment. Last June, Chris Sacca, a ven­ture cap­i­tal­ist and early in­vestor, wrote a widely read cri­tique on his blog. Broad­cast­ing hastily con­ceived mi­crothoughts live to the world with no edi­tors might ap­peal to en­ter­tain­ers, jour­nal­ists, in­sur­rec­tion­ists, trolls, spam bot mak­ers, and vul­gar­i­ans, he ar­gued, but it can feel off-putting, if not dan­ger­ous, to most ev­ery­one else. Ac­cord­ing to Sacca, al­most a bil­lion peo­ple had tried Twit­ter, only to turn on their heels and leave. He’s still a be­liever, though: “The com­pany it­self is im­prov­ing, not wors­en­ing,” he wrote. “The stock mar­ket doesn’t get that, be­cause Twit­ter has failed to tell its own story to in­vestors and users.”

A week later, Twit­ter an­nounced that Dick Cos­tolo would re­sign as CEO, end­ing a five-year run. Dorsey, the com­pany’s co-founder and then-ex­ec­u­tive chair­man, would take over on an in­terim ba­sis. For Dorsey, it was a se­cond shot run­ning the com­pany. A cere­bral pro­gram­mer from St. Louis, who be­fore join­ing Twit­ter had dab­bled in botan­i­cal il­lus­tra­tion, fash­ion de­sign, and mas­sage ther­apy, Dorsey in 2007 be­came Twit­ter’s first CEO, over­see­ing its ini­tial chaotic growth.

In 2008, with Twit­ter fre­quently crash­ing un­der grow­ing de­mand, Dorsey was ousted by the board and re­placed by his fel­low co-founder, Evan Wil­liams. Dorsey spent the fol­low­ing year suc­cess­fully re­mak­ing his pub­lic im­age, co-found­ing Square, a mo­bile pay­ments startup (even­tu­ally tak­ing it pub­lic in the fall of 2015). In a se­ries of TV and mag­a­zine pro­files, he gave off the per­sona of a tech vi­sion­ary—an ec­cen­tric poly­math who liked to stroll through the streets of San Fran­cisco and New York rhap­sodiz­ing about sim­ple de­sign and el­e­gant busi­ness so­lu­tions. “Jack Dorsey is one of the big­gest and most am­bi­tious in­no­va­tors of our time,” Lara Lo­gan re­ported on CBS’s 60 Min­utes. “Many be­lieve Jack Dorsey is the in­tel­lec­tual suc­ces­sor to Steve Jobs.”

In 2011, Dorsey re­turned to Twit­ter, step­ping into the role of ex­ec­u­tive chair and serv­ing as a cru­cial be­hind-the-scenes ad­viser to CEO Cos­tolo. This past sum­mer, on tak­ing over from Cos­tolo, Dorsey said he would con­tinue as Square’s CEO. The un­ortho­dox, two-tim­ing chief ex­ec­u­tive ar­range­ment con­jured an ob­vi­ous prece­dent: Steve Jobs, who for a time ran both Ap­ple and Pixar.

In a lecture at Stan­ford in 2011, Dorsey ac­knowl­edged that he of­ten looked to Ap­ple for in­spi­ra­tion. “Ap­ple is run like a the­ater com­pany,” he said. “It has a great sense of pac­ing. It has a great sense of story.”

“It wasn’t that we were watch­ing a pud­dle. It was that we were watch­ing a pud­dle to­gether”

For Twit­ter to sur­vive on its own for an­other decade, it needed a new and im­proved story to dis­arm the doubters on Wall Street and to win back the de­sert­ers.

Rake-thin and bearded, Dorsey ra­di­ates a sense of com­posed qui­etude. Walk­ing and talk­ing around Twit­ter’s of­fices, he has the air of a do­cent show­ing off a col­lec­tion of Don­ald Judd sculp­tures. He wears a white T-shirt, black jeans, and lace­less, or­ange high­tops that look like they’ve been painted from a bucket of melted cream­si­cles. “What’s in­ter­est­ing about Twit­ter is that the value is not the so­cial net­work you bring to it,” Dorsey says. “It’s ac­tu­ally the peo­ple you meet around in­ter­ests that you dis­cover.” That said, he does rec­om­mend fol­low­ing his mom, Mar­cia Dorsey. She’s big into sun­rises and sun­sets.

He says he feels en­er­gized by his two CEO jobs. The board­room-to-board­room com­mute is a quick one—the two com­pa­nies are across the street from each other. Ev­ery Mon­day, Dorsey meets with each com­pany’s lead­er­ship teams and sets the agenda for the week. Then he spends the ma­jor­ity of his time meet­ing with prod­uct teams and re­cruit­ing tal­ent. In Fe­bru­ary he hired Natalie Ker­ris, for­merly a long­time mem­ber of Ap­ple’s fiercely con­trol­ling pub­lic-re­la­tions team, to help firm up Twit­ter’s of­ten shaky stage­craft.

To clear his head, Dorsey wakes up early, ex­er­cises, and med­i­tates on the Golden State War­riors, who cur­rently own the best record in the NBA. He side­steps a com­par­i­son with Steph Curry, the team’s scor­ing phenom, and in­stead pays homage to the in­flu­ence of role play­ers. “What’s re­ally im­por­tant to me right now in my own lead­er­ship is un­der­stand­ing how to build a great team dy­namic in­stead of just hir­ing a bunch of in­di­vid­u­als and he­roes,” he says.

Dorsey also likes to com­pare the job of a CEO to the role of an editor-in-chief—refining a com­pany’s nar­ra­tive for the pub­lic, snip­ping un­nec­es­sary chunks of its work­force, and cut­ting through the clut­ter of re­search and de­vel­op­ment to fo­cus on im­por­tant prod­ucts. “I think I have good taste and a con­stant de­sire to sim­plify and elim­i­nate what doesn’t mat­ter,” he says.

Over the past decade, as Twit­ter grew into one of the world’s largest and most as­tound­ing repos­i­to­ries of one-lin­ers, other star­tups arose and be­gan col­lect­ing the best spec­i­mens for them­selves, cre­at­ing a new cat­e­gory of jour­nal­ism based on some poor sap’s ill-ad­vised tweet. Buz­zFeed and the Huff­in­g­ton Post, among other me­dia star­tups, have be­come ex­perts at min­ing Twit­ter to un­cover cul­tural trends, break­ing news, and celebrity brain farts, all of which they skill­fully repack­age into eas­ily con­sumed sto­ries for read­ers on their own sites. As a re­sult, of­ten the best way to find all the crazy, in­ter­est­ing things hap­pen­ing on Twit­ter on any given day is to read about them some­where else.

Dorsey has be­gun the tricky task of edit­ing Twit­ter, fig­ur­ing out how to har­vest more of the value from within. Since he re­turned with his mis­sion to fine­tune Twit­ter’s story, the com­pany has adopted a oneword mantra: live. “Twit­ter is live,” says Les­lie Ber­land, the new chief mar­ket­ing of­fi­cer. “Live is

what Twit­ter truly is about,” says Adam Bain, the chief op­er­at­ing of­fi­cer. “We’re fo­cused now on what Twit­ter does best: live,” Dorsey told an­a­lysts in Fe­bru­ary. “Twit­ter is live: live com­men­tary, live con­ver­sa­tions, and live con­nec­tions.” Dur­ing the earn­ings call for the 2015 fourth quar­ter, Twit­ter ex­ec­u­tives used the word “live” 36 times in 54 min­utes.

Dorsey says he had a pre-pud­dle inkling that Twit­ter was meant to be a live medium. It came to him years ago as a mi­nor earth­quake jos­tled San Fran­cisco. “I was at the of­fice on a Satur­day, and peo­ple were spread out all over the place,” he says. “And my phone buzzed right next to me, and then I felt the earth­quake. So the tech­nol­ogy was ac­tu­ally faster than the earth.”

The em­pha­sis on live is not only a spasm of cor­po­rate jar­gon-mak­ing. It’s a prod­uct strat­egy, and there’s logic to it. Dur­ing the lat­ter part of the 20th cen­tury, a range of me­dia out­lets, from ESPN to CNN to MTV, grew into highly prof­itable, multi­bil­lion-dol­lar busi­nesses in part by dish­ing out sig­na­ture cov­er­age of live events: sports games, mu­sic fes­ti­vals, political de­bates, car chases, crim­i­nal tri­als, mil­i­tary op­er­a­tions, zoo an­i­mal es­capes, and earth­quakes. Dorsey and his team say they can make Twit­ter into the pri­mary place peo­ple go when they feel the im­pulse to eaves­drop on world events. For years the vol­ume of tweets has spiked dur­ing pub­lic spec­ta­cles. Dur­ing CBS’s cov­er­age of the Su­per Bowl, al­most 4 mil­lion peo­ple gen­er­ated 16.9 mil­lion tweets. When Leonardo DiCaprio won for best ac­tor dur­ing ABC’s broad­cast of the Academy Awards, it gen­er­ated 440,000 tweets per minute. “Twit­ter is a live pub­lic con­ver­sa­tion that’s hap­pen­ing all over the world,” Ber­land says. “We own it. We do it in a way no one else can.”

For the com­pany to per­suade the masses to turn to Twit­ter—rather than, say, CNN—the next time a nat­u­ral disas­ter hits, it needs to edit the chat­ter into some­thing mean­ing­ful, or at least not over­whelm­ing. In Oc­to­ber 2015, the com­pany in­tro­duced a fea­ture called Mo­ments, which cuts through the frac­tal galaxy of the Twit­ter feed and creates a man­age­able se­ries of tweets and im­ages se­lec­tively up­dated as an event un­folds. Twit­ter an­nounced that var­i­ous news out­lets, al­ready well-sea­soned at turn­ing Twit­ter di­a­logue into news copy, in­clud­ing the New York Times, Fox News, and Buz­zFeed, would con­trib­ute by as­sem­bling and edit­ing Mo­ments of their own. Other Mo­ments would be put to­gether by Twit­ter’s grow­ing ros­ter of full­time “cu­ra­tors.” On one re­cent af­ter­noon, the fea­ture, ac­ces­si­ble through a tab on the Twit­ter app or Web page, served up mini-mon­tages that pro­gressed from an his­toric same-sex kiss be­tween two mem­bers of the Cana­dian mil­i­tary, to an NFL player su­ing ESPN for post­ing his med­i­cal records on Twit­ter, to the birth of a baby po­lar bear named Juno. The over­all feel is of a rad­i­cally re­duc­tive dig­i­tal news­magazine—what you might get if you ran Ya­hoo! News through a high-pow­ered cen­trifuge.

Mo­ments has been met with dis­dain and ridicule. Hav­ing in­vested the time and ef­fort into fig­ur­ing out how to ex­tract value from Twit­ter for them­selves, the last thing power users want is in­ter­fer­ence from a bunch of hu­man edi­tors to help the new­bies. De­spite the back­lash, Dorsey says he’s op­ti­mistic, though he al­lows that Mo­ments needs refining. The menu for nav­i­gat­ing among sub­jects will be im­proved, he says. The range of top­ics will get richer and more per­son­al­ized. “We’re still ex­per­i­ment­ing with it,” he says. “It’s a great sto­ry­telling medium, but there’s cer­tainly work to do to make it bet­ter for more peo­ple.”

As Dorsey sorts that out, com­peti­tors are, too. At an all-hands meet­ing at Face­book’s head­quar­ters in Fe­bru­ary, Mark Zucker­berg de­clared live video a top pri­or­ity. Face­book is bid­ding for the rights to livestream NFL games and re­cently re­tooled its search func­tion to sur­face up-to-the-minute con­tent. Over the past cou­ple years, Snapchat, the mes­sag­ing app pop­u­lar with young peo­ple, has rolled out a chan­nel for “live sto­ries”—short video com­pi­la­tions chron­i­cling cur­rent events from mul­ti­ple per­spec­tives. Ear­lier this year, In­sta­gram started to pro­mote video reels from the Academy Awards and the Su­per Bowl. In Jan­uary, Google de­buted a real-time ad­ver­tis­ing ser­vice for its sites and apps, in­clud­ing YouTube.

Ama­zon.com has been in­vest­ing heav­ily in live video, and it re­cently un­veiled plans for its first live daily talk show.

Ad­ver­tis­ers look­ing to buy ad space around live events are be­ing courted by mul­ti­ple ser­vices, sev­eral of which have cus­tomer bases equal to or greater than Twit­ter’s. Even so, Twit­ter ex­ec­u­tives say the new com­pe­ti­tion is a val­i­da­tion of their strat­egy. Ad­ver­tis­ing, which ac­counts for roughly 90 per­cent of the com­pany’s rev­enue, grew from $270 mil­lion in 2012 to al­most $2 bil­lion last year. “It’s great that both mar­keters and other folks re­al­ize that live is where the pre­mium is in the ad­ver­tis­ing busi­ness,” says Bain, the COO. “We have ba­si­cally 10 years’ worth of ex­pe­ri­ence build­ing out a live prod­uct.”

In­ter­est in live TV typ­i­cally plum­mets be­tween ma­jor pro­gram­ing events, and so it has on Twit­ter. Dorsey says that’s chang­ing, thanks in part to the ac­qui­si­tion last year of the live-stream­ing app Periscope. Th­ese days, he says, Twit­ter doesn’t have to wait for some­thing to hap­pen on TV to get revved up. Periscope users can cre­ate a live event out of lit­tle more than a con­gre­ga­tion of stag­nant rain­wa­ter. (Streams are broad­cast us­ing the Periscope app and watch­able ei­ther through that app or the main Twit­ter app.) “When there’s a lull, the In­ter­net creates some­thing,” Dorsey says.

His­tor­i­cally, Twit­ter hasn’t spent much on ad­ver­tis­ing, in part be­cause it could al­ways rely on the plat­form’s ad­dicted users to spread the word. It’s ad­ver­tis­ing now. In the fall, Twit­ter aired its first ma­jor TV cam­paign. The com­mer­cial, tout­ing Mo­ments un­der the tag line “a new way to get the best of Twit­ter,” premiered dur­ing Fox’s broad­cast of the World Se­ries. The ad fea­tured manic base­ball fans tweet­ing about fre­netic high­lights from the games. To cre­ate the ads, Twit­ter hired TBWA\Chiat\Day—the same agency that years ago cre­ated Ap­ple’s fa­mous “1984” spot por­tray­ing the ar­rival of Mac­in­tosh com­put­ers as the dawn of a rev­o­lu­tion. “If there was one at­tribute I’d high­light about Twit­ter, it’s our speed,” Dorsey says. “We’re fast. ‘Live’ cap­tures that.”

Live pro­gram­ming also means no safety net. Just as live TV gave rise to blooper reels, the Twit­ter­sphere has be­come the premier venue for so­cial me­dia an­ni­hi­la­tions. The col­lab­o­ra­tive burn­ing of rep­u­ta­tions can be vi­cious. In Fe­bru­ary, af­ter mak­ing an off-color joke while host­ing the awards show of the Bri­tish Academy of Film and Tele­vi­sion Arts, co­me­dian Stephen Fry be­came the lat­est per­son to be pub­licly dunked in the hell­broth of Twit­ter spit­tle. After­ward he made a pub­lic show of quit­ting Twit­ter. “Let us grieve at what Twit­ter has be­come. A stalk­ing ground for the sanc­ti­mo­niously self-right­eous who love to se­cond-guess, to leap to con­clu­sions and be of­fended,” he wrote. “If you don’t watch your­self, with ev­ery move you’ll end up be­ing gashed, bro­ken, bruised or con­tused.”

The im­mo­la­tions are bad for busi­ness. They make Twit­ter sound about as invit­ing as a meet­ing of ri­val biker gangs in a breas­t­au­rant. Since re­turn­ing, Dorsey has re­peat­edly vowed to make Twit­ter a safer plat­form. On Feb. 9 he un­veiled some­thing called the Trust & Safety Coun­cil, an en­tity re­spon­si­ble for mak­ing Twit­ter a kin­der, gen­tler scrum. In a post on its blog, Twit­ter ex­plained that the coun­cil would ini­tially con­sist of mem­bers of more than 40 ad­vo­cacy or­ga­ni­za­tions, in­clud­ing the An­tiDefama­tion League, the Cy­berSmile Foun­da­tion, and the Dan­ger­ous Speech Pro­ject. How this polic­ing will hap­pen re­mains un­clear. “Peo­ple need to feel safe to ex­press them­selves freely,” Dorsey says. “We need to give peo­ple straight­for­ward con­trols to re­port, mute, and block. And we need to im­ple­ment those with feed­back from the com­mu­nity, rep­re­sen­ta­tive of all ends of the spec­trum.”

Last Oc­to­ber, Steve Ballmer, the for­mer CEO of Mi­crosoft and cur­rent owner of the Los An­ge­les Clip­pers, ac­quired a 4 per­cent stake in Twit­ter, then val­ued at about $840 mil­lion, mak­ing him one of its top in­di­vid­ual share­hold­ers. He hasn’t used Twit­ter much—he’s tapped out only a hand­ful of tweets. Nev­er­the­less, he sees the plat­form’s po­ten­tial. In Fe­bru­ary a video of Ballmer jump­ing on a tram­po­line and dunk­ing a bas­ket­ball dur­ing half­time of a Clip­pers game spread across Twit­ter like norovirus on a cruise ship. “Ev­ery­body and their brother who’s ever touched Twit­ter has a the­ory about why peo­ple don’t use it more,” he says. “This is not an un­solv­able prob­lem.” Ballmer thinks the so­lu­tion lies in con­vinc­ing the world that Twit­ter isn’t just a place to pub­lish in­for­ma­tion, but also a de­sir­able lo­ca­tion to sit back and con­sume it. Since Ballmer bought his stake, Twit­ter’s share price has fallen by more than 40 per­cent.

It’s hard to say what Twit­ter will look like in 10 years. If all goes ac­cord­ing to plan, Dorsey, the Steve Jobs em­u­la­tor, could bring Twit­ter its iPod mo­ment and make it some­thing with uni­ver­sal ap­peal. Or his re­turn could be more like co-founder Jerry Yang’s se­cond act at Ya­hoo in 2007. Twit­ter’s fate could be to linger as a semi-im­por­tant Web in­sti­tu­tion, stag­ger­ing from one turn­around plan to the next un­til some­body buys it. The cheaper the com­pany’s stock gets, the more cred­i­ble the per­sis­tent ac­qui­si­tion ru­mors sound. Ev­ery few weeks, the shares bump up on spec­u­la­tion that a suitor, usu­ally Google, is prep­ping a deal.

Dorsey says Twit­ter will per­se­vere. Its au­di­ence will grow. The prod­uct will keep evolv­ing. New voices will emerge. Re­cently, he says, he’s been do­ing a lot of lis­ten­ing. Ev­ery­where he goes, he asks peo­ple what they like about Twit­ter or why they don’t use it. He’s also been heed­ing lead­er­ship ad­vice from a hand­ful of busi­ness men­tors—par­tic­u­larly Bob Iger, the CEO of Walt Dis­ney, and Rick Rubin, the ZZ Top-bearded mu­sic im­pre­sario who’s crafted the sound of ev­ery­one from the Beastie Boys to Kanye West. “One of the most cre­ative and fo­cused souls I know,” Dorsey says.

Just as weather apps dis­play cur­rent con­di­tions and fore­casts, Dorsey thinks that some­day Twit­ter will of­fer a glimpse not just of what’s hap­pen­ing, but also what’s about to hap­pen. In the mean­time, Twit­ter will keep its eye on the great pud­dle of the now. “We have this unique abil­ity to break news 10 to 15 min­utes be­fore any other ser­vice,” he says. “And we can ac­tu­ally bring peo­ple down to the street and bring some­one di­rectly where the event is hap­pen­ing, and the sen­ti­ment and the emo­tion and the speed at which things hap­pen are pretty amaz­ing.” <BW>

From left, Dorsey, Ber­land, and Bain out­side Twit­ter’s head­quar­ters in San Fran­cisco

In­spi­ra­tion in­stal­la­tion

at Twit­ter head­quar­ters

DATA: TWIT­TER, COM­PILED BY BLOOMBERG

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