October 30, 2010
Why Twitter’s C.E.O. Demoted Himself
By CLAIRE CAIN MILLER
San Francisco
AT the annual South by Southwest gathering of techies in Austin, Tex., in March, conference organizers had chosen a hangar-size room to accommodate their star speaker: Evan Williams, the co-founder of Twitter, the messaging and social networking site that had become a digital phenomenon.
In a private moment before the doors opened, Mr. Williams, who is famously deliberate and cautious, snapped a photograph of the endless rows of chairs facing the stage and posted it on Twitter.
“Gulp,” he wrote.
Later, as Mr. Williams talked with the interviewer about building a 21st-century business, keeping to Twitter’s foundational principle (the Google-like “be a force for good”) and fostering corporate experimentation, members of his audience started groaning — and leaving, one by one.
“They wanted Ev Williams; they got Ev Williams,” a Twitter staff member said later.
It is no small irony, of course, that a man so ill at ease on the big stage is a pivotal force in a communications revolution, one that has made it easier for people to chat, disseminate information and mobilize locally and globally with almost anyone who has a cellphone or an Internet connection.
And Twitter has become one of the rare but fabled Web companies with a growth rate that resembles the shape of a hockey stick. It has 175 million registered users, up from 503,000 three years ago and 58 million just last year. It is adding about 370,000 new users a day.
It has helped transform the way that news is gathered and distributed, reshaped how public figures from celebrities to political leaders communicate, and played a role in popular protests in Iran, China and Moldova. It has become so muscular and ubiquitous that it now competes with the likes of Google and Facebook for users — and is beginning to compete with them for advertising dollars.
Yet for all its astonishing growth, Twitter has succeeded in spite of itself — the enviable product of a great idea and lightning-in-a-bottle viral success rather than a disciplined approach to how it’s managed.
Because of that, Twitter is on the cusp of becoming the next big, independent Internet company — or the next start-up to be swallowed whole by a giant like Google or, possibly, the next start-up to run out of steam.
Now the company is trying to instill some of the rigor and sense of purpose it needs to ensure that it is, indeed, the next big thing.
“The thing I’ve learned that’s much different than any other time in my life is I have a team that is really, really great,” says Mr. Williams, 38. “I’ve been studying this stuff for a really long time, and I’ve screwed up in many, many, many ways in terms of managing people and product decisions and business, so I feel fairly confident at this point that it could scale pretty well.”
Last month, he unexpectedly announced that he had decided to step down as chief executive and give the job to Dick Costolo, who had been Twitter’s chief operating officer.
Mr. Williams, who remains on the company’s board, now focuses on product strategy. He made the decision after conceiving and spending months working on the recent redesign of the Twitter Web site. People who have worked with him say he excels at understanding what Internet users want and contemplating Twitter’s future, but isn’t a detail-oriented task manager.
“He takes these things that everyone thinks are as big as they can get, these geeky things, and he makes them mainstream,” says Philip Kaplan, a co-founder of the review site Blippy and one of Mr. Williams’s close friends.
Mr. Costolo, meanwhile, is all about the details of making money and getting things done. This has been his third time running a company; he sold his last one, the Web subscription service FeedBurner, to Google in 2007.
For his part, Mr. Williams may embody a classic Silicon Valley type — the inspired, talented start-up guy with good ideas, but not the one to execute a sophisticated business strategy once things get rolling, says Steve Blank, an entrepreneurship teacher at Stanford.
And Mr. Williams may have also earned the self-awareness and confidence to recognize exactly who he is.
“Evan Williams is the type of entrepreneur who knows when to pivot,” says Mr. Blank, “and what we may be seeing is wonderful signs of entrepreneurial wisdom.”
TWITTER was born in 2006 as a side project.
At the time, it was an appendage of a podcasting service named Odeo, another company that Mr. Williams co-founded that had millions of dollars from investors.
Even the founders, though, were having a hard time getting excited about Odeo, and Mr. Williams told everyone who worked there to hatch new ideas. While sitting on a children’s slide at a park eating Mexican food one day, an engineer, Jack Dorsey, suggested to colleagues a simple way to send status updates by using text messages.
Mr. Dorsey and Twitter’s third co-founder, Biz Stone, built a prototype in two weeks. During that time, Mr. Stone was ripping up the carpet at his Berkeley home when his cellphone vibrated in his pocket. It was Mr. Williams sending a message on Twitter: “Sipping pinot noir after a massage in Napa Valley.”
Twitter was a unique entrant on the social media scene. People could follow others without being followed back, and all posts were public by default — and limited to 140 characters so they could fit inside cellphone text messages.
The founders likened Twitter to ice cream: not that useful, but “a fun thing for family and friends when they are not in the same place,” Mr. Williams says.
That is a far cry from his vision today, an about-face that is typical of Twitter’s evolution. For a long time, Twitter’s founders talked about it with awe, as if it had a life of its own and they were mere bystanders. They freely acknowledged that they had no idea how people would use it or how it would make money.
But they thought it had potential, and in 2007 they spun it off as a separate company from Odeo, with Mr. Dorsey serving as Twitter’s first chief executive, Mr. Stone as creative director and Mr. Williams as chairman.
Mr. Williams had dipped into his own funds to cash out Odeo’s investors and subsequently gained a controlling stake in Twitter — but he was spending his days running yet another company, Obvious, an incubator for start-ups, and wasn’t focused on managing Twitter.
While Mr. Stone, an outgoing showman, was friends with both Mr. Williams and Mr. Dorsey and socialized with them, Mr. Williams and Mr. Dorsey are much quieter men whose only bond was their work. When Mr. Williams decided to join Twitter full time in the spring of 2008, his relationship with Mr. Dorsey quickly became strained as the two men competed for power.
By the end of 2008, Twitter’s growth was exploding — and things inside the company were beginning to break down. Mr. Williams suggested to Twitter’s board that it push Mr. Dorsey out. With the exception of Mr. Dorsey, the board unanimously agreed, according to several people involved in the discussions. Mr. Williams had run three companies, directors reasoned, so they figured that he would do a better job.
Upon Mr. Williams’s ascent, Mr. Dorsey became Twitter’s chairman. Although that move was potentially fraught with problems, the board wanted to ensure that Mr. Dorsey remained close to the company because he still owned a large stake in Twitter and he had originally come up with the idea for it, according to two board members.
The change shocked employees and further frayed relations between Mr. Dorsey and Mr. Williams. Mr. Dorsey declined to comment for this article, but people close to him say he felt betrayed by Mr. Williams.
“There was a feeling that Ev wanted to take control after he realized the potential importance of Twitter,” says a Twitter employee who was there during the transition and requested anonymity to protect business relationships.
“It’s hard and confusing,” Mr. Williams says of Mr. Dorsey’s departure. “I think there’s few cases in history where the C.E.O. steps down and is also the founder and reports to someone and that works.”
Directors say Twitter’s board meetings are amicable, and in the last couple weeks, Mr. Dorsey has been spotted around the offices more and has taken on a greater role in long-term strategy.
Even with Mr. Williams as C.E.O., Twitter was growing faster than he or anyone else at the company could handle. In 2009, Twitter ballooned to 71.3 million registered users from 5 million. The Web site crashed often, and the “fail whale” — an image of a whale that appears on the site whenever Twitter falters — became the butt of jokes.
Twitter was fielding dozens of calls a week from big companies, celebrities and politicians. Among the callers were CNN, “The Oprah Winfrey Show” and the State Department, which asked Twitter to delay maintenance so that Iranians protesting an election in 2009 could continue using the service.
“We were just hanging on by our fingernails to a rocket ship,” Mr. Williams recalls.
What the company needed was simple: people to do all the work. Yet it moved painfully slowly in hiring, with just 110 employees by the end of 2009, even though it had raised $150 million in venture capital by then.
“The mistake I made was definitely underhiring, both in quantity and in experience, in several areas, for a long time,” Mr. Williams says now. He attributes that mistake to the daily distractions of running Twitter and not anticipating how big it would become.
Twitter’s first office in San Francisco was classic start-up: dorm-room décor, complete with a keg in the kitchen, a couple of big, green concrete deer and a communal table where employees ate take-out burritos together.
Big-name chief executives would visit the company and sit on frumpy couches because there wasn’t an adequate conference room. A video crew once walked in through Twitter’s unlocked front door without permission and began recording employees.
The company’s offices today have locked doors and a receptionist in a sunlit lobby, where the green deer now stand. Trendy furniture includes plentiful conference tables, and while there is still a keg, a chef prepares lunch for the 300 employees.
Sixty percent of those people are engineers, who have spent the last year methodically rebuilding the software that runs Twitter and developing a system to monitor downtime.
The fail whale still appears, but not nearly as often, an important change now that Twitter sells ads to companies like Starbucks, Ford and Microsoft. The ads can appear on the Twitter feed as sponsored posts, or in Twitter’s list of trending topics or among the suggested accounts that Twitter recommends that its users follow. Mr. Costolo spearheaded all of these initiatives.
Twitter finally hired a recruiter, as well as people to handle mundane but important big-company tasks like human resources, payroll and ensuring that all of Twitter’s partners use the same blue bird logo. A whiteboard near the executives’ desks lists headings like “commit,” “invest” and “leverage.”
Mr. Williams and his colleagues no longer liken Twitter to ice cream. They now describe it as an information network, not a social tool, and see it as an essential way for people to communicate and get information in real time.
Yet even though Twitter’s executives say their heads are finally above water, Mr. Williams still describes the company as “a 6-foot-tall sixth grader — there’s a lack of maturity, despite size and the perception of outsiders.”
He says Twitter now has a team that can realize the company’s ambitions — a revelation coming from someone who arrived in Silicon Valley with something to prove and volumes to learn about working with others.
EVAN WILLIAMS grew up on a farm in Nebraska, “90 miles and an eternity” from Lincoln, he says. And he didn’t fit in.
“My brother was the consummate Nebraska boy — the football star who went to the university, was president of his fraternity, hunted with my dad all the time,” he says. “I just didn’t feel at home there.
“I had a fierce desire to create things, to be independent and prove myself, which caused me to reject authority, but never in a sort of rebellious way,” he adds. “It was more like, ‘I’m going to show you by doing it all myself.’ ”
Mr. Williams dropped out of the University of Nebraska and started a business in Lincoln, financed by his father, designing Web sites for local businesses and making CD-ROMs about Nebraska football and the Internet.
But it turned out that, among other problems, football fans weren’t using CD-ROMs. The business ended up being Mr. Williams’s first failure, and he couldn’t repay his father.
Mr. Williams had devoured the early issues of Wired magazine, and California loomed in his imagination as a place where he could truly carve out his own niche as an entrepreneur. He made his first move west in 1997, with a marketing job at O’Reilly Media, the technology publisher in Sebastopol, Calif.
“Ev was just very frustrated, and he had ideas for how we could do things differently and better,” recalls Tim O’Reilly, the publisher’s founder. “He had a little bit of attitude, a chip on his shoulder, but always with good spirit.”
Mr. Williams left O’Reilly after seven months — “I was bad at working for people,” he says. And in January 1999, at the height of the dot-com bubble, he started his second company, Pyra Labs, with his former girlfriend, Meg Hourihan. Paul Bausch, a friend from high school, soon joined.
Pyra made a Web-based project management tool but soon saw a different opportunity: a tool that allowed users to easily post articles and photographs to personal blogs. That became Blogger, one of the first Web services that automated blog publishing.
Soon after, the tech bubble burst, and Blogger was running out of money. Mr. Williams told his five employees, including Ms. Hourihan and Mr. Bausch, that he could no longer pay them and that he would run the company alone.
But six months later, in June 2001, Blogger started making money by charging for added features, and Mr. Williams had a budget that allowed him to hire new workers. In 2003, Google acquired Blogger.
Several people who once worked at the company said they didn’t make money on the sale because Mr. Williams had never submitted the paperwork needed to allocate stock options. Mr. Williams says that this group hadn’t worked at the company long enough for their stock options to vest.
Others have a different view of Mr. Williams’s tenure at Blogger.
“I don’t think he took care of the people who got him to where he was,” says Ms. Hourihan, who earned millions of dollars from the sale. “It was bitter, horrible and tough. He’s not C.E.O. material. It doesn’t play to his strengths. He’s a better inventor; he’s better at coming up with ideas.”
Mr. Williams says that all successful businesspeople make enemies along the way. Yet he also says he learned from the Blogger experience. “I was trying to do everything myself when we were going through hard times,” he says. “When it was just me, I was happier, which I think is a sign of failure of working with people.”
In 2004, Mr. Williams left Google, where he was still running Blogger, and planned to take time off. Instead, he started working on Odeo with his neighbor Noah Glass. A year later, he again found himself running a company.
MR. WILLIAMS doesn’t fit the Silicon Valley stereotype. He is neither a back-slapping former frat boy nor a socially awkward programmer most content behind a computer screen.
He is at ease with himself, and convivial and dryly funny in small settings, but he tends to be quiet in large groups and is ambivalent about his newfound celebrity. Recently, with invitations to Davos and the Grammys, he traded in his uniform of jeans, a bird T-shirt and a hoodie for a suit — only to lose his luggage on the flight to Switzerland.
Last year, when his wife, Sara Morishige Williams, went into labor and wrote about it on Twitter, CNN published the news and her photo while she was still in the hospital. But Mr. Williams rarely posts personal messages to the 1.3 million people who follow him.
His fingers move constantly while he talks, whether fiddling with his keychain or shredding toothpicks at a bar, and staff members give him a drink and an espresso to loosen him up before big public appearances.
“Often there will be a room with five people having a conversation and he says the least, but when he does talk, everyone listens intently, and it’s a gem,” says Mr. Kaplan, his friend.
In business, that trait can be beneficial. In 2008, Facebook tried to buy Twitter, and financiers asked Mr. Williams if he wanted to sell. He said he wanted to sleep on it, and the next day sent them a long e-mail about why he wanted Twitter to stay independent.
“He’s got this ability to be patient in this very productive way,” says Bijan Sabet, who is on Twitter’s board and is a partner at Spark Capital, which invested in the company. “It was not just this flip e-mail but very thoughtful — what we could accomplish by when, why there’s still so much we have left to do. It was pretty inspiring.”
But others say Mr. Williams’s methodical approach can get in the way. “Ev is very difficult to work with because he has a tough time making a final decision on products,” says the C.E.O. of a Silicon Valley social networking company who requested anonymity because the company works with Twitter. “This all changed when Dick took over. He’s very logical and knows how to make things happen.”
From Mr. Williams’s point of view, his division of labor with Mr. Costolo, a wiry and restless counterpoint to Mr. Williams’s reserve, is a sign of success. After failing early on to work with others, Mr. Williams says he has figured out how to be part of a team.
“Dick is hard-charging and very focused on urgency and executing now, and I tend to be very contemplative,” he says. “My weakness is probably taking too long to make a decision, and his is being too hasty.”
THE cumbersome details of running Twitter now fall to Mr. Costolo. He says his biggest challenge is ensuring that in other countries, like Japan, South Korea and Brazil, where Twitter is growing by leaps and bounds, the company avoids the managerial mistakes it made in the United States.
That means marketing Twitter as an information network, not a social one, from the get-go; buying enough computing power; and hiring people to sell ads in those countries. Twitter also has to prove that it can build an advertising business in the United States.
The company, meanwhile, is trying to avoid the bureaucracy that plagues larger businesses. The topic is important to Mr. Williams, who says he started companies because he didn’t believe in aligning himself with institutions.
Twitter’s executives talk about the “Dunbar number” — the maximum number of people, generally believed to be 150, with whom one person can have strong relationships. This effort, mind you, comes from a company with a business model that fosters a multitude of ever-growing — and largely glancing — interactions among Twitter’s users.
“I’ve never seen a company so focused on avoiding the Dunbar number,” says Adam Bain, who recently joined Twitter from the News Corporation as head of global revenue. “You can tell Ev planned it out.”
Each time employees log on to their computers, for instance, they see a photo of a colleague, with clues and a list of the person’s hobbies, and must identify the person. And notes from every meeting are posted for all employees to read.
Speaking to a group of new hires at an orientation session last spring, Mr. Williams said Twitter had three goals: to change the world, to build a business and to have fun.
“You can succeed by only building a business, and many companies do,” he said. “We won’t consider it success unless it’s all three.”
Nick Bilton contributed reporting from New York.