#GrowthStall: Twitter’s Moment of Solemn Reflection

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

Jack Dorsey, the 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.”

Bloomberg Businessweek Twitter cover
Featured in Bloomberg Businessweek, March 28, 2016. Subscribe now.
Photograph by Christopher Gregory for Bloomberg Businessweek

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.

Jack Dorsey, Leslie Berland, Adam Bain outside Twitter headquarters
From left, CEO Jack Dorsey, Chief Marketing Officer Leslie Berland, and Chief Operating Officer Adam Bain walk outside Twitter's headquarters.

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 he 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.” 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.

Twitter headquarters lunch area
Lunchtime at Twitter headquarters, which houses about half of the company’s worldwide total of 3,900 employees.

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 high-tops 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, a former 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 with 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.

Twitter screens
An installation in a hallway at Twitter.

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 it 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 fine-tune Twitter’s story, the company has adopted a one-word 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 full-time “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.”

Twitter headquarters
An employee works at his standing desk.

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 live-stream 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. (To broadcast, they use the Periscope app; streams are 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 Anti-Defamation 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.”

Twitter hashtag suggestions
A board of employee-suggested funny hashtag suggestions for Twitter to incorporate.

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 the 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.”