Twitter CEO Costolo Channels Grove in Management Seminar

When Twitter Inc. Chief Executive Officer Dick Costolo isn’t traveling abroad or overseeing new products to compete with social-networking rival Facebook Inc., he’s often lecturing employees on the merits of good management.

At least four times a year, Costolo leads a two-day “Managing at Twitter” seminar, including role-playing difficult situations, whiteboard brainstorming and readings from former Intel Corp. CEO Andy Grove’s book “High Output Management.”

As Twitter matures into a global business, approaching a possible initial public offering and a projected $1 billion in sales in 2014, Costolo is seeking to avoid the fate of startups -- such as Groupon Inc. -- whose single-minded focus on growth left them with few managers capable of running a large organization. The CEO said he started the program after hearing about inconsistencies in Twitter’s management habits.

The course is “essentially how I want you to manage at Twitter and what I believe is important,” Costolo said in an interview on Bloomberg West. “How I want you to lead.”

His involvement in training is unusual for a technology CEO, said Ben Horowitz, co-founder of venture capital firm Andreessen Horowitz.

“They’re going from a tech phenomenon to a very large business,” Horowitz, whose firm is an investor in Twitter, said in an interview. “A big turning point is when he started training the managers.”

Bloomberg LP, the parent company of Bloomberg News, is an investor in Andreessen Horowitz.

Adult Supervision

Costolo, who joined Twitter in 2010 after running startups and working at larger companies such as Google Inc. and Accenture Plc, became the microblogging site’s third CEO in as many years and its most experienced leader. His attention to organizational training is a departure from predecessors Jack Dorsey and Evan Williams, also co-founders of the company, who devoted most of their time to keeping the site up and running, Horowitz said.

In some ways, Costolo served as the adult supervision that technology startups commonly bring in when they need more experience than their entrepreneur leaders can provide, such as when Facebook brought in Sheryl Sandberg from Google in 2008 to complement founder Mark Zuckerberg, or when Eric Schmidt replaced Larry Page as Google’s CEO in 2001.

Costolo said one of his priorities is keeping a handle on the complexities that emerge as the company manages its “hypergrowth.”

“I think you’re constantly looking to clarify the organization and simplify the organization,” he said.

Groupon’s Lesson

Other startups have underestimated the need for experienced management at their peril. Groupon, a daily-discount startup, hired thousands of salespeople in its first few years of growth, before its inexperienced co-founder and CEO Andrew Mason presided over embarrassing missteps, including restated earnings and three quarters of results that missed analysts’ expectations. Mason was fired last month.

At Twitter, Costolo sees an opportunity to add more management rigor than is typical for young companies focused on growth.

“I would contrast my management philosophy here with the general Silicon Valley notion that management isn’t a first-class competency,” Costolo, 49, said in a separate interview at Twitter’s San Francisco headquarters. “It’s underrated.”

In his class, Costolo talks about how managers should clearly communicate goals to employees who report to them, rather than telling them what they want to hear. He conducts a role-playing session, where staffers take turns relaying a piece of bad news, and corrects them when they try to sugarcoat the message or blame someone else in the company.

“Many of them are managing by wanting to be liked,” he said. That approach “ends up creating misery for your team because people get thrown under the bus later.”

Adding Jokes

Costolo came up with the idea for the course from a conversation he had with Horowitz at a technology conference in Sun Valley, Idaho, in 2010. Just a few months after he was promoted to CEO from chief operating officer, Costolo says he grew concerned that inconsistencies in how people managed different teams would create problems as Twitter expanded and built international offices.

Horowitz had created a similar course a decade earlier, when he was CEO of Opsware Inc., and gave Costolo the outline he had used. The Twitter CEO, a trained improv comedian, spent the next six months refining the syllabus with his own experiences, insights and jokes. He solicited input from Horowitz, members of his human-resources staff and Kim Malone Scott, a former colleague at Google who went on to develop a training program at Apple Inc. and lead operations at Dropbox Inc.

No Outsourcing

“He doesn’t want to outsource this,” Scott said in an interview. “He feels you have a ton of leverage as a manager and spending time teaching people directly is one of the most important things you can do.”

For many managers at Twitter, Costolo’s course is the first management training they have received. Cynnthia Leduc, an information-technology manager who leads a team of 15, rose into management at her previous tech-support job at Inc. without any formal training.

Costolo’s involvement in the class “is a sign of how serious the company takes having good managers,” Leduc said. “There aren’t too many companies in the Valley that would have that hands-on approach.”

Question List

Since taking the seminar, Leduc has begun asking her team to come up with a list of questions or concerns to bring to their weekly one-on-one meetings, which helps identify potential issues.

Costolo also wants to create a style of management that’s unique and different from Google, EBay Inc. and other companies from which Twitter often recruits new managers, he said.

“I started realizing that people were bringing the success biases in from other companies where they had managed,” he said. “I realized I’ve got to get people managing the way I want them to manage.”

Costolo has bolstered his management bench in recent months, promoting former Pixar executive Ali Rowghani to the role of chief operating officer in December, at the same time Mike Gupta, a veteran of Yahoo! Inc. and Zynga Inc., became chief financial officer. Adam Messinger, an Oracle Corp. alumnus who joined Twitter in 2011, was recently promoted to the role of chief technical officer.

Working Together

The CEO also meets regularly with Dorsey, who remained chairman of Twitter while co-founding and running mobile-payment startup Square Inc.

“I’m much more an extrovert, and he’s much more of an introvert,” Costolo said of Dorsey on Bloomberg TV. “But the two of us have a great relationship and I think we’ve found the right way to work together and make sure we’re spending a lot of time together.”

Costolo borrows heavily from Grove, who led semiconductor pioneer Intel through its fastest years of growth in the 1980s and who wrote books on management decision-making. Like Costolo, Grove was promoted to CEO from the No. 2 role at a pivotal time for his company.

Costolo’s leadership style is defined by his openness to the ideas of others, Horowitz said. Unlike Google’s Page, who took the reins back from Schmidt in 2011, and is more inclined to run a meeting by handing out directives, Costolo listens to everyone in the room before making a decision, Horowitz said.

“Larry Page’s strength is that he’s the smartest guy in the world,” Horowitz said. “Dick doesn’t have to be the smartest guy in the room.”

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