In this episode of Acquired, hosts Ben Gilbert and David Rosenthal, along with former Twitter CEO Dick Costolo, delve into the story of Twitter—a platform that has significantly impacted society, from everyday users to global politics. They discuss Twitter's journey from its SMS roots to becoming a social media giant, its struggle with user growth and revenue compared to Facebook, and the missed opportunity to acquire Instagram. Costolo candidly reflects on his tenure, including challenges with third-party developers, content moderation, and the company's approach to free speech. The conversation also touches on Twitter's IPO, the platform's role in political discourse, and Costolo's recent controversial tweet. They conclude with the importance of voting and encourage U.S. citizens to participate in the upcoming presidential election.
"Today, we tell the story of a company that has changed every single one of our lives, Twitter."
This quote sets the stage for the episode, highlighting Twitter's pervasive influence on daily life and global events.
"So, as Ben and I were reflecting on what the acquired way to do a Twitter episode would be, we realized that there actually was this pretty significant fork in history."
The quote reflects on a pivotal moment in tech history that could have altered the landscape of mobile and social media.
"The former CEO who generated the first dollar of revenue, scaled it to a real business and took it public. Dick Costolo."
This quote introduces Dick Costolo's significant contributions to Twitter's growth and success.
"If you love acquired and want to hone your own craft of company building, you should join the community of acquired limited partners."
The quote encourages listeners to join the community for deeper insights into company building and investing.
"Pilot is the one team for all of your company's accounting, tax and bookkeeping needs."
This quote introduces Pilot's services, positioning them as essential for startups and growth companies.
"When that stuff started to happen, it became obvious to me that the web was this really extensible thing and place, and that that was where most of the innovation was going to occur in the immediate future."
Costolo explains his realization of the web's potential for innovation, leading to his entry into the tech industry.
"The idea behind Feedburner was it'll be important to sit between publication and subscription because there will be all sorts of interesting things that happen that intersection publication and subscription, and we should do that."
This quote explains the concept behind Feedburner, emphasizing the value of managing the flow of content from publishers to subscribers.
"At every time there was an acquisition offer, we felt like the probabilistic outcome of us being able to do something a lot better than that and with more significant returns over time, we should do it on our own."
Costolo describes the rationale behind Twitter's decision to reject acquisition offers and continue growing independently.
"We'll make the ads tweets and we'll just inject them into the feed, whether it's a syndication feed or a third-party feed or our own site. And that was really the birth of the native."
Costolo explains the innovative approach to Twitter's ad format, which involved using tweets as ads to fit seamlessly into the content feed.
"Necessity is the mother of invention. The reason we invented that is because we had to. There was no demilitarized zone of tweets."
Costolo attributes the invention of Twitter's ad format to the necessity of adapting to the platform's unique content distribution challenges.
"Based on engagement, there's like a ton of pieces you got to go build out. That's like a heavy engineering lift."
This quote emphasizes the complexity and the substantial engineering effort required to build out Twitter's advertising model based on user engagement metrics.
"I remember telling the board, I got the perfect person... And everyone else were like, what? We're going to hire someone from Fox to do this?"
This quote illustrates the board's initial skepticism about hiring Adam Bain, which contrasts with Dick Costolo's confidence in Bain's suitability for the role.
"Most people don't realize we went from literally $0 in revenue before I got there... to a run rate of over $2 billion a year when I left in July 2015."
Dick Costolo highlights the rapid and significant revenue growth Twitter experienced under his leadership, marking a remarkable financial turnaround.
"We went and got engineers who had done some of this stuff before at Google."
This quote shows the strategic recruitment of experienced engineers from Google to overcome Twitter's product and engineering challenges.
"You can't build an advertising business in which a bunch of other people own the user experience because it doesn't make any sense."
This quote captures the rationale behind Twitter's decision to control the user experience, which was essential for the viability of their advertising business.
"Instagram just sold to Facebook for a billion dollars... that's rough for us."
Dick Costolo reflects on the impact of Instagram's sale to Facebook, recognizing it as a strategic setback for Twitter.
"The road from that to building a platform where developers could build into Twitter was far."
Dick Costolo acknowledges the challenges Twitter faced in transitioning to a platform model, justifying the focus on advertising as the more viable strategy.
"And there are all these just ways we would been able to be a lot more competitive and that would have been fun." "It just replays automatically. Those guys had come up with a bunch of cool, innovative ideas, like you say, precursor to TikTok. And we bought it." "When Instagram launched short video, seemingly in reaction to Vine, I didn't think it was going to hurt us as badly as it did."
These quotes illustrate the potential for Twitter to have been more competitive with unique features from Vine and the unexpected impact of Instagram's response to Vine's video features.
"You can't view Facebook content anywhere but Facebook, and you can view Twitter content, billions of tweets per day all over the web." "That was a place where I felt Facebook can't compete there because they won't let their content be viewed off Facebook."
The quote highlights Twitter's unique position in allowing its content to be syndicated across the web, unlike Facebook, which could have been a competitive advantage.
"It took us seven years. Seven years. And you know how hard it was to build a company that was worth $13 a share while I was gone the last two weeks?" "You all know, sitting here, that you didn't do anything today to increase the value, intrinsic value of the company by almost 100%."
Costolo's quotes reflect on the rapid increase in Twitter's stock value during the IPO and the need for employees to remain focused on their work rather than the stock market.
"It's just hard for people to get until they get it. It's one of those things that once you get it, you get it. And until you get it, you're like, why does anyone use this thing?" "The Twitter graph is the economist. And that one dude who's super hilarious at ESPN that writes about the Milwaukee bucks, he's not in your phone, he's not someone you email in Gmail."
These quotes explain the difficulty new users have in understanding how to use Twitter and the unique nature of Twitter's interest graph compared to Facebook's social graph.
"You really can't outrun someone once they have a lead and they have either network effects going among a consumer user base, or they have, look at Netflix." "When you've got that network, you can just beat the crap out of the new kid on the block."
Ben Gilbert's quotes underscore the challenges smaller companies face when competing with established platforms that have strong network effects and financial resources.
"We were constantly trying to find that similarly, like, what's the thing to go do that changes the equation?" "We just weren't able to find that right fit there."
Dick Costolo's quotes indicate Twitter's active search for strategic opportunities to enhance its competitive position, though ultimately, they did not materialize.
e WhatsApp, you remember shortly after Facebook acquired WhatsApp, crashed for like 8 hours. Telegram added 13 million users in that, like, 6 hours. Why? Because it's just your contacts. You import them from your phone and you've rehydrated the exact same network in a matter of minutes. So those networks are less resilient over time and can be hit in the side of the face. In a moment, because they're so easy to rehydrate. The beauty of a LinkedIn or a Twitter is they're difficult networks to build. There aren't other network node types like them. They're much more resilient to competition. Yeah.
This quote emphasizes the vulnerability of networks that are easy to replicate, like WhatsApp, and contrasts them with more complex and unique networks like LinkedIn and Twitter, which are harder to duplicate and thus more resilient to competition.
Twitter is the only social platform, I think, that exposes bi directional. You can go to any Twitter account and see what accounts that Twitter account follows. You certainly can't do that on Facebook. You can't do that on LinkedIn, to your point. Okay, great. You extract that data, it's not going to get you anywhere.
The quote highlights Twitter's distinctive feature of bi-directional following visibility, which is not available on other major platforms like Facebook and LinkedIn, thereby contributing to Twitter's network uniqueness and resilience.
It's a good question. I'm not sure what the answer to that is, to be honest. I don't know what the upper bound on either one of those is. Obviously, it's the case that on Facebook you can micro target, you know, most everything about those users as an advertiser, you know where they live, you know where they went to school, you know what high school they went to, you know, relationship statuses, and on and on and on, and sex and blah, blah, blah, blah, blah. And on Twitter, you don't, you don't know that you have an interest graph, but you don't have a detailed demographic understanding of your users. The ability to micro target by demographics gives them extraordinary pricing power. But who knows? It's hard to know where either of those tops out, I guess, is the short answer. And the only reason for the differences that I can think of are the interest targeting versus the demographic targeting. But it's possible that you could come up with a world in which nothing really changes about the way you think about either user base, but the average revenue per user, or the value of a user flip flops because of some other innovation. I just don't know what the answer to that is.
This quote discusses the difference in revenue per user between Twitter and Facebook, attributing Facebook's advantage to its ability to micro-target users based on a wide range of demographic information, a feature that Twitter lacks.
Yeah, it's interesting because it's funny. Like, we don't know any demographic information about our listeners, but we do know what they like. And from that we can extrapolate that they're an incredibly valuable audience. I don't need to know demographic information to know that everybody who listens to us skews toward founders, skus towards executives, skus towards investors. Knowing that means that they're a much more valuable audience than if I knew the demographic stuff. I've heard that argument before, that Facebook has more information so you can target more granularity, so you can charge higher amounts because you can guarantee that someone's getting exactly the customer they think they're getting. But I always come back to this thing where, gosh, if you can know the things people care about, there's something that for certain use cases is much more valuable about that.
The speaker reflects on the value of understanding user interests over demographics, suggesting that for certain audiences and use cases, knowing interests can be more valuable for targeting and may attract a more desirable audience for advertisers.
I have to tell you that it's like the Medvedev thing. People are like, wow, you were there when Medvedev tweeted at Barack Obama. You're like, yeah, that's not what we were thinking about that day. We were thinking about the fact that site was down. It's kind of always like that. You read these company histories or you read people's biographies. There's always this mythology of, we knew, and we knew then that this was exactly where we were headed. My experience is that that's all nonsense or largely nonsense. It just is. We were always surprised. I'll give you an example. I'm in my Monday morning staff meeting shortly after becoming CEO. It's like November 2010. My assistant comes in the office leadership team meeting, you got to meet for 90 minutes and go through all this sort of more strategic topics. And it's expensive meeting because you got the ten people with the most reports in the company. My assistant comes in the meeting and goes, hey, his phone call for you all by way of saying, like, okay, why are you even telling me that? Take a message. Not going to interrupt this meeting for, like, a phone call. And she goes, it's the White House. My first thought was like, I didn't do anything. What do they call me?
What's the White House calling me for?
I was like, first of all, it was like, Zuckerberg. No, I was like, first of all, how do you know it's the White House? Did they call and say, it's the White House? How do you really know it's the White House? She's like, no, it's Valerie Jarrett. She wants to talk to you. And then my second thought was, I didn't do anything. What is the White House one to talk to me for? It's my midwestern guilty conscience. They wanted us to come to the White House and with some other tech leaders and talk about these kinds of things you guys were just mentioning. And I remember thinking, like, man, I got a computer science degree. What do you want to talk to me about this stuff? After it happens, you realize it, and you start to think about it. You're like, oh, I got to start actually being more thoughtful about these things and understanding how we think about intellectual property policy and how we were blocked in China and who should we talk to in us government about that? But as it's happening, you just don't kind of realize whether or not it's a momentous thing or just, well, that was weird. You don't sort of realize it until later, and you look over your shoulder and the impact you had or that the service had is sort of the wake that's behind the boat. You don't recognize it while you're in it.
The speaker recounts how the day-to-day challenges of running Twitter often overshadowed the realization of the platform's significant role in political events, with the true impact of such events on society becoming clearer only in retrospect.
There's own goals, and by own goal. I mean, it's a soccer metaphor where you're like, what just happened? The old, the vice president of HR comes by and is like, you're not going to believe what just happened. And you're like, you've got to be kidding me.
There's just always, you're like Snoop Dogg in our office.
Yeah. For example, I was never fortunately, never actually there for most of those things. Fortunately or unfortunately, but all that stuff trying to balance and manage, and I was just always trying to tell myself, and it's hard because you want to like, wait a minute, what has just happened? And I got to go focus on that. But you're just constantly trying to remind yourself, like, what's the highest leverage thing I could be working on right now? Not dive bombing people and getting into the weeds. But it's hard because you feel like this crazy thing that's super messed up and shouldn't be, and I can go show them how to fix it. But you're right. And on top of all that stuff, there are these self inflicted wounds there are at every company.
This quote reflects on the complexities of managing a company, where leaders must constantly prioritize high-leverage activities while also addressing urgent and unexpected problems, including those that are self-inflicted.
Yeah. The thing that people bring up is, oh, you wrote this note in whatever it was, 2014 to the team that gets sort of overplayed as early as 2010, I was like, this is nonsense. Why are we allowing this stuff on the platform? And the defense to. There was a combination of both. A naivete around, we're the free speech wing and the free speech party. But there was also this sort of like, well, because it's a slippery slope, and if you suspend Bob, then what are you going to do the next time Janet says something like that? Or if you're going to suspend Bob for X, what are you going to do about when Janet says X Prime? And I always just kind of said, like, well, who cares? We'll cross that bridge when we come to it. This guy's clearly, like, threatening violence against this person, but in a way that doesn't specifically violate our terms of service, which is stupid, because our terms of service say, in addition to all the specific reasons you can be kicked off the terms of service, say, we can remove your account for any reason or no reason. So just tell them we removed you for no reason. Yeah, you're an at will user. So I just always had wished we were more aggressive on that front while understanding the other side of the coin, which was. And the pushback I got. The heavy pushback I got, which was, whoa, whoa, whoa. If we do X, then what about X Prime? I just think that all of the platforms have waited too long to say, well, actually, we do need to go do X, and we'll figure out X Prime when it happens.
This quote illustrates the internal debates and challenges Twitter faced regarding content moderation, with a focus on the balance between free speech and the need to remove harmful content, and the speaker's wish that they had been more proactive in addressing these issues.
Boy, did that go sideways. Holy smokes. First of all, I should know better, you'd think, than to use sarcasm on the platform. But I was making a sarcastic response to Parker and Jason Calcanus in this whole back and forth about the Brian Armstrong's post about separating the mission of the company from social activism and social causes. I think Parker made some comment about, I'm not going to remember his exact response to Jason, but it was something like, look, if you want to really want to go do that stuff, you go to a nonprofit. And so I just fired off this sarcastic response. I was also, like, doing four other things that day and getting ready to entertain a bunch of friends the following day. So I fired off this sarcastic response. I was like, I'm just going to cause an argument. I don't need to deal with this right now. I'm just going to not pay attention to Twitter for a little while. Boy, was that a bad decision. I should have used the pitchfork analogy, and then the headlines would have been, Costello incites farmers to revolt. What I was trying to do that went horribly wrong was just make the observation that, look, if you think you can separate the social contract from the economic contract in society, then don't be surprised when the pitchforks come out. That went wrong quickly. A bunch of people were like, you should explain it. You get back on there and explain it. I'm like, how do you explain sarcasm? That seems like a bad idea. So I just kind of left it up there and, ah, people will settle down. And then I'm laughing because I started getting these violent threats on my instagram, pictures of tomatoes in my house in Napa Valley. And people were like, I hope these tomatoes burn in the fire. And how about if I line you up in front of those apples and shoot. I was like, wow, this is really bad. Finally, the next day was like, all right, I just take the whole thing down. But, man, what a mistake that was. Whoops, I'll bet.
The speaker shares an experience where a sarcastic tweet led to severe backlash and threats, illustrating the potential dangers of miscommunication on social media and the heightened sensitivity of the online audience.