Biz Stone does not want to talk about how and when Twitter will make money. He’s busy building his dream.
“Everyone wants to know, but the truth is we don’t need to make money right now. We have money,” said Stone, creative director and one of Twitter’s three co-founders over dinner at the YES2009: Youth Engagement Summit in Kuala Lumpur on Nov 16. The summit, which drew over 1,000 participants, also featured other notables including Bob Geldof and former world chess champ turned politician Gary Kasparov.

Twitter — a free social networking and micro-blogging service that allows its users which number over 58 million to send and read 140-character messages via any device that can access the Internet, such as mobile phones and personal computers — is certainly not short of money. It has US$35 million (RM120 million) in the kitty from the last round of funding by Todd Chaffee of Institutional Venture Partners and Peter Fenton of Benchmark Capital in February this year. On Feb 13, the day after Twitter closed the deal, Stone posted on the company blog that the social media company had not been “actively seeking more funding” because “significant capital” from their June 2008 round of funding totalling US$15 million from Bijan Sabet of Spark Capital and Amazon.com CEO and founder Jeff Bezos was “still in the bank”.

“It is more important to us to build value into our company before trying to make money. Twitter is only about three years old. There’s no rush,” said Stone in Kuala Lumpur.

In a July 24 report on CNN.com, he likened the constant queries about Twitter’s business strategy to “a nice loving mom who wants to make sure you’re eating”.

Despite their transparency about practically everything else such as disclosing management decisions and office going-ons on Twitter, flickr and the company blog, blog.twitter.com, the founders of Twitter have generally kept mum about the company’s projected revenue. At the press conference following his talk on Nov 16, Stone refused to confirm or deny an online rumour that a hacker had discovered documents predicting 3Q2009 earnings of US$900,000.

On July 16, Stone published a post on Twitter’s blog confirming that a hacker had succeeded in cracking a Twitter employee’s password and had stolen confidential documents which the hacker then sent to journalists, some of whom published excerpts. The documents contained financial projections, meeting notes and partner agreements according to TechCrunch, a technology blog that was among those contacted by the hacker.

But the public’s concern about the company’s financial prospects is understandable and a measure of how important Twitter has grown to be, says Stone.

“An entire ecosystem has sprung up around Twitter and they don’t want to wake up and find it has disappeared. So we have come up with a viable business plan that will be profitable,” says Stone. “Twitter is so accessible it’s used by large companies like Dell and small ones like the Albion Bakery in London. Whenever they bake a batch of fresh bread, they tweet about it and their customers come running.”

The plan is to offer paid services for companies starting next year, explains Stone during his talk at the youth summit. “Twitter can provide additional data information or analytics. It’s not compulsory, but the services will be an advantage. We want to allow companies to spend as much as they like if they are getting what they need. That’s a hint by the way,” he adds with a smile and a raised eyebrow.

For Twitter co-founders Stone, Evan Williams, CEO and Jack Dorsey, chairman — the focus has always been on creating value for the user. “We didn’t want to make money until we had something reliable,” he told the audience during his talk at the summit organised by Sledgehammer Communications at the Putrajaya International Convention Centre.

“It’s important for Twitter to be a force for good. I want people who work for us to wake up every day happy in the knowledge that they are doing good in the world,” added Stone later during dinner.

Which is not to say that Stone does not want to make a profit with the San Francisco-based Twitter.

“The two goals are not mutually exclusive,” he points out. “We will only make deals with companies where everyone wins.”
The quiet-spoken and boyish-looking 35-year-old who has a penchant for understated, casual wear describes himself as more artist than techie despite his involvement with technology-based companies. “My first job was in design, when I was studying theatre arts,” he says.

Stone took a part-time job moving boxes at publishing house Little Brown & Co while studying at the University of Massachusetts on a theatre arts scholarship in 1994. One day, he noticed his supervisor working on a book jacket design and while everyone was out to lunch, Stone designed a cover and tucked it into the pile of outgoing designs. In true fairy-tale fashion, Stone’s book jacket design was selected and his supervisor made him a designer. At 20, he dropped out of college and worked with Little Brown & Co for three years.

“You create opportunities for yourself and creativity is a renewable resource. You’ll never run out,” he told the audience while narrating how he went from a part-time box-mover to co-founder of one of the world’s hottest companies.

Incidentally, Stone’s nickname which he now goes by, “Biz”, was similarly self-created. Born Christopher Isaac Stone in Boston, Stone  said on the Tavis Smiley PBS television talk show in the US on Aug 13 that he christened himself “Biz” when he was really young.

“I couldn’t say Christopher, I said ‘Bizibur’, and my parents thought it was funny... and it stuck,” Stone told host Smiley.
Stone’s decade-long career in start-ups began in 1999 when he was approached by a friend, Marc Ginsburg, to start the blogging community, Xanga.com.

“It was a lotta fun,” he recalls. But by 2001, Stone was unhappy with the direction Xanga was taking.

“My advice to young entrepreneurs is to remember that every investor you bring in is a board member you cannot fire,” he told summit participants on Nov 16. At dinner that day, Stone said his ambitions for Twitter were partly fuelled by the frustrations he had experienced with earlier start-ups.

His next move was to join Blogger when it was acquired from Pyra Labs by Google in 2003. Although Xanga was a rival, Blogger founder Williams invited Stone to work for him. Stone accepted and helped relaunch Blogger in 2004. The next year, both Williams and Stone left and founded Odeo, a podcast company for which Twitter was just a side project.

“It was just a little experiment that unfolded and taught us what it was meant to be,” says Stone. “It was a happy mistake.”
Twitter’s founding idea is rooted in the world of vehicle despatch, narrated Stone. “Jack [Dorsey] noted how cars and bikes delivering packages around town constantly told each other where they were and what they were up to. Jack then asked, ‘What if I could use the web to tell my friends what I was up to, indirectly?’ The original interface was pure web, but then we thought about using mobile phones and SMSes to send messages — that’s where the 140-character limit comes from, by the way. A single SMS allows for 160 characters, we allowed 20 characters for the user’s name.”

The system’s working name was just “status” until the team found the word “twitter” in the dictionary.

“The dictionary defines twitter as ‘a short burst of inconsequential information’, which was just perfect,” Stone told his audience. On March 22, 2006, Jack Dorsey sent out the very first message on Twitter from his Twitter account @jack: “just setting up my twttr”.

Stone recalls the precise moment when he realised Twitter was something worth building.

“We [Stone and Dorsey] had just built the prototype and we were testing it out over the weekend. I decided to change the carpeting in our new house in Berkeley, California, and it was just awful. There was a heat wave on and I was dripping sweat and cursing. Then my phone buzzed and it was Evan [Williams] and he said, ‘Sipping Pinot Noir after a massage in Napa Valley’ and I collapsed laughing. That was enough for me. I knew I wanted to work on this.”

“Twitter is a triumph of humanity, not a triumph of technology,” Stone is often quoted as saying. For him, the beauty of Twitter lies in the “social alchemy” it creates.

“The more engaged global citizens are, the more they are able to connect and put themselves in another’s shoes, the more empathy there is in the world. It makes the world a smaller place and that’s a force for good. It’s what drives us at Twitter.”
Twitter Inc was formed in 2007. That same year, Stone got married to Livia McRee, a wildlife rehabilitator.

Social consciousness is not something Stone applies only to Twitter. Both he and his wife are vegans (a strict form of vegetarianism), a choice he made when he met her.

“When I met Livia 10 years ago, she was a vegetarian and wanted to take the extra step and be vegan. I said, ‘Let’s do it together then’,” he recounted on Nov 16. Stone, who had shed his casual brown jacket for a casual black one, was served a specially prepared meal of tofu and broccoli while the other guests were tucking into a multi-course Chinese dinner.

Twitter’s watershed moment was at its official launch at the interactive music festival and conference SXSW2007 (South by Southwest) where it also won the web award. “There were a lot of early adopters there. Everyone was talking about it there,” Stone told PBS.org in a May 17, 2007 article.

Since then, the start-up’s growth has been phenomenal. In March, Nielsen Online published a report which charted Twitter’s growth at 1,382% in February this year compared to the same month last year. This is based on PC web usage alone which doesn’t tell the full story as Twitter’s platform allows it to deliver messages via SMS and clients (applications that interface with Twitter)on mobile phones. In 2007, Twitter had about 300,000 user accounts. Today, the number has surpassed 58 million.

In February this year, the San Francisco-based company had 30 employees and was valued at US$250 million. Now, it has over 90 employees and in September, it was valued at US$1 billion by a group of investors who, according to a post published by Stone on Sept 28 on Twitter’s blog, had just “closed a round of funding” which wsj.com confirmed would amount to US$100 million. According to Stone’s post,  the investors include Insight Venture Partners, a New York venture capital firm, T Rowe Price, the mutual fund company, and current Twitter backers Spark Capital and Institutional Venture Partners.

Twitter’s speed of growth has been so tremendous that the staff “spent most of 2008 catching up”, says Stone. So frequently did the messaging system collapse under the weight of its popularity that the icon it uses to apologise for a system failure, the “Fail Whale”, gained its own following. One fan, San-Franciscan David Bill, even tattooed the image onto his calf.

The image, a whale lifted out of the sea by a flock of birds, was designed by Shanghai-born artist Yiying Lu who loaded it onto royalty-free photo website istockphoto.com which under the site’s licence, grants rights to perpetual worldwide online use for a small sum. Lu has since removed the image from the photo-sharing site. When the image became famous, however, she cashed in by opening the failwhaleshop.com at the end of last year.

Lu, who is now a creative strategist at Sydney-based branding agency Brandsrpeople2, told The New York Times in February that the online shop had made “a couple thousand dollars”.

“We’re not sure how we feel about the success of the Fail Whale. Evan says it’s bitter-sweet,” says Stone wryly.

Meanwhile, the debate on Twitter’s long-term viability rages on. According to US-based market research company ComScore, Twitter.com’s traffic in October this year was down 8% from September, suggesting that Twitter’s growth has stalled and is starting to decline. Furthermore, Nielsen Online reported in April that 60% of new Twitter users drop off after a month.

“At a certain point, there isn’t enough new users to make up for defecting ones,” wrote David Martin, vice-president of primary research Nielsen Online on the research company’s official blog.

In July, a study by ComScore announced the un-cool fact — for something that was seen as über cool when it was launched — that more than 50% of Twitter users are over 35, with only 11% of its users aged 12 to 27.

There is also the question of whether Twitter can add anything to the service that will help spur its growth. Its founders have long admitted that Twitter’s success is rooted in its simplicity and open-platform approach. Even cosmetic changes, such as “What are you doing?” which greets Twitter users to “What’s happening?”, made headlines.

On the plus side, a September report by ComScore shows that since February, teenagers are the single fastest growing demographic in Twitterverse. “There is an impending youth invasion,” writes Andrew Lipman, director of industry analysis at ComScore, on its corporate blog.

Also, in a survey released earlier this month that shows the impact Facebook, Twitter and the like are exerting on consumers, ComScore said social media influenced 28% of US holiday shoppers in gift-buying decisions this year. Shoppers were most influenced by product reviews written by other consumers, said ComScore of its survey.

US retailer JC Penney has some 627,000 fans on its Facebook page and 3,200 followers on Twitter, and Kodak has 47,000 on Facebook and 13,000 followers on its “kodakCB” Twitter site.

Facebook, which says “social shopping” is the main new e-commerce trend on its site, announced in September that it was teaming up with Nielsen Co to allow companies to track consumer trends with polls. 

Twitter board member and investor Chaffee told The Washington Post on Feb 13 after the US$35 million round of funding that Twitter was a potential game changer.

“From a business perspective, it is a media property that is growing very quickly,” he said. “Twitter is the only thing we [Institutional Venture Partners] have found that is open, real time, ubiquitous, scalable and persistent. For now we want it to grow as fast as possible.”

Stone himself is not worried about Twitter’s survival in the long term.

“It will evolve based on its users. Twitter is teaching us what it wants to be. We see people helping others. Last year, 200 cities organised Tweetups and raised money for charity. We have opportunities to make money we’re not tapping yet.

We’re doing good in the world. And in five to 10 years, hopefully that’s what we’ll come to represent,” he said in a Q&A session at the summit when asked where he thought Twitter would be in five years’ time.

This article appeared in Manager@Work, the monthly management pullout of The Edge Malaysia, Issue 786, Dec 21 - Dec 6, 2009.