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News : Innovation Last Updated: Oct 9, 2015 - 12:32 AM


Twitter's backstabbing founders set for IPO and firm valued at $18bn
By Michael Hennigan, Finfacts founder and editor
Nov 7, 2013 - 7:57 AM

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Evan Williams, Biz Stone, Jack Dorsey co-founders of Twitter. Noah Glass, a missing co-founder who came up with the company's name, became a victim of the founders' infighting. 'New York' magazine in a review of a new book on the rise of Twitter says: [At one point, Ev confronts Jack about his claim that he invented Twitter. "No, you didn't invent Twitter," he says. "I didn't invent Twitter either. Neither did Biz. People don't invent things on the Internet. They simply expand on an idea that already exists."]

On Wednesday, Twitter set the price of its initial public offering (IPO) at $26 a share, valuing the company at $18.1bn. Twitter shares are set to begin trading on Thursday on the New York Stock Exchange and this week, the publication of New York Times tech columnist Nick Bilton's book, 'Hatching Twitter,' tells the story of backstabbing and war among the founders and how Evan Williams when ousted as CEO vomited into a rubbish bin while Jack Dorsey after he was fired as CEO, went to meet with Mark Zuckerberg, to ask about a job at Facebook.

Aaron Sorkin, writer of 'The  Social Network,' the movie about Facebook's early growing pains, would have a lot of material from Twitter's early years to make another movie.

With 70m shares sold in the offering, Twitter has cash of $1.8bn. The IPO’s price was raised on Wednesday afternoon, reflecting the strong demand for the company’s stock.

Twitter has about 230m users, but not all of them use its 140-character messaging service on a daily basis. Facebook said about 1.2bn people used the service at least once a month in the third quarter.

Dick Costolo, the current CEO of Twitter, who took over as CEO from Evan Williams in October 2010, managed to double revenues to $422m in the first nine months of this year but a loss of $134m has been reported.

However, most of the revenue comes from the United States and there are questions about how much advertising can be harvested from the site that was last upgraded in 2011.

The New York Times says Richard Greenfield, an analyst with BTIG Research, said Twitter drew people during breaking news events, like Monday night’s shooting at a New Jersey mall, but needed to do a better job helping people find topics they were interested in so they would return frequently.

“The challenge is to prevent that person from waiting for the next event to come back,” Greenfield said. “How do you move that dormant user to every day, or multiple times a day, or every minute?”

Mary Jo White, chair of the Securities and Exchange Commission, on Wednesday questioned whether investors could understand a company’s future prospects when they were bamboozled by the “sheer magnitude” of user numbers that might bear no relation to profitability.

On the jackpots for the founders: Noah Glass may get nothing; Evan Williams' 10.4% stake is worth over $1.8bn; Jack Dorsey, the chairman has a 4.3% stake in the company, which is worth over $800m and Biz Stone's stake has not been disclosed as it's below 4%.

Fighting, jealousy and resentments are not uncommon in startups and one enduring potential source of friction  is how the pie should be divided.

In 2011, Paul Allen a co-founder of Microsoft, who had left the firm for health reasons in 1983 before his shareholding made him a multi-billionaire, revealed that he remained  bitter about how Bill Gates had allegedly treated him:

Finfacts: Microsoft, Facebook and the common woes faced by startups/ young companies

A 2011 issue of Vanity Fair says Jack Dorsey "found himself working for a San Francisco software start-up called Odeo, which was going nowhere. One day he proposed an idea to his boss based on a notion that Dorsey had been noodling over for years. He was fascinated by the haiku of taxicab communication - - the way drivers and dispatchers succinctly convey locations by radio. Dorsey suggested that his company create a service that would allow anyone to write a line or two about himself, using a cell phone’s keypad, and then send that message to anyone who wanted to receive it. The short text alert, for him, was a way to add a missing human element to the digital picture of a pulsing, populated city."

"With Twitter, it was an idea I had when I was eight years old and started developing when I was 14," he told The Economist in a video interview.

A review of Nick Bilton's book in the FT says that unusually for Silicon Valley, neither Williams, Dorsey, nor the under-the-radar co-founder Biz Stone, still work day-to-day at Twitter and only Williams retains a stake that is more than 5%.

Dorsey, however, is cast as personifying the stereotypical “what I had for breakfast” tweet. While few dispute he had the original idea, Bilton gives him little credit because Twitter has evolved into more of a tool to talk about “what’s happening?” than the status updater Dorsey devised.]

'New York' magazine deals with the various personalities under subheadings: Hates, Why the hate? and Biggest hater moment.  On Dorsey on: Why the hate?

Jack is essentially too big for his bespoke britches; the moment Twitter takes off, he becomes an insufferable diva, wearing Dior, imitating Steve Jobs, and doing flashy interviews in the press while Twitter's actual infrastructure remains unstable and poorly managed. This inspires animosity among Ev and Biz, who conspire to have Jack fired. (Jack ultimately gets his revenge, but not without a lot of intervening drama.)"

Finfacts: Wall Street Journal on Silicon Valley dreams of techno-utopias and arrogance

Finfacts: Women, African-Americans and Hispanics/ Latinos are unwanted in Silicon Valley

Jack Dorsey founded a mobile payments firm called Square, when he left Twitter, and here he is hosting a lunch for the firm's 13 male interns. Women couldn't hack this Internet stuff!


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