Hatching Twitter: A True Story of Money, Power, Friendship, and Betrayal Page 13

  The venture capitalists didn’t care about the bills, which were flowing in. Each month’s user growth was higher than the one before; the projections for the coming months, higher still. The charts accompanying the presentations looked like stairways to heaven.

  Ev noted in his presentation that the company hoped to raise ten million dollars in capital at a rate that would put Twitter’s valuation at fifty million dollars. But by early May, amid the frenzy and excitement of investors hoping to attach their name to Twitter, the valuation of the company had jumped to sixty million. Then it spiked to seventy million a few days later. In the end, when the news finally broke, the company was worth eighty million.

  It didn’t matter that Twitter still had no business model or even the faintest sign of one. Or that the site was broken. Everyone still wanted a piece of the fledgling company because it was gaining so much attention. Investors wanted their names associated with the Next Big Thing, and they believed they could help fix its problems.

  From the outside looking in, it appeared that Twitter was just growing too quickly. The venture capitalists lining the streets, ready to hand over millions of dollars, believed that with the right check and the right investor guidance, the company would be able to hire new engineers and scoop up a few new servers, and all would be right in the world. Of course, what happened inside the company was often very different from how things were perceived on the outside.

  Inside, it was complete disarray.

  In April 2008 Jack fired Blaine, seemingly in an attempt to show Ev his control of the company. Internally it was a typically ugly exit, with Blaine being sacked while he was on vacation. Yet externally the tech media believed it was just an oh-shucks-it’s-time-to-move-on-and-we’re-still-friends story. Then Jack fired Lee Mighdoll, another senior engineer who had been hired only a few months earlier. After Blaine was fired, the site’s problems only worsened. Blaine had been the core programmer of Twitter, and without him Jack struggled to fix certain issues.

  Since the site’s inception, when Twitter went down, people were greeted by a picture of a cat doing something funny. “I is in your komputer,” one notification proclaimed, a picture of a sleepy kitten curled up inside an old PC. As the company had grown up slightly, Biz decided the cat pictures were too jokey and went in search of something more serious. He soon came across an illustration on a stock-photography site by Yiying Lu, an artist and designer from Sydney, Australia, of a whale being lifted from the sea by some birds. This became the new image people saw when Twitter crashed. As the site was going off-line so much, it didn’t take long for the whale to garner its own nickname: the Fail Whale.

  There was also the bittersweet problem that celebrities were now using Twitter, bringing more followers and sign-ups with them. In a trend that would continue indefinitely, some of those celebrities would randomly show up at the office. The pilgrimage to the great blue bird. One morning, when a couple of engineers strolled into the office and walked into the kitchen to get their morning coffee, they found a member of the band blink-182, half-asleep and half-drunk, pouring a small bottle of gin into a bowl of Fruity Pebbles cereal, then chowing down on breakfast. At other times, the rapper MC Hammer would show up out of nowhere with his entourage and just hang out.

  But the celebrities didn’t get a true glimpse of Twitter either. They were ignorant of the disputes between Jack and Ev. Even the fund-raising had been a cluster fuck—at least behind the scenes, where it had become another internal tug-of-war gone awry: Ev pulling on one end, Jack on the other, Biz trying his best not to get caught in the middle.

  While Ev had been leading the funding talks, Jack felt excluded from the conversations. Wanting to prove to Ev that he could handle the task, Jack tried to negotiate with investors on his own. As a result, one minute a venture capitalist would get a call about a meeting from Ev, the chairman. The next, the phone would ring with Jack, the CEO on the line, hoping to set up the same meeting. To the venture investors, it just came across as a slight misunderstanding. To Jack it came across as being slighted.

  One afternoon Jack got on the phone with one of the venture capitalists and negotiated a deal that would value Twitter at one hundred million dollars with the latest fund-raising. Proud of himself, he trudged off to tell Ev. But it was too late. Ev had already decided that he wanted to use another firm. The lead investor would be Spark Capital, and Bijan Sabet, a well-respected and kind partner at the Boston-based firm, would be joining the board of Twitter after it closed its eighteen-million-dollar round of investing in June 2008, which would value the company at eighty million dollars.

  From Jack’s perspective the deal that he had struck was a better one than Ev’s, and he was once again irate that Ev was going above him to make decisions.

  Though Jack didn’t know it at the time, for Ev the funding round hadn’t just been about the money or the valuation of the company. It had been about a bigger goal, fixing the company the best way Ev knew how: by taking more control of its daily operations.

  Fuck Fuck Fuck …

  Bijan’s fingers moved on the keyboard in a repetitive motion. Back and forth he typed, one single word, like a parrot with Tourette’s syndrome. “Fuck fuck fuck fuck fuck fuck fuck fuck fuck fuck fuck fuck fuck fuck fuck fuck fuck fuck.” Then he hit “send,” catapulting the words in an e-mail to Fred Wilson’s in-box. Nothing else, just the word “fuck,” eighteen times.

  He didn’t need to add anything to the message. No explanation was needed. Fred knew exactly what had just happened.

  Bijan buried his head in his hands, closed his eyes, and repeated the word one last time to himself. “Fuck!” In Twitter’s eighteen-million-dollar round of financing in June 2008, Bijan’s company, Spark Capital, had invested fourteen million, with Jeff Bezos of Amazon and Fred Wilson investing the majority of the other four million—along with several angel investors. The large sum put in by Bijan’s company had secured him a seat on the board of Twitter, along with Fred Wilson. Over the next couple of months Bijan had started to become entrenched in the company, attending a few meetings, raising his hands for a few critical infrastructure votes. And now here he was, fucking it all up already.

  He sat for a moment, pointlessly trying to reason whether he could somehow, by some means, any means, delete an e-mail he had accidentally sent to Jack a few minutes earlier. It was impossible, he knew. You can’t resurrect the dead or delete an e-mail that has traveled eighty-five thousand miles per second across from Boston to San Francisco.

  After a few seconds trying to calculate the incalculable, Bijan sat up and frantically began typing another e-mail.

  To: Jack. “Please call me when you get this message,” he wrote, noting that he wanted to clear up his previous e-mail. “Out of context this could be really confusing.”

  It had all started in July 2008, when Twitter purchased its first company, Summize, which used Twitter’s third-party tools to allow people to search everyone’s public tweets. People had taken to the feature as quickly as they had taken to Twitter itself. Before long, so many people were using Summize that Twitter found itself competing with the company for page views. Rather than snuff it out, Twitter decided to purchase Summize and its small team of highly competent engineers.

  The sale had been relatively painless. The initial negotiation between Fred and John Borthwick, an investor who was on Summize’s board, occurred while the two were standing next to each other at a bathroom urinal. “Why don’t we just join these companies and call it a day?” John said as he peered over at Fred, a tinkling sound emanating from their respective urinals.

  Fred agreed. After a couple of in-person meetings, a deal was struck (not in a men’s room, thankfully).

  July had already been a busy month as Twitter had also moved into new offices: a fancy, modern, loftlike space with lots of windows and room to grow. Among the fun features they had added to the office (a living-room setup with a couch and video games, a large red phone booth, and a fully stocke
d kitchen with cereal and other snacks), Jack had suggested putting in a Radiohead room. “It can play Radiohead twenty-four hours a day!” he said excitedly when suggesting the idea.

  After the company had signed the paperwork with Summize and divvied up Twitter stock as part of the sale, Jack got on the phone with Greg Pass, the engineer who had been running the tech side of Summize.

  “Hey, so we’re thinking that, since we don’t really have any real leadership here on the engineering team, that you can run all of it,” Jack said.

  Greg sat silent for a moment, processing what Jack had just said, immediately realizing that something must be amiss at Twitter, as he heard the CEO utter the words “no leadership” on the engineering team. “Um, okay,” Greg said, but before he had a chance to ask what Jack meant, he was interrupted.

  “And,” Jack said, “how about you run the operations side too?”

  The operations side of the company included managing the so-far-disastrous scaling of Twitter’s servers. “Um, I don’t have any experience running operations,” Greg said.

  “Well, there is no one here that can run it better than you,” Jack replied matter-of-factly.

  When they got off the phone, Greg was shocked. And he wasn’t the only one. Jack sent an e-mail to the company announcing that there would be a management switch, that Greg was now director of operations, or “ops” for short, and overseeing all of engineering. (Jack planned to focus his time on product development.) When the message arrived in Ev’s in-box, he was livid. “You’re just going to put someone in charge of engineering and ops for the entire company and not discuss it with me or the board?” he said to Jack in pure frustration.

  It was the “enough’s enough” moment for Ev. But also for Fred and Bijan. And in several secret calls and meetings, they decided it was time to figure out what was going on inside Twitter.

  Fred and Bijan, now the two investors on the Twitter board, flew out to San Francisco from New York and Boston on the red-eye. They set up meetings with Goldman, Biz, and Jeremy. For what? “Oh, just to talk. We want to get your thoughts on how things are at Twitter.” It was partially true. But in reality, Fred and Bijan wanted Jack out. So did Ev. The main purpose of the meetings was to learn how such a move would go over with employees. Twitter’s senior staffers didn’t need much cajoling.

  One by one, Goldman, Biz, and Jeremy were shuffled away from Twitter’s office and into coffee shops and gently interrogated. Then the most senior employees were told that Fred and Bijan, with the full support of Ev, were going to demote Jack, removing him as CEO. “What do you think?” they asked, even though the decision had essentially been made.

  Bijan and Fred soon found out that Jack had been incompetent with the company’s finances too. Although revenue was still at zero, expenses were quiet the opposite, with growing server fees, text-message bills, and payroll. Jack, who had been managing expenses on his laptop, had been doing the math incorrectly. When Ev learned about this, he asked a friend and seasoned entrepreneur, Bryan Mason, to meet with Jack and show him how to manage the company’s books, but Bryan spent the entire meeting at a whiteboard with a marker explaining the basics of accounting.

  When Bijan and Fred met with the engineers, they heard mostly worries about Jack. “Engineering and ops are a disaster,” they consistently said. “He’s a great guy. A great friend. A fun boss. But he’s in over his head,” another announced. “He’s like the gardener who became the president.” “I don’t know who is in charge. Ev presents the product and vision for what’s going on, and Jack just sits in the corner and takes notes.”

  The board members knew they had to find a new role for Jack or let him go immediately.

  Everything was all set; it was all about to happen. Then the plan came to a screeching stop.

  “I’ll quit!” Biz said to Fred and Bijan as he folded his arms and sat back in his chair like a petulant child. “Should Jack be running Twitter? Probably not,” Biz admitted, but he believed that forcing Jack out would tear Twitter in two. Although most employees would have helped pull Ev’s side of the tug-of-war rope given the choice, and although Jack was completely out of his league as CEO, some Twitter employees, including Biz, still loved him. “I’m serious. If you fire Jack, I’ll quit.”

  It was a bluff, but it worked. Fred and Bijan knew they couldn’t lose Biz, especially if they were pushing Jack out too. As Biz’s job as cofounder had unfurled, he had started to serve two distinct roles at Twitter. First, he had become the public face of the company. Given Jack’s and Ev’s strange and often quiet public posture, Biz had stepped up his gregariousness and become the guy who joked with the press, enlivened employees, and often entertained the visiting celebrities.

  He had also become the moral line at the company. In late November 2007, Twitter had been used as a prop on the TV show CSI: Crime Scene Investigation: Tweets were used as clues to track down the victim of a murder. It didn’t take long for fiction to turn into reality, and the FBI and other law enforcement started knocking at Twitter’s door demanding information on certain people who used the service. Biz and Ev, along with Crystal, had emphatically said no, adamant about protecting people’s identities on Twitter rather than caving to some big guys with guns in suits.

  While Bijan and Fred were whisking employees away, Jack suspected something was amiss—secret closed-door meetings, quiet phone calls from Ev in the conference room—but he had no idea about the severity of the situation.

  What’s more, Jack had no idea that Biz’s threat to quit was Jack’s second reprieve in recent weeks. Another pardon had taken place earlier in the month after a disastrous attempt by Jack to break bread with Ev, whom he barely spoke to anymore.

  The two cofounders had agreed to meet for dinner to talk about the turmoil. Jack thought the purpose of the meal was to mend some broken bridges. He suspected Ev wasn’t happy, but as neither of them was direct about his views and feelings, they had been skirting around the conversation.

  They met at Bacar, a California fusion restaurant, in early August. The smell of burning wood drifted through the air as they both doused their uncomfortable feelings with a few large glasses of alcohol. After long stretches of silence that were punctured by short bursts of small talk, they got down to business. “What’s going on?” Jack asked Ev as they waited for their meal to be served. “You don’t seem happy.”

  Ev explained that the company’s problems—the blackouts, the lack of communication with him and the board, and the text-messaging bills that were approaching six figures—were all hurting the growth of Twitter. Ev noted that over the past few months the Twitter company blog had been one post after another explaining that the site was down—all of this, he said, was an embarrassment to Twitter.

  “Do you want to be CEO?” Jack interrupted, point-blank. Ev was caught off guard by the question. “Do you?” Jack asked again, in a rare stern moment.

  “Well, I’ve been thinking about things,” Ev replied, taking a sip from his martini, then swerved and jumped back into a slew of other problems the company was going through: the lack of hiring, the costs, the chaotic culture.

  Jack interrupted again. “You’re not answering the question. You have to tell me if you want to be CEO. I don’t want to leave this table without knowing your intent; I do not want to work under a cloud.”

  Ev paused briefly. He had not planned to tell Jack that evening about the board’s plan to demote or remove Jack, but he was now being pressured to answer. He hadn’t even told Goldman what was going on, fearing that such a conversation would be told to his girlfriend, Crystal, and eventually come back to Jack. Finally Ev took a deep breath and replied. “Yes. I want to be CEO. I have experience running a company, and that’s what Twitter needs right now.”

  “Fine,” Jack said, a look of anger and disgust on his face. “I want to move immediately on this. I want to tell the management team tomorrow.”

  After an extremely awkward dinner, Jack walked home panicking
about what to do. When he opened the door to his apartment, he paced, his feet tapping the brown hardwood floor as he tried to clear his head. Then he dropped down onto his white couch, slipping his laptop out of his Filson bag and quickly rattling out an e-mail to the senior management team telling them there would be an emergency meeting the following morning. Then he sent another message, to Fred and Bijan, describing the conversation with Ev.

  Jack then tried to go to sleep but found himself lying awake in bed, tossing and turning as he replayed the evening’s conversation in his head. He suspected that this was all some elaborate ploy by Ev to take power and control of the company and that the moment Fred and Bijan read the news, they would stop the miscreant chairman.

  The next morning in the office, everyone filtered into a conference room for this emergency meeting. As Jack and Ev stood a few feet from the conference-room door, about to walk inside, they both received a text message from Bijan saying that they should call him immediately, together. Do not do anything, Bijan said. “Call me now.”

  They walked out of the conference room, where the management team now sat utterly confused. And although they were about to get on the same conference call, Jack turned in one direction, entering the Radiohead room, and Ev walked into another separate conference room, both to call Bijan.

  “Look, we’ve heard what’s going on and we don’t want you to do anything yet,” Bijan said. “Just hold off for now.”

  While Jack listened, he paused for a moment as he heard Radiohead lyrics floating in the background in the tiny conference room, his iPhone pressed up to his ear trying to block out the faint music. He looked in the direction of the speaker, briefly registering the irony of the song “Karma Police” playing while he was embroiled in this confusing power battle with Ev.

  Bijan continued, “Fred and I are gonna fly out there next week and meet with you both and the management team,” he said.