Dick Costolo: How Twitter's CEO jumpstarted a social media revolution
Still touted as one of the most influential social media platforms of modern day, Twitter has taken the digital world by storm ever since its founding in 2006. And it was Dick Costolo—CEO of Twitter from 2010 to 2015—who blazed the trail for Twitter's ubiquity and ultimately, success. But in today's episode, we'll hear how with great power comes very great responsibility, for better or for worse.
Dick Costolo is an operator, advisor, and investor who most notably served as the CEO of Twitter from 2009 to 2015. Prior to Twitter, Dick was the co-founder of FeedBurner which was acquired by Google 2007. Following the acquisition, Dick spent several years at Google before moving over to Twitter as their COO and then CEO.
Dick Costolo on the highs, lows, and lessons learned taking Twitter from $0 to $2.25 billion in revenue
There have been many iterations of Twitter since its founding in 2006. Hear from its former CEO on how he took the company from an often-dismissed “interesting idea” to a multi-billion dollar business.
It’s hard to imagine two jobs where you need to think on your feet more than being an improv comedian and a CEO. Dick Costolo would know—he spent years pursuing improv fame before turning to the world of tech and eventually becoming the CEO of Twitter. After his computer science degree, Dick turned down offers to work as a programmer and instead found himself in Chicago improvising scenes at the Second City alongside the likes of Steve Carell. But after an unsuccessful round of auditioning for SNL, Dick decided it was his time to retire his dreams of comedy fame and accept a job as a consultant.
But he didn’t stay a consultant for long. It was the early 90s and the emerging internet was unbelievably fascinating to Dick. “It was just obvious to me, right from the get go, that you could build anything you wanted to build on top of it,” he says. The lure of internet-based businesses led Dick to co-found a number of companies, including a consulting firm called Burning Door Networked Media, and web monitoring service called SpyOnIt. In 2004, Dick co-founded FeedBurner, a content syndication platform for RSS. The platform’s underlying technology would prove incredibly useful to future feed-based platforms like Twitter. In 2007, Google acquired FeedBurner for $100 million.
In this article, Dick reflects on a career rife with highs and lows most only dream of (or have nightmares about.) He shares how he manages to take harsh criticism in stride, how he’s learned not to take market fluctuations too seriously, as well as the best piece of business advice he’s ever heard, from none other than Jeff Bezos.
It all started with a DM from Twitter co-founder Ev Williams. Ev was about to take a paternity leave and asked Dick if he was in a rush to start his new company, or if he’d consider filling in as COO at Twitter for a short period of time first. Dick was intrigued. In 2009, Twitter was still pre-revenue, had no mobile app, and the “fail whale,” a cartoon graphic that appeared when the site crashed, was still a regular appearance. But Dick saw how quickly momentum was building. “I just decided it was a once in a lifetime opportunity to get onboard a rocketship and see what happens,” he says. As the conversation progressed, the offer turned into a full-time role instead of an interim one.
Once he joined Twitter, Dick was tasked with developing a profitable business model. “I remember thinking, man, we have so many different things to do,” he says. “We’ve gotta fix the brittle architecture the platform’s been built on—that needs tons and tons of work. We have to figure out how to monetize this successfully in a world where Facebook is dominating.” What was more, the company was the subject of frequent criticism in the media. “The most recent two magazine covers about Twitter at the time had the bird dying in extraordinary ways,” recalls Dick. “I remember telling my communications team, ‘The goal for the rest of 2010 is no dead logos on the covers of national magazines.”
Meanwhile, the company was experiencing a period of great change and turmoil as the board scrambled to make sure the right leaders were at the helm of the company. “It was a nightmarish month and a half that probably took five years off my life,” says Dick. He recalls spending several weeks completely convinced he’d be fired. “There was a conversation about putting together my severance package,” he says. “But then they came back to me and said, ‘Actually, no. Will you please stay and run it?’”
After settling in as CEO, Dick spent the next few years growing the company significantly. His tireless efforts culminated in Twitter’s IPO in 2013. But being a public company came with even greater scrutiny and criticism. “By 2014, we were really starting to get beat up because user growth wasn’t fast enough,” he says. The company had just started to use an algorithm-based timeline instead of a purely reverse chronological feed, including a feature called “while you were away,” that curated a collection of the best content since a user last logged onto Twitter. “This feature was profoundly helpful in driving daily active usage on Twitter. We were just getting going and it was just starting to work,” he says.
But despite his efforts to drive up usage, Dick still faced judgment. One day in 2014, Dick’s daughter called and said, “Hey Dad, I have bad news and good news.” Dick asked for the bad news. His daughter said, “The bad news is Yahoo Finance says you’re one of the five worst CEOs of the year.” Dick replied, “Okay, what’s the good news?” She said, “Well, no one reads Yahoo Finance.” Ever the comedian, Dick laughs retelling the story. “You really, truly have to have a thick skin and not take everything personally.”
Not only did Dick receive criticism for his role as CEO, but his company at large was often subject to the same. “It’s one of the few companies in the world where the employees are working on a platform where all of the customers are talking about the work they’re doing on that same platform,” he says. “You’re bombarded moment to moment by customers. Employees at Okta aren’t looking at Okta feeds every two seconds of people criticizing their work. As the leader of a company like that, you have to give employees context for what’s happening.”
Similarly, when it came to Twitter’s stock performance, Dick felt it necessary to contextualize some of the rapid changes employees were seeing. The night of the IPO, the company printed $13-16 in the S1 as the target price. But they ended up pricing at $26 later that night and closed day one at $47. Dick flew back to the Twitter world headquarters that night to talk to his employees.
“I get on stage in front of the whole company and say, ‘It took us six and a half years to build a company that we thought we could take public at $13 a share,’” says Dick. “While I was on the road for two weeks we priced the IPO at $26 a share. So I don’t know what you guys did while I was gone, but it’s amazing because you just added $12 billion of value to the company in two weeks. That’s awesome. I can’t wait to see all the things you guys built.” His employees laughed. “Then I said, ‘While we were on the floor of the New York Stock Exchange today, you all added another $15 billion of value to our company,” he says to an audience still laughing heartily at the irony. “While you were all sitting in here watching TV, someone must have been back there working on stuff.”
Dick summarized the lesson for his team: “It’s important for you to internalize that the valuation of the company is no longer tied to what we’re doing internally to make the company successful. So don’t freak out when the company and the stock inevitably takes some downward turn.” The wider perspective helped employees ride the waves of market fluctuations without as much disruption. “We just became resilient to it,” says Dick.
As CEO, Dick faced his fair share of naysayers. “In the early days, people were like, ‘Well sure Twitter’s interesting, but there’s no way they can ever monetize,” he says. But Dick and his team proved them wrong. “We went from zero dollars in revenue to $2.25 billion a year by the time I left in July 2015. Only a handful of companies—like Google, Facebook and Amazon—did it quicker than us.”
But after six years of running the company, Dick knew it was time to call it quits. “I was just exhausted,” he says. “Running Twitter is like running another company in dog years. Every one year was like seven years.” Today, Dick along with former Twitter CRO Adam Bain run a venture fund, 01 Advisors, meant to be a much-needed source of capital “for operators by operators.”
But Dick still carries forward many important lessons from his years at the helm of Twitter. Dick remembers a 2011 interaction with Jeff Bezos as one of the most important business lessons he ever learned. Twitter had an open independent seat on the board and Dick was trying to recruit Jeff to join. “Jeff asked us some strategy questions and we were discussing our answers. Someone said, ‘Well, Steve Jobs says the most important part of strategy is saying no.’”
“And Jeff laughed that crazy amazing trademark laugh he has,” says Dick. “And he said, ‘Yeah well, I like to do everything. My team has to talk me out of stuff.’ And he laughed again and said, ‘You know, there are lots and lots of different ways to be successful.’”
“It sounds silly and trite, but he is totally right,” says Dick. “One of the things you learn as an investor is how to typecast a CEO based on different success archetypes. ‘Mark Zuckerberg is like this, or Evan Spiegel is like that.’ But in reality, there’s lots of different ways to make a name for yourself. That’s still the best business advice I’ve ever gotten.”
Dick Costolo: As the CEO of the company, you really truly have to have a thick skin or not take everything personally to have that job, because it's just constant. But it's totally worth it because you have hopefully had thousands and thousands of people for whom you've been responsible and for whom you've helped develop their careers, build their lives, and do it while being a good person.
Talia Goldberg: Welcome to Wish I Knew the show about the revelatory aha moments that founders, CEOs and leaders discover along their own business journeys and why taking risks leads to growth. I'm your host, Talia Goldberg, and for our final episode of season one, we're going to peek behind the curtain of one of the most talked about companies today, Twitter, and I can think of no better guest than the former CEO of Twitter, Dick Costolo. So we all know that little blue bird that took over the internet, from the way we consume news to how we speak to one another, it's transformed the media landscape over the last 16 years, starting in March of 2006. And there have been many iterations of Twitter since its founding.
Speaker 1: Twitter has long been regarded as inconsequential chatter about trivial things, but it's become serious business. People are tweeting, as they call it, from the floor of Congress, from Oscar parties, even from the Nightline offices.
Speaker 2: The Occupy movement, just like the other momentous protests of 2011 have signaled a major change in the use of social media. Twitter, for example, has doubled in size and it's become a news setter own right.
Speaker 3: Mr. Dorsey, does Twitter have the ability to influence elections?
Speaker 4: No.
Speaker 5: Elon Musk is trying to reassure advertisers on Twitter. Musk told big companies that want to advertise his takeover of Twitter won't harm their brand.
Talia Goldberg: So as you can hear, Twitter's just grown massively over the last 15 years, and it's obviously still evolving a lot today. And in fact, before we went to record this episode, I was playing around online with an AI chatbot that's powered by character AI, and the chatbot's trained to be like Elon Musk. So for fun, I asked it, "Who do you think you're going to make the CEO of Twitter?" And the Elon bot responded saying...
Elon Musk Chatbot: I think Dick Costolo would be an outstanding choice. He was the former CEO at Twitter already. He did a tremendous job, and he really grew the business. But the thing about Dick is that he's a really great guy, humble, hardworking, collaborative, and cares about people. I think he has the skills to succeed.
Talia Goldberg: It sounds like that chatbot has done its homework. Dick has had a pretty wild career. He started out in the Chicago improv scene and actually did improv with Steve Carell. I think that's pretty amazing, and not something you typically associate with a CEO, at least not the CEOs I get to work with. But as you'll hear in today's episode, Dick eventually walked away from the comedy stage and went into the corporate boardroom. After founding several companies, one of which was acquired by Google, Dick joined Twitter in 2009 as COO. That was back when the company was just about 40 employees, and it was at a time where things like the Fail Whale, that cute little whale graphic that appeared every time Twitter server was down, was a lot more common.
Dick was quickly promoted to CEO, and led the company through IPO in 2013. On today's episode, Dick shares it all, from the bitter details from his five years at Twitter to his thoughts on Elon Musk taking over. And I think you'll hear throughout the episode what answer would likely be if Elon ever did ask him to be CEO again. And moderating today's conversation is Dick's friend of over a decade, Shannon Brayton, who's also Bessemer's very own chief marketing officer. Here's Shannon.
Shannon Brayton: Well, hi. Thank you so much for joining us on Wish I Knew.
Dick Costolo: Yeah.
Shannon Brayton: So will you tell us a little bit about yourself and a little bit about your background?
Dick Costolo: Sure. Born and raised just outside of Detroit. Entire family's in the automobile industry. I started studying programming languages when I was 10 or 11 or something like that. My dad got me one of the first Radio Shack Personal Computers, TRS80s, got a major in computer science. But I started doing standup comedy at the Student Union my senior year, and decided when I graduated what I really wanted to do is try to get on Saturday Night Live. So I went to Chicago, turned down programming offers, started hanging out around Second City and performing there. And I actually, interesting story showed up my first day, and Steve Carell and I were in the same group. We both showed up there the same day.
Shannon Brayton: Who was funnier?
Dick Costolo: Well, Steve is very, very funny. How's that for an answer? We ended up being there in really the heyday of that whole world of Second City. Adam McKay was there, the director of many of Will Ferrell's movies, in the Big Short and a number of others. Tina Faye, Amy Poller, the whole group that started the Upright Citizens Brigade, Rachel Dratch, Horatio Sanz, on and on and on. You didn't really know it was the heyday until later when looking back.
Shannon Brayton: Were you always a funny kid? Did people constantly tell you, hey, you're the class clown or funny person?
Dick Costolo: Not really until I was a junior senior year in high school, I was just smart assy more than really, really funny. And in college though, it became more apparent like, oh, this is easy for me. People would say stuff like, "It was amazing, that thing you said last night." And I would think, "What thing?" And they're like, "No, come on. That was like, you must have thought of that weeks ago." And I was like, "I don't even remember what you're talking about." I ended up auditioning for SNL twice, and not only didn't get it, didn't even get called back to New York. So after the second one of those, it was like, all right, I got to go put my computer science degree to use. I got to make some money, and I got hired by Anderson Consulting in their technology services group and world headquarters, and did that for a few years. And then the internet happened, wait, it was already happening, I should say that Netscape browser-
Shannon Brayton: To '95?
Dick Costolo: End of '93. Netscape browser, Mozilla came out and I saw it immediately as, wow, this thing is super extensible and it's the future.
Shannon Brayton: So you leave Anderson Consulting because of the pull of the internet?
Dick Costolo: Yeah. It was just obvious to me moment one, from the get-go, you could see that you would be able to build anything you wanted to build on top of it. Unfortunately, I didn't think, "I should start an online bookstore," like Jeff did at the time. Otherwise, that would've been great.
Talia Goldberg: Dick left Anderson Consulting and dove headfirst into the startup world. He co-founded a number of companies, including a consulting firm called Burning Door Networked Media, and a web monitoring service called Spy On It. I'd love to understand what your experience was like as a founder.
Shannon Brayton: What are some of the big memories you have of that time?
Dick Costolo: I mean, being a founder is awesome. When I founded my first company, which was essentially a consulting company for Web 1.0, or Web 0.1 companies in '94, '95, '96, you were like, oh my God, working for yourself is so much better than working for somebody else. I mean, it was immediately like, well, this is amazing, but you don't really realize it of course, until you do it for the first time, because it's scary. I don't have a guaranteed income. I don't know anything about selling. But when you do it for the first time, you quickly realize, oh man, I'm never doing anything else. This is amazing. Because when you're working for yourself and doing something that you're passionate about. And you get to make all the decisions, and frankly, I would change that to even say, and you have to make all the decisions, it's incredibly invigorating. There is no, "Oh, I got to get out of bed and go to work." It's, "I can't wait to get out of bed and get in there, and do those three things that I didn't get a chance to do yesterday."
Talia Goldberg: In 2004, Dick co-founded FeedBurner, which was a content syndication platform built on RSS, its technology would prove incredibly useful to future feed-based platforms, just like Twitter.
Dick Costolo: RSS and Adam were technologies and basically XML formats that allowed you to syndicate content from any publication into anything that wanted to suck up those syndicated versions of your content, and republish them elsewhere. So that people could create platforms that allowed you to read everything you wanted to read from around the web all in one place. And we just decided, look, there's going to be a great opportunity if you're the publisher clearinghouse for all of this content that gets syndicated, to be sitting between publishers and subscribers, and amending that content to include ads, to include subscriptions, to include all sorts of other meta content that will make it easier for publishers to track where their content's going, who's looking at it, monetizing it away from their website, on and on and on.
Talia Goldberg: FeedBurner piqued Google's interest.
Dick Costolo: Google was super interested in obviously the monetization and syndication of content around the web. That's the entire backbone of Ad Sense.
Talia Goldberg: Dick began to have conversations with the folks at Google who were eyeing Feed Burner as an acquisition. Google eventually pulled the trigger in 2007, and bought FeedBurner for a whopping a hundred million bucks.
Shannon Brayton: When you sold the company to Google, what was it like being an acquired founder inside of a big company like that?
Dick Costolo: So you're building this technology company in Chicago and you get acquired by Google, and it's this 800 pound gorilla and it's just crushing it. And people were like, who is this idiot? Why is in Susan Majeski's staff meeting, who is this guy? Is he taking notes? But my favorite memory of day one at Google is we go to Mountain View for the first week where have been acquired and we're out there sort of meeting everybody we need to be working with. And we go to the Friday all hands meeting, which Google calls TGIF, and Larry and Sarah Gay are on stage answering and we're like, "Hey, we're going to do Q&A." And I'm thinking to myself, this is going to be amazing. You've got some of the best engineers in the world and the two guys who built Google on stage, and we're going to have this amazing...
Dick Costolo: You built Google on stage and we're going to have this amazing conversation and back and forth dialogue about the massive technological problems of the day. And the first question is, yeah, Sergei, I've noticed that the line for Indian food at lunch is really long now. What are we going to do about that? And I thought, oh my God, they're going to fire this person. This is insanity. I can't believe this person's taking up all of our time to ask this ridiculous question. The answer was something like, yeah, I've noticed that too. We got to do something about that. I remember thinking, wow, this is really different than what I thought was going to happen.
Shannon Brayton: So this is like 2007. So this was a real precursor to the point where employees ask that kind of stuff all the time.
Dick Costolo: Yeah, I was just like, that was really weird.
Shannon Brayton: Dick met a fellow entrepreneur, Ev Williams, before he sold FeedBurner to Google. Ev's company, Blogger, had been acquired by Google in 2003 and that became an important connection for the future.
Dick Costolo: By the time Google bought FeedBurner, those folks had left and gone on to start OEO, which became Twitter. So that was the whole segue into getting reacquainted with Ev Williams and that whole group. And eventually two years later when I left Google getting hired into Twitter to be COO.
Shannon Brayton: You heard that right. Ev Williams went on to co-found Twitter with Jack Dorsey, Noah Glass, and Biz Stone in 2006 and they eventually brought Dick on board to become COO in 2009.
So I'd love to know, how does that turn into the COO of Twitter offer? What happened to get you there?
Dick Costolo: I was getting ready to start another company with one of my FeedBurner co-founders a couple of years after having been at Google and integrating FeedBurner in the company. And I told Susan, I'm going to go start something else. Ev, I think, he DM'd me on Twitter and said something like, hey, I'm about to have my first baby. I need to take up a few weeks off for paternity leave. Any interest while you're getting up and running with your new thing or before you do your new thing and helping me just kind of coming in and watching the shop for a few weeks. And I said, sure. And then as I recall, he sent me another note a little bit later along the lines of what if it was more of a permanent role as COO.
Shannon Brayton: Dick had a big decision to make. Does he start another company or does he jump into help with Twitter? And remember this was still really, really early in Twitter's lifecycle. It was pre-revenue, the site was constantly crashing. It had no mobile app. It was the wild west. What was your framework for making the decision that the COO role was the right thing for you?
Dick Costolo: I had already started a couple companies and had success and sold one to Google. And I think if I hadn't had a success yet doing that, I might've thought I really, really want to go forward on my own. But Twitter was already working and taking off and off to the races even though it hadn't figured out a business model yet or hadn't started worrying about that yet, rather, I guess it's a better way of saying it. And just decided it was once in a lifetime opportunity to get on board one of these rocket ships and see what happens.
Shannon Brayton: So you go in as COO and what are you essentially responsible with doing?
Dick Costolo: Evan asked me to go figure out what the business model is. I had an executive of a major technology company say something to me the other day. I said, advertising is undefeated. Many, many tech founders may think otherwise, but in the end advertising is always a model that works. And that's been I think more or less true and that's what we decided we were going to do with Twitter.
Shannon Brayton: So how does it end up that you become the CEO? Walk us through that.
Dick Costolo: Oh God, that's a whole thing.
Shannon Brayton: And Dick is right, it did become a whole thing. There was a lot of role shuffling amongst the four co-founders. First, Jack Dorsey was CEO from 2006 to 2008. Then Ev Williams became CEO. And while Twitter's popularity and user base continued to grow, it wasn't making money like Facebook. So the board decided to appoint Dick as CEO in 2010. But it definitely didn't seem like a straightforward decision even to Dick himself at that time.
Dick Costolo: It was a month and a half of drama-
Shannon Brayton: Unfortunately for that company I feel like drama's been a real hallmark.
Dick Costolo: I know, I remember the first time Facebook had a bad earnings report or something bad happened at Facebook I was actually on CNBC that week and they asked me, what do you think it's like at Facebook today? And I said, it's probably pretty traumatic because they've been the 900 pound gorilla and crushed everything in their path and it's like today they're not invincible and that's a rough thing to wake up to. The person hosting the show is like, do you ever go through that at Twitter? I started laughing. I was like, yeah, every Tuesday when there's a bad article. Oh, more bad press than New York Times, is it Wednesday already? That's the way the company was. Let's see, I'll frame it this way. It was a really dramatic and weird, I'd say six to eight weeks where there was all this back and forth and there was a wild where I thought, okay, I'm going to be excused from the company, I'm not working here anymore. Then there was a while where it was like, no, will you please stay and run it? It was just weird and frankly a nightmarish like six to eight weeks that probably took another five years off my life.
Shannon Brayton: It sounds fraught.
Dick Costolo: It was a lot of drama, and then there was drama behind the drama.
Shannon Brayton: You survived the drama, you get into the role, and your first day in the job what are you thinking to yourself?
Dick Costolo: The things I remember thinking were, man, we have so many different things to do. We've got to fix the architecture of this thing's been built on, which is brittle and needs tons and tons of work. We have to figure out how to monetize this successfully in a world in which Facebook is crushing us. The most recent two magazine covers about Twitter have the bird dying in extraordinary ways. This is before I've taken over I think, and I was like, okay. I remember telling my communications team goal for the rest of 2010, no dead logos on the covers of national magazines. Low, low bar. If we can't clear this bar, we're in big, big trouble.
It's funny 'cause it's kind of come full circle and people were like, well sure Twitter's interesting but there's no way it can ever monetize. They'll never be able to monetize it, and then we did. Long story short, we went from $0 in revenue to two and a quarter billion a year by the time I left in July 2015. I think it's Google, Facebook and Amazon maybe did it more quickly as software companies and that might be it.
Shannon Brayton: Coming up, just how did Dick build the business of Twitter and send the company into the tech stratosphere? And even with that success, how do you know when it's time to move on? That's next.
In 2010, the true form of Twitter was starting to take shape from the company's roadmap to its culture. Something that we know has changed quite a bit in the last decade and especially just the last couple months.
So, we should note we're recording this on November 8th and that's helpful because there's so much going on at Twitter. It feels like it changes every day. I just am curious, there's been so much written about the culture and what's going on over there and how sad people are about watching it be destroyed, especially people that were tweets and work there. There seems to be a lot of goodwill within the company. So I'm curious from your perspective culture that you tried to build, culture that work, culture that didn't, any comments on that I would just find very valuable, especially today.
Dick Costolo: Yeah. The problem with these things is everyone who listens to me, that's not what happened. But here's my perspective on it. There was a culture of we're not taking the fact that the site crashes seriously enough. I'm really overgeneralizing, but there wasn't a culture of pace of execution, speed of execution, accountability to look when the site crashed, were they all hands on deck and let's get it fixed? Yes, but it wasn't like, oh my God, drop everything. Nobody go to any conferences. Everyone stay here in the office. Let's figure out what's happening and how do we make sure this doesn't happen again? We just didn't do stuff like that. Again, I'm focusing on specifically the site going down, but there was just kind of generally a, we need to pick up the pace, have more of a culture of accountability and have more of a culture of metrics and data that we're going to use to make decisions, not just dogma and everyone around here knows dot, dot, dot. And so those were the kinds of things I tried to get going, if you will.
Shannon Brayton: So, was it a lack of urgency?
Dick Costolo: I mean, yeah. It was a combination of cadence, we need to get moving, there needs to be a pace of execution that we need to pick up on. We need to be making decisions more quickly that are informed by data and then executing and then communicating those decisions and moving forward on them and not sitting on decisions that need to be made for three days, four days, five days at a time. So it was just some of that kind of stuff. It doesn't mean that no one did any of that before, it was just not institutionalized.
Shannon Brayton: Got it. You and I have talked about this because it's actually a very funny story. There were obviously amazing parts to that job that you really loved and really enjoyed, but on the worst side of the job, your daughter comes home and tells you, dad, I've got some news for you about an article that you were mentioned it.
Dick Costolo: Oh, this is a ways down the road. So we go public in 2013 and the IPO's fine. And then the end of 2013 lists come out, CEO of the year and this thing and that thing and whatever thing. And then in 2014, a year later you're a public company now, we're starting to get beat up because user growth isn't fast enough. We've started to introduce the parts of the algorithm timeline, which have been profoundly helpful in driving daily active usage on Twitter. We had introduced a thing called While You Were Away, which was essentially an algorithmic timeline collection of the best stuff since you last logged onto Twitter, no longer being purely reversed chronological order. That was really just getting going and just starting to work. So user numbers were tough the first three or four quarters of being a public company, even though our financial numbers were great. So end of 2014 comes out and my daughter-
Dick Costolo: So end of 2014 comes and my daughter calls me and is like, "Hey Dad, I have bad news and good news." I was like, "Okay, what's the bad news?" She goes, "The bad news is Yahoo Finance says you're one of the five worst CEOs of the year." I was like, "Okay, what's the good news?" She's like, "Well, no one reads Yahoo Finance is part of the good news, and the other part of the good news is you're number five. So there's four people who are ahead of you." And I looked at the list and the first guy's in jail in Spain. I was like, "It's pretty bad."
I'll make one comment on that because it's been sort of in the news this week. You really truly have to have a thick skin or not take everything personally to have that job because it's just constant. One of these guys who worked for me who was on Twitter this week, yesterday he goes, "And then in 2015, after Dick C. was ousted." I was like, "Man, even the people who work for me think I was fired." Oh God. I text this person. I'm like, "How little severance do you have to get for people to know you quit?" I was like, I should have gone back to the board and gone, "Hey, can you guys fire me? Because then I would get this big crazy severance check instead of quitting and getting nothing and giving you back all my uninvested options."
Shannon Brayton: The badgering in the articles can be really hard for morale, especially for someone like you who has to get up in front of the company and explain why these stories are being written. It's hard. It's a burden.
Dick Costolo: Of course. I would get up on stage and I would tell the company, "Look, we all know that..." Here, let's pick the particular Article X that's been written on about the company. "We all know there are nine things that are totally untrue in this article." The next time a bad article comes out, and I think it's called the... I'm going to get it wrong. It's based on [inaudible 00:21:51], but there's a name for this where you read an article, you know everything about it is wrong because you have information about everything that's going on in the article and then you turn to the page in the newspaper and you assume the next article is totally accurate because you don't know anything about it. I would get up in front of the company and say, "Look, we all know that a bunch of this stuff in this particular article, a couple of the things are true and eight of the things aren't true. We just have to keep our head down and focus. And if we do the things we know we need to do and focus on the metrics that we know we need to drive, all the stuff takes care of itself." What are you going to do?
We became resilient to it. I'll give you an example. Night of the IPO, we go public, we print $13 to $16 in the S1 is the target price. The night of pricing, we price at 26. Closes day one at 47. I fly back to world headquarters that night, and I talk to the company and Ev and Jack and Biz and I all fly back to world headquarters and I get on stage and I say, "Hey, it took us six and a half years to build a company that we thought we could take public at $13 a share." Because that's what we printed on the cover of S1. And that was when we started on the roadshow four weeks ago. "While I was gone for two weeks on the roadshow and at the conclusion of the roadshow, we priced the IPO at $26 a share. So I don't know what you guys did while I was gone for two weeks, but it's amazing because you just added $12 billion of value to the company in the last two weeks. So that was awesome. I really can't wait to find out all the things you guys built." And everyone is, of course, laughing. And then I said, "And then while we were on the floor of the New York Stock Exchange today, you all added another 15 billion of value to our company while I was gone,$ just today while you were all sitting in here watching TV, someone was back there working on stuff." And they're all laughing. And I said, "Look, the reason I'm saying this is because it's important for you all to internalize that the valuation of the company is no longer tied to the moment to moment internal dynamics of what we're doing to make the company successful. So don't freak out when the company inevitably in the stock inevitably takes some downward turn someday and turn around and go, what did that? Because you just saw proof that the movement today and the value creation in the stock in the last two weeks has literally nothing to do with what happened inside the company in the last two weeks. Keep that in mind."
I think that the company did a pretty good job of that and I was able to get back on stage then when we crushed our financial numbers but missed some user target by 2 or 3 million MAU and the stock tanks like 18%. I would get on stage and say, "Look, we all know what we have to do, we all know what the targets are. The stock's going to go up and down, we just have to be resilient." I think that was helpful. People of course freak out because they were multiplying their stock options by the highest stock price and now they can't buy the car they wanted to buy, but you can't prevent everyone from freaking out about things.
Shannon Brayton: Now there's some really good nuggets in there, but I'd love to get a little bit of perspective from you too on how important you think internal communications is.
Dick Costolo: Super important. I mean because you're working on the platform where it's one of the few companies in the world where the employees are working on a platform where all of the customers are talking about their platform and the work they're doing.
Shannon Brayton: Yeah. Great point.
Dick Costolo: So you're bombarded moment to moment by one of your customers about what you're doing and what you're building. There are very, very, very few other companies in the world that are like this. The employees at Okta aren't looking at Okta feeds every two seconds of people saying, "Why did you do that instead of this other thing that obviously you should have done?" So it's a particularly challenging company to work at, and so it's critical obviously inside a company like that internal context for what's happening and what they're seeing that the leaders are giving them that context.
Shannon Brayton: In June 2015, Dick Costello resigned as CEO of Twitter. He took the company public, grew it significantly, but the company also struggled to reach profitability.
Dick Costolo: I was just like exhausted. I'd been there for six and a half years. I wasn't a founder of the company and it's an exhausting company to run. I think I had sat on some other interview, running Twitter is like running another company in dog years. It's like one year is seven years. You're constantly, constantly, constantly in the media under pressure and globally we would have, "Hey, the minister of so-and-so in India wants to talk to you." Like, "Oh man." This doesn't happen at Salesforce unless they want to give Benioff an award. And when they were calling me, it wasn't to give me an award, it was like, "Why is this tweet still up that's making fun of the prime minister?" It's just constant. At the end of 2014, I think maybe at the very beginning of 2015, I said to the lead independent director at Twitter like, "Hey man, next year is my last year. Time to wrap this up."
Shannon Brayton: So bridging to what's happening there today, I'd be remiss to not ask you what you think about Elon's purchase of Twitter and what's going on over there and what you think might happen in the future.
Dick Costolo: I mean, this is a particularly challenging question because talk about a polarizing conversation on the platform. Elon is one of the most successful entrepreneurs that we've seen ever. The fact that he has consistently been underestimated in what he would be able to do at Tesla and then delivered on it is ridiculously impressive. You kind of feel like, look, people who are underestimating this guy, he's done it time and time and time again. Having said that, you can see the team he's got in there. You can see them learning lessons that all of us who have worked there before learned. And you can see them learning him in real time like, okay, it was obvious, I think to a lot of us, he thinks he's going to be able to have this perspective on content moderation. Just wait. Here we are week one and okay, I've gone from we're not going to do anything about content moderation until X, Y, Z happens to anyone found impersonating accounts in this way is going to be permanently banned from the platform.
You can just see them learning things that we all learned in real time and that's the way it's going to go with people who are new to running these platforms and haven't been through it before. Same thing's going to happen... I'll back up one second and say people I think mistakenly and repeatedly refer to the First Amendment when they're talking about freedom of speech on Twitter. Twitter doesn't have to abide by the First Amendment. It's private company. It's not a government organization. Also, there's no first amendment in Germany or in India. They've got their own specific speech laws. And guess what? If you don't adhere to the speech laws inside those countries, then your employees in those countries are going to be in big, big trouble and may be subject to arrest and fine and everything else. So it's not obvious whether you should suspend X account or not suspend X account. It never is. It's super gray.
You constantly find that if you come across an issue you think is obvious and black and white that it's not, you'll take action in some way and then find out two hours later, "Oh, what about this?" And then you'll smack your head and go, "Yeah, that's another edge case we hadn't thought about." This content moderation stuff is super, super hard and it's easy when you're not inside that organization and seeing the 9,000 different angles on an issue, it's easy to go, "Why don't you just let people do whatever's legal?" And it quickly becomes once you're inside, they're like, "Oh, that's actually legal speech, but truly, truly horrible. And if we don't get rid of it, we'll lose all of our users." So it's a hard problem and I have a lot of empathy for being in that seat because no matter what you do, 50% at least of users are like, "That was stupid." And some number less than 50% of users are like, "Oh, that was the right thing to do." And that's the way it's going to continue to be.
Shannon Brayton: This whole podcast is really called Wish I Knew. It's predicated on the idea about what do you wish you knew in the middle of that? Is there anything related to that that you wish you knew that would be helpful for other founders or CEOs to learn from?
Dick Costolo: Oh man. I'll answer the question by way of telling a couple stories.
Dick Costolo: Oh man, I'll answer the question by way of telling a couple stories. I remember getting up in front of the company the day that I told them I was leaving, and the first question was this guy from this designer who asked me, "What are you going to do when you wake up tomorrow?" Or whatever the next day I wasn't going to work there was. And I said, "I think I'm finally going to be able to sleep in until 10:00 AM and I hope I don't wake up until noon." And then it actually happened, and that was the first night in years I haven't woken up at 3:00 in the morning and gone, oh man, what am I going to do about this X issue in Japan? Or What am I going to do about these two VPs that hate each other? Or whatever.
You're running a 4,000 person company. You're basically everybody's parent in a city because you're only as happy as your unhappiest child and you've got 4,000 people you're responsible for. And you can't blow any of the issues off when there's an HR issue. You can't be like, "I don't have time to think about that." Because inevitably two weeks later and the CEO's notified and said he didn't have time for that, and it's some huge, horrible problem it's ballooned into. So what I wish I'd known is how much more peaceful it was sooner than that. It was a fantastic revitalization of being able to live my life without 24/7 being bombarded with stuff. You walk down the street and that's all that anyone wants to talk to you about when you're running that company is whatever is going on that particular day. But it's totally worth it because you have hopefully had thousands and thousands of people for whom you've been responsible and for whom you've helped develop their careers, build their lives, meet people who they have ended up building families within the company you created.
Help them understand how to lead, how to manage, how to do it while being a good person. I always used to tell my managers, my leaders at the company, being a good leader doesn't require you to be a jerk. You can be forthright with people without being a jerk. It just requires you to make sure you're telling everyone the same story and you're being forthright with them. And if you think people are fooled, they're not, and they're just going to create misery. If you're forthright with people and say things like, look, I understand that you don't like that I'm canceling this project. Of course, I understand that. You've been working on it for two months and you've been working hard on it. You've been here till 9:00 PM. I get it. You're upset about it. I understand that, but it's no longer a priority and we have to move on. So one of the things I want to talk to you about is what we're going to work on next. You don't have to say, shut up and suck it up and get out of here. So I just think helping people understand how to lead and manage like that. And having done that with thousands and thousands of people and meeting all these people I got to meet around the world. I got to sit in the Prime Minister Abe's office in Japan. I got to sit in the Roosevelt room across from President Obama. I got to sit in Winston Churchill's old chair in 10 Downing Street. You don't get to do that if you're not taking chances and not running with one of these big companies and not trying to get out there and make it happen.
So all that stuff, it's totally worth it and great. And I look back on it and I think that was amazing. Taking your company public on the New York Stock Exchange. You turn the corner down at Wall Street and Broad, and there's a giant blue Twitter logo across the entirety of the front of the New York Stock Exchange. It's insane. People don't get to do that all the time. So you got to take the good with the bad and then know there's going to be a horrible article in the New York Times on Tuesday morning. Yeah, well, that's the way it goes.
Shannon Brayton: So speaking of living your life, tell us a little bit about what you're doing now.
Dick Costolo: A lot. Adam Bain, who was CRO at Twitter, and when I say we, the company built Twitter from $0 in revenue to two and a quarter billion a year in five and a half years. By we, I mean Adam. Adam and his organization, and the organization he built of 1,800 or so people. When Adam left Twitter at the end of 2017, as Jack's COO, he and I got together. We're lamenting the fact that there weren't like a bunch of four operators by operators, investors out there who could really help people who were going through early growth understand how to scale, and decided to go do that and been having a blast doing that. We've just raised our third fund. We're still investing our second fund. We do mostly, hey, we've found product market fit, and now we need to migrate from building a product to building a business type companies.
So call it late series A, early series B. That was also an interesting hole in the market. There are tons of early stage folks in the investing side. There are tons of growth folks. There aren't a lot of people sort of where we'd like to jump in, and that's been a blast and we're learning a ton. So that's great. On the personal side, I decided during COVID I wanted to learn new skills, and one of them was I want to learn how to cook like an Italian grandmother. No recipe, no measuring cups, just do it all from scratch and do it by feel. So I'm doing a ton of Italian cooking and it's a blast. I headed over to Italy for a few days to cook at a couple kitchens and with some of the grandmothers, and I'm sure they'll yell at me in Italian, and I'm frankly nervous about it.
Shannon Brayton: That sounds amazing. So I'm going to ask you a couple rapid fire questions. Okay?
Dick Costolo: Yeah.
Shannon Brayton: We would like to know where we can find you on a Sunday night as you're preparing for a Monday morning. It sounds like you might be in the kitchen.
Dick Costolo: I'm in the kitchen on Sunday nights. Almost every Sunday night I cook.
Shannon Brayton: And what are you making this Sunday night in Italy?
Dick Costolo: I have no idea. Last Sunday night I made carbonara. I've got a great butcher in Napa, and I made carbonara with asparagus tips.
Shannon Brayton: It looked amazing. I did happen to see your Instagram story. What's your go-to pick me up to invigorate you when you hit a wall? Coffee?
Dick Costolo: I'm definitely a huge coffee addict. I have three cups of coffee in the morning. For sure for me, I exercise when I hit a wall. That's almost always what it is for me.
Shannon Brayton: And do you have a favorite quote or a personal mantra that you carry with you into your work and/or life?
Dick Costolo: One of my favorite business quotes ever was when in 2011 we had an open independent seat on the board and we were trying to recruit Jeff Bezos to join the board. And had a conversation with Jeff about it, and Jeff asked us some strategy question, and there was a little bit of a back and forth. And one of the things that came up was, well, Steve Jobs says the most important part of strategy is saying no and you have to do very, very few things. And Jeff laughed that big Jeff Bezos laugh that he has, that crazy amazing infectious laugh that he has. And he said, "There are lots and lots of different ways to be successful." And it sounds silly and trite and stupid, but he is totally right. One of the things you learn as an investor is trying to typecast a CEO based on some success bias of, well, Mark Zuckerberg is like this, or Evan Spiegel's like that. It's just, there's lots of different ways to do it.
And understanding that and being aware of the fact that there are lots of different ways to be successful is probably the best business advice I ever got. And I try to always remember that when we're talking to new companies or talking to people that don't think about things the way I think about them.
Talia Goldberg: That's it for today's episode of Wish I Knew. You can find and follow the show on Apple, Spotify, Amazon Music, or anywhere you listen to podcasts or at vvp.com/wishIknew. Special thanks to this week's guest, Dick Costello, and also a thank you to Shannon Brayton for moderating the conversation.
Wish I Knew is a podcast by Bessemer Venture Partners. The show was created by our very own Karen Lee and Christine Deakers. I’m your host, Talia Goldberg. Our show is produced by the team at Filia Media. Our lead producer is Molly Getman. Our executive producer is Kait Walsh. We’re engineered by Evan Viola. Our theme music is by Terry Devine King at Audio Network. Additional Music by Blue Dot Sessions.
And remember, don’t take every headline to heart. Be resilient.
This is our last episode of season one. If you liked what you heard, rate us on Apple Podcast and then recommend the show to a friend or a colleague. And don’t forget to follow us wherever you listen to podcasts so you can be the first to know when season two officially drops.See Less