Bloomberg News

Stone’s Move Leaves Twitter Without Founders’ Full Attention

June 29, 2011

(Adds analyst’s comment in fourth paragraph.)

June 29 (Bloomberg) -- Twitter Inc. co-founder Biz Stone’s decision to join fellow company alumnus Evan Williams at Obvious Corp. leaves Twitter with none of its creators fully devoted to the microblogging service.

Obvious, a startup incubator that helped give rise to Twitter, will be revamped to focus on “solving big problems” and help develop systems that “improve the world,” Stone said yesterday on his blog. Williams had announced in March that he was stepping away full time from Twitter, though he remains involved in the company.

While co-founder Jack Dorsey is still at Twitter as executive chairman, he divides his time with another startup -- mobile-payment company Square Inc., where he serves as CEO. Twitter’s newer executives are now working to maintain user growth and compete with social-networking rivals such as Facebook Inc., without as much day-to-day help from the founders.

“Inventing something is not the same as turning it into a business,” said Josh Bernoff, an analyst with Forrester Research Inc. in Cambridge, Massachusetts. “They already have a passionate user base that’s growing. So I think that the founders probably look at that and say, ‘You know what? Why don’t we let people who are good at that work on that, and we’ll go and work on something else?’”

‘Incredibly Productive’

Twitter is now run by former Google Inc. product manager Dick Costolo, who took the reins from Williams last year.

“The Twitter crew and its leadership team have grown incredibly productive,” Stone said in the blog posting. “I’ve decided that the most effective use of my time is to get out of the way until I’m called upon to be of some specific use.”

While Twitter’s traffic has surged over the past four years, its advertising business has grown more slowly than at Facebook, the world’s largest social network. Its ads may generate less than a 10th the revenue of Facebook’s this year, according to New York-based EMarketer Inc.

The company also has undergone multiple management changes since its start. Dorsey served as CEO until 2008, when he ceded the role to Williams.

The three founders remain involved in Twitter, the San Francisco-based company said in an e-mail.

‘Deeply Connected’

“Twitter is lucky to have all three of our founders still deeply connected to the company,” Twitter said. “Jack is executive chairman and leads our product team; Biz works closely with us on social good efforts, consumer media opportunities and various other projects; and Ev is regularly involved at the board level.”

Obvious also will be run by Jason Goldman, a former Twitter executive. Obvious was first created by Williams to buy back a company from investors that he and Stone failed to sell about six years ago, Stone said. The two began working together after leaving Google in 2005.

The assets from their failed company included Twitter, which lets users publicly write 140-character messages to people who follow them. Williams and Stone, as well as Dorsey, continued building the company within Obvious. In 2007, the group raised capital from outside investors and rolled out the service.

--Editors: Jillian Ward, Nick Turner

To contact the reporters on this story: Joseph Galante in San Francisco at jgalante3@bloomberg.net; Brian Womack in San Francisco at bwomack1@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net


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