Twitter cofounder Biz Stone talks about the beginning of the social media platform and its extraordinary rise in his new book Things a Little Bird Told Me. He also ingeniously blends in business wisdom. In this exclusive excerpt, Stone talks about a Monday morning in late 2008 when he uncharacteristically put on a pressed white shirt and went with cofounder and then CEOEvan Williams to meet Facebook's Mark Zuckerberg. It is also about the colourful beginnings of the valuation of a company and why it is important to trust your instincts even when you are the smaller guy in a business meeting:
As soon as I walked into the office, Jason Goldman told me that Ev, who had recently taken over from Jack as CEO, was waiting for me in his car downstairs.
It wasn't normal for me to show up at work and be told that Ev was waiting for me to go to a meeting. Something was up.
"Why's he waiting for me? What's the meeting?" I asked.
"Just go."
So I turned around and went back outside the building.
Indeed, Ev was waiting for me in his Porsche.
I got into the car. "Where are we going?"
"Palo Alto."
"Oh! Is today the day we're supposed to do that Q-and-A at Google?" I said. "I wish I hadn't worn this shirt. I feel weird in this shirt."
t was just an ordinary white buttondown shirt, like a suit shirt, but I was obsessing. Should I have tucked it in? I already felt awkward in the stupid shirt, and now we were going to Google.
We started driving toward 101 South. Ev likes to drive fast.
And in spite of his general patience with me, he gets annoyed when I babble without thinking.
"Stop talking," he said. "We're not going to Google. We're going to Facebook."
"Why are we going to Facebook?"
"To see Mark Zuckerberg."
"Why?" By this time we were racing down 101.
"Facebook wants to acquire us." Sometimes Evan is an enigma. When he said this, his expression didn't change at all.
"Oh," I said. "Do we want to be acquired?" "I don't know. Probably not."
We didn't speak for a few minutes, while Ev dodged and passed cars, manoeuvring in and out of the fast lane. I thought about our last round of financing. It had placed the company's valuation at something like twenty- five million dollars.
"How much does Facebook want to acquire us for?" I asked "I don't know."
"Do you want to sell the company to Facebook?" I asked again. This time Ev said no.
"Well," I said, "why are we going down to Facebook, then? I feel weird in this shirt."
Ev said the shirt was actually appropriate for the trip—I could tell he was trying to end the shirt part of the conversation—and that it was too late to back out now. He had agreed that we would meetMark Zuckerberg and talk about acquisition.
"If we don't want to sell the company," I said,"maybe we should just make up a price so ridiculous that nobody would ever pay.
That way, we honour the obligation of having the conversation but we get out of it."
"What would be a crazy number?" Ev asked.
I blurted out the biggest number I could possibly imagine: "Five hundred million dollars." I started laughing before I was even finished saying it. Ev started laughing, too.
We were speeding down 101 laughing out loud imagining how funny it would be if Mark Zuckerberg asked us how much we would sell the company for and we said five hundred million dollars...
Mark suggested we talk and led us to a small room on the other side of the floor that was probably an unoccupied office. The room was just big enough for one chair and one love seat.
Mark walked in first and took the chair. I walked in next and squeezed onto one side of the cozy love seat.
Coming in last, Ev said, "Would you like the dooropen or closed?"
Mark's response was "Yes."
Yes, what? The answer didn't compute. Ev paused for a second, waiting for Mark to correct his answer, but no further instructions were forthcoming, so he said, "I'll just close it halfway," and carefully adjusted the door to a slightly ajar position...
Mark quickly got down to business. He said,"When it comes to partnerships, I don't like to talk about numbers."
"Neither do we," Ev said quickly.
"But," Mark added, "if you were to say a number, then I could tell you yes or no right now."
What were we supposed to do? After hemming and hawing a bit, Ev just went for it. He said,"Five hundred million dollars."
Wow, I thought. He actually said that number. As I've mentioned, Evan is a very grounded individual. He likes building productivityapplications that help you make to-do lists and check them off. All his time is accounted for.
Later he would even use his calendar to set aside time to play with his children.
I was pretty sure "Offer our company to the founder and CEO of Facebook for five hundred million dollars" was not on Evan's to-do list. I looked at Evan, but he was focused on Mark.
There was a slight pause, and then Mark said,"That's a big number."...
Taking that meeting was a rookie mistake. If you're not serious about selling, you shouldn't take an acquisition meeting, because once an offer is made, you have an obligation to present it to the shareholders for serious consideration. There are three reasons an entrepreneur sells his company, and none of them applied to us.
One, you're about to be crushed by competition or sued into oblivion. Two, you're tired or done and just want the money already. Three, your company's potential, when paired with another company, is orders of magnitude bigger than you can possibly imagine attaining alone. (Actually, at the time, Twitter was doing so miserably, technically speaking, that we almost fell into the category of entrepreneurs who should sell because they're just about screwed. It might have been a good idea to go to Facebook, but we weren't ready.) Unbelievably, within the week, Mark Zuckerberg came to us with an offer. It was a mix of cash and stock that added up to, drumroll please . . . five hundred million dollars. That number had come out of nowhere.
It was simply the biggest number I could think of. I didn't even know if there was that much money in the world. It had started as a joke, and now it was real. Talk about creating your own opportunities.
The offer was a big shocker, and a banner day for Twitter.
We had a call with the board to discuss what to do, and then Evan composed a very convincing letter to the board explaining why we weren't ready to sell. All signs pointed to Twitter's potential to succeed. We had barely gotten started. We thought we could build a business, but the only way to find out was if we went for it.
The truth of the matter was that we were as passionate about Twitter as we had been from the start. We wanted to see it through. We were playing by our own rules, and we were willing to bear the consequences if it all came crashing down.
Again, the takeaway here isn't about my behavior, which I'm the first to admit was juvenile bordering on obnoxious.
Making jokes about massive amounts of money and then proposing them to serious potential investors is no way to build a career or a business. The point is to trust your instincts, even if you're smaller and less powerful than the other guy.
Several months later, in a round of financing led by Benchmark Capital and Institutional Venture Partners, Twitter was valued at two hundred fifty million dollars. Facebook's offer, based on my joke, had spiked our value.
Who knew that this was how these things worked? I had assumed a lot more went into the valuation of a company, but as it turns out, it's not much of a science. It starts at zero, and then one day you find yourself in a room telling people they can have x percent of your semi-existent company for x million dollars. You set your company's own valuation. It's made up, and then it's affirmed by what people are willing to invest.
These days Twitter is worth something like fifteen billion dollars. One day it could be worth a hundred billion. Those, Mr. Zuckerberg, are really, really big numbers.
As soon as I walked into the office, Jason Goldman told me that Ev, who had recently taken over from Jack as CEO, was waiting for me in his car downstairs.
It wasn't normal for me to show up at work and be told that Ev was waiting for me to go to a meeting. Something was up.
"Why's he waiting for me? What's the meeting?" I asked.
"Just go."
So I turned around and went back outside the building.
Indeed, Ev was waiting for me in his Porsche.
I got into the car. "Where are we going?"
"Palo Alto."
"Oh! Is today the day we're supposed to do that Q-and-A at Google?" I said. "I wish I hadn't worn this shirt. I feel weird in this shirt."
t was just an ordinary white buttondown shirt, like a suit shirt, but I was obsessing. Should I have tucked it in? I already felt awkward in the stupid shirt, and now we were going to Google.
We started driving toward 101 South. Ev likes to drive fast.
And in spite of his general patience with me, he gets annoyed when I babble without thinking.
"Stop talking," he said. "We're not going to Google. We're going to Facebook."
"Why are we going to Facebook?"
"To see Mark Zuckerberg."
"Why?" By this time we were racing down 101.
"Facebook wants to acquire us." Sometimes Evan is an enigma. When he said this, his expression didn't change at all.
"Oh," I said. "Do we want to be acquired?" "I don't know. Probably not."
We didn't speak for a few minutes, while Ev dodged and passed cars, manoeuvring in and out of the fast lane. I thought about our last round of financing. It had placed the company's valuation at something like twenty- five million dollars.
"How much does Facebook want to acquire us for?" I asked "I don't know."
"Do you want to sell the company to Facebook?" I asked again. This time Ev said no.
"Well," I said, "why are we going down to Facebook, then? I feel weird in this shirt."
Ev said the shirt was actually appropriate for the trip—I could tell he was trying to end the shirt part of the conversation—and that it was too late to back out now. He had agreed that we would meetMark Zuckerberg and talk about acquisition.
"If we don't want to sell the company," I said,"maybe we should just make up a price so ridiculous that nobody would ever pay.
That way, we honour the obligation of having the conversation but we get out of it."
"What would be a crazy number?" Ev asked.
I blurted out the biggest number I could possibly imagine: "Five hundred million dollars." I started laughing before I was even finished saying it. Ev started laughing, too.
We were speeding down 101 laughing out loud imagining how funny it would be if Mark Zuckerberg asked us how much we would sell the company for and we said five hundred million dollars...
Mark suggested we talk and led us to a small room on the other side of the floor that was probably an unoccupied office. The room was just big enough for one chair and one love seat.
Mark walked in first and took the chair. I walked in next and squeezed onto one side of the cozy love seat.
Coming in last, Ev said, "Would you like the dooropen or closed?"
Mark's response was "Yes."
Yes, what? The answer didn't compute. Ev paused for a second, waiting for Mark to correct his answer, but no further instructions were forthcoming, so he said, "I'll just close it halfway," and carefully adjusted the door to a slightly ajar position...
Mark quickly got down to business. He said,"When it comes to partnerships, I don't like to talk about numbers."
"Neither do we," Ev said quickly.
"But," Mark added, "if you were to say a number, then I could tell you yes or no right now."
What were we supposed to do? After hemming and hawing a bit, Ev just went for it. He said,"Five hundred million dollars."
Wow, I thought. He actually said that number. As I've mentioned, Evan is a very grounded individual. He likes building productivityapplications that help you make to-do lists and check them off. All his time is accounted for.
Later he would even use his calendar to set aside time to play with his children.
I was pretty sure "Offer our company to the founder and CEO of Facebook for five hundred million dollars" was not on Evan's to-do list. I looked at Evan, but he was focused on Mark.
There was a slight pause, and then Mark said,"That's a big number."...
Taking that meeting was a rookie mistake. If you're not serious about selling, you shouldn't take an acquisition meeting, because once an offer is made, you have an obligation to present it to the shareholders for serious consideration. There are three reasons an entrepreneur sells his company, and none of them applied to us.
One, you're about to be crushed by competition or sued into oblivion. Two, you're tired or done and just want the money already. Three, your company's potential, when paired with another company, is orders of magnitude bigger than you can possibly imagine attaining alone. (Actually, at the time, Twitter was doing so miserably, technically speaking, that we almost fell into the category of entrepreneurs who should sell because they're just about screwed. It might have been a good idea to go to Facebook, but we weren't ready.) Unbelievably, within the week, Mark Zuckerberg came to us with an offer. It was a mix of cash and stock that added up to, drumroll please . . . five hundred million dollars. That number had come out of nowhere.
It was simply the biggest number I could think of. I didn't even know if there was that much money in the world. It had started as a joke, and now it was real. Talk about creating your own opportunities.
The offer was a big shocker, and a banner day for Twitter.
We had a call with the board to discuss what to do, and then Evan composed a very convincing letter to the board explaining why we weren't ready to sell. All signs pointed to Twitter's potential to succeed. We had barely gotten started. We thought we could build a business, but the only way to find out was if we went for it.
The truth of the matter was that we were as passionate about Twitter as we had been from the start. We wanted to see it through. We were playing by our own rules, and we were willing to bear the consequences if it all came crashing down.
Again, the takeaway here isn't about my behavior, which I'm the first to admit was juvenile bordering on obnoxious.
Making jokes about massive amounts of money and then proposing them to serious potential investors is no way to build a career or a business. The point is to trust your instincts, even if you're smaller and less powerful than the other guy.
Several months later, in a round of financing led by Benchmark Capital and Institutional Venture Partners, Twitter was valued at two hundred fifty million dollars. Facebook's offer, based on my joke, had spiked our value.
Who knew that this was how these things worked? I had assumed a lot more went into the valuation of a company, but as it turns out, it's not much of a science. It starts at zero, and then one day you find yourself in a room telling people they can have x percent of your semi-existent company for x million dollars. You set your company's own valuation. It's made up, and then it's affirmed by what people are willing to invest.
These days Twitter is worth something like fifteen billion dollars. One day it could be worth a hundred billion. Those, Mr. Zuckerberg, are really, really big numbers.
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