An SMS inspired Jack Dorsey to start a $16 bn social network

In March 2016, Twitter celebrated its decade of existence in the World Wide Web. The twelve-year-old Microblogging giant has come so far now since the first tweet of the co-founder  Jack Dorsey’s “just setting up my twttr” back on March 21, 2006.

We can see the popularity of tweeting by going through the list of the most popular and influential people in the world using this website. Be it the US president Barack Obama, or Katy Perry, stunning Kim Kardashian, sportsmen like Christiano Ronaldo, entrepreneurs like Bill Gates, News Channels like CNN and BBC, Sports channels like ESPN, Indian Superstar and Shahenshah Amitabh Bachchan, Indian PM Narendra Modi or Indian Superstars like Shahrukh Khan, Salman Khan and Indian Cricketers like MS Dhoni and Virat Kohli.

We can see every class, every industry is it glamour, sports, business, journalism, entrepreneurship hits Twitter. It is now the favourite network of celebrities and media outlets and even the household persons.

Twitter Founders

twitter startup story

A team comprising of Jack Dorsey (American programmer and entrepreneur), Evan Clark Williams (American Computer Programmer and Internet Entrepreneur), Noah Glass (American Software Developer), Christopher IsaacBizStone (Angel investor and advisor) founded the company.

Headquartered in San Fransisco, California, US the company’s present CEO is Jack Dorsey. An Iranian-born American businessman, Omid R. Kordestani, has been the Executive Chairman of the company since October 2015.

Jack Dorsey has also co-founded Square and been on the board of directors of The Walt Disney Company and Fancy. He serves on the advisory board for Techonomy Media, Ustream and Thrive Capital.

Evan Clark Williams also founded Blogger and Medium, two of the largest and most notable blog distribution websites. On September 25, 2012, Williams created a publishing platform, Medium (at Medium.com). Initially, it was available only to early adopters but was opened to the public in 2013.

Why Was Twitter Created?

In Dorsey’s words, the origin of the word Twitter was …we came across the word ‘twitter’, and it was just perfect. The definition was ‘a short burst of inconsequential information,’ and ‘chirps from birds’.”

Dorsey cultivated the idea of an individual using an SMS service to communicate with a small group which became the base of Twitter. Their first prototype, developed by Dorsey and contractor Florian Weber, was used as an internal service for Odeo (twitter’s parent company) employees and the full version was introduced publicly on July 15, 2006.

In October 2006, Biz Stone, Evan Williams, Dorsey, and other members of Odeo formed Obvious Corporation and acquired Odeo, together with its assets—including Odeo.com and Twitter.com—from the investors and shareholders. They did not call it a social network, they called it microblogging, but it was hard to define because it didn’t replace anything.

During the event, South by Southwest Interactive (SXSWi) conference in 2007, the usage of the site increased from 20,000 tweets per day to 60,000. Reaction to the conference was highly positive. The brand grew rapidly under Jack Dorsey as CEO completing two successful rounds of funding. They even launched the official support for hashtags.

Later in October 2008, Evan Williams took over as the CEO for the reasons best known to them. In his tenure of two years as CEO, the company raised money, got celebrity endorsements and publicity, and continues to grow rapidly. The first tweet from space occurred during this period.

Later in October 2010, Dick Costolo took over as the CEO. During his tenure of service for three years, the CEO the company started making acquisitions, closed an $800 million Series G, put its advertising plans to fruition, launched site redesigns, and continued to grow. In November 2013, it has its initial public offering. Post-IPO, the company’s pace of acquisitions increased dramatically.

They added numerous features on their website such as Instant Timeline, While You Were Away, Quality Filter, Curator, and Moments the company diversified manifolds. In July 2015, Dick Costolo departed and Jack Dorsey picked up the role of interim CEO.

Twitter’s Nomenclature

The original project code name for the service was twttr inspired by Flickr and the five-character length of American SMS short codes. The decision was also partly due to the fact that domain twitter.com was already in use, and it was six months after the launch of twttr that the crew purchased the domain and changed the name of the service to Twitter.

Funding and Revenue Generation

Twitter’s series A round of funding was for an undisclosed amount that is rumoured to have been between US$1 million and US$5 million. The deal was closed in July 2007. Dave Holmes, manager of the iconic band Coldplay invested in Twitter at that time.

Its series B round of funding in 2008 was of $22 million and it’s series C round of funding in 2009 was of $35 million from Institutional Venture Partners and Benchmark Capital along with an undisclosed amount from other investors including Union Square Ventures, Spark Capital, and Insight Venture Partners.

The company is backed by Union Square Ventures, Digital Garage, Spark Capital, and Bezos Expeditions. By March 2009 communications consultant Bill Douglass predicted in an interview that it would be worth $1 billion within six months, which came to reality when the company closed a financing round valuing it at $1 billion in September of that year.

The company raised US$200 million in new venture capital in December 2010, at a valuation of approximately US$3.7 billion. Earlier in March 2011, 35,000 company’s shares sold for US$34.50 each on Sharespost, an implied valuation of US$7.8 billion.

Twitter announced a “significant” investment in August 2010 led by Digital Sky Technologies that, at US$800 million, which was the largest venture round in history.

In December 2011, the Saudi Prince Alwaleed bin Talal invested $300 million in Twitter. The company was valued at $8.4 billion at the time.

In total, Twitter has raised $1.5 billion in 13 funding rounds.

The company generated US$45 million in annual revenue in 2010 but ended up at a loss in that year. Users’ photos can generate royalty-free revenue for Twitter. In June 2011, Twitter announced that it would offer small businesses a self-service advertising system. Twitter generated US$139.5 million in advertising sales during 2011. Twitter reported its financial revenue statistics for the first quarter of 2014 to stand at $250 million.

Some Twitter Numbers

twitter startup story

According to Fast Compay, Twitter has 326 million monthly active users. The users send more than 500 million tweets every single day. 80 per cent of them uses Twitter on their smartphones. The daily active users stood at 100 million.

Twitter Demographics

24% of All Internet male users use Twitter, whereas 21% of All Internet Female users use Twitter. There are 261 million International Twitter users which account for 79% of Twitter accounts are based outside the United States. There are over 69 million Twitter users in the US. Roughly 46% of Twitter users are on the platform daily. The total number of Twitter users in the UK is 13 million.

37% of Twitter users are between the ages of 18 and 29, 25% users are 30-49 years old. 56% of Twitter users $50,000 and more in a year. The top three countries by user count outside the U.S. are Brazil (27.7 million users), Japan (25.9 million), and Mexico (23.5 million). 36% of Americans aged 18 to 29 years old use Twitter. 80% of Twitter users accessing the platform on a mobile device, and 93% of video views are on mobile.

Twitter Financials

Twitter’s revenue stands at $711 million. Advertising revenue totalled $545 million ($374 million, International:$242 million), an increase of 6% year-over-year. Mobile advertising revenue was 88% of total advertising revenue. Total ad engagements were up 91% year-over-year.

Twitter is currently valued at $16 billion.

Fun Facts

Twitter can handle 18 quintillion user accounts. 74% of Twitter users say they use the network to get their news. 85% of small and medium business users use Twitter to provide customer service. More than 100 million tweets contained GIFs in 2015.

Saudi Arabia has the highest percentage of internet users who are active on Twitter. In Q3 2017, Twitter live-streamed more than 830 events. Twitter also live-streamed 96 million hours of live user-generated content in Q3 via Periscope.

The number of Twitter timeline views in 2014 is 200 billion. 83% of 193 UN member countries have a Twitter presence. Twitter’s revenue per employee is $488,913.

Conclusion

What started off as 140 characters specific messaging service has now grown to become one of the largest social networking platforms. This user-specific service has become so large now, the number of characters increased to 280. Further, users have created their own jargon to get their message across! Back then, no one even imagined that this platform would be worth $16 billion.

Mohit Kumar
Founder of MovieNasha and many other websites is a blogger by choice and a current student of Computer Science Engineering.

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