"Mr. Williams says that all successful businesspeople make enemies along the way." – The New York Times, October 30, 2010
How Twitter's owners and top executives say Twitter was founded is different than how Twitter was actually founded.
Mainly, the official version leaves out the role of a major cofounder. Some early Twitter investors also wonder if it also leaves out a scandal.
Twitter is now worth more than $5 billion – and climbing toward $10 billion on secondary markets – so it's worth setting the story straight.
The official telling of Twitter's founding goes like this:
Ex-Googler Evan Williams had a startup called Odeo. It was going to be a podcasting platform. Evan asked his friend, another ex-Googler named Biz Stone, to join him. When Apple launched iTunes podcasting, and made Odeo's podcasting platform irrelevant, Evan and Biz and an Odeo employee named Jack Dorsey decided to create something called Twitter instead. Odeo's investors didn't like Twitter, and Evan did them a huge favor by buying back all their stock and making them whole.
According to interviews with about a dozen early investors and employees, the story of how Twitter was actually founded begins with an entrepreneur named Noah Glass, who started Odeo in his apartment.
The story begins about six years ago...
THE REAL HISTORY OF TWITTER
"Noah had a product where you call a phone number and it would turn your message into an MP3 hosted on the Internet. That was the technology that Noah brought that turned into Odeo," says early employee Ray McClure.
Along with Charles River Ventures and about a dozen other individuals, one of Glass's earliest investors in Odeo was a former Google employee named Evan Williams. Williams was more involved with Odeo than most investors are with startups in their portfolios, and eventually, Odeo moved from Noah's apartment to Williams's. Williams, who had recently sold a company called Blogger toGoogle, had just bought a nice house and wanted to put his old apartment to good use.
"I think it was something Ev was interested in, but it was mostly Noah's thing," says McClure.
"At that time, it would have been me, Evan [Henshwaw-Plath, better know by friends as "Rabble,"] and Rabble's wife Gabba. Mostly it was the four of us working out of the apartment."
By July 2005, Odeo had a product: a platform for podcasting.
But then, in the fall of 2005, "the shit hit the fan," says George Zachary, the Charles River Ventures partner who led the firm's investment in Odeo.
That was when Apple first announced iTunes would include a podcasting platform built into every one of the 200 million iPods Apple would eventually sell. Around the same time, Odeo employees, from Glass and Williams on down, began to realize that they weren't listening to podcasts as much as they thought they would be.
Says Cook: "We built [Odeo], we tested it a lot, but we never used it."
Suddenly, says Zachary, "the company was going sideways."
By this point, Odeo had 14 people working full time – including now-CEO Evan Williams and a friend of his from Google, Christopher "Biz" Stone.
Williams decided Odeo's future was not in podcasting, and later that year, he told the company's employees to start coming up with ideas for a new direction Odeo could go. The company started holding official "hackathons" where employees would spend a whole day working on projects. They broke off into groups.
Odeo cofounder Noah Glass gravitated toward Jack Dorsey, whom Glass says was "one of the stars of the company." Jack had an idea for a completely different product that revolved around "status"--what people were doing at a given time.
"I got the impression he was unhappy with what he was working on – a lot of cleanup work on Odeo."
"He started talking to me about this idea of status and how he was really interested in status," Glass says. "I was trying to figure out what it was he found compelling about it."
"There was a moment when I was sitting with Jack and I said, 'Oh, I do see how this could really come together to make something really compelling.' We were sitting on Mission St. in the car in the rain. We were going out and I was dropping him off and having this conversation. It all fit together for me."
One day in February 2006, Glass, Dorsey, and a German contract developer Florian Weber presented Jack's idea to the rest of the company. It was a system where you could send a text to one number and it would be broadcasted out to all of your friends: Twttr.
Noah Glass says it was he who came up with the name "Twttr." "I spent a bunch of time thinking about it," he says. Eventually, the name would become Twitter.
After that February presentation to the company, Evan Williams was skeptical of Twitter's potential, but he put Glass in charge of the project. From time to time, Biz Stone helped out Glass's Twitter team.
And it really was Glass's team, by the way. Not Jack Dorsey's.
Everyone agrees that original inkling for Twitter sprang from Jack Dorsey's mind. Dorsey even has drawings of something that looks like Twitter that he made years before he joined Odeo. And Jack was obviously central to the Twitter team.
But all of the early employees and Odeo investors we talked to also agree that no one at Odeo was more passionate about Twitter in the early days than Odeo's cofounder, Noah Glass.
"It was predominantly Noah who pushed for the project to be started," says Blaine Cook, who describes Glass as Twitter's "spiritual leader."
"He definitely had a vision for what it was," says Ray McClure.
"There were two people who were really excited [about Twitter,]" concurs Odeo investor George Zachary. "Jack and Noah Glass. Noah was fanatically excited about Twitter. Fanatically! Evan and Biz weren't at that level. Not remotely."
Zachary says Glass told him, "You know what's awesome about this thing? It makes you feel like you're right with that person. It's a whole emotional impact. You feel like you're connected with that person."
At one point the entire early Twitter service was running on Glass's laptop. "An IBM Thinkpad," Glass says, "Using a Verizon wireless card."
"It was right there on my desk. I could just pick it up and take it anywhere in the world. That was a really fun time."
Glass insists that he is not Twitter's sole founder or anything like it. But he feels betrayed that his role has basically been expunged from Twitter history. He says Florian Weber doesn't get enough credit, either.
"Some people have gotten credit, some people haven't. The reality is it was a group effort. I didn't create Twitter on my own. It came out of conversations."
"I do know that without me, Twitter wouldn't exist. In a huge way."
By March of 2006, Odeo had a working Twitter prototype. In July, TechCrunch covered Twttr for the first time. That same summer, Odeo employees obsessed with Twitter were racking up monthly SMS bills totalling hundreds of dollars. The company agreed to pay those bills for the employees. In August, a small earthquake shook San Francisco and word quickly spread through Twitter – an early 'ah-ha!' moment for users and company-watchers alike. By that fall, Twitter had thousands of users.
By this point, engineer Blaine Cook says it began to feel like there were "two companies" at Odeo – the one "Noah and Florian and Jack and Biz were working on" (Twitter) and Odeo. Twitter, says Ray McClure, "was definitely the thing you wanted to be working on."
THE BUYOUT
At a board meeting for Odeo that summer, Noah Glass presented Twitter to Odeo's directors. They hardly blinked at it.
Then, one day in September 2006, Odeo's CEO Evan Williams wrote a letter to Odeo's investors. In it, Williams told them that the company was going nowhere, that he felt bad about that, and that he would like to buy back their shares so they wouldn't take a loss.
In his letter to Odeo's investors, Williams wrote this about Twitter:
By the way, Twitter (http://twitter.com), which you may have read about, is one of the pieces of value that I see in Odeo, but it's much too early to tell what's there. Almost two months after launch, Twitter has less than 5,000 registered users. I will continue to invest in Twitter, but it's hard to say it justifies the venture investment Odeo certainly holds -- especially since that investment was for a different market altogether.
Evan proposed buying back Odeo investors' stock, and, eventually, the investors agreed to the buyback. So Evan bought the company – and Twitter. The amount he paid has never been reported. Multiple investors, who had combined to put $5 million into Odeo, say Evan made them whole.
Five years later, assets of the company the original Odeo investors sold for approximately $5 million are now worth at least 1000X more: $5 billion.
How do those investors feel now?
We spoke to most of them, and in general, the answer is that most feel at peace now – if only now. Some are wistful. Others are hurt. Speaking to one or two, you can detect a suspicion that they were somehow conned by Williams.
Most echoed the sentiments of James Hong, the cofounder of HotOrNot.com and an Odeo angel investor. Hong told us, "Obviously, I wish what happened hadn't happened. There was a dark period where I didn't want to hear about Twitter."
Many of the Odeo investors still appreciate Williams's gesture.
"At the time, it was well received as a gracious act," says one individual investor, Don Hutchinson. "Often when you're investing in early stage companies you end up with a dead loss."
A few wish that Williams had been more upfront about what he was planning to do next, as they would have loved to re-invest in Twitter.
"I wish he had reached out to me," says Mitch Kapor, still an active and successful investor in the Valley. "I think he could have, but didn't. And I'd say its sort of a shared responsibility."
Some of the investors who sold Odeo and Twitter to Evan Williams for a few million dollars wonder about his intentions at the time.
Had Evan tricked them into thinking Twitter wasn't worth much, when he already knew it would be a gold mine?
One investor asked: "Could Evan have known this would be the world's best thing ever and hid it while re-capitalizing the company?"
"If there's ever any litigious stuff in the air," says this investor, "it will be: How much did Evan know about the user engagement and numbers of Twitter at the time of buying it out?"
EVAN WILLIAMS: THE DARK SIDE
Probably the only reason anyone feels comfortable bringing up those kinds of questions is that Evan Williams has a reputation for being quietly shrewd. Lots of Odeo investors and employees used the word "calculating" to describe him.
Also, people have made strong accusations against Williams in the past.
A New York Times profile from last fall resurfaced old allegations that Williams failed to properly compensate Blogger employees when he sold that company to Google in 2003.
His Blogger cofounder, Meg Hourihan, is reported in the story to have said, “I don’t think he took care of the people who got him to where he was." The Times also reported that "Mr. Williams says that all successful businesspeople make enemies along the way."
The truth is we'll probably never really know whether Williams actually thought he had the next big thing when he downplayed Twitter to investors.
On the one hand, by early as the summer of 2006, there was already plenty of evidence that some users found Twitter impossibly addictive. Evan Henshaw-Plath says he remembers one Odeo employee racking up a $400 SMS bill. So many users sent so many texts that Odeo eventually agreed to pay employee texting bills. Noah Glass says that, early on, mobile carriers told him they'd never seen so much SMS activity than they did with Twitter.
One early Odeo employee, who preferred not to be named, says "Ev decided there was something interesting enough in Twitter that he wanted to buy all the assets and buy everyone out."
On the other hand, Twitter really only did have a few thousand users at the time Evan bought it and the rest of Odeo back from investors. Blaine Cook told us that there was a meeting during the summer of 2006 about whether or not to just turn the whole thing off. Everyone agrees it wasn't obvious that Twitter would a huge hit until six months later, in the spring of 2007, when it took over the SXSW Interactive conference in Austin, Texas.
It's worth noting that months after buying Odeo back from its investors, Evan Williams offered a select few of them a chance to buy into Twitter at a a $25 million valuation.
Tim O'Reilly, an Odeo investor who also who runs O'Reilly Media and its famous Web 2.0 conferences, reflects: "It's certainly possible that Ev is more Machiavellian than he appears. I don't know. I take it at face value that he was doing what he thought was best."
"It's very easy to look back and say, 'Wow, I'd like to have a bigger piece of that.' It's very easy to say that."
Either way, Odeo's investors agreed to let Williams buy them out.
Image: YouTube
The first thing Evan Williams did when he bought Odeo back from investors was to change its name to Obvious Corp.
What he did next was shocking to everyone involved.
He fired the man who was Odeo's founder and Twitter's biggest champion, Noah Glass.
"I remember when Noah told me he wasn't going to back to Twitter," says McClure. "I was shocked."
"We were out at night and he said it looked like he wasn't coming back. He had taken a two week break and I thought it was just a little break. Hard to hear him say that. It kind of blew my mind because I felt like we all identified with this, and of course I was worried about the team."
Why was this so shocking?
Probably because everyone we talked to, from employees to the more hands-on investors, all agreed that Twitter would not have been created without Glass.
Odeo engineer Evan Henshaw-Plath describes Glass, Dorsey, and Florian Webb as Twitter's "actual founders."
"Noah got really into it," says Henshaw-Plath. "Seriously obsessive. I-don't-care-if-my-marriage-dies-I'm-focused-on-this into it."
"Noah cared a lot about Twitter," says Blaine Cook, the Odeo employee who eventually became Twitter CTO. "If you look at his profile now, it says 'I started this.' And he did."
George Zachary, the partner at Charles River Ventures and lead Odeo investor, tells us that while Jack Dorsey is "the real core founder" of Twitter, Noah was a "huge advocate."
Why did Williams fire Glass?
The most common answer we heard is that the two had clashing personalities. Everyone says so. Basically: Glass is loud and Williams is quiet.
"Noah, you can always hear him talking," says McClure. "Ev, you can always hear him thinking."
Along these lines, one Odeo employee says that Williams might have fired Glass because Glass was volatile. The employee remembers a time when Glass was "a little hard" on girl named Crystal. "I think it was a day that he was kind of stressed. He was a little volatile."
Others, including Glass, suggest the reason he might have been pushed out is that he expressed too much interest in running Twitter. Early on, before Evan or Biz were believers in Twitter, Glass wanted to split the product off as its own company and be CEO.
"That was the plan - take this thing and spin it off," he says. "I actually had done all the paperwork and was ready to roll. It was ready to go. That's probably part of the reason why I'm no longer involved with it."
"I told [Williams] I would do things differently. When you speak truth to power, the ramifications can go a lot of different ways."
Zachary says that the reason Evan Williams ended up in control of Twitter is that "Evan had the money to be able to buy out the shareholders. Noah did not."
Most everyone we talked to seemed pretty sure that Glass walked away from Odeo/Obvious/Twitter with some equity in hand. The truth is that, at first, he did not. Later, perhaps when Twitter was spun out of Obvious, he got some.
"I came away with something. If I'd stayed, if it would have gone the other way, I would have come away with a lot lot more."
Glass says the whole mess left him feeling "betrayed."
"I felt betrayed by my friends, by my company, by these people around me I trusted and that I had worked hard to create something with. I was a little shellshocked. I was like, 'Wait...what's the value in building these relationships if this is the result?' So I spent a lot of time by myself. And working on things alone."
"History is written by the winners." – George Orwell
In March 2011, five years after Twttr was born, Howard Stern had Christopher "Biz" Stone on his show.
Evan Williams, Noah Glass, Biz Stone
Stern asked Stone about the founding of Twitter, and Biz relayed this version of events:
Howard Stern: So you and Evan are working at Google, you turn to him one day, and say what?
Biz Stone: I went out to California to take a risk. I was at Google for two years, they IPO'd, I suddenly found myself very comfortable. I thought this isn't risky. Evan and I quit Google, we started this Odeo company. Problem with Odeo was although it was a good idea and we raised venture capital to build it, we were not using the product. We were not emotionally invested in the product. If you're going to do a startup and you're going to take that risk, you have to be emotionally invested.
HS: Did you have any success with it? Did anyone sign up?
BS: It wasn't a complete dud. It wasn't lighting the world on fire like Blogger.
HS: How much money had you raised?
BS: We had raised about $5 million.
HS: It takes money to put up the infrastructure. That's the thing. And with these companies it's difficult, because you gotta offer it free first. Like Facebook and all that. You gotta offer it free so that people start using it.
BS: Big leap of faith and you have to start building. It wasn't lighting the world on fire. We weren't thrilled by it. What had happened was during this time, my other cofounder Jack Dorsey and I had become close collaborators and friends. We were starting to talk about what else we could do besides this that would be more fun. And Evan, who was our third cofounder, had this great idea. He said, "You guys seem to be getting along really well. Why don't you just take a break? Take two weeks and build something totally different. Something fun, something you guys really want to do.
HS: And when someone says that to you, you can build that because you know how to program? You write the script, so to speak?
BS: Right. So Jack and I built the prototype. We took two weeks and built the working early model of Twitter and showed the rest of the team. We said, "What do you guys think?" People were pretty underwhelmed.
Biz Stone: I went out to California to take a risk. I was at Google for two years, they IPO'd, I suddenly found myself very comfortable. I thought this isn't risky. Evan and I quit Google, we started this Odeo company. Problem with Odeo was although it was a good idea and we raised venture capital to build it, we were not using the product. We were not emotionally invested in the product. If you're going to do a startup and you're going to take that risk, you have to be emotionally invested.
HS: Did you have any success with it? Did anyone sign up?
BS: It wasn't a complete dud. It wasn't lighting the world on fire like Blogger.
HS: How much money had you raised?
BS: We had raised about $5 million.
HS: It takes money to put up the infrastructure. That's the thing. And with these companies it's difficult, because you gotta offer it free first. Like Facebook and all that. You gotta offer it free so that people start using it.
BS: Big leap of faith and you have to start building. It wasn't lighting the world on fire. We weren't thrilled by it. What had happened was during this time, my other cofounder Jack Dorsey and I had become close collaborators and friends. We were starting to talk about what else we could do besides this that would be more fun. And Evan, who was our third cofounder, had this great idea. He said, "You guys seem to be getting along really well. Why don't you just take a break? Take two weeks and build something totally different. Something fun, something you guys really want to do.
HS: And when someone says that to you, you can build that because you know how to program? You write the script, so to speak?
BS: Right. So Jack and I built the prototype. We took two weeks and built the working early model of Twitter and showed the rest of the team. We said, "What do you guys think?" People were pretty underwhelmed.
When we heard this interview, we'd already been working on this story for a while. We'd talked to Odeo investors and Odeo employees who had all seen the creation of Twitter firsthand.
What Biz told Howard Stern sounded different from what all those people told us – especially in the way it left out Noah Glass and Florian Weber.
We couldn't help being a little offended for them.
Earlier this month, Noah Glass, who had not updated his Twitter, YouTube, or blog accounts in almost two years, posted to Twitter that he was "putting life into cardboard. moving back to San Francisco. back to life."
Not long afterwards, he responded to one of our emails. We set up a phone call.
Touching on what it feels like to be left out of history, how hard it is to be "betrayed" by your friends, and whether Ev Williams lied to Odeo investors about Twitter's numbers, it went like this…
A Note: We reached out to Evan Williams several times to discuss this story. He never responded. After we published this story, he tweeted, "It's true that @Noah never got enough credit for his early role at Twitter. Also, he came up with the name, which was brilliant."
Special Thanks: This story wouldn't have been possible without immense help from Business Insider's Dylan Love.
Read more: http://www.businessinsider.com/how-twitter-was-founded-2011-4?op=1#ixzz1iR3njovV
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