7 Take-Aways From A Fireside Chat With Twitter's CEO

| About: Twitter, Inc. (TWTR)

It is rare that a public company CEO sits down for a two hour and twenty-one minute interview. Kudos to Sarah Lacy of Pando.com for a great fireside chat with Dick Costolo, Twitter's (NYSE:TWTR) CEO. The interview covered Costolo's background before Twitter (including his 5 years in comedy) as well as his management style, perspective on the IPO roadshow and his vision for the company. I am bullish on Twitter (though I haven't established a position yet) and believe that its monopoly on realtime conversation is a huge asset. In this article I will discuss my seven take-aways from the fireside chat.

Low Key Guy

During the IPO roadshow, Costolo made a bet with a banker that the next person to walk into the San Francisco bar where they were sitting would not recognize him. He won that bet.

He is not a Steve Jobs, Marissa Mayer or Mark Zuckerberg. There is no cult of personality around the guy running Twitter.

Thoughtful Management Style

Costolo talked more about his management style than Twitter itself.

I was impressed with his comments on management. At the very least, it indicates that he has put a lot of thought into the art of managing.

Twitter is not Costolo's first CEO assignment. He founded and served as CEO of a few companies before selling one to Google (NASDAQ:GOOG). It seems that his previous CEO experience, as well as his Google experience, have prepared him for the job.

Costolo brought over from Google some of its practices for quantifying and measuring quarterly goals. He said that these quantifiable goals help "make sure everybody understands what [he] understands." This seems like an obvious management technique, but is hard to get right.

Here are some more articles about Costolo's management style:

Unfortunately, there was not much discussion about M&A. Smart acquisitions are critical for successful big tech companies because they constantly need to reinvent themselves to stay ahead.

Google, for instance, owes much of its success to companies that it acquired.

Twitter has made a few acquisitions, but no game changing ones. It will be interesting to see how Costolo approaches M&A.

Velocity Of Release

Costolo talked about how he has pushed the company to speed up the "velocity of release" of new features (listen around minute 1:02 and 1:24). This is the right thing to focus on.

By the way, I am very pleased with the new updates to the Twitter App that were released today.

Big Question From Roadshow

Having just come off the IPO roadshow, it is interesting to hear Costolo's impression of the questions from investors. Around minute 21, he says that one of the investors asked, "[Twitter] is completely indispensable to me, why isn't everybody on this?"

This sentiment is part of the bull case for Twitter. By the time Facebook (NASDAQ:FB) IPO-ed, there was already Facebook fatigue. Facebook had already achieved huge penetration and was hyped to death (remember that movie?). Twitter is at a much earlier stage in its development, which could mean that there is more upside potential for public market investors.

Unique Content

Twitter's monopoly on realtime public conversation is the cornerstone of my bullish thesis on the company.

Costolo, however, pointed out another key asset: unique content. From Lady Gaga to the NFL, famous and/or important people are creating unique content on Twitter through their tweets (listen around minute 1:24). Twitter is a great tool for syndicating content from other sites, but it is also a place where unique content is created and covered elsewhere.

Twitter is in a good position as long as it remains one of the places (maybe the leading place) where the "conversation" happens.

Big Goal, Modestly Stated

Costolo has a big vision for the company. He said that one of Twitter's core values is to reach everybody on the planet. However, it seems that he is going to go after this goal in a disciplined manner.


Although Twitter and Snapchat are not direct competitors, there is some overlap. Costolo had good things to say about Snapchat.

From an investor perspective, I prefer a CEO that recognizes, and even praises, the competition than one that dismisses other companies.

Furthermore, Costolo picked up a few things from Snapchat (mostly the design and the importance of messaging) and is incorporating them into Twitter's new app release.


Costolo made a good impression. He is thoughtful about management and has a good background for the job of CEO of Twitter.

Back in the '90s, I remember when websites first started appearing in TV commercials. That was a sign that the internet had arrived.

Over the last few months, a similar thing is happening with Twitter. You can't watch an NFL game without seeing the Twitter handles of the broadcasters and the hashtag for that game's matchup. Twitter is becoming an integral part of the way people communicate in realtime.

Facebook lacks the realtime element.

Messaging apps are great for realtime (Snapchat, Whatsapp, etc.), but are limited to you and your friends/family. They lack the public broadcasting element that Twitter has.

The combination of realtime and public elements give Twitter a unique positioning in the tech/social/broadcast/communications landscape.

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Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in TWTR over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I may trade any of the securities mentioned in this article at any time, including in the next 72 hours.

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