Information vs. Socializing: How Twitter Created a New Way to Stay Informed

Twitter is the hotspot for quick social media posts and sharing news. Everyone from celebrities to politicians, to artists use this platform to keep their followers up to date on the most recent news. The site’s simple design and use make it a great way for an individual to notify a large number of people at once. It’s not like mass emails that followers have to sign up for or a Facebook post that gets buried under a pile of other posts, advertisements, and videos. It’s clean and easy. This has made it particularly useful for those who want to get the word out quickly about an event or occurrence.

History

Twitter began as an idea of Jack Dorsey’s, while he and the other board members of a podcasting company called Odeo were having a brainstorming session. He explained how an SMS based service would be a great way to communicate with a group of people, and the others agreed. They began working on what they called twttr. The word ‘twitter’, meaning the bird chirps and small bursts of information seemed perfect for the idea, and the five-character version was reminiscent of the popular site Flickr and the five-digit shortcodes used in short messaging service (SMS). They began working on the project in March of 2006, with the first prototype used internally by Odeo employees. Six months after its launch, they were able to purchase the domain name Twitter.com and changed the name to match. The full version of the platform was released publicly in July of 2006.

Odeo members Evan Williams, Jack Dorsey, Biz Stone, and others shifted from Odeo and created Obvious Corporation, acquiring Odeo and its assets from the shareholders and investors, putting it into their own hands. Twitter became its own company in April of 2007.

At first, no one was sure how to label this new social platform. It wasn’t like anything else currently available. Some called it a social network and some called it microblogging. All agreed, Twitter was more about sharing information than about socializing and the idea spread like fire. The singular event that really fanned the flames was the South by Southwest Interactive (SXSWi) conference of 2007. Twitter used the event to show people what it really was like by setting up two 60-inch plasma screen, placing them in the conference hallways and streaming Twitter messages during the event. Attendees used the platform to keep in touch with each other and those speaking talked about the new service. Prior to this event, Twitter had around 20,000 tweets per day, but while the SXSWi conference was going on, that number jumped to around 60,000.

Twitter grew quickly in the beginning. In 2007 there were 400,000 tweets every quarter and by 2008 this had grown to 100 million. In January of 2009, it was ranked third social network on Compete.com. This growth didn’t slow down over the next few years, as in 2010, in February, use of the site had reached 50 million a day, and by June there were 65 million every day. To take advantage of this success, Twitter announced they would begin to offer promoted tweets as a form of advertising on April 13 of 2010. They immediately had interested companies, including Best Buy, Starbucks, and Red Bull. In only a year, it had reached 140 million tweets a day in March of 2011. Twitter’s numbers increased every time a major event was happening, such as prominent sporting events or highly popular movie releases.

A year later and the wildly popular microblogging site was up to 340 million tweets a day. The 140 million users were keeping the platform active and by the end of the year, they had reached 200 million active users.

Acquisitions and financials

In the beginning, the idea was unique and inspired, and Twitter was able to raise over $57 million from venture capitalists. The exact number hasn’t been made public and the initial funding has been speculated to have been between $1 million and $5 million. The next wave of funding totaled $22 million, followed by the third that reached $35 million in 2009 from Benchmark Capital and Institutional Venture Partners. There was also funding from other investors for an amount that hasn’t been disclosed. Twitter has been backed by several big names, such as Bezos Expeditions, Spark Capital, and Union Square Ventures.

In response to a 2008 The Industry Standard statement that said Twitter faced trouble with its long-term viability due to its lack of revenue, Todd Chaffee, a Twitter board member, presented the idea of using e-commerce to allow Twitter users to directly purchase off the site. There was already quite a bit of merchandise being displayed and shared, so allowing these direct purchases seemed the right move. Twitter’s growth and success instigated Bill Douglas, a communications consultant, to confidently state in a March 2009 interview that within six months Twitter would be worth $1 billion. This prediction came true when in September they reached the value of $1 billion.

In July of that same year, Hacker Croll illegally stole documents that were then published by TechCrunch showing the predicted Twitter revenue to reach $400,000 by the third quarter of 2009 and then to reach $4 million by the fourth quarter, although it wasn’t disclosed how this jump was to take place. Even more amazing was that these documents also projected that Twitter would reach $1.54 billion in revenue and $111 million in net earnings by the end of 2013. This release wasn’t met kindly by Twitter. Co-founder Biz Stone stated that there may be a legal response to the person who hacked them.

Despite these bold predictions, Twitter earned around $45 million in 2010 in annual revenue, operating at a loss for most of that year. In August, there was an investment of $800 million led by Digital Sky Technologies and in December of 2010, the company was able to raise new venture capital to the tune of $200 million. Twitter shares were selling for $34.50 in March of 2011 on Sharespost.

Because of the way Twitter can gain revenue through users’ images royalty-free, they were able to use that, along with forming an agreement with World Entertainment News Network (WENN) to earn revenue. They went a step further by creating a self-service advertising system for small businesses. Throughout 2011, they were able to earn $139.5 million in advertising. At the end of 2011, Alwaleed bin Talal, a Saudi prince, invested $300 million. Twitter was valued at $8.4 billion. By 2016, this had increased to $15.7 billion.

Early in 2012, on February 21, Twitter entered into a partnership with Yandex. This Russian search engine utilizes the real-time news feeds that Twitter offers. This same year, on October 5, Twitter bought Vine, a company where users were able to upload short video clips to share with others. They released it as a separate, standalone app.

Twitter planned to raise $1 billion for its start in the stock market and they announced they had filed the necessary paperwork with the US Securities and Exchange Commission on September 12, 2013. They amended their filing in October and stated they would list on the New York Stock Exchange. Their 70 million shares were listed at $26 on November 6 of 2013.

The very next day, while Twitter shares opened at $26, it closed the day at $44.90, resulting in the company being valued at about $31 billion. Because of this, early investors increased their capital, as well as executives. This meant that Even Williams and Jack Dorsey ended up gaining $2.56 billion and $1.05 billion. The current CEO, Dick Costolo, who had stepped into that role in 2010, gained $345 million. The following year, in February, Twitter released outcome the outcome results of it going public. The net loss was $511 million in the fourth quarter of 2013. After this, Twitter’s 2014 first quarter revenue amounted to $250 million.

Also in 2014, on June 4, the company made the announcement that they planned to acquire Namo Media. This firm specialized in what’s called ‘native advertising’, a type of advertising that is more cohesive with the platform it’s on and the functions therein. They wanted this mainly for the mobile appearance and use. This very same month, on the 19, they also announced that they had made a deal with a company called SnappyTV. This allowed them to share pieces of video from televised broadcasts. The amounts involved in this deal were never released publicly. Next, Twitter purchased CardSpring, keeping this amount private as well. CardSpring allowed buyers on the site to sync coupons to their credit cards to receive discounts when making purchases in stores. This would entice more retailers to use Twitter. Later in July, Twitter made another announcement that they were acquiring Mitro. This small startup was a password-security company. For the next several months, Twitter was a bit quiet, until October 29, when they came out and stated they had formed a partnership with IBM to help businesses use Twitter data to better understand customers and current trends. Twitter continued to stay busy. In February of the following year, they stated that they had acquired an advertising network for social media stars called Niche. The price of this acquisition was said to be $50 million. Twitter announced their acquisition of Periscope on March 13, 2015. This app allowed users to stream videos live. Twitter also acquired TellApart. This was an ads tech firm.

Towards the end of 2015, Twitter was seeing a decrease in its growth. Financial news websites reported made it clear that Twitter was slowing down. This didn’t seem to stop Twitter though. It announced in June of 2016 that it had acquired Magic Pony, an artificial intelligence (AI) startup for $150 million. Later this same year, Twitter received some takeover approaches from Alphabet, Microsoft, Verizon, The Walt Disney Company, and Salesforce.com. As a result, Twitter shares increased by 20% in September and the board of directors discussed making a deal. However, no deal would be made, as at this time Twitter was facing some sharp criticisms about harassment and gross misuse of their service, allowing abusive and bullying tactics on the platform. The potential buyers decided to back off to avoid being tied to the bad publicity.

Challenges and Controversies

Despite Twitter being primarily used for information sharing, it hasn’t escaped controversy. In fact, it’s faced quite a few over the years. In 2009, there was a large number of compromised accounts. While this is normal for most social media platforms, these were all due to a Twitter administrator was hacked with a dictionary attack and involved 33 high profile accounts. This resulted in the US Federal Trade Commission (FTC) bringing charges against Twitter. This would mark the first time the FTC charged a social platform for a lapse in security. These charges were settled on June 24 of 2010 and mandated that Twitter instigate security measures, such as developing and maintaining a security program that’s independently audited biannually.

In May of 2010, İnci Sözlük, a Turkish online community reminiscent of 4chan, found a bug within the system that forced users to follow accounts without making them aware and without their permission. In September, it was discovered that there was a ‘MouseOver’ exploit. When a user would simply move their mouse cursor over a blacked-out part of a tweet, an XSS Worm would activate, re-post itself, and open links. This exploit was reused for pornographic websites and pop-up ads. Despite it being reported to Twitter, a user and developer found it to still be exploitable and used it to create colored messages. This virus was spread for fun and had no harmful results, but the potential for users to use it illegally for criminal activity was easy enough to be highly concerning. Twitter quickly patched the bug after this and announced they would not be pressing any charges.

In 2012, it became common knowledge that you could purchase a large number of fake followers on Twitter. People trying to increase their notoriety would use these ‘bot’ account followers to seem more popular and therefore gain more attention. This wasn’t just used with singers and actors, but also with politicians. In fact, it was found that most high-profile politicians used this tactic to gain more attention. Despite efforts from Twitter to cut back on fake accounts, this still remains an issue. While some of these fake accounts are created for monetary gain, some are made by campaign workers and friends to help their candidate or famous associate. In 2013, two researchers from Italy found that 10% of all accounts on Twitter were likely to be bots. Many others estimate it’s actually higher than that.

This same year, there was once again a number of high-profile accounts hacked, including The Guardian and the Associated Press. Twitter rolled out a two-step login verification to try to counter this. Later on, there was a public demand for further security measures when several well-known women were sent rape and death threats. The outcry was so strong that a petition was signed by 100,000 people and Twitter introduced a ‘Report Abuse’ button.

The ‘bot’ followers came back into the spotlight when, in June of 2014, Politico revealed an analysis they had done. This resulted in uncovering the accounts with the highest number of fake followers. Former US President Barack Obama came in with the most at 46.8% and Debbie Wasserman Schultz, the Democratic National Committee Chairwoman came in with more than 35%.

Twitter was criticized in 2014 when images of the beheading of journalist James Foley was shared over the platform. Twitter responded to the outrage by saying that they would remove images of people who had died when requested by family or other authorized individuals and suspending accounts found to be spreading the gruesome imagery.

Throughout the years following, there were several bugs and security weaknesses found that Twitter worked to fix quickly. However, a consistent spot of criticism for Twitter is how they collect data on their users, then shares that data with third parties. This allows for more personalized advertising based on tweet history and activity. Within their privacy policy, they also hold the right to sell this information if Twitter is sold. 

In 2017, Twitter responded to the report of Russian interference in the 2016 US presidential election by banning some Russian media outlets that were tied to this interference. This was deemed a violation of free speech by the Russian foreign ministry. Later in 2017, in November, Twitter was revealed to be one of the major corporations hiding money in offshore companies to avoid paying taxes. 

In 2019, now CEO Jack Dorsey announced that Twitter would no longer run political ads, stating that they were too effective and would be too influential to its users. This political influence caused ripples when conservative politicians and supporters claimed they were being censored more than their liberal counterparts. 

CEO Jack Dorsey

Dorsey was born on November 19, 1976. He grew up in Missouri in a stereotypical American home with a father working and a mother who took care of the household needs. He attended a Catholic high school and was the occasional fashion model. His interest in technology and software started early. He attended the University of Missouri-Rolla for around two years before transferring to New York University in 1997. It was here that he would come up with the idea for Twitter and its success would drive him to drop out of college with only a semester left to graduate. He became CEO of Twitter on October 5 of 2015. He’s received criticism for his stance on controlling the information spread across Twitter, with some saying the control is biased or too limiting and others saying Twitter doesn’t do enough to limit misinformation from being spread. Jack Dorsey has maintained that his goals for Twitter are to make the platform more civil and a healthier environment for its users, though he has also admitted that the structure makes it fairly easy for abuse and harassment to happen.

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