But when he got bounced from his late-night gig at
O'Brien isn't the only one who is tapping Twitter's mass-media potential. The social network, which will celebrate its five-year anniversary in March, last year signed up more than 100 million people who sent more than 25 billion updates called tweets.
Now Twitter finds itself at a crossroads, where it will finally have to answer the question: Can it make money?
"2010 was the year Twitter became a phenomenon," said
The man in charge of turning Twitter into a business is
It will now be up to Costolo to determine whether
Twitter becomes the next major independent Internet company like
Facebook or the next promising start-up to get bought or flame out like
Even with surging interest in Twitter, Costolo insists "we have every intention of remaining independent."
Twitter has turned down takeover offers from
Part of his entrance strategy was helping Twitter raise cash to expand while relieving pressure for an initial public stock offering, which Costolo says is still on the distant horizon.
That investors valued Twitter at nearly
In addition to advertising, Twitter gets millions of dollars from
"Twitter is big, it's here to stay and it's an important part of the Internet," said Twitter investor
The Web's third-most-popular social network began as
a side project growing out of founders Biz Stone and Williams' work on
blogging software and Twitter Chairman
Twitter has been embraced by political leaders and
celebrities who use it to promote themselves and companies that use it
to promote their products. The
Twitter also was instrumental in fueling dissent this week against Egyptian President
Twitter's influence is still dwarfed by Facebook, which has more than half a billion users and a vast global reach. A recent Pew Internet & American Life Project study showed that only 8 percent of adult Internet users in the U.S. use Twitter.
Yet Twitter is one of the rare Internet companies to
make such a big splash in the mainstream. It has been likened to social
networking service Facebook and
The success of Twitter has turned its low-key founders Stone and Williams into Internet celebrities. Twitter's
And Stone was recently a surprise guest on "The Colbert Report" to give host
Despite all the hobnobbing, Twitter's offices are as
democratic as the service. Company executives sit elbow to elbow at
long desks and lunch at small tables with employees. Staffers flock to
meeting rooms named for different types of birds. They take breaks to
learn "twideokinetics," a combination of meditation and martial arts,
with Twitter Chief Technology Officer
Stone said he was proud of Twitter's corporate culture, which has drawn top recruits from Facebook,
"Twitter was built on the fundamental belief that people are good and that if you give them the tools, they will do good things," Stone said.
Now Costolo is bringing business discipline to Twitter. The 350-person company is building data centers to cope with crushing traffic and has hired 250 people in the past year alone. It's trying to combat its image as an innovation laggard. And it has clarified its vision: It's billing itself as an information network that connects people to what's important to them as it happens.
Costolo is the quintessential operating executive whose job is to bring "order, focus, calm and execution," Twitter investor Wilson said.
For much of its young life, Twitter had no real plan except to keep up with its explosive growth — and to keep its users from seeing the "fail whale," the cuddly cartoon mammal that surfaces when Twitter is flooded with too much traffic.
Co-founder Williams said he was amazed that the service kept growing in popularity even when for so long there were so many hurdles to using it. Last fall he oversaw a redesign of Twitter's website that made it easier for users to post photos and videos, and easier for marketers to reach out to those users.
"Now we have gotten to the point that we can rise to the challenge," Williams said. "We are building on the lessons of the last couple of years that have shown us what Twitter is and how to run it."
Twitter's challenge is twofold: making the product easier and more engaging and, most important, making money.
Social media networks have been reluctant to flood their sites with ads targeting the millions of people who interact with one another online. Instead they have sought out less obtrusive and more natural ways to connect users with marketers.
For Twitter, that has meant trying to come up with ads that are so relevant and useful that users don't think of them as ads.
Costolo claims Twitter has "cracked the code" on that kind of advertising and predicts advertisers will soon spend millions of dollars on Twitter. Analysts say Twitter's efforts so far are promising.
Called Promoted Tweets and Trends, these ads show up at the top of Twitter feeds or trends. Advertisers pay anytime someone interacts with the Twitter update by clicking on a link, forwarding the update to friends or replying to it.
On average, 5 percent of Twitter users who see a
promoted Tweet interact with it, a rate that Costolo said was "an order
of magnitude greater" than most online ad campaigns. Promoted Trends go
for as much as
"We have definitely seen great success in partnering with Twitter," said
But some advertisers are not yet sold. Costolo is banking that will soon change. He concedes that there is "a ton of work left to do on the advertising platform," but says he has never seen an advertising business work so well so quickly.
Twitter is ramping up by building a national sales force, hiring executives from Facebook and
"We all believe that Twitter could be one of the great Internet companies," Costolo said. "We know we have to prove that, and we know we have a lot of work to do."
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