Jack Dorsey wasn't content to unleash just one revolution. He released two.X
Dorsey co-founded Twitter (TWTR) with three others in 2006. He first served as CEO from 2007 to 2008. But it was after returning as CEO in 2015, Twitter really took off. Tweets are now a key part of global discourse — and revenue at the company is up more than 50% in that time.
Starting one of the world's most popular online services would be enough for most. But during his break from Twitter in 2009, Dorsey started Square (SQ). Square is an even bigger win for investors and for anyone that needs to accept mobile payments.
Along with friends Jim McKelvey and Tristan O'Tierney, Dorsey invented square credit card readers that connect to cellphones. Shares of Square are up more than 700% since their first day of trading in November 2015. That makes the S&P 500 look like it's standing still with a 51% rise.
Dorsey remains CEO of both companies. And he's the soul of their success.
"I began working with Jack when he was 15 and riding his bike to work," McKelvey, author of "The Innovation Stack: Building an Unbeatable Business One Crazy Idea at a Time," told Investor's Business Daily.
Dorsey, even as a teenager "displayed an unusual ability to quietly focus, even in the first minute when we met," McKelvey said.
Honor Focus Over All
How does Dorsey get so much done? Paradoxically not by multitasking, but by focusing his attention, McKelvey said.
Dorsey prizes in-depth understanding over idle chatter. McKelvey saw this when the two worked on projects together. "I gradually learned that (Dorsey) would never interrupt, giving you time at the end of a thought to add any additional ideas," McKelvey said. "His ability to embrace silence means he gets much more information from any conversation."
Dorsey: Know Innovation Is Hard Work
Dorsey, 43, grew up in St. Louis. He had a speech impediment. That made him a loner. And it was hard to imagine him becoming one of the global communication innovators.
Dorsey spent most of his free time with the IBM Jr. computer he was given when he was 8. At 14, he became interested in dispatch routing. Dorsey eventually created and shared software still used for taxicab logistics. That led to an attempt to start a bike messenger business. But he found little demand.
Dorsey attended Missouri University in the mid-1990s. He transferred to New York University. But he dropped out a semester short of graduation in 1999. He got a job as a programmer with a bike messenger dispatcher. How? He hacked its website. And he showed the owner how easy it was.
In early 2000, Dorsey moved to Oakland, Calif. There he began thinking about ways to extend the capabilities of AOL's Instant Messenger. The service allowed users to let friends know if they were away from the computer. Unable to sleep one night, he got up and sketched out ideas for sharing a more detailed personal status update.
In 2005, Evan Williams, owner of the podcasting pioneer Odeo in San Francisco, hired Dorsey. His partners included Biz Stone and Noah Glass. Dorsey soon earned a reputation for his meticulously accurate work.
Brainstorm To Produce Innovation
By 2006, Odeo was struggling to find a winning product. Group brainstorming provided the breakthrough, though. Glass urged Williams to consider Dorsey's idea of an expanded text status update service.
Williams was best-known for creating one of the first applications for blogging. He thought the update could be a "microblog" that allowed sharing of opinions and news with friends.
Like blogs and unlike instant messaging, these could remain accessible in chronological order to anyone in a group. Stone owned a Treo, an early cellphone with messaging capability. And he saw the future need for constant updates.
The sound of a phone vibrating when a call or message came in reminded Glass of brain impulses that cause muscles to twitch. Looking that word up in a dictionary, he saw the word twitter: "The light chirping sound made by certain birds. A similar sound, especially light, tremulous speech or laughter."
Everyone liked it for the name of the company. And Dorsey sent the first tweet to co-workers in March 2006. The service went public in July. And the following April, Twitter launched as an independent company. Dorsey was CEO.
Despite a lack of management experience, he focused on priorities in an early memo: "We have only four priorities: performance, usability, development efficiencies, and costs."
Rebound From Adversity With Bold Action
Twitter boomed — almost too much. In 2007, an average of 5,000 tweets were being sent a day. The next year? 300,000.
The system was overwhelmed and often broke down. So Dorsey was pushed up to the chairman position in October 2008. Williams took day-to-day management for the next two years. And Dick Costolo, a former executive at Alphabet (GOOGL), became CEO.
Dorsey took the setback as an opportunity. He'd returned to St. Louis in 2009 to pause and reflect. McKelvey, a glass blower at the time, mentioned he lost a $2,500 sale. Why? He could not accept credit cards.
Solving that problem resulted in Square. Dorsey and McKelvey's new card reader turned smartphones into credit card terminals. They founded Square in 2009, bringing Dorsey back to San Francisco.
To this day, Square stays true to its simple roots. Dorsey has an unusual transparency rule at Square. Any meeting of more than two people must distribute notes to the entire staff. Doing this keeps everyone informed.
And that's important, as Square is growing fast. Revenue is up more than 300% since 2015 to $5.1 billion. And it made more than $300 million in the most recent 12 months, reversing a loss in 2015. The stock carries a 98 IBD Composite Rating.
Prioritize Profits At The Right Time Like Jack Dorsey
Dorsey returned to Twitter as executive chairman in 2011. And he reclaimed the CEO role in 2015.
"I spend 90% of my time with people who don't report to me, which also allows for serendipity, since I'm walking around the office all the time," he told Forbes. He gives each company he runs the attention it needs according to its priorities.
In its first decade, Twitter had its hands full managing growth. Investors were patient about making a profit.
Advertising now provides the bulk of revenue, and Twitter recently changed reporting to focus on monetizable daily active usage, or mDAUs. Even in the difficult first quarter of 2020, mDAU rose 24%. Since Dorsey took over as CEO in 2015, revenue is up 57%. And profit hit $1.3 billion, up from a loss in 2015.
"In this difficult time, Twitter's purpose is proving more vital than ever," Dorsey told investors in May. "We are helping the world stay informed, and providing a unique way for people to come together to help or simply entertain and remind one another of our connections."
Dorsey's persona comes through in the companies he runs. "Jack is a calm, confident, and creative leader," Stone, author of "Things a Little Bird Told Me: Confessions of a Creative Mind," told IBD.
Stone says the philosophy of author Antoine de Saint-Exupery sums Dorsey up. Saint-Exupery said: "If you want to build a ship, don't drum up people to collect wood and don't assign them tasks and work, but rather teach them to long for the endless immensity of the sea."
And that's Dorsey's power, Stone says. "Jack inspires people."
Jack Dorsey's Keys
CEO and co-founder of Twitter, a leading microblogging and social networking service founded in 2006. Also, co-founder, chair and CEO of Square, which has provided merchant payments services since 2009.
Overcame: Lack of experience as a leader while first assuming the CEO role at Twitter in 2007.
Lesson: Ignore conventional wisdom about what can succeed. "Public conversation can help the world learn faster, solve common problems, and realize we're all in this together."
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