How Biz Stone's Biggest Mistake Spawned Twitter

[TechCrunch]

"The first, second, third company I went to work for, somehow I screwed them all up. Doing startups is all about making mistakes," Biz Stone nervously admitted onstage at the New Context Conference in San Francisco. He'd just confessed that he didn't prepare anything so will talk about his biggest screw-ups, including one that could earn him many millions of dollars when Twitter IPOs.

"Making mistakes for fun and profit," the Twitter co-founder joked. Nowadays he's running a foundation focused on animal welfare, and a new company called Jelly that's still in stealth. But it all started with Xanga, where he made his first of three big stumbles.

Culture Circa 1999, Stone was working as a designer. Some of his friends had graduated from college and became consultants, which they promptly figured out they hated.

"Hey, let's start a web company" one told him, because that was enough detail in those days. The company was Xanga, an early blogging platform that became a popular place for teens to pour their hormone-addled hearts out. Stone said "I loved coming up with these feedback loops, things that made people feel a certain way." One was 'eProps', a feature for showing appreciation for someone else's writing. "I liked being able to express myself by letting other people express themselves," Stone recalled.

"[Xanga] grew pretty quickly...but my friends started hiring their consultant buddies. In my vision we'd start a company right next to MIT and hire these great smart kids out of MIT and have this cool culture of innovation and ideas. But that was immediately at odds with my friends' friends who said we had to be in New York," Stone acquiesced.

He wanted an office near Union Square and the East Village, close to cool restaurants. "No, let's get the cheapest space possible near the Port Authority in this crappy building" they demanded.

"The culture of the company started to dramatically shift away from innovation and a way of making people feel. I really didn't like working there." He flashed back to a rough morning in the Big Apple: "I woke up and said 'I didn't want to go to work', complaining to my wife."

"So what I did was I quit, which was a mistake, because I was too young and too green. What I should have done was work really hard to make a change in the company culture. The lesson I learned was that company culture at the beginning is incredibly important. You have to tend to it...almost as much as you tend to your product."

Whether you like it or not, a "super-organism" will emerge from your early employees, and that will be your company culture. "You might get lucky and it will be awesome," but if you don't pay attention to it, he said it can become caustic. "My mistake was not paying attention to company culture. That would come into play later for me and it was a good lesson learned."

Mission "I ended up back in my mom's basement blogging. I really enjoyed being on the other side, and now all I have is a blog. I'm not building anything and I felt like it was a big mistake." The name of his blog may have saved him, though. It was called 'Biz Stone, Genius'.

"I pretended like I had all these genius ideas while I was really in my mom's basement." He got noticed, got a book deal, and when another blogging platform called Blogger was acquired by Google, Stone says "[its founder] Ev Williams reached out to me and invited me to work at Google."

"Obviously working at Google wasn't a mistake" he said hinting at its coming rise to power. "I used to just walk around. I don't know if I was supposed to, but I'd just open doors and see what people were doing."

One led to a guy surrounded by DVRs. Stone asked what he was doing. "I'm recording everything being transmitted on TV all over the world." Stone backed out saying "Okay, carry on, carry on." Another led to "a sea of people operating illuminated foot-pedal scanning devices. "We're scanning every book ever published." "Okay, carry on, carry on," Stone repeated.

"A feeling I got from working at Google was that technology could solve any problem. Yes it's fantastic, but what I realized later was there's technology and there's people. Google had its list ordered: Technology. People. And I think the right order is: People. Technology. You have to think about people first and technology second. Hopefully technology gets out of the way."

"The other thing I learned was their whole aphorism, their internal words to live by is 'Don't Be Evil'. Originally I thought that was great, but then I realized 'Don't Be Evil' isn't 'Be Good'. It's measuring everything on a scale of evil." Stone put on his villain voice, stating "We're going to assume we'll always be inclined to evil. Well let's try to remind ourselves not to be evil."

"That's when I realized aphorisms framed in the negative don't work. A better aphorism might be 'Be Good'. Don't have an aphorism that 'don't be something'.

That came in handy as he plotted the course for his new company Jelly. At a board meeting they were discussing a way to communicate their idea and he realized it was really artificial. 'Don't be artificial' could be their aphorism! But then he caught himself, remembering the Google days. "Our thing can be 'Be Genuine'. Let's just tell our users what we're doing."

The irony of Jelly being in deep stealth right now and not telling anyone what it does seemed lost on Stone, but he'd come away understanding two big mistakes Google was making, determined not to repeat them.

Emotion "I was on the car ride home with Evan Williams and I thought I had this genius flash," Stone says, starting to get fired up.

"Evan! You can record your voice in your browser with Flash." Ev replied, "Yeah, we're doing this with AudioBlogger." But Stone snapped back, "If you can talk to your browser, we can convert it to an MP3. And there's these iPod things everyone seems to love them. What if we took what you said to your web page and converted it to an MP3 and [put it in an attachment in RSS]."

Next, Stone is dreaming up a way to automatically find RSS items with MP3s and sync them to your iPod. "Couldn't we do the democratization of radio!?!" It turns out other people were already creating podcasting. "But for like 10 minutes we thought we were total geniuses." Stone laughed.

The two decided to quit Google and form Odeo, but it was a tough time for Stone. Google was on a winning streak. "I was watching the stock price go up and up with a calculator [figuring out how much money I was missing out on]. My wife said I shouldn't do that."

"Odeo, it turned out, was a big mistake." But a very profitable one with time.

After his talk, Stone granted me an audience in the green room to go deeper into the end of Odeo. "What happened was that Apple put podcasting in iTunes. That's normally a deathblow, but Evan came up with a really good pivot. I forget exactly. It was focused on social discovery. It was something the Apple guys weren't going to do. It sounded like a great idea."

But soon Stone told Evan, "What you wrote will basically make us the kings of podcasting. And he was like 'Yes'. But here's my question. Do you want to be the king of podcasting? He slouched and said 'no'. I said 'neither do I, and that's the problem'" Stone recounted to me in a dim back room of the New Context Conference hosted by Digital Garage and Neo. "We'd raised all this money, and we came to the painful realization that even if we were successful at it we didn't want it. Evan put his head in his hands and was like 'you're right.'"

Earlier onstage, he'd explained why ruling the next generation of talk radio didn't appeal to him. "The death blow to Odeo really was that we didn't even like podcasting. We didn't like listening to podcasts. We didn't like making podcasts. We were really shy in front of the microphone." He mimicked him and Williams trying to record, going back and forth, "No, you say something!"

"The problem was we didn't even like our own project. It pitched really well. It was very intercoursey but we didn't use it. This is when I learned a really valuable lesson."

"If I had one piece of advice to tell an entrepreneur, I always say, 'You have to have emotional investment in what you're working on.' That's what we lacked at Odeo. If you use your own product and giggle when you're making and using your own product, then the whole world saying it's dumb just rolls off of you, because you're loving what you're doing. And that ends up shining through the branding and communication, and that rubs off on people. It's infectious enthusiasm."

Nearing the end of his presentation, Stone pleaded with the technologists in the crowd, "You can't just be working on something because you think other people will like it. That's a huge mistake. The big thing I learned at Odeo was you have to be emotionally invested in your work or failure is guaranteed."

Origin Preparing to leave for a flight to New York City, Stone told me backstage that he hadn't read Nick Bilton's book "Hatching Twitter" yet, and since he'd forgotten his tablet, probably wouldn't get to read it soon.

As far as how he's depicted, Stone tells me excitedly, "No matter what it says, who gets books written about them? Abraham Lincoln! Whatever it says it's still pretty cool. I'm not too worried about it, as far as I know I'm not a major player because I didn't do anything too juicy. I was loyal to my friends," implying other founders weren't as upstanding.

How Stone hopes to be remembered is for fighting for the people. "I was the champion of users in general."

More specifically, he detailed to me that "When we wrote the Terms Of Service, I went through it personally and wrote tips. 'I know you never read this but this is what it means. You can't really delete a tweet once it's out there. If you don't like that maybe this isn't for you.' I tried to embody the user and explain that it's public, and fought any association with any particular government and tried to remain neutral."

Though he hasn't read Bilton's take, Stone agreed to give me his version of the Twitter origin story.

Apparently, Evan told Odeo's board that he and Stone were convinced they didn't want to do podcasting. They thought the board might install a new CEO, but it was them the board had invested in. Then they struck upon an idea, "What if we make a new company?" So they created Obvious Corp and bought Odeo.

Stone and Evan were still in the early stage of prototyping their new communication startup when Stone tells me about the moment "I realized I was emotionally invested in Twitter," referring to his third and most important lesson.

"I decided to do some home improvements, to tear up the carpet and reveal the beautiful hardwood floors underneath. But there was no hardwood floor, and there was a heat wave. I was sweating and my phone buzzed." It was a tweet from Ev, delivered as a text message. "Sipping pinot noir after a massage in Napa Valley." With a smile, Stone tells me the stark difference in their situations "made me laugh out loud. I'm laughing out loud and this is awesome." He knew this is what he wanted to build.

Tying together his presentation before leaving the stage earlier in the morning, Stone paraphrased Ben Franklin and reflected: "It's possible that the mistakes of your life are way more interesting than any of your successes. They certainly have been for me and they've helped me a lot." Xanga, Odeo..."They were all failures, but the next startup, Twitter, was a success and now I get to go ring the bell on Wall Street."

[Image Credit: Kim Kulish/Corbis, PJ Media]

[TechCrunch]