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Wednesday, December 3, 2014

This Man Was Supposed To Become Steve Jobs 2.0 — Here’s What Happened Instead

Jack Dorsey and Steve Jobs
In 2011, there was a thing smart people around the technology industry used to say. It was that Jack Dorsey, the cofounder of Twitter and Square, was going to be the next Steve Jobs.
Steven Levy, the esteemed technology journalist, wrote in Wired: “When people talk about who might fill the vacuum left by Jobs’ death, Dorsey’s name keeps coming up.
“Talented geeks once dreamed of working with Jobs; now they fantasize about working with Dorsey.”
Once, GigaOm’s Matthew Ingram saw Dorsey give a talk at conference. The next day, Ingram wrote a post saying that Dorsey “is at least a strong contender” to “don the mantle of the Apple co-founder and CEO.”
Ingram wondered, “Could Dorsey change the way we interact with technology and the world around us in as profound a way as Jobs?”
Among all those who argued that Dorsey was on his way to becoming Silicon Valley’s “next Steve Jobs,” the person who did it with the most authority was a man named Randy Wigginton.
When Wigginton was 14 years old, he used to wake up at 2:30 in the morning to work on software for a computer that he was building with some people he knew: Apple cofounders Steve Wozniak and Steve Jobs. Wigginton stayed at Apple until 1985, when Jobs also left the company.
Later in life, Wigginton went to work for Google. By 2011, he was working at a new startup: Jack Dorsey’s second company, Square.
When Steve Jobs died that year, Newsweek reporter Dan Lyons called Wigginton to talk about his old boss. At the end of the interview, Lyons asked about his new one.
“You now work at Square, which is run by Jack Dorsey, a guy that many people say reminds them of Steve Jobs. Do you see that similarity?” Lyons asked.
“Yes,” said Wigginton. “Jack has a vision for things that don’t exist yet … I truly believe he is the Valley’s next Steve Jobs.”
There are few reasons the comparison between Jobs and Dorsey was made so often back then.
The first was that journalists loved the notion. Steve Jobs was not only Silicon Valley’s best CEO ever, he was also the most fun to cover. He was by turns inspirational, mean, competitive, and funny. We didn’t want to see him go. We hoped someone else in the Valley would step up and become as interesting as him.
The second was that, in many ways, Dorsey and Jobs had similar life stories. Both dropped out of college. Both cofounded startups that would change the world. Both were fired from those startups. Both returned to those companies years later.
The third reason for the comparison was that Dorsey seemed to encourage it, if subtly.
In the summer of 2012, someone created a Tumblr blog called “Steve Jobs’ Spirit.” According to popular lore, this “someone” was an Apple employee or two.
The blog published one post. Its title was “Thoughts on Jack Dorsey, by Steve Jobs.”
It was written like a letter and addressed to “Jack.”
“I have no problem with your success,” it began.
“The problem is, you wholesale ripped off my identity. Grand theft. I don’t mean that in a small way, I mean that in a big way. You are not just trying to be the next me, you are trying to be me.”
Then, point by point, the post’s anonymous author goes over ways in which Dorsey had begun emulating Jobs.
Dorsey in Steve Jobs glasses
Jack Dorsey in Steve Jobs glasses.
It links to a photo of Jobs wearing his iconic rimless glasses with circular lenses. It links to a photo of Dorsey wearing what looks to be the same exact pair.
It quotes Jobs telling Playboy, in 1987, that, after getting fired from Apple, “I feel like somebody just punched me in the stomach.” It quotes Dorsey telling Vanity Fair that getting fired from Twitter “was like being punched in the stomach.”
It links to a video where Steve Jobs says of an Apple product, “No one has done this before.” It links to a video where Jack Dorsey says the same thing.
The post goes on like that, showing how Dorsey seems to be constantly quoting Jobs without attribution.
“Catch my drift?” the post concludes. “Stop trying to be me. Stop trying to be the next me. Be the first Jack Dorsey. Your time is limited, so don’t waste it living my life.”
A funny thing has happened since that anonymous admonishment was posted to Tumblr two years ago.
Smart people in tech stopped saying Jack Dorsey was the next Steve Jobs.
Why? And what has he become instead?

Terrible First-Time CEOs

The big thing people always forget about Steve Jobs’ career is that when the Apple board fired him in 1985 it was absolutely the right thing to do.
At that point in his career, Jobs was petulant and rude and impossible to work with. He had great ideas for products, but he was unable to ship them in time or under budget.
This is the way Jack Dorsey is most like Steve Jobs: He was also a lousy first-time CEO.
Dorsey was bad at being CEO of Twitter for different reasons than Jobs was bad at Apple. Whereas Jobs was intemperate, Dorsey was inept.
The first few chapters of “Hatching Twitter,” New York Times columnist Nick Bilton’s book about the creation of Twitter, reads like an indictment against young Jack Dorsey’s management abilities.
There’s a story about how, one day toward the end of Dorsey’s tenure, Twitter’s top engineer met with some of the company’s board members.
“We have a bit of a problem,” he said.
The engineer, named Greg, had discovered that there were no backups of Twitter stored anywhere.
“If the database goes down right now, we would lose everything,” Greg told the investors, according to Bilton’s book.
By “everything,” Greg meant ever tweet ever written, every user ID, and all of Twitter’s code.
Panicked at how such a monumental mistake could be made, Twitter’s directors went out and met with other Twitter engineers and asked them about Dorsey.
They were told: “Engineering and ops are a disaster.”
“He’s a great guy. A great friend. A fun boss. But he’s in over his head.”
“He’s like the gardener who became the president.”
It would have been tough for anyone to manage Twitter in its early days. The company employed several anarchists.
At one point, the company had a weekly “stand-up” meeting in which everyone stood up. Everyone except for the anarchists, that is. They would stay seated and curse at any manager who asked them to comply. One time, a clever manager decided to have everyone sit down at that week’s stand-up meeting. The anarchists spent the whole meeting standing up.
Dorsey was never able to rein the chaos in. Partly this was because he was distracted. Bilton’s book reveals that Dorsey would often dash from the office at 6 p.m. sharp to go to one of his favorite extracurriculars: sometimes a drawing class, sometimes yoga, sometimes dress-making class.
Partly, Dorsey could not control the anarchists because he was one himself. He had a tattoo on his forearm symbolizing his adherence to that philosophy.
To be fair to young Jack Dorsey, he was never really CEO of Twitter. He held the title, sure, but while he did, most of the power that usually accrues to the CEO of a startup actually belonged to another Twitter cofounder: Ev Williams.
Early on, Twitter was just a project inside of a company that Williams owned outright. When Twitter started to look like it could stand on its own, Williams asked Dorsey if he would be CEO of Twitter. Williams kept 70% of Twitter and gave Dorsey 20%.
Throughout Dorsey’s tenure as CEO, Williams did for Twitter much of what startup CEOs normally do. Williams handled fundraising and acquisition offers. He made lots of hiring decisions.
Dorsey, drawing a salary of $70,000 a year, was more like a product manager than chief executive. For most of his time, he managed a team of a dozen or so.
One time, Dorsey set up a booth to “launch” Twitter at a dance party. According to Bilton’s book, he ended up slamming a bunch of vodka and Red Bulls and falling on his face. He had to go to the hospital.
Finally, thanks to screw-ups like that, math errors with the finances, the missing backup of the site, and, most especially, because Twitter kept going down, Williams decided he wanted to be Twitter’s CEO.
With the help of investors he picked — over Dorsey’s choices — Williams fired Dorsey and made him an “honorary” chairman.
Much of Bilton’s book is about how this title allowed Dorsey to continue acting in public like he was part of the company, but that he was, in fact, hardly involved.

Learning The Wrong Lessons

Dorsey was fired from Twitter in late 2008.
In May 2009, he tweeted, “Getting ready to embark on something new and entirely different. Excited!”
That “something new” eventually became Square.
The official origin story of Square is that was created as a solution for a friend of Dorsey’s named Jim McKelvey. McKelvey was a glass-blower. One time, he was about to sell a $2,000 piece of glass. The shopper wanted to use a credit card, but McKelvey didn’t have a way to accept the card. McKelvey griped to Dorsey about this. And so Square, the startup that helps small merchants accept credit cards with their smartphones, was born.
The conversation with McKelvey, a Square cofounder, probably actually happened. But as is often the case in startups, there is less poetry to Square’s real origin story than the official one, according to one employee who was there at the beginning.
As prosaic as its origins may have been, Dorsey’s vision for Square was truly epic. He wanted to blow up the entire financial industry and reinvent the way the world bought and sold. After Twitter, says this employee, “Jack was looking to do something.” Dorsey started hiring people to figure out what that something could be. One early, promising project was an app called Log, “a private journaling type of thing.” Dorsey hired an engineer, Tristan O’Tierney to build Log. Then, for some reason, Log died. After about nine months, says this employee, Dorsey settled on a payments startup called Squirrel. Then he changed the name to Square.
Square credit card reader
The Square dongle.
“The vision was, payments suck, the entire financial industry sucks,” says an early Square employee. “It sucks for businesses, but it also sucks for the people who are trying to buy things or invest or have savings.”
Dorsey believed that no one in the financial industry was “taking the user-centric point of view when they are making these financial products,” and that it was a “tragedy” because “payments are this thing that are actually quite intimate, especially when you’re talking about small businesses. Payments are their livelihood.”
But Square was not just supposed to be a solution for small businesses; it was also supposed to be a product for consumers.
“The goal, the ultimate vision,” says another early employee, was “to make paying for things easy around the world using technology that’s in our pockets.”
Square wanted to own both sides of the network, says an early employee. The plan was, “Let’s disintermediate the whole thing.”
Square’s first product, a credit-card-reading dongle you could stick into an iPhone’s earphone jack, was supposed to be thinnest edge of a wedge Dorsey and his team could use to take over the payments world.
Dorsey created the company, and ran it, in an almost exact reaction to how Twitter was built and run. He wanted to learn from his mistakes. Former Square employees say this commitment to change showed in several ways.
Far from leaving the office at six every night, Dorsey pushed himself to work painfully long hours. He carefully selected venture capitalists who would not challenge his authority the way Twitter’s had. In contrast to Twitter, he hired up very fast, and was, within months, managing more employees than he ever had before. He decided that Square would not partner with nearly as many third parties as Twitter had. Dorsey felt that Twitter’s internal organization had been too slow to react to problems, too stagnant. So he consistently reorganized Square every eight to 10 months.
Dorsey banned anarchy, or any semblance of it, from Square. He envisioned the company as one that would be run top down — a place where even top executives would be expected to submit their work to Dorsey for approval before going forward.
Before the first Square dongle had launched, and when the company still had just 20 people, Dorsey sought to hire someone who could help him run the company’s operations in this manner. He met with Keith Rabois, a Silicon Valley veteran who had started out at PayPal and had held a big job at LinkedIn.
During his interview, Rabois had explained to Dorsey the micromanagement techniques that Bill Walsh, the famous former NFL coach, had used to turn the San Francisco 49ers from a losing franchise into a winner of several Super Bowls. Recalling what he’d read in Walsh’s book, “The Score Takes Care of Itself,” Rabois said that one of Walsh’s first moves as head coach was to instruct all of the team’s secretaries on how to answer the phone. The point was that every role within the company had a “standard of performance,” and that if everyone knew what that standard was and strived for it, high performance would naturally result on the field, and the score would take care of itself.
Dorsey quickly hired Rabois.
As the company grew, every senior executive at Square running each of the company’s major functions had to review on their progress with Dorsey every week.
The metaphor that Dorsey most liked to use to describe his controlling management style was that of a restaurant. In a gourmet kitchen, there are 10 people who touch a dish before it goes out. Everyone specializes. Someone sears the meat. Another person plates the vegetables. Some adds the swirled line of sweet-potato mash. And so on. The final step in the kitchen is for the plate to go in front of a person holding a clean wipe rag. This person goes through a checklist to make sure everything about the plate is perfect. Does it have all the spices? Does the plate look spotless? Is anything out of place. Dorsey said that his role was to be that last person in the kitchen, for every decision the company made.
Sometimes, Dorsey’s obsession with detail was effective, even charming. The week before Square launched a product called Square Wallet in 2012, Dorsey had an epiphany. When users opened Square Wallet for the first time on their smartphones, it should feel like the unboxing of a real physical wallet. To achieve that effect, Dorsey believed the wallet needed to be wrapped in virtual tissue paper. He suggested this idea to the Square Wallet product manager, William Henderson.
According to an early Square employee, Henderson told Dorsey: “Dude, do you know how much work it’s going to be to render this tissue paper? And make it look realistic? Seal it all up? We have a week to ship and there are so many bugs. Why would we care about tissue paper?”
Dorsey walked away from the conversation undeterred.
Two hours later, he walked up behind the Square Wallet product manager while he was eating lunch.
Dorsey leaned in.
“William. Tissue paper.”
He walked off.
When Square Wallet launched, it was wrapped in virtual tissue paper.
Sometimes Dorsey’s style of management, combined with his seeming expectation that everyone in the company should work as many hours as he did, drove people nuts.
In fact, the other way Jack Dorsey is a lot like Steve Jobs is that after he was fired from his first company, he went on to be a micromanaging, detail-obsessed CEO that lots of people hated working for. Remember, before Steve Jobs succeeded with Pixar and in his return to Apple, he failed at a personal-computing company called NeXT.
In 2011, The Wall Street Journal’s Monica Langley reported that Dorsey would monitor the whereabouts of Square employees, and text them when he hadn’t seen them for a few hours. Langley also reported that Dorsey told employees to stop going on vacation. She reported that he had told one employee to skip his bachelor party.
Employees eventually confronted Dorsey. At an all-hands meeting, they asked why he “guilts” them into working 12-hour days and over the weekends.
Dorsey refused to back down. “We have new competitors who want to kill us,” he said, according to Langley. “We have to hold them at bay and move faster than they can imagine.”
In 2012, Square employees began taking to public forums on the internet to complain about working conditions. On Glassdoor, a site that lets employees rate their bosses, and Q&A site Quora, they wrote that Dorsey was expanding Square too fast, hiring too many inexperienced managers, and pushing employees too hard.
One or two took direct shots at Dorsey.
One wrote: “There is so much BS flowing in the arteries here with Jack being ‘GOD’. Maybe Jack is GOD, but if you don’t believe that, you are going to be screwed.”
Another wrote that Dorsey “was pushed out of Twitter because he did not know how to run a company and he still does not.”

Very Different Comebacks

New Twitter HQ Jack Dorsey Dick Costolo Golden Gate Bridge
Matt Rosoff Business Insider
Jack Dorsey at Twitter again.
One obvious reason people started comparing Jack Dorsey to Steve Jobs a lot back in 2011 was that, in early 2011, Jack Dorsey returned to Twitter as an executive chairman in charge of product.
Dorsey’s return seemed to echo Jobs’ return to Apple, more than a decade after he had been fired.
But Dorsey’s return to Twitter was much different than Jobs’ return to Apple.
After Dorsey was fired from Twitter in 2008, he became something of an unofficial mascot for the company. He gave lots of interviews about how he created Twitter. He traveled the world as a Twitter representative.
From the outside, it appeared as though he was still very involved in the company.
He was not.
A source who interviewed for a job at Twitter during this time remembers asking why Dorsey hadn’t been involved in the hiring process.
This source remembers the interviewer saying: “We don’t talk about Jack. He’s not involved. He’s off doing his own thing. No one cares about Jack here.”
In 2010, that started to change. That summer, Twitter executives started to reach out to Dorsey to complain that Ev Williams was not a very good CEO. Dorsey told them to take their worries to Twitter’s board.
Soon, Williams was fired, and Dorsey was brought back into the company as the head of Twitter’s product development.
In Bilton’s telling, Dorsey arranged the entire coup from behind the scenes. Square employees we talked to couldn’t believe the Dorsey they knew could be so Machiavellian.
Dorsey himself told The New Yorker’s DT Max, “Was I thinking, Screw Ev? Emotionally, was I asking that? I don’t know. Maybe.”
Whether Dorsey schemed his way back into Twitter or not, his return was — in to contrast to Jobs’ — a failure.
During his first meeting with Twitter employees in early 2011, Dorsey stood in front of a projector screen and talked about how Twitter, up to that point, was just a beta product, a prototype. He called it Twitter 1.0. He said it was incomplete.
His disparaging words upset a lot of people in the room, according to Nick Bilton’s “Hatching Twitter.”
According to Bilton, Dorsey never really recovered.
By July, Twitter employees had “started to complain to Twitter managers that Jack was difficult to work with and repeatedly changed his mind about product ideas.”
For a year or so, Dorsey worked two full=time jobs, going into Square and Twitter for full back-to-back days, every day. This also made him seem like Steve Jobs, who continued to be CEO of Pixar for a time after returning to Apple.
But it’s not really clear how devoted to Twitter Dorsey was then. In an interview, Bilton told us that one thing Dorsey did for Twitter was interview job candidates. Sometimes these candidates would later interview for jobs at Square. Bilton says that Dorsey always steered the most talented people to Square, the company he controlled.
By 2013, Dorsey’s big return to Twitter was basically over. By then, he was only coming into Twitter once a week and no one at the company reported to him.
Meanwhile, at Square, employees were not happy to share their CEO.
During an all-hands meeting where employees were allowed to submit anonymous questions, Dorsey got grilled over his two-timing.
There never was a single moment where Jack Dorsey stopped being the next Steve Jobs. But if there had to be one, that meeting could have been it.
“I don’t think I have seen anything as contentious as that,” says a former Square employee.

Handing Over The Checklists

In the beginning of 2013, a New York lawyer named Steve Berger told Square that it had failed to protect his employee from sexual harassment by Keith Rabois, Square’s chief operating officer. Berger said that his client wanted a multimillion-dollar settlement.
According to a report from Kara Swisher, Square’s outside council, Richard Curiale, investigated Berger’s claim and found that Rabois’ relationship had been a “welcome” one. Still, Rabois had not told Dorsey or anyone else in Square management about the relationship. Dorsey asked Rabois to resign, which he did.
Some say Jack was happy to see Keith go, but a former employee tells us that’s not the case. This employee (who is not Rabois) says that anytime Square had a big decision to make, Dorsey “would not even say a word till he would look to Keith for his advice on whether it was a good idea.”
Another source says that up to that point, there had been “two adults at Square: Jack and Keith.”
Rabois’ departure created a huge hole at Square. There went the guy who, like Bill Walsh at the 49ers, had been going around holding everyone to high standards of performance.
Instead of hiring a single COO to replace Rabois, Dorsey decided to hire a team. His two most impressive hires were Gokul Rajaram and Francoise Brougher. Rajaram is a veteran of Google, where he built the company’s first ad network. At Facebook, Rajaram was responsible for all advertising products. Brougher also made her career at Google, where she ran the same massive sales force that Sheryl Sandberg ran at Google, before she became the COO of Facebook.
Gokul Rajaram
Gokul Rajaram.
During the summer of 2013, Dorsey put Rajaram in charge of product development and Brougher in charge of business operations. Suddenly, instead of two adults at Square, there were several. Dorsey started delegating. Things moved faster.
They had to: By the time Rajaram and Brougher were on board, Square had nearly 800 employees.
One former Square employee says the company changed “almost overnight — much for the better.”
Another says Rajaram in particular was “transformational” for Square.
“If you talk to 20 people at Square and ask what impression Gokul had on them, 10 of them would probably say he literally changed their lives. He’s one of the top product guys in the valley, he’s an exceptional individual, exceptional talent.”
Another former Square employee said that Rajaram’s strengths matched up with Dorsey’s weaknesses.
“I think Jack is a better visionary than he is a product strategist. He’s really good at saying, ‘This is the way consumers should be able to do something.’ And with Jack it’s like, ‘Hey, Jack, great, we know what the vision is, it’s ambitious scale, it’s a big deal, I think it’s a great mission.’ But it’s hard to know what to do for the next two years. What do I prioritize? Is one product area more important than another? I don’t think that’s the stuff that’s Jack’s strength. This is why we hired Gokul.”
Every time a new employee joins Square, they get a little gift box. In the box, there’s a book called “The Checklist Manifesto.” The idea is, excellence comes from going through a checklist to make sure you’ve done everything right, every time. For years, the way Dorsey ran Square was to be the guy going over every checklist.
“That’s the clearest thing that’s changed,” says a recently departed employee. “His desire to be a major part of every checklist seems to have changed. What requires a checklist has changed. They’ve gotten faster as a company.”
So what has Jack Dorsey become, if not the next Steve Jobs?
He has become a much better CEO — someone able to hire talented managers, delegate to them, and focus on his own strengths.

Intuit 2.0

jack dorsey young
When he was younger, Dorsey was as likely to be “the next Steve Jobs” as any “random programmer with headphones on and blue hair.”
“Hatching Twitter” author Nick Bilton spent the first half of his book describing Jack Dorsey as an awful CEO of Twitter.
In an interview, Bilton told us that, back then, Dorsey was as likely to be “the next Steve Jobs” as any “random programmer with headphones on and blue hair.”
But these days, Bilton says, his sources tell him Dorsey “is becoming, or is now, a capable CEO.”
“He’s had a lot of experience. [Square] is a big business. He’s made a lot of mistakes and learned a lot of lessons.”
But now that he’s a capable CEO, is Jack Dorsey the CEO of the kind of company he wants to run?
Last Spring, The Wall Street Journal published a story on its front page reporting that Square was unprofitable, running out of cash, and seeking a bailout acquisition from either PayPal or Google, perhaps even at a price lower than its $6 billion valuation.
A couple of months later, Fortune’s Miguel Helft published a counter-story. He said Square hadn’t been negotiating with Google for a sale; it had been talking to Google’s venture-capital unit about possible investment. Helft said he looked at some of Square’s internal documents, and that they painted a much rosier picture of the company’s financials. He quoted an investor in Square who said that any time it wanted, the company could quit investing its revenues in growth and be profitable.
Over the past of couple weeks, we’ve spoken to nearly a dozen former and current Square employees. Often, people who have left a company are only too eager to disparage it. That didn’t happen this time.
According to these people, Square has about 1 million “micro” to medium-sized businesses using its credit-card readers to accept payments. Those merchants will do $30 billion in revenues this year, and $900 million or so of that money will pass through Square as gross revenues. Of that $900 million, Square will get to keep about $300 million in net revenues. These people say that Square could hang on to most of that $300 million and call it earnings (before taxes and all that), but that instead, it is reinvesting the money to try to develop new revenue streams. The gross revenues and net revenues are growing about 50% year over year, we’re told.
Essentially, Square has a somewhat big, fast-growing, low-margin enterprise business with lots of customers. Like many enterprise businesses in a similar position — from VISA to LinkedIn to whoever provides payroll services to the company you work for — Square is trying to upsell its large customer base into higher-margin products.
When Jack Dorsey started Square, he wanted to reinvent both sides of the payments network. He wanted Square to be both the way merchants accept payments and the way consumers make them. It’s never gotten real traction on the consumer side. Back in 2012, it looked like it might happen when Square signed a deal to power mobile payments in every Starbucks. But consumers hardly noticed, and Square was forced to call the deal a success because it helped prove that its payments systems would work with merchants of any size.
Today, we’re told there are two factions within Square. One is led by Dorsey, who still believes that Square can still own both sides of the payments network. The other, perhaps more powerful faction, is led by Rajaram. Its view is that Square, a $6 billion company, could become a $25 billion company like Intuit, if it hunkers down and makes really great products for small businesses.
Does Jack Dorsey want to spend the rest of his life making great products for small businesses?
Through a Square spokesman, Dorsey declined to be interviewed for this article, so we were unable to ask him directly.
A current Square employee tells us Dorsey finds the idea of running $6 billion — or even $8 billion — enterprise payments company “boring.”
Another says that, actually, Dorsey often talks about how he’s motivated by the idea that Square is helping small businesses thrive because small businesses create jobs.
According to “Hatching Twitter,” when Dorsey was running Twitter, he would daydream about quitting – sometimes to sail by himself to Hawaii, sometimes to become a fashion designer. Dorsey has also often talked about how he wants to be the mayor of New York someday.
Maybe he’s wondering what Steve Jobs would do.

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