Jack Dorsey on the History of Twitter and Square

Posted by at 8:00AM

Jack Dorsey Pic
Image Credit: James Ryang

Last Wednesday evening, I attended a talk at the Commonwealth Club in San Francisco with Jack Dorsey, co-founder and executive chairman of Twitter and co-founder and CEO of Square. On this day, Jack walked us through his past and the history of how Twitter and Square came about. It was truly a fascinating story.

Cities and What Happens In Them

It all started when Jack was about 8-years old. He grew up in St. Louis, Missouri and always had this unexplainable fascination, perhaps borderline obsession, with cities. He couldn’t explain what it was about them but because of this, Jack would collect maps of all sorts of cities. To him, Manhattan was the holy grail because there were 8 million people there on any given day doing all sorts of things. This meant lots of activities and various things going on inside Manhattan. And he found all of it interesting. At age 14, he would stumble onto programming solely for the purpose of being able to plot dots on a digital map so that he could visualize these cities. At first, the dots didn’t have any real meaning to them. They were just dots he could add to the maps. He just wanted to be able to do it and self-taught himself programming to do just that. However, at the time, his parents had an old police scanner and he found that by listening in, he could hear about all the things currently going on with the ambulances, fire trucks, and police cars. They would often report what was going on, and where these emergency vehicles were located, and where they were headed. Suddenly Jack has this idea to map out the coordinates of these emergency vehicles and color code them to indicate which was an ambulance, which was a fire truck, and which was a police vehicle. Now, he could roughly see where they were and roughly estimate the path and routes they were traveling to get to their intended destination through these moving dots on this digital map.

He would later find out that there was an official name and profession for what he was doing called dispatch. A few years later, when he was older, he landed a job with Dispatch Management Solutions in New York. A company that tracked various activities throughout the city including trains, taxis, couriers, and emergency vehicles. It was much more sophisticated than the dot system he had programmed years before and he felt like he had just landed in heaven. To be able to visualize the pulse of the city and see what was happening was amazing to him. Eventually though, Jack left DMS and decided to relocate to northern California, where the internet was booming and everything web related was happening. He wanted to build his own dispatch system, one that would be web based. Although things didn’t work out as he planned and his dream failed, one thing he did noticed through all this experience was that dispatch gave a pulse of what was happening in the city at any given time, but the one thing gravely missing from all this were the citizens. Where were they and what were they doing? This was the seed that would eventually give birth to Twitter.

The Birth of Twitter

In 2000, Jack built a basic prototype that allowed him to update what he was doing to his friends through his Blackberry and via an email messaging system. He quickly got it built and took it out to test it in Golden Gate park in San Francisco, updating to all his friends where he was at. He quickly figured out two things. The first was, no one cared about what he was doing at that time. The second, was there was no easy way for them to update or respond back. Not everyone had a device that made it easy for them to push updates. With that, Jack felt the idea wouldn’t work and put the idea aside. Later, he went to work for a podcasting company called Odeo. Odeo was co-founded by Evan Williams, founder of Blogger, who sold Blogger to Google. Evan eventually left Google to start up Odeo and although Jack had no interest in podcasting, he knew of Evan Williams and wanted to work with him. There, he met his future Twitter cofounders, other employees at Odeo at the time. He soon realized that no one there was into podcasting, which was kind of ironic because they all worked at a podcasting company. But it didn’t matter. Shortly after Jack joined, Apple announced that they were going to release free podcasting through iTunes. This basically put Odeo out of business.

With roughly no clue on what they would do, Jack revisited the idea of doing updates, what it was referred to at the time. With the rise of SMS usage and in 2006, for the first time you could send SMS messages across different carriers, he felt that there was a chance for the idea to thrive. He convinced Evan to allow him to work on building this prototype over two weeks and by the end of this two week period, he invited all his fellow cofounders to jump on and try the system. Eventually they invited close friends and family to join in and from there, Twitter was born. I believe the 140 character limit was due to the fact that SMS messages had a 140 character limit and till this day, it just works that way. At first, they couldn’t come up with a really good name for it. They thought about how when you get an update, your phone would vibrate and they wanted to play around words that conveyed a message off that feeling. They thought about “twitch” or “jitter” but neither sounded good. Eventually, one team member decided that twitch wasn’t going to work out but maybe another word starting with tw would. So he opened up the Oxford Dictionary and went down the list to find other words starting with tw. When they came across Twitter, they found one definition of “a short burst of inconsequential information”. It was perfect. They bought the domain for roughly $7,000 and the rest was history.

On the Founding of Square

Although Jack didn’t said it personally in this particular talk, he was eventually ousted from Twitter. After leaving Twitter, not having an idea of what he would do next, he connected with his first boss, Jim Mckelvey, of whom he had kept in touch over the years. Jim was a glass artisan at the time who sold glass artwork for a living. One day, he called Jack to tell him he had just lost a $2,000 sale because his customer didn’t have cash and he didn’t have a way to accept a credit card payment, which was the only form of payment his customer had. Jack thought about it and how both of them had iPhones, basically high tech computers next to their ears, and yet in this day and age, there was no easy way for them to accept credit card payments even with these astonishing devices in their pockets. The traditional way of applying for a merchant account to be able to accept credit card payments was hard and archaic and was not something most people would need. But in the case of his friend, Jim, he realized that not being able to accept credit card payments literally cost him a couple thousand dollars, and in many cases, he realized that there are many people out there who would benefit if there was a simple technology that allowed anyone to accept credit card payments. You could essentially take credit card payments when doing a garage sale, or for your hot dog stand rather than just rely on cash. With that in mind, together with Jim, they decided to build a solution.

Again they had an issue coming up with a good name. Originally they were going to call it Sea Shells because several hundred years back, sea shells were the original currency people used to exchange for goods. But that sounded awful. One day, while sitting there, Jack spotted a squirrel running around collecting acorns. He realizes that squirrels go around and gather acorns the same way people would gather funds from other people. He thought the name was brilliant and set out to do everything to base the brand around a squirrel. They landed a meeting with Scott Forstall, senior VP of iOS development at Apple, and as Jack recalls it, they had all sorts of documentations with a squirrel logo all over it and even the original card slider was built out of wood in the shape of an acorn. They really went all out on the theme. While having lunch with Scott at Apple headquarters in Cupertino, he noticed that the cash register they were using was by a company called Squirrel Systems. Right then, he knew he couldn’t use the name due to trademark issues. It was awkward. He had to convince the Apple team to completely ignore the name during his presentation and to just go with the concept of what they were trying to do. Later, using the same trick they got Twitter’s name from, he opened the Oxford Dictionary again and looked for words starting with sq, the same as squirrel. When he came across square, the various definitions it gave were along the lines of “we’re square” as in we’re even or to square up as in everything is paid up to date. He felt that the definition perfectly reflected the company and thus, Square was officially named.

Where Things Are Now

Jack is currently chairman at Twitter and playing an active role there again while running Square as CEO. Square just launched some exciting new services called Square Register and Square Card Case. Square Register works with the iPad to help merchants replace their current Point of Sale (PoS) system, or cash register, and be able to accept payments directly from customers. Jack explains the advantage of using Square Register over a traditional cash register is that you get an extra layer of analytics that you wouldn’t otherwise have with a normal PoS. He argues that if you ask most merchants how much they made any given day, they could tell you, but if you ask them specifically what they sold and how much of each item they sold, they probably wouldn’t be able to tell you right away. This is a lot of data that could be used to improve the business. Jack believes that if you knew how much sales you did on a particular item, or what you sold at any specific time, say 5pm on Tuesday vs 11am on Thursday, you’ll have more knowledge about what works best for your business and be able to use that to grow and expand. Square Card Case is a cool iPhone app that lets users who frequent any particular stores or merchants to add their credit card to the app and make purchases without a wallet. So for example, lets say you’re buying coffee at some cafe and you have the app on your iPhone in your pocket. All your credit card information and stuff is preloaded into the app. You can load up the App while you’re waiting in line and just put it back in your pocket. When it’s your turn to order, you make an order and simply say put it on “Steven” (or what your name is). This allows them to deduct the purchase from your virtual wallet or “card case” without having the need to carry around your wallet anymore. It’s taking the old open tab concept and making it real time.

At the end, I managed to ask Jack a question regarding why Square doesn’t own square.com and instead uses squareup.com. Jack explains that a famous gaming company called SquareEnix, the makers of the famous Final Fantasy series game, owns the right to square.com. And although square.com isn’t being used for anything at the moment, Jack hasn’t had any luck obtaining square.com from them but they are definitely interested. Overall, it was an amazing talk and Jack is an amazing and humble entrepreneur. I found it extremely fascinating to hear how he started two very disruptive and fame companies and I hope this story help other entrepreneurs figure out something along the way, and if nothing else, at least how to name their company.

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One Response to “Jack Dorsey on the History of Twitter and Square”

  1. gordon says:

    Square and the more recent google mobile app are recent add ons on the payment technology. the problem has always been for card non present the status given by card associations and the very lightheaded aproach to charge backs. are this solutions given the correct aproach only time will tell.

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