In just six short months, Twitter stock holders have been treated to the full, unpredictable Wall Street experience.
First the stock surged — big time — jumping from an IPO price of $26 per share in November to more than $70 per share by Christmas Eve. Then came concerns over user growth and profitability, paving the way for a stock decline that eliminated more than half the company's value in a three-month period. By the time Twitter employees were able to sell their shares, six months after IPO, stock price per share was hovering around $30.
Response has been predictably hysterical; The Atlantic went so far as to pen a eulogy for the microblogging service. But of the many people surprised by Twitter's recent stock market struggles, there was at least one person expecting it: CEO Dick Costolo.
We spoke with more than half a dozen former employees from a variety of levels and departments within the company — former executives down to the low- and mid-level. Many agreed to speak with us on condition of anonymity given the sensitive nature of the material.
According to multiple sources close to the company, Twitter's chief executive warned employees in the months following the company's IPO to prepare for ups and downs in the market. Costolo, who hosts company-wide "Tea Time" chats every other week where employees can ask him questions, at some point prepped Twitter employees that the company's initial stock surge wasn't permanent.
"Dick has done and continues to do a great job of setting expectations around that sort of stuff," one source close to the company told Mashable. "[He's] constantly reminding folks Twitter needs to fulfill its promise and think long term."
"Dick's a straight shooter. He knows he can't bullsh*t people.""Dick's a straight shooter. He knows he can't bullsh*t people."
Preaching patience is far easier than practicing it, and Costolo's advice is likely being put to the test inside Twitter HQ. A number of Twitter executives, including Costolo,promised to hold onto their shares as a show of support for the company even though the six month lockup period is now over.
Others, however, including COO Ali Rowghani, sold shares last week in bulk. Former employees attempted to cash out as well, though technical issues and confusion over who was able to sell caused frustration among them. According to reports, Schwab was unable to process a handful of sale orders, resulting in angry former employees taking to a private Facebook thread to try to circumvent the issues.
Following the lockup fumble, the share price fell nearly 20%. A Twitter spokesperson did not comment on the lockup issue or on sentiment inside the company.
Stock fluctuation isn't rare for newly public companies. Lise Buyer, the founder of Class V Group, a firm that helps companies go to market, says that volatility is almost a given. "Emerging tech stocks always have, and always will be volatile," she told Mashable. "IPOs are the most risky sorts of equity investments as the companies they represent haven't been tested in the marketplace or had to function with the incremental burdens of public disclosures."
The public disclosure element seems to be hampering Twitter. Investors are balking at the company's user growth, which has been slower than expected despite a 25% increase year-over-year. It was widely thought that Twitter was aiming for 400 million users by the end of 2013, and the reality — 255 million as of March 31 — is a long way off.
Stock valuation may not be the only thing Twitter is trying to maintain, however. Multiple former mid- and low-level employees told Mashable they know numerous current employees either planning to leave the company, or actively seeking other work now that the IPO is in the past.
Twitter has close to 3,000 employees, so it's bound to both lose and add new faces on a regular basis. But those planning to leave the company are reportedly doing so because they're burnt out; two to three years at Twitter feels like 10, one former employee told us, a sentiment echoed by two other low-level employees who used to work at the company. Employees seem to enjoy a collegial atmosphere, and no one we talked to said negative things about the product itself, but people work extremely hard — that comes at a price.
Part of that grind is because Twitter innovates constantly. As a public company, it's no longer a startup, but that doesn't keep it from acting like one. "It's like having a thousand cooks in the kitchen at one time," one former employee told Mashable. Added another: "This month's success is next month's expectation. That grind just catches up with people."
In some ways, the situation at Twitter appears to be similar to Facebook's following its IPO in 2012. Investors first flocked to the social network. Then the stock price, which opened at $38 per share in May, fell below $20 by mid-November. Like Costolo, Zuckerberg preached patience to employees, encouraging them to ignore Wall Street and focus on building great products.
Employees did notice the stock decline, however, but few were comfortable talking about it. Bret Taylor, now CEO of Quip, was Facebook's CTO at the time of the IPO. He says employees refrained from talking about the stock price — saying it was viewed as "uncool" to worry about it — even though it may have been on their mind.
"For a lot of people, the vast majority of their personal wealth is tied up in the stock of that single company [after an IPO],""For a lot of people, the vast majority of their personal wealth is tied up in the stock of that single company [after an IPO]," says Taylor, who was also at Google during its IPO. "Not only do you go [from] operating without a lot of public scrutiny, but on top of that, whether or not you have the maturity to try and ignore it, you're sort of seeing your personal wealth fluctuate day to day."
Added a former, mid-level Facebook employee who was also there during the IPO: "It was almost taboo to talk about it."
Facebook also dealt with employee departures, which it appears Twitter will have to do. Taylor left just months after the IPO, although he says his departure was coincidental. But a major reason people leave is that the IPO typically symbolizes the end of the startup phase, a draw for tech workers in the Valley, he says.
Not all employees were quite as understanding. "It was hard not to think they're just cashing out," the former Facebook employee told Mashable.
It's likely Twitter employees face similar challenges, both in regard to employees moving on and adjusting to the daily fluctuations of stock price. Twitter has always been a highly visible company, but never before have analysts and media been so accurately able to scrutinize the day-to-day work of thousands.
As time goes on and the company moves toward profitability, Twitter stock could rebound. Facebook's did — $FB now trades at close to $60 per share, though its user base (1.3 billion) and revenue totals ($2.5 billion in Q1) are both significantly larger than Twitter's (255 million and $250 million in Q1). Plus, Twitter isn't the only tech stock having a rough spring. Other Silicon Valley companies like Yahoo (-11%), Facebook (-13%), and Tesla (-25%), are all down since March, too. Still, underlying concerns about the company's prospects for growth and widespread adoption remain — and investors will have to decide if those issues are surmountable.
Assuaging employee concerns will fall on Costolo's shoulders moving forward. Numerous sources told Mashable that the CEO regularly talks about the company's long-term goals, refusing to get swept up in the day-to-day pitfalls. The former standup comedian is a favorite among Twitter employees, and his straight-to-the-point management style separates him from some of the other execs who tend to beat around the bush, one former employee told Mashable.
Some people respond well to that kind of direction. Others do not. "Dick is the kind of guy you either love or you hate," this former employee says. "There's no real middle ground with him."
Twitter employees seem to lean toward "love" when it comes to Costolo. Investors, though, are still on the fence, seeking user growth, monetization opportunity and profitability from the product. In the meantime? Twitter will have to buckle up for the ride.