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Jack Dorsey, Twitter, and Square

Zusammenfassung

Jack Dorsey sent the first tweet on March 21, 2006 — “just setting up my twttr” — and was fired as Twitter’s first CEO a year later. He returned to lead Twitter as CEO in 2015, a period in which the platform struggled with growth, content moderation, and harassment. During the intervening years he had co-founded Square (2009), which solved a deceptively simple problem (taking credit card payments on a phone) and grew into a multi-billion-dollar financial services company (later Block). Dorsey is unusual among major tech founders in having founded two significant companies in the same decade, and in having built a product — the tweet format — whose 140-character constraint shaped global public discourse for over a decade.

The Twitter Founding

The story of Twitter’s founding is contested among its four co-founders. Jack Dorsey, Noah Glass, Biz Stone, and Ev Williams were all involved in the initial concept at Odeo, a podcasting startup, during a 2006 brainstorming session. Dorsey is credited with the core concept: a status service where users could broadcast short messages about their current status to their network. The name “twttr” was proposed; the vowel-dropping was inspired by Flickr.

Dorsey’s contribution to the 140-character constraint was pragmatic: SMS messages were limited to 160 characters; Twitter needed to fit within an SMS with space for a username prefix, leaving approximately 140 characters for content. Twitter was designed as an SMS-accessible service — you could post and receive tweets via text message — which explains the constraint that would define the platform’s character for its first decade.

Dorsey was CEO from Twitter’s founding until October 2008, when he was replaced by Ev Williams. The reasons for his departure were not publicly specified but reportedly included concerns about his management attention and priorities. Dorsey has been a dedicated practitioner of yoga and meditation; reportedly, he spent significant time in fashion design and fashion school during this period — activities his co-founders found incompatible with startup leadership demands.

Twitter under Williams and then Dick Costolo (2010–2015) grew to hundreds of millions of users, launched the IPO in 2013 ($1.82 billion raised, $14.2 billion valuation), and struggled with the same persistent challenges: slow user growth relative to expectations, harassment and abuse problems, and difficulty translating cultural importance into advertising revenue.

Square: The Card Reader on the Phone

In 2009, Dorsey’s friend Jim McKelvey — a glass blower — lost a sale because he couldn’t accept credit cards. McKelvey mentioned this to Dorsey. The observation crystallized into a business idea: why couldn’t a small business accept card payments through a smartphone?

Existing credit card processing required businesses to have a merchant account, a payment terminal leased from a bank or processor, and a complex setup process that took days and excluded most micro-businesses. The result was a two-tier system: large businesses could accept cards, small businesses and individuals could not.

Dorsey and McKelvey co-founded Square in 2009. The product was a small plastic dongle — a card reader that plugged into the headphone jack of an iPhone or iPad — that allowed anyone to swipe a card and process a payment through the Square app. The device was initially given away free. Square handled the merchant account setup, payment processing, and fraud management, charging a flat 2.75% per swipe with no monthly fees or minimum transaction requirements.

The flat rate was the design decision. Traditional processors used complex tiered pricing with different rates for different card types, transaction sizes, and merchant categories. Square offered a single rate regardless. Small merchants could calculate their costs simply. The simplicity was the product.

Square grew rapidly: small businesses, food trucks, farmers’ markets, and individual sellers who had previously operated cash-only. The company added Square for Restaurants, Square for Retail, payroll, and inventory management — building a small-business financial operating system around the original card reader.

Square went public in November 2015 at an IPO price of $9 per share, below its 2014 private valuation of $15.46 per share — a rare down IPO from a Silicon Valley startup, widely interpreted as a signal that the venture funding environment had inflated private valuations. Square recovered: by 2021, the stock had risen to over $250. The company renamed itself Block in December 2021, reflecting its diversification into Cash App (peer-to-peer payments), Afterpay (buy-now-pay-later, acquired 2022), Tidal (music streaming, acquired 2021), and Bitcoin services (TBDEX, a Bitcoin-based exchange protocol).

Cash App vs. Venmo

Square’s Cash App (launched 2013 as Square Cash) competed directly with PayPal’s Venmo in peer-to-peer payment. Cash App was simpler to set up (no bank account required to receive payments, though needed to withdraw) and added Bitcoin buying/selling in 2018. By 2021, Cash App had 40 million monthly active users and was generating more gross profit than Square’s original card reader business. The pivot from B2B (merchant services) to consumer (Cash App) was one of the more successful consumer fintech entries of the decade.

Return to Twitter

In October 2015, Dick Costolo resigned as Twitter CEO after sustained pressure from investors over slowing user growth. Jack Dorsey was appointed interim CEO and then permanent CEO in October 2015. He accepted the role on condition that he could continue running Square.

The dual-CEO arrangement was controversial from the start. Investors and analysts questioned whether one person could lead two significant public companies simultaneously. Dorsey’s response was that he was a product designer and could provide creative direction to both without the operational overlap that might make dual leadership impossible.

At Twitter, Dorsey’s priorities included: rebuilding the product quality, addressing harassment and abuse (a sustained challenge that successive management teams had underinvested in), and exploring new formats. The 280-character limit (expanded from 140 in November 2017) was the most visible product change — Dorsey had resisted it for years as a violation of the original constraint, and approved it when experiments showed engagement improved without reducing the quality of discourse.

Twitter under Dorsey also launched Spaces (live audio), Fleets (disappearing stories, discontinued), Tip Jar, and Super Follows (subscriber content). The account ban of Donald Trump on January 8, 2021 — two days after the Capitol insurrection — was the most consequential and controversial content policy decision in Twitter’s history. Dorsey defended the decision as necessary while acknowledging the precedent of a private platform permanently banning a sitting head of state.

Dorsey resigned as Twitter CEO for the second time in November 2021, with Parag Agrawal (Twitter’s CTO) succeeding him. The resignation came before Elon Musk’s hostile acquisition of Twitter in October 2022 — a transaction that Dorsey publicly supported before criticizing Musk’s subsequent management decisions.

The Tweet as Cultural Infrastructure

The tweet’s design — short, public by default, addressable, linkable, retweet-able — created a communication format that shaped political discourse, journalism, academic communication, and crisis communication in ways no one predicted from a simple status update service.

Real-time news: Twitter became the de facto wire service for breaking news, because witnesses could publish from the scene before journalists arrived. The 2011 Osama bin Laden raid was reported on Twitter before any official announcement. The 2009 Hudson River plane landing was first photographed and shared on Twitter.

Political communication: Barack Obama’s 2008 campaign used Twitter; Donald Trump’s use of Twitter from 2009 through 2021 represented an unprecedented case of a political figure using a social platform as primary communication infrastructure, bypassing institutional media.

Arab Spring: Twitter and Facebook were credited with organizing roles in the 2010–2012 Arab Spring protests, though subsequent analysis found the relationship more complex — social media amplified existing organizing rather than creating it from nothing.

The platform’s role as public discourse infrastructure created policy obligations that its original design as a status service had not anticipated. The gap between Twitter as a simple messaging tool and Twitter as global public sphere was never fully resolved.

📚 Sources