You Only Have to Be Right Once (8 page)

Levie finally found a believer in then twenty-nine-year-old Mamoon Hamid at U.S. Venture Partners. His $6 million infusion in January 2008 kept Box afloat for another year while the founders retuned their features for the corporate buyer, including the ability of administrators to delete accounts, track who accessed which file and when, and control which groups can have access to files and folders.

Levie turned himself into a student of enterprise software. He devoured industry classics like Thomas J. Watson Jr.'s
Father, Son & Co
., about the early years of IBM, and Matthew Symonds'
Softwar
, an authorized Larry Ellison hagiography. “I immersed myself in it,” said Levie. Literally: He lined the walls of his dingy apartment with four-foot-high posters of the logos of Oracle, Sun Microsystems, Salesforce, and Siebel Systems. (Though faded, they're still there. His girlfriend, who had been clerking for a federal judge in Arizona, “isn't here often enough to care,” he said.)

A second epiphany came in April 2010 when Levie was sitting in his bedroom watching the live webcast of Steve Jobs unveiling the first iPad. “My imagination ran wild,” Levie recalled. “The thing looked like a piece of paper, and that's exactly what most businesses are still running their businesses on.” He instantly e-mailed Box's engineers, ordering them to develop an app for the device by the time it debuted in stores—and they did.

Around that same time Procter & Gamble started sniffing around. Executives at the consumer products giant were starting to use iPads and wanted access to their files. And while it took eighteen months of courting and customizing to close the deal, having a product that worked smoothly for 18,000 of its employees opened doors for Box at other giant companies.

Levie spent 2011 continuing his self-education. He e-mailed his favorite pioneers in his industry with a simple, if ballsy, request: “Spend one hour with me.” Tom Siebel, who founded Siebel Systems (acquired by Oracle for $5.85 billion in 2005), told Levie he once traveled to four states in a single day to meet with customers. Craig Conway, who ran PeopleSoft when it sold to Oracle for $10.3 billion, glanced at Levie's calendar, saw roughly one customer meeting and echoed that advice. Levie, focused on what was going on inside Box, had lost the perspective, gleaned from IT support calls, that had saved the company. He began meeting eight customers a week, peppering each with questions about what was working and what wasn't.

This listening-tour process did more than hone Box's strategy. It honed Levie. The guy who turned off dozens of VCs is now considered a model entrepreneur. “We saw everything exactly the same way,” said Gary Reiner, a partner at venture firm General Atlantic who spent months doing due diligence before putting $100 million into Box in 2012. “It's like he's been doing this for twenty years. I can't throw him a question he hasn't already thought of.”

• • •

BOX'S LOS ALTOS HEADQUARTERS
feel more like Facebook's fun zone than Oracle's stiff towers. There's a bright yellow slide, a room with ping-pong tables, unicorn figurines, and lots of scooters. “I'm not a scooter person, but this stuff matters for our culture,” he said. Box's staff is approaching 1,000, with key hires from Oracle, Google, and Salesforce.

But for all the giddiness, danger lurks. Not a month goes by without some mortal threat against Box. Virtualization giant VMWare announced plans to offer file-synchronizing in 2012. Salesforce, an investor in Box, announced a rival storage feature called Chatterbox around the same time, though by 2013, it was already rebooting its effort. Dropbox, meanwhile, has started Dropbox for Business, in a play for those lucrative business accounts.

Then there's Microsoft, which has Box firmly in its sights. Levie got lucky by originally competing with the Redmond giant's SharePoint software. While Microsoft bundles it with other offerings and has sometimes threatened price hikes on existing products if customers signal they want to switch, SharePoint is notoriously expensive. For every $1 customers spend on the software itself, they're spending on average $8.70 for outside firms (developers and IT consultants) to get it to run. While it does considerably more than Box, such as linking into inventory systems, traditionally it's been hard to use and until recently didn't work on mobile devices running Google's Android system or Apple's iOS. The 900-pound gorilla, however, has woken up. “Box, along with other smaller companies, got there before Microsoft,” said Jared Spataro, SharePoint's senior marketing director. “But we always see customers wanting fewer vendors, not more.”

Levie's defenses, built in collaboration with his latest consigliere, Ben Horowitz, founding partner of the Valley's hottest VC shop, Andreessen Horowitz, which invested in Box's $48 million round in 2011, look like this: Build a sales team that can look and act like Oracle's while preserving Box's innovative, fast-moving culture, and make Box a viable platform on which other software firms can connect and sell their file-related technologies. The only way Levie will become the next Larry Ellison is to insert Box at the nexus of a company's most important data. “I have to do everything, all at once, as quickly as possible,” said Levie, gleeful about the fact that he has bitten off more than he can chew. “If I had a clue how this industry worked, I would not attempt to do what we've done. I was blissfully ignorant.”

Jack Dorsey, Twitter, Square:
Jack of All Trades

Jack Dorsey is arguably the most successful multitasker in business history. He cofounded two of the world's hottest tech companies almost on top of each other—simultaneously building himself a $1 billion fortune in each while serving as chairman of one and CEO of the other.

Twitter's story, of course, is widely known. Promotional platform, democracy tool, news disseminator—it's all that, and Dorsey's original microblogging vision, too. Twitter's post-IPO valuation has flirted with $40 billion. Unless you're a small business eager to accept credit cards, Square is less well-known and its outcome remains far less certain—though it's raised $200 million at valuations that, by 2014, had risen to $5 billion—given the huge competition emerging in mobile payments. But that's largely beside the point: When
Eric Savitz
spent time with him, the now-thirty-seven-year-old Dorsey was focused on the challenge that most successful entrepreneurs face: How does one allocate time so efficiently that a blockbuster can be achieved—multiple times?

 

Y
ou cover a lot of ground hanging out with Jack Dorsey. In just the first fifteen minutes of a visit to the San Francisco headquarters of Square, which makes the device that turns a smartphone into a credit/debit card machine, we covered the way he structures his time, how the company organizes work, a recent acquisition, group meetings, corporate transparency, and what he eats for breakfast every morning (two hard-boiled eggs with soy sauce). We darted into the company's cafe, where he insisted I try a Kombucha, a fermented tea energy drink. He urged me to try the grape version; bottles of the cherry variety, he explained, tend to explode. “You won't like it at first,” he warned, correctly, of the vinegary brew.

Then we were off touring more of the third floor of the storied
San Francisco Chronicle
building. Dorsey looked over the shoulder of someone sitting in an open area among long rows of desks, plying a big-screen Mac, and then joined a discussion at a tall table between a group of graphic artists and marketing staffers. There are conference rooms—21 of them, all glass-enclosed, all named after notable squares, like Tahrir (Cairo), St. Peter's (Vatican City), and Old Market (Nottingham, where the legendary Robin Hood may or may not have hung out). In one darkened room a handful of engineers worked on integrating a large project with Starbucks, which invested $25 million in Square and now uses it to process all credit and debit transactions in its U.S. stores.

“We encourage people to stay out in the open because we believe in serendipity—and people walking by each other teaching new things,” said Dorsey with a slight wave of his hand. “But every now and then you need to focus as one team.”

This philosophical entrepreneur evokes a little bit of another technology wizard with mystical leanings. But Dorsey is nerdier than Steve Jobs (he is a programmer first, an impresario second), his ego seemingly in check. Like Jobs, Dorsey is a disrupter on an epic scale and a repeat offender. Twitter, the microblogging service he cofounded in 2006, has turned more than 500 million people worldwide into broadcasters of messages capable of starting revolutions. And by accepting e-payments with Square, more than two million businesses are upending the financial services industry; in 2013, Square exceeded $500 million in revenue.

Those companies have made Dorsey a billionaire. His stake in Twitter, after the 2013 IPO, was worth more than $1 billion. In that same year, his share of Square, based on funding valuations, also neared a billion.

Before he cocreated two of hottest tech companies on the planet, Dorsey gave little sign of brilliant focus. He wrote dispatch software for ambulances and cop cars, dropped out of college (twice), took up botanical drawing, became a certified masseur and, later, dabbled in fashion design. More recently he has made noises about becoming mayor of New York City. His mother sometimes despaired he would ever find himself.

But he knew better. The side trips are part of the road map; his discursiveness is the obverse of intense discipline. Dorsey is a serial wanderer, mentally and physically, because it helps him concentrate: “The best thinking time is just walking.” He has worn a trench between Square, his previous apartment around the corner, and the offices of Twitter, a few blocks away. Before he starts his day, he runs three to five miles. He likes to take new recruits on tours of San Francisco.

Management by wandering around was made famous thirty years ago by
In Search of Excellence,
the book that celebrated the leadership and innovation of entrepreneurs like Bill Hewlett and David Packard. Dorsey has his own brand of “loose-tight properties”—autonomy on the shop floor but working under centralized values. Pay attention to the smallest things, Dorsey frequently says, while keeping sight of what's truly important.

The guy focuses not only on breakthrough ideas but also radically different kinds of corporate structures to contain and develop them. Wittingly or not, Dorsey provides an original model of how to start and run a company.

• • •

DORSEY GREW UP IN
St. Louis, the oldest child of Tim and Marcia, who are clearly his biggest fans. In September 2013, they flew out to see their son speak at the Techonomy Detroit conference. And Jack, hardly innocent of the spotlight, confessed to pregame jitters backstage. Why? “My mom and dad are here.”

Tim, who runs a small company called MA Tech Services, which makes mass spectrometers, reported that he is an avid Tweeter (@Tim535353). Jack's younger brothers tweet, too: There's Daniel (@darkside) and Andrew (@andrew), who writes on his home page, in blaring caps-lock-style, “U AINT COOL TILL U ON TWITTER.”

Even Marcia tweets. @marciadorsey's page says: “Mother of @jack . . . Does that make me the grandmother of Twitter?”

As a kid Dorsey was captivated by iMaps and the cities they described. As a teen he became interested in the dispatch services used by taxi services and other transit systems. At sixteen Dorsey tried to start his own bicycle courier service, in part to have an excuse to write code to run the business—until he found little demand for bike messengers in St. Louis.

A self-taught coder, Dorsey graduated in 1995 from Bishop DuBourg High School, then enrolled at the University of Missouri-Rolla but didn't stay long. Still fascinated by systems, Dorsey discovered a security flaw in a website operated by a New York City company called Dispatch Management Services, run by Greg Kidd. Dorsey found Kidd's e-mail address on the company's computer system and sent him a note alerting him to the flaw. Kidd immediately offered Dorsey a job, and he bolted from Missouri for the Big Apple.

While in town, Dorsey enrolled at New York University. Though he's now clean-cut and often dressed in Prada suits, Dorsey in those days wore a nose ring and dreadlocks (he still sports tattoos under the expensive threads), and spent free time in the East Village listening to punk bands like Rancid. Kidd and Dorsey went on to start a new company called dNet, which provided same-day delivery of e-commerce purchases. dNet received early funding from the Band of Angels, a venerated group of one-hundred–plus Silicon Valley veterans, but the company never quite got traction. It was a good idea but a decade early: Amazon and Walmart now do the same thing.

After dNet flopped, Jack flew home to St. Louis, trained to be a massage therapist, and wound up following Kidd to the Bay Area. He settled into a tiny shed in the courtyard of Kidd's house in the Rockridge section of Oakland (Kidd says it was about 60 square feet but had power, broadband, and proximity to a hot tub). Dorsey spent his time helping take care of Kidd's infant daughter and then picked up work writing dispatch and ticketing software for an outfit providing ferry service to Alcatraz. That led to a full-time gig at the podcasting startup Odeo, built by a former Google star named Evan Williams.

Despite a wealth of buzz, Odeo never made it. “I didn't want to do podcasting at all, but I wanted to work with that team,” said Dorsey, referring to Biz Stone and Williams. “We weren't building tools that we loved, or that we used, that we had to make better for ourselves.”

But from that mess emerged something good, potentially great. Dorsey brought forward the seed idea for a microblog platform, and the group gave him a fortnight to write the code. “I took one other programmer named Florian [Weber] and Biz, and in two weeks we had it,” he recalled. “Little by little, we took more employees from Odeo, and then eventually we spun it out as a separate company.”

Not just any company. Twitter allowed Dorsey to focus on an idea instead of a business entity—an approach he would take again when launching Square. “I knew it would be a big concept, I knew it would have legs, because it was a concept and the essence of a technology that I was using in other modalities, dispatch, mainly,” he said. “And then the company kind of just formed around it.”

At the start, he says, he never even thought of Twitter as a company. It hardened into one, as a larva develops an exoskeleton. “The most efficient means to spread an idea today is a corporate structure; 200 years ago it was probably something different; 100 years from now it will be something completely different,” he said. “But all of that is in service of the idea.”

Twitter went viral at the South by Southwest conference in 2007 and has been soaring ever since. It raised over $1 billion in venture money, from the likes of Kleiner Perkins, DST Global, Union Square Ventures, Benchmark Capital, and others. And then its November 2013 IPO saw shares soar—Twitter was suddenly worth almost $25 billion.

• • •

DORSEY, STILL REGARDED AS
a coder rather than a manager, was kicked upstairs at Twitter in 2008, retaining the chairman's job but stepping away from day-to-day management. Rather than take a break or remain content helping to guide Twitter, he immediately jumped in yet again. Dorsey launched Square from his one-bedroom apartment overlooking the old U.S. Mint in San Francisco with Jim McKelvey, who had hired him as a programming summer intern when Dorsey was fifteen. The idea for a new company grew out of a practical problem. McKelvey, a sometime glassblower, had designed a $2,500 faucet but failed to make the sale because he couldn't process a credit card.

Twitter has gotten credit for helping to topple Arab dictators. Square's plan was to disrupt the multitrillion-dollar payments system. Originally called Squirrel (as in squirreling money away), Square set out to make it far easier for small merchants to accept plastic, with a smartphone peripheral that can swipe cards, for a 2.75 percent transaction fee. (Square forks over most of that to credit card companies.) In a new twist, Square started offering merchants the option of paying $275 a month for unlimited transactions up to $250,000 a year.

Dorsey “looked at how money could be a lot more functional,” says Vinod Khosla, the venture capitalist, who invested in Square's Series A round. “That's a different question than the one PayPal is asking. It's a more fundamental question: What can you do for the users of money?”

Square is not just about transactions. Dorsey wanted to help retailers run their businesses more efficiently by giving them better data—and getting closer to their customers. A service called Square Register turns a mobile device or tablet into a point-of-sale system, providing inventory management, customer tracking, business analytics, and the like. The next innovation, Square Wallet, lets you buy things without having to swipe a card; you can even pay hands-free at certain businesses, including Starbucks, using localization technology that tells a store you're there. Square Wallet also allowed retailers to build in rewards programs.

It was a huge potential market, with huge competition, including PayPal, credit card companies, and, at some point, Apple. And a huge entrepreneurial challenge for Dorsey, who still had responsibilities at Twitter. To fulfill his dreams for the company, Dorsey developed an unusual corporate organism at Square—and a highly structured approach to managing his time. “The company needs to have a weekly cadence,” he explained. Dorsey's schedule looks something like this:

— Monday: address management issues

— Tuesday: product engineering and design

— Wednesday: marketing and communications, and growth

— Thursday: meetings with outside partners and developers

— Friday: “company and culture” and recruiting

— Saturday: off (in particular, he likes to hike)

— Sunday: strategic thinking and job interviews

For a while Dorsey stuck to this schedule every week at both Twitter and Square. In 2012, he began going to Twitter just every other day, mainly to discuss strategy.

How did such militaristic discipline allow for spontaneity—and discovery? “I do a lot of my work at stand-up tables, which anyone can come up to,” Dorsey said. “And I get to hear all these conversations around the company. I spend 90 percent of my time with people who don't report to me, which also allows for serendipity, since I'm walking around the office all the time. You don't have to schedule serendipity. It just happens.”

Dorsey's model for the well-tuned company is a newsroom. He once worked on his high school newspaper, and sees himself as the editor-in-chief of Square, curating ideas that come from his staff and suggesting ideas to them. “I really like that model at both Twitter and Square because it allows for people with the most information around the company to bubble something up,” he said. “But it also allows the leaders in our company to recognize trends and intersections, and [assign] teams to those intersections.” Employees, Dorsey says, “can actually dramatically change the course of the company by presenting a good idea.”

Transparency and trust drive everything. Dorsey insists that everyone who works for him knows what the company is up to and why it's doing it. So he instituted an astonishing rule at Square: At every meeting involving more than two people, someone must take notes—and send them to the entire staff.