Twitter opted for a so-called 'confidential' IPO, allowed under a provision of the Jumpstart Our Business Startups (or JOBS) Act designed to make it easier and less expensive for small, high-growth companies to go public. It allows Twitter to run its financials by the Securities and Exchange Commission, which can raise red flags without exposing them publicly. The act also allows Twitter to keep every aspect of its filing out of public view until 21 days before the road show for potential investors.
Of course, Twitter insiders have a pretty good sense of how much Twitter shares might go for when the company IPOs late this year or early next. And in a piece titled "The Payday at Twitter Many Were Waiting For" that led the business section of Saturday's New York Times, Nick Bilton and Vindu Goel offered a tantalizing tale of just how spectacularly early investors might make out. Bilton and Goel report that back in 2007 when Twitter co-founder Evan Williams was looking for backers, he "dashed off a note to his old friend Dick Costolo, who had just sold his company to Google, asking if he would like to put in $25,000 or $100,000."
Within three minutes, according to the Times, Costolo wrote back, "I'm on the $25k bus. Thanks Ev, this will be a lot of fun." Bilton and Goel don't reveal their source on this, but presumably it's either Costolo (taking a victory lap for being smart enough to immediately grasp the potential of Twitter) or Williams (patting Costolo on the back for his prescience). Costolo, of course, became CEO of Twitter in October 2010, taking over from Williams -- and scoring even more equity in the process. But his early $25K bus ride will likely result in a rather astonishing return for him, according to the Times:
Although many details are still unclear -- most of all the offering price of Twitter's stock -- Mr. Costolo's initial investment is probably worth more than $10 million, with additional shares he has received as an executive worth many millions more, according to people knowledgeable about the company's finances.
If only Costolo had opted for the $100K bus. Poor fella.
Simon Dumenco is the "Media Guy" media columnist for Advertising Age. Follow him on Twitter @simondumenco.