Jack Dorsey On Charlie Rose: "It's Really Complex To Make Something Simple."

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Twitter Chairman and Square founder Jack Dorsey sat down with Charlie Rose last night to talk about Dorsey’s unique position of being responsible for two technology startups based on the idea of simplicity: Twitter and Square. Watching this interview you realize that Dorsey’s accomplishments have little to do with luck, and more with his focus on creating the purest products by throwing away any unnecessary flourishes. “It’s really complex to make something simple,” he tells Rose.

Dorsey describes himself as an “editor” who edits technology and teams “so that we have one cohesive product that we tell the world.” In the clip above (provided by the Charlie Rose Show), Dorsey talks about how he got the idea for Square and how hard it is to make mobile payments no more complicated than swiping a credit card.

Dorsey believes the most powerful technologies are those which disappear, like the iPad disappears:

“When you’re using the iPad, the iPad disappears, it goes away. You’re reading a book. You’re viewing a website, you’re touching a web site. That’s amazing and that’s what SMS is for me. The technology goes away and with Twitter the technology goes away. And the same is true with Square. We want the technology to fade away so that you can focus on enjoying the cappuccino that you just purchased.”

In the clip below, he talks about how he got the idea for Twitter from his obsession with cities and dispatch systems, but how he felt those systems were missing one thing: the people, his friends. Now Twitter is not just about status updates but about pointing to, and carrying via short links, other media on the Web. He boils down the essence of Twitter into this: “Any media that you can imagine it can point to a carry in real-time.  And the only other technology I know that’s done that well is the web itself.”

Dorsey also pegs the number of registered Twitter users at 200 million (when I checked with Twitter to confirm this number, I was told it was very close, but not quite there yet—so chalk that up to rounding). Also, asked at the end whether Twitter is making any money, Dorsey said the company has revenues but it didn’t sound like it’s got any profits yet.

You can watch the full interview here or read the full transcript below (courtesy of Charlie Rose).

TRANSCRIPT

CHARLIE ROSE: Jack Dorsey is here.  He is the chairman of Twitter.  Since its inception in 2006, the site has become a powerful tool of information and communication.  Almost 200 million users worldwide tweet every day.

That has allowed Twitter to become a real-time news feed. It’s also reshaped how public figures from celebrities to politicians communicate.  The company is now working hard to monetize its popularity. Dorsey started Twitter as a side project in 2006 with Evan Williams and Biz Stone.

His latest venture is called Square, which can turn your mobile phone into a credit card reader.  Pleased to have Jack Dorsey at this table for the first time.  Welcome.

JACK DORSEY: Thanks for having me, Charlie.

CHARLIE ROSE: Good to have you here.

Let’s just talk about Square and go back to Twitter.  How did that come about?

JACK DORSEY: It came about because my cofounder is a glass artist and he sells these beautiful glass faucets and he was selling one for $2,000.  And all he had in his pocket was his mobile phone.  He couldn’t accept the credit card from the woman who wanted to buy this faucet and she didn’t have a checkbook and she obviously didn’t have $2,000 of cash, so he lost the sale.

And we were discussing this and we have these general purpose computers next to our ears and yet –

CHARLIE ROSE: The iPhone-4.

JACK DORSEY: Or an Android phone, or a blackberry, whatnot.  But yet he wasn’t able to accept that credit card.  So we wondered why that was, and we answered it by building this system.

CHARLIE ROSE: You write code, yes?

JACK DORSEY: Yes.  I wrote code.

CHARLIE ROSE: And that’s what you do well?

JACK DORSEY: Yes.

CHARLIE ROSE: That’s what you’ve been recognized for since you were 14 or 15 years old.

JACK DORSEY: Yes.

CHARLIE ROSE: So you immediately set out to do what?

JACK DORSEY: My goal is to simplify complexity.  I just want to build stuff that really simplifies our base human interaction.  Twitter was around communication and visualizing what was happening in the world in real-time.  Square was allowing everyone to accept the form of payment people have in their pocket today, which is a credit card.

So we have built the simplest way to accept credit cards.  It’s a little tiny device that we give away for free, and you just download some so wars from the app store and plug it in to your mobile phone or iPad and suddenly you can take credit cards.  So if you’re a tax accountant or a lawyer or doctor or even a hair stylist, you can now accept credit cards.

CHARLIE ROSE: And you monetize this how?

JACK DORSEY: We take a cut of every transaction.  So we charge 2.75 percent and 15 cents on the transaction. which we then pay the credit card companies out of.  So the user only has to pay that 2.75 percent.  They don’t pay any credit card fees.  They don’t have to have a setup charged. They don’t have to pay for the hardware or even the software.

CHARLIE ROSE: Hardware’s free, software’s free.

JACK DORSEY: You just use the phone you have in your pocket.

CHARLIE ROSE: OK, so this sounds to me like a win-win for everybody. Small businesses like it . . .

JACK DORSEY: Yes, they love it.

CHARLIE ROSE: Somebody has a credit card and wants to pay with a credit card likes it.

JACK DORSEY: You can pay everywhere now.

CHARLIE ROSE: So you who created this with your partner like it.  It seems so fundamental.  Why hadn’t someone done that before?

JACK DORSEY: It turns out it’s really complex.  It’s really complex to make something simple and especially when you started addressing the financial world.

We have a number of things — in order to accept credit cards you have to talk with a bank.  Normally when you’re a small merchant or a business or individual you have to get a merchant account, which means you have a one to two year relationship with the bank, and then there’s always these fees and setup costs and monthly minimums.  It’s a mess.

And it’s never really been designed in a beautiful way and that’s what we’re good at.  That’s really hard to do.

CHARLIE ROSE: How do you minimize fraud, because that would be a concern?

JACK DORSEY: Right.  So we actually have a lot of benefit in using the credit card system itself because a lot of the protections are on the payer side.  When someone issues you a credit card, when your bank issues you a credit card, they assume that that card is going to be lost or stolen.  So all of the protections are watching the payer.

So if we get a swipe or if we get a signature on those card payments then a lot of the risk is off us because we know the payer was in that location. And apart for that, there’s a lot of information in these phones.  There’s GPS.  We know where the transactions are taking place.  People are putting in their Twitter accounts.  They’re putting in their Facebook accounts. They’re telling us about themselves and we can use that to build a reputation for how they will interact in the world.

CHARLIE ROSE: Did I read that you were involved in some kind of lawsuit because of somebody else?

JACK DORSEY: We — so we worked on this system which actually was prior art.  So we built this little credit card system with another individual who we worked very well within the past.  But unfortunately we were not included on the patent we both created together.  So it’s just a minor thing.  We’re not independent on this IP, it’s just something nice to have.

CHARLIE ROSE: And this is the future of mobile payment, in your judgment?

JACK DORSEY: I think so.  I think — the biggest thing we’re trying to address is let’s simplify this entire world.  Let’s speak what people are using today.  A number of people in the United States, almost everyone, is using plastic cards to pay for things, but it’s extremely difficult to accept these cards.  So let’s make it’s easy and take more and more of the friction out as we can.

CHARLIE ROSE: And what’s the global response?

JACK DORSEY: The global response has been really good.  You need to tailor these technologies to each market. So we’re starting on the U.S., but we want to be completely payment device agnostic.  Different countries use different methods.  So in Japan, for instance, they’re using a lot of near-field communications, obviously.  In places like Kenya they’re using SMS, they’re using phone credits.

So all these markets have their own technologies to pay for things and exchange value, so we need to make sure that Square can accept every for of payment that is in the payers’ pocket.  In the U.S. it’s the credit card.

CHARLIE ROSE: And how do you divide your time between Square and Twitter?

JACK DORSEY: I have a really fortunate situation.  I’m now in the midst of I think two of the great et cetera companies in the world.  I’m chairman of the board of Twitter so I go in when I’m needed, I point out what I think is moving, what technologies are interesting, things we may need to fix and things that we’re doing really well at.  And when I’m not needed I get ou of the way.

CHARLIE ROSE: And how did Twitter get started?

JACK DORSEY: Twitter has a long story.  I’ve always been fascinated by

cities and how they work.  And I taught myself how to program so I can understand how the city works.

CHARLIE ROSE: You taught yourself to program so you could understand how cities work?

JACK DORSEY: I wanted to visualize them.  I wanted to see them.  I wanted to play with them.  I was inspired by New York City and just — if you consider New York City, all these entities roams about the cities, taxicabs, ambulances, fire trucks. And they’re always reporting where they are and what they’re doing. And if you can visualize that you can see how the city is living and breathing and what’s happening in the city.  So I started building dispatch software.  And that’s the software that runs these entities, always reporting where they are and what they’re doing. I’m in an ambulance at Fifth and Broadway taking a patient in cardiac arrest to St. John’s Mercy, a very, very simple model.

In 2000 I realized that I had this beautiful picture of all these verticals in the city that make the city work but I was missing the citizens.  I was missing the people.  I was missing my friends. So what if I could just take my phone and — we didn’t have mobile phones that worked that well in 2000.  I had a very simple Rim device which was the precursor to the blackberry.  What if I could be anywhere and share what’s happening and I could get everything in real-time?  What if we did that?

And it turns out it was just the wrong time.  In 2006 SMS got really big in this country.  I met my cofounders Biz Stone and Evan Williams who had worked with blogger to build blogger.  So they understood the importance of self-publishing.  And I just added this real-time aspect, this SMS aspect and we said what if with just SMS and the web I can go anywhere I want and report what I’m doing and see what everyone else is doing in real-time, a very, very simple start and users have taken it from there.

CHARLIE ROSE: Was there a conversation that took place to make you do that or did this take place in your head?

JACK DORSEY: We were — you know, we were working –

CHARLIE ROSE: Because it was Odeo what was the company?

JACK DORSEY: We were working at a company called Odeo, which was a podcasting company, and I joined as an engineer.  And the interesting thing about Odeo was that no one in the company was really that excited about podcast.  So we weren’t –

CHARLIE ROSE: So it was a business you didn’t care a lot about?

JACK DORSEY: Yes.  I just wanted to work with Ev and Biz.  I saw them from afar as my first real job, the first time I had to write a resume.  I wanted to do more consumer facing stuff because I had always been back in the real-time transactional systems, and they presented that opportunity.

So I joined, I worked on this podcast, it wasn’t that interesting.  And then iTunes came out with the podcast directive which kind of took Odeo’s business model and potential off the table.  So we started trying to figure out what we’re going to do and how we make audio more social, how we have group communication.

And during this time SMS was coming and being used and the first time you could send a message from Cingular to Verizon and it was amazing.  I fell in love with the technology and the rest of the company did as well. And one day Ev said “Go out, think of some things to do, come back, we’re going to present to the company.” And I took a group of two other people and we talked about this very simple idea of being able to report where I am and what I’m doing and go out in real-time over our phones and the web in 160 characters.  And we were on the playground and we presented to the company.

It didn’t really go anywhere, but then a week later we talked about it more and we decided I would take two weeks and Biz Stone and my other programmer Florian, and we would build the system.  And we built in the two weeks and we took more and more resources.  And the first tweet that was actually written by a human was by me and it was inviting co-workers.

CHARLIE ROSE: Inviting co-workers?

JACK DORSEY: That was the start.

CHARLIE ROSE: and how did you decide on the responsibility between you and Evan and Biz?

JACK DORSEY: Well, I was leading a lot of idea and the vision for where the product was going.  Ev was funding and supporting what we were doing. He put the shelter over our heads.  And Biz was just an amazingly creative guy.  And he was helping come up with words like “follow” –

CHARLIE ROSE: He’s the marketing –

JACK DORSEY: He’s a marketing genius.  He’s amazing and fun to talk to.

CHARLIE ROSE: So where is it evolving to?  Because some have made this point — it’s more information than social, social being Facebook.

JACK DORSEY: Yes.  I think that is a great point.  I think we’ve put a lot of emphasis on tweeting when a lot of the value is actually following people.  And anything you’re interested in the world whether it be Charlie Rose or JetBlue or a public figure or your local coffee shop, they’re on Twitter and broadcasting what is interesting to them.  They’re broadcasting about the organization, what they’re doing. So I can go and get immediate value from these things that I care about. And that’s the most important thing is being able to get in immediately and being able to follow someone I love, like Kanye West or like Barack Obama or any politician serving my particular state.  I can see them immediately.

But then there’s another hook — you can actually participate with.  You can reply to them, and they may reply back.  They’re human again.  And we spend so much time putting these organizations and public figures on this massive, massive pedestal, but we have to remember they go through all the small details of live that we do.  And you can make them human again and you can interact with them.

And it’s not just humans, it’s a social movement.  It’s seeing what’s unfolding in Iran.  It’s seeing what’s unfolding in Moldova or Arizona or anywhere in the world.

CHARLIE ROSE: And so it has political implications?

JACK DORSEY: It could.

CHARLIE ROSE: It did in Iran.  It was about the only way people could communicate.

JACK DORSEY: It was one way.  There were multiple ways.  I think what was really important in Iran was that the first time people were really using these tools to be on the ground and show what was happening.  And that alone created an international conversation.

To a lot of people in America Iran and what’s happening in Iran is a black box.  It’s hard to understand what’s happening.  But to be able to instantly see video and to see man on the street accounts of how things are unfolding in real-time as they’re happening is amazing and I’ve never seen that before with any other technology.

CHARLIE ROSE: What I don’t understand when you look at your penetration around the world, you’ve done really well in Japan, and Facebook hasn’t. What does that say?

JACK DORSEY: We’ve had massive success in Japan.  And it wasn’t just recently.  It was very early on.  It was within our first year.  People just took to it right away, and we really couldn’t figure out why.  But we found all these amazing things.  People would actually put these automated tomogotchis onto Twitter and you could follow the tomogotchi patterns.

CHARLIE ROSE: What does it say about culture?

JACK DORSEY: It’s a very engaged culture and they’re very, very focused on constantly iterating technology.  And Twitter is a very, very fast way to do it.  In Japan, it’s not 140 characters, it’s 140 words.  So you could write a little mini-novel. This is a whole story in the universe.

CHARLIE ROSE: And in China?

JACK DORSEY: In China it’s the same, very much the same.  So people are writing non-stop about what’s happening within the country, what’s happening around the country.  So it’s a very, very interesting peek into these cultures.

CHARLIE ROSE: So there’s these two ideas.  One is Twitter is the next big internet success story.  I would expect you to say yes, but if you had to say yes, why would you make the case?

JACK DORSEY: I think it’s huge.  I think it’s huge because never before have we had such access to that immediate information.  And once we have that information we can participate and interact with it.  It spans at the intersection of every single media.  It’s a great way to point to video, to images, to text, to web sites.  Any media that you can imagine it can point to a carry in real-time.  And the only other technology I know that’s done that well is the web itself.  So I put it on the same league as the web.

CHARLIE ROSE: When was the last time you wrote an e-mail?

JACK DORSEY: I write one every day.

CHARLIE ROSE: More than one?  Do you write many or do you mainly use text messaging?

JACK DORSEY: I use text messaging a lot more.

CHARLIE ROSE: Than e-mail?

JACK DORSEY: More than e-mail.

CHARLIE ROSE: And do most people you know who are — have the same affinity for technology follow that rule, follow that practice?

JACK DORSEY: I think so.  As we go to a younger generation that’s definitely through because it’s more instantaneous.  I use e-mail as a reference.  E-mail is a great reference.  It has a subject line.  It titles what the e-mail is about and I can refer to it, I can search.

But it’s not great for communication because it’s not focused on the most important thing.  The subject is the message, and that’s the message.  The subject is in the message in the IM.  It’s bringing the content to you right away.

One of the things I love about the iPad, for instance, is when you’re using the iPad, the iPad disappears, it goes away.  You’re reading a book. You’re viewing a website, you’re touching a web site.  That’s amazing and that’s what SMS is for me.  The technology goes away and with Twitter the technology goes away.  It’s so easy to follow anything you’re interested in.  It’s so easy to tweet from wherever you are. And the same is true with Square.  We want the technology to fade away so that you can focus on enjoying the cappuccino that you just purchased.

CHARLIE ROSE: Your CEO has said that Twitter has cracked the code when you advertise.  What did he mean by that and how have you cracked the code?

JACK DORSEY: It’s not just the advertising but the human behavior.  It’s a new way to communicate which is to spark interaction. One example of this is one of the first entities that was using the promoted products that Twitter has was Disney and “Toy Story.”  We naturally have when toy story three came out people were going the theater and they were tweeting they were going to see “Toy Story 3″ and some would tweet during the movie. Then they would come out and say “This is amazing.” And it just naturally trends to the top.  And Disney used that as a way as an opportunity to capture that natural trending ability and then also point to content that they want to surface to their consumers and to their customers.

So it was just a very natural and easy way to again point attention and direct attention to something that the advertiser wanted to see.  But you’re going to see that anyway, because it was trending.

CHARLIE ROSE: The relationship between Evan, Biz, you, and where there’s tension and where there’s not tension and where one — and why there have been so many different executive changes since Twitter was founded, what’s the answer?

JACK DORSEY: For any Silicon Valley company, the most important thing is the company.  And any great founders need to get out of the way of the company.  We presented a spark with an idea.  We saw a lot of the direction being driven by our users, and a lot of what we have to do now demand very, very specific management. And we know our strengths.  And that’s mainly it.  This company is bigger than any individual.  It’s bigger than Biz, bigger than Ev, bigger than myself.

CHARLIE ROSE: Do I get this then?  So Biz’s strength is marketing?

JACK DORSEY: He’s a great communicator.  He’s a great protector of the brand.

CHARLIE ROSE: Evan’s strength is product strategy and that kind of thing?

JACK DORSEY: Yes, he has a great way of thinking about the user and how the user’s coming to the technology.

CHARLIE ROSE: And your strength is writing programming?

JACK DORSEY: My strength is programming.  I also think my biggest strength is simplification.  That’s what I love doing.  I love making something complex.  I love taking everything away, taking all the debris, the conceptual debris from a technology away so that you can just focus on what’s most important.

So I see myself as a really good editor.  That’s what I like to be.  When I edit a technology, I want to edit a team, I want to edit a story so that we have one cohesive product that we tell the world.

CHARLIE ROSE: Meaning what?  What does “edit” mean?

JACK DORSEY: There’s so many ways Twitter could go, there are so many features Twitter could build.  There’s so many features that Square can build.  But there is only one or two going to bring us to the next level. So edit that to one, to get rid of all those inputs and edit to one cohesive story, one single thing we’re saying to the world and that’s what we do with product.

CHARLIE ROSE: Are you by — at the core, primarily a software programmer or are you primarily an entrepreneur who’s simply wanting to ask the right questions which will lead you to the next business?

JACK DORSEY: I think I’m a mix.  I love building technology, I love programming.  I love building teams.  And I also love building beautiful things.  I love art, I love design, and I love seeing that intersection of technology and the teams that work on it.

CHARLIE ROSE: But once you build them are you thinking about the next thing?

JACK DORSEY: No, I’m thinking about how to scale what we built, how to bring it to a global audience.

CHARLIE ROSE: So what do you have to do to scale Twitter?

JACK DORSEY: We have to get it everywhere.  We have to make it easy for people to use.

CHARLIE ROSE: How many, 200 million users?

JACK DORSEY: Yes, 200 million people are using Twitter.

CHARLIE ROSE: Facebook has 500 million plus.

JACK DORSEY: So we have a long way to go.

CHARLIE ROSE: Do you think you can reach 500 million.

JACK DORSEY: We can go well beyond that. And I think the important thing for Twitter is that it works on any technology.  The mobile phone itself, like anyone in the middle of — we have a short cut in Iraq, for instance, Twitter has a short cut in Iraq, and 60 percent of the population of Baghdad has a cell phone in their hands and they can use SMS.  And they can send a tweet for free to the short code in the middle of Baghdad and then also receive these tweets in real-time. That is amazing.  That is just unheard of. And that’s why I’m so excited about this technology because it speaks to the lowest common denominator, every technology.

CHARLIE ROSE: Would you argue the most exciting agent of change in the world today is the number of mobile devices?  I mean by that one smart phone, that an increasing number of people in the world have it, that that’s the agent of change, how many people get put in their hands a device that has such power?

JACK DORSEY: I think it’s a — I think it may be — it’s a single spark. I think it’s a good way to further our understanding of what it means to be mobile and what it means to have technology around us all the time. But the iPad is mobile as well.  Laptops are mobile.  So all these devices we can take with us and interact.  But I think the important is what does that mean for these technologies?  What does it mean for communication when a device like those knows where it is, when it can accept the forms of payments that we use and we can build it into address whatever we want to address.

CHARLIE ROSE: So what is your counsel inside when the subject is the following — we ought to merge with Google or we ought to follow the Facebook pattern and stay independent and go public?

JACK DORSEY: I think Twitter is so unique that we must stay independent. We must continue to build what we dream of having in the world.  And we’re just barely started, that’s the thing.  Twitter’s been an amazing success, but we’ve just gotten started.

CHARLIE ROSE: Just gotten started because of what it can do or just gotten started –

JACK DORSEY: Because of what it can do.

CHARLIE ROSE: Lay that out for me, finally, what it is you think you can do.

JACK DORSEY: So we’ve built this very easy way, no matter where you are, to put content in, to share what’s happening around you.  But it’s still very difficult to find meaning and relevancy in real-time.  How do we get people to discover what’s most important?  How do we surface what’s happening right now that someone should pay attention to? And that happens within your social network.  It happens in the things you care about, within the country or even the world.  But how do we in real-time bring that to people?  And this is not just a challenge for Twitter. It’s also a challenge for the technology industry because we have all of this information just swirling about.  How do we make sense of it?  We need to do a much, much better job in making sense of it.

CHARLIE ROSE: Is Twitter making money?

JACK DORSEY: It’s making money.  We have revenue.

(LAUGHTER)

CHARLIE ROSE: I know you have revenue.  Making money has to do with profit.  Making money has to do with a positive cash flow.

JACK DORSEY: We have a long way to go.

CHARLIE ROSE: That’s yes, or no?  I’m not sure?

JACK DORSEY: We have revenue.  We have revenue.  You’ll have to speak to Dick.

CHARLIE ROSE: Everybody has revenue.

(LAUGHTER)

Thank you for coming.

JACK DORSEY: Thank you so much.

CHARLIE ROSE: Jack Dorsey, Square and Twitter. Thank you for joining us.  See you next time.

END

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