Avoiding Facebook Fate Is Twitter CFO’s Goal on Way to IPO

Wednesday, 10 Oct 2012 08:37 AM

 

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Ali Rowghani got a voice mail on his mobile phone from Steve Jobs on a Saturday in early 2010. The Apple Inc. co-founder wanted to keep Rowghani, then chief financial officer at Walt Disney Co.’s Pixar, from leaving to become finance chief at Twitter Inc.

Jobs, who also led Pixar before selling it to Disney, made several calls, as did Disney Chief Executive Officer Bob Iger, said a person with knowledge of the matter who asked not to be identified because the interchange was private. Rowghani left anyway.

“This company is already like world famous and making this massive impact and has clearly touched this nerve,” Rowghani remembers saying about Twitter at the time. “I didn’t think I’d encounter opportunities like that very frequently.”

At his new employer, Rowghani, 39, has assumed a broader range of responsibilities than the typical number-crunching CFO, holding sway over partnerships and global expansion. While Rowghani also handles finances, he’s one of the closest advisers to CEO Dick Costolo, and he will figure more prominently as the microblogging service seeks to fend off competition while heading for an eventual initial public offering.

“Ali’s brought terrific business judgment to the company,” said Peter Currie, a private investor who is on Twitter’s board. “He thinks broadly. He doesn’t think just from the point of view from his position as CFO.”

Google, Facebook

Executives have declined to speculate on a timetable for an IPO. For now, the company is focused on attracting users and finding ways to generate revenue from advertisers eager to reach Twitter’s audience of more than 140 million people. The company is forecasting at least $1 billion in sales in 2014, two people with knowledge of the matter said in June. That was about twice the prediction at the time from EMarketer Inc.

Aside from helping Twitter grapple with such companies as Facebook Inc. and Google Inc., Rowghani’s bigger challenge will come in navigating the San Francisco-based company toward an IPO. He hasn’t guided a new company through the process and has little experience holding the top finance job at a publicly traded company.

Twitter will probably be the biggest consumer-Web company to make a market debut since Facebook, which has lost half its value since May 17, when it went public with too high a price set by its finance chief, David Ebersman, along with advisers. Rowghani will need to set Twitter’s price high enough to secure the funding Twitter needs without giving it a loftier valuation than it deserves.

IPO Scrutiny

“Like Facebook, Twitter will be a very high-profile consumer IPO and will be scrutinized even more closely as a result of Facebook’s missteps,” said Lise Buyer, principal at Class V Group in Portola Valley, California. “The CFO is the member of the management team who is most deeply involved in the process from start to finish.”

In a recent example of Rowghani’s widening remit, he was given oversight of business development and partnerships, according to people with knowledge of the matter.

“He’s a calm and strategic thinker,” CEO Costolo said. “He’s been incredibly helpful to me in driving operating leverage and operating efficiency across the company.”

Relations with partners haven’t always gone smoothly. The company said this year it’s tightening rules on how Twitter’s Tweets could be used on other sites. It forced companies such as LinkedIn Corp. to pull Twitter postings and it rankled partners, including Instapaper LLC, maker of a news-archiving application.

Developers Disagree

“Effectively, Twitter can decide your app is breaking a (potentially vague) rule at any time, or they can add a new rule that your app inadvertently breaks,” Marco Arment, Instapaper’s founder, wrote in a blog. “They’ve always had this power. But now we know that they’ll use it in ways that we really don’t agree with.”

While the rules left other companies dismayed, it also gave Twitter more control over its content -- and the ability to wring sales from users’ tweets.

Born in Iran and raised in Dallas, Rowghani was a Fulbright scholar and a McKinsey & Co. consultant before attending Stanford University for graduate work. He joined Pixar in 2001.

Rowghani showed an interest in the details of every aspect of the business -- in addition to the numbers, said Ed Catmull, president of Disney Animation and Pixar.

Pixar Penny-Pincher

“Here, we give a lot of credibility if the leaders roll up their sleeves and dive in and do real work, it just means they know what’s going on,” Catmull said.

That knowledge helped Rowghani spearhead an effort to reduce film costs as the studio stepped up movie output.

“I was totally in the weeds on that stuff -- and I was trying to bring a more systematic-like business-driven intuition to answering those questions” about how the movie comes together, Rowghani said. “You can have a process and have creativity at the same time. It’s not like one squashes the other.”

That combination of skills made him an attractive candidate for Twitter, said Peter Fenton, a Twitter board member who interviewed him before he joined the company.

Rowghani helped the company implement its advertising strategy, Fenton said. Twitter announced its first advertising services in April 2010 and has been expanding them ever since.

“Ali says, ‘Let’s lay out our ideas, what’s going to scale, what’s going to work,’” Fenton said. Rowghani worked with Costolo to turn them “into a framework for how we would scale the revenue of Twitter.”

Courting DST

Rowghani played a key role in lining up the venture capital round from DST Global and other existing investors that valued Twitter at about $8 billion last year.

“The discipline that Ali brought to the fundraising was really an internal discipline -- which is, if they raise money at a certain valuation, they needed to understand how they were going to deliver,” Currie said.

Rowghani also had oversight of Twitter’s international expansion plans for about nine months. During that period, Twitter management debated whether to form a partnership or joint venture with a local company to help lure users in Japan.

Rowghani pushed for the company to stay independent to retain control over its future, according to a person with knowledge of the deliberations. Rowghani’s view prevailed.

While he’s willing to speak his mind, Rowghani is also affable, with a boisterous laugh that fills conversations at meals, said David Fischer, vice president of business and marketing partnerships at Facebook, who became friends with Rowghani at Stanford.

Persian Feast

“He’s just unendingly friendly and upbeat and cheerful,” Fischer said. “He’s just a humble and down-to-earth guy.”

Rowghani, who’s single, is known for big dinner parties at his home in San Francisco’s East Bay, said another Stanford friend, Roy Gilbert. When his mother came to town for a recent visit, Rowghani hosted more than 100 guests. His mom ladled out authentic Persian food while guests hung out on a large balcony overlooking the Oakland Hills and the San Francisco Bay.

That friendliness extends to the workplace, including when he was at Pixar, said Oren Jacob, former chief technology officer at Pixar.

“He understands how to strike the very careful balance between the creative needs of a project, with the attention to financial management,” Jacob said. “To walk both of those -- a content and a management space at the same time -- and have enough appreciation for both sides of that coin.”


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