CNBC News Releases

CNBC Exclusive: CNBC Transcript: Twitter CEO Dick Costolo Speaks One-On-One with CNBC's Julia Boorstin Today

WHEN: Today, Thursday, November 7th

WHERE: CNBC's "Squawk Box"

Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Twitter CEO Dick Costolo. Excerpts of the interview will begin airing on "Squawk Box" at 6am ET.

Following are links to the interview on,, and

All references must be sourced to CNBC.

JULIA BOORSTIN: Well, Dick, thanks so much for talking to us. We really appreciate it. The big news today, of course, is your upward-revised pricing. Why did you do this, and what have you learned from the road show?

DICK COSTOLO: I think that-- well, to answer the first question, is I think as we've been on the road and seen-- enthusiasm for the story and the way we're thinking about the future of the company, and our long-term plans-- that's enabled us to make the changes that we've made to the price.

BOORSTIN: You've played it very safe so far. Is it risky to come out higher?

DICK COSTOLO: I think that it's completely based on the enthusiasm we've seen for everything we're trying to do, and everything we're trying to accomplish, and how that story's resonating with potential investors. And that's enabled us to make this decision.

BOORSTIN: In your conversations with potential investors, do you think they understand how Twitter really works, and how you guys make money?

DICK COSTOLO: So the answer-- to both questions is absolutely yes. In fact, one of the things I've-- that's been most exciting for me on the road show is the propensity for some of these investors to come in and show me examples of how Twitter has been so powerful.

And one investor in Chicago showed me a tweet from Sean Lennon about-- Ai Wei Wei, the Chinese artist who was imprisoned-- under house arrest in China for his use of Twitter. And Sean Lennon's tweet about that imploring everybody else to tweet the same kinds of things. So that enthusiasm from investors and their own use of the product, both from-- a user basis, and then from the potential of it as a monetization platform has been fantastic to see.

BOORSTIN: How much does your I.P.O. strategy been informed by what happened with Facebook's I.P.O., that debacle?

DICK COSTOLO: I think that our strategy approaching the I.P.O. has been based on-- me and our investors, frankly, having a number of conversations with other CEOs and investors around Silicon Valley. One of the great things about Silicon Valley is irrespective of how competitive you might be with another company, or how closely you might be working with that company, there's a great sort of give and take, and camaraderie from -- between some of the executives in the valley and some of the other investors in the valley.

And I'll just give you as a quick example-- Aneel Bhusri-- of Workday is just one example, has been tremendously helpful in thinking about this is what was-- this is what worked for us. This is what you should think about going into the road show, et cetera. So spending the time in advance of the road show with those kinds of folks has been-- amazing and super helpful to us.

BOORSTIN: It seems like the Facebook example must have loomed large though?

DICK COSTOLO: Well, as I say-- my approach to this was really to make sure that we were spending our time with a breadth of-- executives and investors who have been through this a number of times before. I mean, you know, so as a CEO, you go through these things maybe once, twice, three times at the most. And of course, the investing side has been through it many, many times. So you want to get as much understanding from others who have been through the process so there-- you don't have that asymmetry going into the process.

BOORSTIN: How is your I.P.O. process different because of the Jobs Act?

DICK COSTOLO: I think one of the things it enabled us to do was-- one-- obviously, we filed confidentially. It allowed us to be thoughtful and patient with the time that we spent-- during that filing process. We were working on it-- for months, of course, before we-- made it public. And I think that's just-- very helpful in terms of not going from zero to 100 both internally and externally, and allowing the people working on it internally to start to develop the way of thinking about the way they're filing these things, and the way of working together on it. So that was-- enormously helpful to us.

BOORSTIN: Now because of regulatory reasons, you had to go public within a certain time period. If you didn't have those restrictions, do you think now would still be the right time for Twitter to go public?

DICK COSTOLO: Yeah, I think we're-- one of the things you want to do-- when you're thinking about becoming a public company is understand how ready you are to be a public company, and that's readiness in terms of, of course, visibility to the future, but also how well you think you're-- ready from an R&D standpoint.

Do you like the product cadence that you've developed? Do you think you have an understanding of how efficient you can be in your product development-- as you start to increase the-- execution speed, et cetera? And I think that across the various axes of the business, both from the sales teams-- platform engineering team, product engineering team, et cetera, we felt like we were ready.

BOORSTIN: Well, knowing what you know now about the I.P.O. process, what would you do differently?

DICK COSTOLO: So-- you're going to -- you know, this is-- I hate to give the trite answer, but here it comes. So get ready (LAUGH) for it. I really wouldn't change anything about the way we've approached the process this time. I think that the team has just done a tremendous job preparing-- both me and the rest of the executive team for everything we were going to go through, and being thoughtful, and methodical about everything we've gone those-- along the way. So I'm -- extremely happy with the process we've gone through to get here, and how everything's gone so far.

BOORSTIN: How do you dress investor concerns that Twitter isn't profitable?

DICK COSTOLO: There's nothing -- first of all, the way-- well, I'll start off by saying there's nothing structural about Twitter that prevents us from having the kind of margin profiles of our peer group. We are investing for the long term. We think this is a long-term company, a company-- that for which there is a fantastic use case for every person on the planet.

In fact, everybody inside the company would give you example after example of this is why I think this Twitter would be valuable to anyone. And so we have a significant number of investments we want to make as we move down that path, investments in our distributed platform, investment in our Twitter and TV strategy, et cetera, et cetera. We will -- investments in our product infrastructure for mobile testing suites, et cetera. We will continue to make those investments in the growth of the core business for the foreseeable future.

BOORSTIN: But Twitter has massive R&D, and other infrastructure costs that are much higher than comparable companies even when they were at this phase in their life cycle. How do you address concerns about that?

DICK COSTOLO: So historically, when I took over as CEO in 2010, what we were working on structurally was increasing the reliability of the site. You know, a few years ago the site was down with some frequency on increased loads. It would go down, and my first priority when I became CEO was that can't happen anymore.

So we made those investments in building a reliable software and hardware infrastructure, and an extensible software infrastructure. Today, I would absolutely say that there is nothing structural about our infrastructure that prevents us from having the kind of margin profiles of our peer group.

BOORSTIN: So what does that mean in terms of a path to profitability?

DICK COSTOLO: Well, what it means is that we're going to continue to invest in the kinds of things I want to do to speed up-- product innovation and cadence of product innovation. We're going-- and those include things like when you release mobile applications, being able to have-- test a number of hypotheses, an ever increasing number of hypotheses with a specific release and all the complex infrastructure you want to build underneath that.

There's absolutely nothing structural within the company that prevents us from achieving the kinds of margin profiles of our peer group. But I'm going to continue to invest in the near-term in those kinds of infrastructure-- capabilities, in the partnerships that we've developed, in our platform partnerships, in Twitter and TV that we know and have full confidence in will allow us to grow the core business.

BOORSTIN: So you talk about-- there's nothing structural now. But in short-term, you're investing, what is the long-term? When are we going to see Twitter become profitable?

DICK COSTOLO: I will give you-- keep giving you the same answer. We feel like we have every ability. There's nothing structural that prevents us from achieving those kinds of margin profiles. But in the near-term and for the foreseeable future, we're going to continue to make the investments that I think we want to make to grow the business.

BOORSTIN: Now a lot of successful Silicon Valley companies have a founder who also has a controlling stake in the company, who's also running the company. That's not the case with Twitter. Is that an advantage or a disadvantage?

DICK COSTOLO: I think that the funny thing about this-- the industry goes through these waves of-- saying either, "Well, you need a professional CEO" Or-- and then the other version of the wave is, "Well, you have to have a founder be the CEO" The reality is that they both-- they're both working models.

And you've got folks like-- John Donahoe at Ebay right now doing a fantastic job. And-- you know, there are lots of examples of both founder CEOs, and Larry Page, and Mark at Facebook, and people who weren't founders of the company who are now in the company as CEO.

I think the key is making sure that you've got a connection back to the inventors of the product. Again, I-- I'll look at-- John as an example at Ebay, Jeff Weiner and Reid Hoffman at LinkedIn, and then-- my relationship with Evan, Jack-- and business quite strong-- Evan, Jack both still on the board of-- directors. And I spend a significant amount of time with those guys.

BOORSTIN: Now, Ashton Kutcher told me he thinks Twitter has a signal to noise problem, that people's feeds end up getting sort of crowded with a lot of junk. Do you agree?

DICK COSTOLO: I think that the beauty of the interest graph, the more accounts that you follow, the more you have a painting of what that user's interests are, all us to do all sorts of things with the future of the product in order to deliver the right kind of user value to you wherever you are in the moment anywhere you are.

We have already got a couple of innovations that have launched to-- a subsegment of our users. They've been written about in a number of the technology blogs like our ability to notify you-- about an event when we think it is particularly relevant to you.

One of those-- as I mentioned, has launched. We have-- a number of them. So for example, when I was on the east coast the other week during the road show, I received a notification that there was a fire at 26th and Valencia, which is a street corner near the office here in San Francisco. And I got that because of the map of the accounts that I follow paint a picture of a number of folks who live and work near here.

So our ability to reach out to you and make Twitter an indispensable companion to life in the moment, make Twitter an indispensable companion to the live experience is absolutely how we think about the power of that interest graph, and the number of accounts you follow. And that will increasingly allow us to deliver more user values.

BOORSTIN: Well, you're delivering an additional factor-- additional information with this new tool you're talking about. What about the fact that-- you know, I'm going to continue to follow more people, and it's so easy to retweet, that my Twitter feed just gets crowded. Is that something you're trying to address?

DICK COSTOLO: The beauty of the 140 characters is that it facilitates this in-the-moment consumption, and the ability to scan a significant amount of content quickly. And as we think about being the public real-time, conversational, distributing platform at-scale, I think that 140-character constraint serves us really well in our ability to deliver you a significant amount of information across a variety of your interests that's easily scannable.

BOORSTIN: So how do you want to change or improve how Twitter works?

DICK COSTOLO: I think about when I talk to the company about the kinds of things we want to achieve, I think about it entirely in service to again, what do we need to do to make Twitter the indispensable companion to life in the moment? The indispensable companion to the live experience.

Within that direction, within that point on the horizon, I absolutely look to the designers and the engineers, and the product managers in the company to create bold and courageous innovations, and hypotheses that we can go test out in the market.

BOORSTIN: Does that mean we'll see a new user interface? How big are we talking about in terms of changes?

DICK COSTOLO: Well, I'll tell you one of the interesting things about having a company that's got such scale with its user base. You want to make sure that your designers, and product managers, and engineers are continuing to be bold and courageous in the kinds of things they're trying. Without starting to worry about, well, what if we do this thing and it's too big, and people don't like it?

So one of the things I implore my designers, and engineers to do is make sure they're being as bold and courageous as possible. And hopefully that will result in significant ways in which people can experience the product differently.

BOORSTIN: We saw Twitter growth slow this year. And there's a big question a lot of people are asking, is Twitter going to be appealing enough to really mainstream users? What do you think?

DICK COSTOLO: So I think that we have had consistent, consistent growth in our user-base that's now gotten us to over 230 million monthly, active users. Again, as I've said before, everybody inside this company has a number of examples that they could show you that helped them believe and understand why this product could be useful to anyone in the world-- anyone in the world.

We all do. We're numerous examples. And so one of the things we want to make sure we're doing is making the product as engaging and compelling as possible for everybody. When they come to the product in that first 48 hours they sign up, there's massive, global awareness of Twitter.

So what do we need to do to bridge that gap between massive global awareness and quick engagement on the platform? That's thinking about things we can do during the sign-up process to make it easier to get the product right away. It's the photo-forward, media-forward capabilities we've launched in the product very, very recently so that that media that people are tweeting out isn't hidden behind the home timeline, but it's there front and center and ready to be engaged with. That combination of small things and larger, strategic things I think will enable us to do what we want to do.

BOORSTIN: A new AP-CNBC poll points out that people under the age of 35 don't necessarily think that Twitter would be a great investment. People under the age of 35 are heavily your demographic. Do you need the people who use Twitter to also invest in Twitter?

DICK COSTOLO: I think that as-- you know, as I've said to you earlier here, one of the things we've been delighted about on the road show is the enthusiasm for what we're trying to achieve. And over the long term of how we think this company and what we're building can become this indispensable companion to life in the moment. And I think that that vision and our goals for the product and the service will result in, you know, helping people understand whether they want to invest in the company or not.

BOORSTIN: So Facebook seems to be getting into Twitter territory. They have hashtags. They're encouraging more public posts. What kind of threat is this to Twitter?

DICK COSTOLO: So when we think about the characteristics of Twitter that make it unique, it is all of public, real-time, conversational, and distributed. We are the only platform that is all of those at scale. When I think about the kinds of things we want to do to achieve what we want to achieve, it's only about amplifying those four things.

We don't feel like we need to pivot one of those to a different characteristic. We don't feel like we need to add a fifth characteristic. And if we do what we want to do, and achieve our goals in amplifying those four things, I don't really have to worry about how everybody else thinks about their characteristics--

BOORSTIN: So you're worried about Facebook or other startups?

DICK COSTOLO: I don't worry about other platforms-- of course you have an understanding of the competitive landscape, and the global landscape, and these regional platforms-- and these global platforms. Within that framework, it's important to make sure that we're amplifying what we believe-- what we believe we understand as our four core characteristics that make us unique at scale.

And if we do that and don't worry about, well, what if we added this fifth characteristic? Or do we need to pivot characteristic B to this other characteristic? If we do what we need to do and amplify those four characteristics, everything will take care of itself.

BOORSTIN: How will Twitter look different in a year or five years?

DICK COSTOLO: I think that as we think about that, you know, that vision for what we want to be, that indispensable companion to the live experience, it will be increasingly about making sure that you know-- you always know that you will find out about these moments in your life, whether they're very, very specific and local, or whether they're macro, global, or national events, that Twitter is the place to go for those, and Twitter is the company and platform that lets you know about them the moment they happen.

BOORSTIN: You've announced a bunch of TV partnerships. What do investors need to understand about why these TV deals are really important for Twitter?

DICK COSTOLO: Because Twitter is the perfect complement to television. TV has always been social. You talk to the person you're sitting next to on the couch. You talk to the people you're-- you know, at work with the next day around the proverbial water cooler. And we are helping broadcasters and content partners A) drive tune-in and discover in advance of the show, B) and extremely importantly, being the place for live reach during a show.

What I mean is during the show, while it's on-air, not in the hours afterward, but while it's on-air, Twitter has become the second screen for conversation about that show while it's happening. So -- being able to help broadcasters and content partners aggregate that attention on Twitter during the show and engaging that live reach is a super-powerful capability for our broadcast partners--

BOORSTIN: I get why it's valuable for them. But how does it end up boosting your bottom line?

DICK COSTOLO: Look, the more that we have platform partners, including our television partners and content partners building into Twitter, delivering their unique content onto our platform, instant replays-- previews for an upcoming show, 60 minutes in 60 seconds, the more we do those kinds of things and have platform partners building their unique content into Twitter, the more user value we can drive, and the more beneficial it is to the overall health and business.

BOORSTIN: What about other potential revenue streams? You already sell some data. It seems like you could make a lot of money by selling more data.

DICK COSTOLO: Actually, I would say that-- you know, recently, we've announced that we've brought Nathan Hubbard in to explore commerce opportunities for us. I think one of the things we'll be looking at, obviously, from that hire that we made and announced is looking at ways in which we can explore-- additional commerce opportunities on the platform. There's already commerce happening on Twitter every day. Again, when you think about the company that we're building, this indispensable companion to life in the moment, there are all sorts of in-the-moment opportunities. And Nathan's been brought in to explore those.

BOORSTIN: So commerce on Twitter, when will we start to see that show up in Twitter's revenues?

DICK COSTOLO: Nathan's just joined the company, and he's ex-- I have-- we have him not prescribed go do this. He's an extremely-- he's got ex-- an incredible amount of experience from the ticketing business, which is very much about-- you know, time-- yield management over time, and in-the-moment-- commerce. So I'm letting him explore those kinds of opportunities, and think about those right now. And we'll see what happens there.

BOORSTIN: I know you also made a big hire in the news business. Does this indicate that there could be -- big revenue for you in creating original content? What can we take from that?

DICK COSTOLO: I think that's more about making sure that with-- the breadth of our media partners, that we're a complement to what they're trying to achieve in their business. Because again-- I completely believe that the more we enable our platform partners to build off of Twitter and build into Twitter, the more successful an ecosystem we'll create for our users.

BOORSTIN: A lot of people are concerned you have an international problem. Your international revenue far lags your usage. What are you doing to address that?

DICK COSTOLO: Well, first of all, we-- the-- over 70% of our users are international, and we've seen tremendous growth globally in the platform. We're even placing people on the ground, and that will be an area we continue to invest in to make sure that just like here interest U.S., we're driving unique, regional content into the platform to further facilitate user value in those kinds of countries.

We built the business, the foundation of the advertising platform-- began here in the U.S. and then expanded outside of the U.S. after that. We've just recently launched our self-serve platform for the small-business market here in the U.S. It has not launched internationally yet. So those kinds of things -- I think will enable us to grow the business internationally.

BOORSTIN: So it sounds like you don't think that news will generate its own new revenue stream. Retail could. What are other areas that could be generating significant new revenue for Twitter?

DICK COSTOLO: Well, I think about, again, that future exploration of in-the-moment commerce, the kinds of things that Nathan came into the company to think about as an area we'll explore, but I don't have any time, for those.

BOORSTIN: How big do you think Twitter could be? A billion users? What's your number?

DICK COSTOLO: You know-- when we've been on the road show, one of the questions I'll get is, "What is the total addressable market for Twitter?" And my first reaction to that question when I got it was, well, they must be talking about the financials.

And-- so when they then ask, "No, I'm talking about users," you know, at first I'm taken aback because everybody-- again, everybody inside the company knows and has experience with the value that Twitter could deliver to anyone in the world. And so when people ask that question, my reaction is, it's the entirety of the world of connected people. Because we all see every day, everyone who works here, examples of how Twitter could be valuable to all of those people.

BOORSTIN: Final question. What's your biggest challenge in either running the business of Twitter, or the product of Twitter?

DICK COSTOLO: It's absolutely making sure that as we continue to grow, my product managers, and designers, and engineers are thinking boldly and courageously about the kinds of things we could be doing for our users, and not equivocating in our efforts to becoming that indispensable companion to the live experience.

BOORSTIN: And no more Fail Whales?

DICK COSTOLO: Well, that we cleared up a while ago, hopefully.

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