Twitter's goal in IPO: to avoid becoming Facebook

Fri Nov 8, 2013 3:18pm EST
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By Olivia Oran

(Reuters) - As Twitter Inc's chief financial officer planned the company's initial public offering this year, he had one overriding goal: to avoid becoming the next Facebook Inc.

Twitter CFO Mike Gupta grilled banks about how to sidestep the problems that beset Facebook's IPO from start to finish, asking detailed questions about everything from how to pick an exchange to how to communicate with analysts.

"They were really information and data hogs," said one person who worked on the process. "They wanted a lot of different perspectives and to make sure that they did this right."

In the end, Twitter made different choices from its rival social networking site for its IPO. Facebook selected Morgan Stanley as its lead underwriter, while Twitter picked Goldman Sachs. Facebook listed on Nasdaq, where trading glitches marred the initial hours of trading, while Twitter listed on the New York Stock Exchange.

Facebook Chief Executive Mark Zuckerberg skipped out on at least one major meeting with investors during the company's IPO roadshow, but Twitter's CEO Dick Costolo attended all meetings across the country.

"The whole thing was very business-like and very professional," said a second source who worked on the process. "They decided there was no wearing hoodies with investors," he added, referring to the hooded sweatshirts that have become a trademark of Facebook's Zuckerberg.

Twitter also made sure its shares were sold for a low enough price to attract strong interest and keep shares high in their early days of trading, after Facebook's shares dropped in the days after its IPO. While Twitter's shares were down nearly 6 percent to $42.26 in Friday afternoon trading, they were still trading well above their IPO price of $26.

Bankers said Gupta and Twitter's director of investor relations Nils Erdmann looked closely at what worked - and what did not - for other Internet companies that went public, including Pandora Media Inc, Zynga Inc and LinkedIn Corp.   Continued...

The Twitter Inc. logo is displayed on screens prior to its IPO on the floor of the New York Stock Exchange in New York, November 7, 2013. REUTERS/Lucas Jackson