Jack Dorsey Still Has Pull at Twitter. Just Ask the Vine Guys.

Published on October 25, 2012
by Peter Kafka and Mike Isaac

Asa Mathat |

Earlier this month Twitter bought Vine, a three-man video-sharing start-up that has yet to launch. Twitter may build its own video hosting system, so it’s possible Vine may play a role in that effort one day.

But the main reason Twitter bought Vine is more concrete: Jack Dorsey wanted Twitter to buy Vine.

Multiple sources say the Twitter co-founder was the one who decided that the company should buy the start-up, and pushed hard to make the purchase happen.

While CEO Dick Costolo ultimately signed off on the deal, “this happened because Jack wanted it to happen,” says a person familiar with the transaction.

And while this isn’t a mammoth transaction by 2012 standards, it’s still one of the biggest acquisitions Twitter has made. If the Vine guys stick around and hit their numbers, the company may end up paying north of $30 million for the start-up.

Lesson: Whatever else Jack Dorsey is up to at Twitter, he still has significant clout there.

Here’s the longer version of the Twitter/Vine story, as relayed to ATD by people who know both companies:

Vine, which is supposed to let users share brief video clips from their iPhones, formed in June and was supposed to launch this fall. SV Angel’s David Lee, who had backed Vine, showed Dorsey the app in the hope that the design guru would give it his seal of approval.

Instead, Dorsey ended up pushing to buy the company — not as a standard “acqhire,” but with the notion that the Vine guys would keep working on the app and release it on their own.

The arrangement is supposed to echo the one that Facebook and Instagram reached earlier this year, and that’s not a coincidence. At one point, Dorsey had pushed Twitter to buy that photo-sharing app, as well.

Vine and its investors turned down Twitter’s first offer. They accepted a second, much larger one.

Vine’s backers got Twitter stock, and Vine’s three-man team got a mix of cash, stock and incentives. The Vine guys are now Twitter employees, but they won’t go to work there. Instead, they’ll stay in their New York headquarters and keep working on their app.

Can’t wait to see it.

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