Memo to Peter Thiel: I Was Wrong About Twitter, Too

Peter Thiel is underestimating Twitter (TWTR). I should know; I made the same mistake.

On Sept. 17, Thiel, an early Facebook (FB) investor, used part of a wide-ranging CNBC interview to dismiss the microblogger. "Twitter is hard to evaluate. They have a lot of potential. It's a horribly mismanaged company -- probably a lot of pot-smoking going on there."

Let's be clear about what Thiel is saying here. He isn't commenting on cannabis so much as accusing Twitter of poor performance. A claim that any sober analysis of the numbers would instantly refute. Overall revenue growth is up 117 percent over the past 12 months. Ad revenue per 1,000 timeline views -- a key metric for the company -- doubled in the most recent quarter and is growing even faster overseas.

Of course, it would be easy to skewer Thiel if I hadn't been just as dismissive of Twitter and CEO Dick Costolo. But I was.

Dysfunctional and Slow

Back in 2011, a Fortune exposé told of a dysfunctional culture in which nothing moved fast enough. Even Costolo -- barely six months into the job as CEO -- had come off poorly for spending six weeks to craft a new mission statement. Naturally, I piled on in a follow-up column:

"At Twitter, arrogance seems to have manifested itself in the form of a confused mishmash of visions and product strategies. Six weeks to form a mission statement? Six weeks is a lifetime in tech, especially in the fast-paced microuniverse we call Silicon Valley."

I'd concluded that column by saying I would avoid the Twitter IPO, which looks like a smart decision on the surface. The stock is up about 13 percent since the offering vs. 15 percent for the S&P 500 (^GPSC), a small but likely transient win that will evaporate now that the business is performing as well as it is.

Costolo never responded to my finger-pointing. (As if he needed to.) But he did respond to Thiel, in the most hilarious way possible:

4 More Quotes Every Twitter Investor Should Know

For Costolo, it wasn't just an applause-worthy quip. It was also reflective of a style that's helping him to foster a high-performance environment that his workers have come to treasure. Twitter headlines Glassdoor's list of the top 25 U.S. companies in terms of culture and values.

How did he take the microblogger from dysfunctional to dynamite performer in three years? Here are four things Costolo says about managing and leadership that every current or would-be Twitter investor should know.

1. Crazy sometimes leads to innovation; let it happen. "I want people to always feel like [employees] can suggest whatever crazy idea they want to suggest, and whatever crazy design idea they have -- and let me worry about whether that is something we should do or not," Costolo said in a late-2013 conversation on Chris Hardwick's Nerdist podcast.

2. Admit mistakes so your reports don't repeat them. "Those are great teaching moments when the CEO is standing in front of you and saying, 'Here's a great example of someplace I screwed this up,'" Costolo said in a February 2013 interview with the Wall Street Journal, referring to the benefits of a two-day class he teaches to new Twitter managers.

3. Venture outside the management bubble. "I try to spend a lot of time with people outside my direct reports. The view from the top is totally distorted. If you only spend time with your directs, you have no perspective on what's really going on," Costolo said in a May 2013 interview with Inc.

4. Don't try to be popular. "As a leader, you need to care deeply, deeply about your people while not worrying or really even caring about what they think about you. Managing by trying to be liked is the path to ruin," Costolo said in a September 2013 speech at TechCrunch's Disrupt conference.

Sounds to me like pretty sober advice from a man accused of lighting up on the job. Then again, I've been wrong before. Pass the Doritos, please?

Motley Fool contributor Tim Beyers didn't own shares in any of the companies mentioned in this article at the time of publication. Find him on Twitter as @milehighfool. The Motley Fool recommends and owns shares of Facebook and Twitter. Try any of our Foolish newsletter services free for 30 days. To read about our favorite high-yielding dividend stocks, check out our free report.