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In Twitter’s early days, the company was known seemingly more for its fail whale than it was for offering any clear value as a consumer Web product. During tonight’s PandoMontly fireside chat with CEO Dick Costolo, Sarah Lacy described that era as a “shit show.” Others in Silicon Valley have called the company a “weed” that by all conventional startup wisdom should have died on multiple occasions, but refused to do so.

Costolo wasn’t at Twitter for many of its most trying moments, but he took exception to that description nonetheless. Twitter’s difficulties were the “victim of your own success”-type, he argues. The company was simply blowing up in terms of usage. As it struggled simply to keep the site online, one consequence was that it largely ignored more everyday questions like, what does the finance team need to look like, and how should HR work and what’s the compensation philosophy?

Another factor contributing to Twitter’s early chaos was the fact that it was founded by three highly passionate and creative individuals, Costolo believes. And like many of history’s great bands, creative disagreement was inevitable, he adds.

Costolo’s arrival at Twitter came in 2009, when his good friend, Twitter co-founder and then CEO, Evan Williams, asked him to “help out a little” while Williams was out on paternity leave. Shortly thereafter, he was asked to join as a full time COO.

Costolo was getting ready to launch his next startup, having wrapped up a tenure at Google following its acquisition of his previous company FeedBurner. Despite being excited about this “blank canvas” phase, Costolo recalls thinking, “This could become one of the breakout permanent members of the digital constellation and I gotta do it.”

Twitter’s success was anything but inevitable, he admits, as demonstrated by the persistent fail whales. But the potential was obvious. Costolo began by shoring up the fundamental operational to dos, like defining those missing finance and HR systems. It’s not a stretch to say that he brought a new found sense of professionalism to the company.

Of course the story ended with Costolo being named CEO just over a year later in October 2010, and taking the company public in November of this year.

The transformation of Twitter didn’t end with the operational tune up. Once Costolo assumed the top spot at the company, his next challenge was to shift Twitter’s culture to fit his image. He describes the company’s culture upon his arrival as “passive aggressive,” explaining that people routinely failed to speak directly and address problems in meeting, but regularly spoke behind each others’ backs afterward.

“The culture of a company is a hard thing to move,” Culture says. “There’s lots of inertia built up.”

Even to this day, he spends a significant amount of time making sure people are being forthright and communicating effectively. A few of his key directives to employees include, “Make sure that everybody understands what you understand,” and “Your job is to make sure people get the message you’re trying to communicate, not leave the room with a smile on their face.”

Those outside of Twitter may have overstated how chaotic and messy things were. Or, more precisely, they likely overstated how different it was in this regard than nearly every other startup. Today, the company is one of the most highly valued and successful public companies of its generation.

Some of that surely can be traced back to Costolo’s influence and his effect in righting the ship, beginning in 2009. But just as surely, much of this success is due to the creative vision and early product execution by the company’s founders.

Twitter is a big, mature company, and generates hundreds of millions of dollars in revenues today. Thankfully, the fail whale is a distant memory, as is the revolving door to the CEO suite.

[Photo by Yelena Sophia for Pandodaily]