* Returning Dorsey wants Twitter to be more mainstream
* Will work with both Twitter and start-up Square
NEW YORK, March 29 (Reuters) - Twitter co-founder Jack Dorsey, who returned this week to the company after a two-year absence, wants to make the microblogging site more approachable to the masses, he said on Tuesday.
"We have a lot of mainstream awareness but mainstream relevancy is still a challenge," Dorsey said during an event in New York hosted by the Columbia Journalism School.
Dorsey, who will oversee product development while serving as Twitter's executive chairman, acknowledged that the service is "something that people can't immediately get their head around."
Known for short messages limited to 140 characters called tweets, Twitter has emerged as one of the most popular social media companies. It counts among its users celebrities such as Ashton Kutcher, Conan O'Brien and Charlie Sheen.
Still, relatively few of Twitter's more than 200 million registered users are active on the site. Research firm eMarketer cited data showing that less than 25 percent of Twitter users generate about 90 percent of tweets.
Dorsey said he wants to concentrate on users "that don't really understand what Twitter is and see Twitter mainly as a consumption experience."
"We need to refocus on the value and that is my goal in the next few months," he said.
Dorsey started Twitter in 2006 along with Evan Williams and Biz Stone. He served as its first chief executive until Williams replaced him in 2008. [ID:nN28213276]
He returns as Twitter faces questions about competition from rivals such as Facebook, and its business model that includes advertiser-sponsored tweets. Even so, Twitter's perceived value among investors has grown by leaps and bounds.
In December, Twitter was valued at $3.7 billion in a $200 million funding round led by venture capital firm Kleiner Perkins Caufield & Byers. An auction of Twitter shares on the secondary market earlier this month suggested investors were valuing the company at $7.7 billion.
Even with his role at Twitter, Dorsey will remain chief executive of mobile payment start-up Square, which he founded during his time away from Twitter's day-to-day operations.
He said he could handle wearing two hats at once.
"I structure my time in a very very disciplined way," he said. "It's not a large context shift to go back and forth between both companies."
(Reporting by Jennifer Saba; Editing by Richard Chang)