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not sure anyone has heard but,
I resigned from Twitter https://twitter.com/jack/status/14653K47002426867720
— jack⚡️
(@jack)
November 29, 2021
The above lines and an image of his resignation email are how Twitter Founder and ex-CEO Jack Dorsey announced his departure to the world.
The markets cheered the move. Company stock rose 11% after Dorsey said he was leaving the company he founded. Twitter has been a bad investment since its IPO in 2013. It closed at $41.65 on day one. Eight years later, it is trading at $42.07. During this same period, the Nasdaq has moved up from 4,500 levels to over 15,000 and the S&P 500 has gained around 160%.
Dorsey is also the CEO of payments service Square, and the company is getting deeper into cryptocurrency which Dorsey is also very keen on. This article on Tipranks says, “On October 15, SQ CEO Jack Dorsey tweeted, “Square is considering building a Bitcoin mining system based on custom silicon and open source for individuals and businesses worldwide. If we do this, we’d follow our hardware wallet model: build in the open in collaboration with the community.”
Dorsey is the CEO of both Twitter and of Square.
SQ already has a couple of bitcoin-based projects underway. In July this year, Dorsey announced on Twitter (TWTR), again, that “Square is creating a new business (joining Seller, Cash App, & Tidal) focused on building an open developer platform with the sole goal of making it easy to create non-custodial, permissionless, and decentralized financial services. Our primary focus is #Bitcoin. Its name is TBD.”
When the CEO has his priorities elsewhere, it makes sense for him to leave.
However, when he said that Parag Agrawal, who was formerly Twitter’s Chief Technology Officer would be taking over his role, the markets sent the Twitter stock down 9%. They don’t think that a CTO has what it takes to make the company tick.
“I’ve decided to leave Twitter because I believe the company is ready to move on from its founders,” Dorsey said in the email. “My trust in Parag as Twitter’s CEO is deep.” Clearly, the markets don’t share Dorsey’s trust.
Why the Thumbs Down for Agrawal?
No one doubts Agrawal’s tech credentials. He joined the company as an engineer in 2011. He was part of the team that worked on Twitter’s advertising technologies. This team worked on using machine learning and mathematical systems that were able to target ads to particular users based on their tweets. Later, he joined the Twitter Architecture Group, a team of the company’s top engineers, who reviewed and improved the company’s projects under development.
However, markets don’t believe that an engineer is a right person to take over Twitter. The company holds an inordinately large influence in the social media space when it comes to conversations. It has become THE platform for everyone from presidents to CEOs to sportspeople to activists to celebrities to send out their message to the world. For instance, meme crypto coins rise and fall on the back of Elon Musk’s tweets. Unfortunately, for its investors, it hasn’t been able to leverage its influence into advertising revenues.
The company keeps tinkering around with bells and whistles but it hasn’t been able to crack the advertising code. Agrawal has been with the company for a decade and has worked on Twitter’s advertising tech but he hasn’t found a solution. He has been part of Dorsey’s inner circle in the company, and both men are said to be intensely dedicated to technology. Does Twitter need a quieter, humbler version of Dorsey?
Management Rejig
Agrawal has already started making his presence felt. Just days after Dorsey stepped down from the top job at the microblogging company, Twitter announced that its engineering head Michael Montano and design chief Dantley Davis would step down in management rejig. This move would be completed by the end of this month.
Agrawal is reorganizing the management structure at Twitter under a “general manager” model. Kayvon Beykpour, Bruce Falck, and Nick Caldwell will lead the consumer, revenue, and core technology verticals, respectively. The general managers “will lead all core teams across engineering, product management, design, and research,” according to a Twitter filing with the Securities and Exchange Commission.
Apart from this, the company said that Lindsey Iannucci, senior operations and strategy executive with Twitter, will move up into the company’s leadership team as chief of staff and vice president of operations.
Dantley Davis’ exit is most likely to impact Twitter. Davis was known for his no-nonsense persona. Under him, the design was catapulted to the C-suite at Twitter. This Fast Company article says, “He pushed to get misinformation labels live. His group helped to deactivate algorithms that prioritized white faces when auto-cropping photos. And he set up a team to tackle problems like targeted harassment.
“Davis also overhauled Twitter’s design group, making it more responsible for product development.” However, his aggressive style caused his team members to report to HR that they felt “psychologically unsafe.”
What’s Next for Twitter?
Twitter’s Q3 earnings saw revenue come in at $1.28 billion for the quarter. Ad revenue grew 41% year-over-year. Average, monetizable DAU came in at 211 million, up 13% compared to the corresponding quarter in 2020.
Ned Segal, Chief Financial Officer said, “We expect total mDAU in Q4 to grow at or above the Q3 rate of 13% on a year-over-year basis.”
The company said that its potential market size is $150 billion and it is on track to generate $7.5 billion in revenue in 2023.
The markets have factored in all these numbers and the stock hasn’t gained momentum. Agrawal will have to prove his management chops and his ability to make Twitter’s ad revenues match its influence. Until then, expect the stock to continue to trade at its current levels.
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