Wednesday, January 26

Jack Dorsey steps down as CEO of Twitter

Jack Dorsey will step down as CEO of Twitter Inc. and relinquish control of the microblogging site he founded and helped build a global communications platform that, despite being widely used, has struggled to keep up with its peers. of social networks.

Chief Technology Officer Parag Agrawal, who joined Twitter in 2011, was promoted to CEO. Dorsey will remain on the board of the San Francisco-based company until his term expires in 2022, Twitter said in a statement Monday. Agrawal will also join the board and director Bret Taylor was appointed independent chairman.

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“The company is ready to leave its founders behind,” Dorsey said in the statement. “My trust in Parag as CEO of Twitter runs deep. His work for the last 10 years has been transformative. I am deeply grateful for your skill, heart and soul. It’s your time to lead. ”

Dorsey, 45, is also the head of payments company Square Inc., and has turned his attention more to cryptocurrencies, particularly Bitcoin, in recent years. After co-founding Twitter in 2006, he stepped down as CEO in 2008 and then returned to work in 2015. He will continue to run Square, according to a company spokesperson.

Dorsey’s departure marks the end of a complicated and eventful six-year career at the helm, which featured an attempted divestiture of the company, a business turnaround that brought Twitter to profitability, and an effort by activist investors to oust Dorsey from his job. When Dorsey returned as CEO, many analysts and investors predicted that he would eventually leave Square and manage Twitter full time. But Dorsey instead stuck to a hands-off management style to run both companies for years.

While Twitter’s business has improved since Dorsey took over, Twitter’s once-shrinking user base has been growing steadily for years – the company hasn’t delivered the same kinds of returns as its peers. like Snap Inc. and Facebook owner Meta Platforms Inc. Shares of Twitter are up 67% since Dorsey’s return in 2015. Shares of Meta are up 260% in that same period.

“The conclusion of the headline here is the execution of Twitter,” said Mandeep Singh, an analyst at Bloomberg Intelligence. “When you compare Twitter to all other social media platforms, the level of engagement they had, they were never able to monetize it as well as some,” rivals, he said. “Investors acknowledge that having a man as CEO of two companies was not very effective in terms of execution.”

In early 2020, Dorsey came under fire from activist investor Elliott Management Corp., who criticized Twitter’s performance and how the CEO was wasting his time. A year earlier, Dorsey had said that he planned to spend up to six months of the year working in Africa to better understand the continent’s internet users, a measure that was ultimately scrapped due to the Covid-19 pandemic.

The hedge fund reached an agreement with Twitter and the Silver Lake private equity group in March 2020 to appoint three new directors to Twitter’s board and create a committee to review its leadership and governance.

However, that deal with Elliott came at a cost: Twitter was required to increase its monetized daily users by 20% or more and drive revenue growth. Dorsey risked losing his job if those goals were not met, Bloomberg reported. In November 2020, the committee concluded that Dorsey should retain his role.

In a statement Monday, Elliott said its collaboration with Dorsey and Twitter over the past two years has been “productive and effective.” He said Twitter now has an “ambitious multi-year plan to dramatically increase the reach and value of the company,” and the firm is confident that Agrawal and Taylor, who is COO of Inc., are “the right leaders. for Twitter at this crucial time for the company. ”

Dorsey has a net worth of $ 12.3 billion, and Square represents more than $ 10 billion of that amount. He has publicly pledged much of his Square stake to charitable causes, according to data compiled by Bloomberg. CNBC reported the news of Dorsey’s departure early Monday.

Initially, Twitter investors applauded the move, sending the stock up as much as 11%. But the rally failed and the stock fell 1.3% to $ 46.48 as of 2:02 pm in New York.

Agrawal’s appointment indicates that Twitter will continue to focus on blockchain and decentralized technologies, which have become a major point of interest for Dorsey. As CTO, Agrawal was the key person within Twitter when he created Bluesky, which aimed to create a “decentralized standard” for social media, a project Dorsey said was his “biggest focus” during an interview in July. Agrawal, who was appointed CTO in 2017, has also been involved in Twitter’s crypto and blockchain teams.

In his second term as CEO, Dorsey also navigated Twitter through widespread pressure from politicians and activists to take a more proactive role in moderating hate speech, misinformation, and other forms of objectionable content from political leaders.

Dorsey took a stronger line than his social media peers during Donald Trump’s presidency, permanently banning the former president from Twitter and telling Congress that he takes some responsibility for the online organization that led to the Jan.6 riot on Capitol. Hill. The company also recently introduced a program to verify data for misinformation on its platform.

Dorsey has also led Twitter while experimenting with social media innovations, including the latest live audio products and subscription services. In June, the company introduced Twitter Blue, a long-awaited premium service that allows users to rescind tweets and organize their posts. He launched Twitter Spaces, a live audio chat service that was destined to compete with the upstart Clubhouse. However, none of the new features have managed to break through in any significant way, and Twitter has historically moved much slower with new products than investors would like.

Agrawal’s appointment is a “clear indication that Twitter’s focus must remain product and technology-centric,” Youssef Squali, an analyst at Truist Securities, wrote in a research note. “That has been the Achilles heel of the company.”

In recent months, Twitter picked up its pace of acquisitions after years of languid deals as the company made a renewed effort to increase the addition of new features. In May, the company acquired the Scroll news reading service.

But the company has also faced competition for the attention of users from newer rivals, including TikTok and Snapchat, which have large audiences among the younger age cohorts with short-form video products.

Twitter said earlier this year that it wants to double annual revenue to $ 7.5 billion by 2023, and expects to grow its user base by an average of nearly 20% in each of the next three years, according to a regulatory document. The company is forecast to generate $ 5.09 billion in sales this year.

In the third quarter, Twitter said it had 211 million daily users, 5 million more than in the previous period and an increase of 13% from the previous year. The social media service attributed the growth to “continuous product improvements and global conversations about current events.”

© 2021 Bloomberg LP

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