The abrupt departure of a chief executive is normally bad news for a major public company. Investors value the stability of well-communicated, well-planned succession.
So it was extremely unusual that, after the shock announcement of Jack Dorsey standing down as CEO of Twitter with immediate effect on 29 November, there was a brief spike in the company’s share price. It jumped by 7.6 per cent when the market opened yesterday.
It must have come as something of a bruise to the ego of Dorsey, who cofounded the company and sent the very first tweet, to see that his parting ways with it was enough to add (for a couple of hours) $4bn to the company’s market valuation.
Why would the market appear to welcome Dorsey’s departure? Technology companies are often in thrall to their founders, and Dorsey had been persuaded to return as CEO in 2015, having been ousted by its board of directors in 2008 after his first tenure as chief executive.
Part of the issue is that Twitter has always been seen as something of an ugly stepchild when compared with its social media rivals. Its popularity grew rapidly from when it was founded in 2006 until 2015, when it reached 300 million users, but since then user growth has stalled and, in some years, fallen. It does not have the size of Facebook and Instagram, or the cool of newer rivals such as TikTok.
Revenue per user also lags behind its rivals. Until recently, Twitter had virtually nothing in the way of new features or ideas – as a company, it has long struggled with being compared to the tech giants while actually managing on much lower budgets, and with a much smaller team.
If Dorsey’s return was supposed to turn things around, verdicts on his success have been distinctly mixed. In the simplest of terms, Dorsey just didn’t seem like he was all that interested in Twitter. It barely felt like he even used it.
Foremost among the problems was that Dorsey was a part-time CEO. His other company, the business-to-business payment provider Square, is less well known but its revenue and market value are nearly three times that of Twitter. Dorsey’s personal wealth is far more dependent on Square’s value than that of Twitter.
That meant in many ways, Twitter – despite 300 million users and a $35bn-plus valuation – was in many ways Dorsey’s side hustle. It wasn’t the main source of his wealth and he often made it obvious that was the case – it rarely felt like he was trying to hide it, or to convince anyone Twitter was his main concern.
This was heightened by Dorsey’s various weird hobbies and obsessions. Like many Silicon Valley men, Dorsey became a fan of intermittent fasting and also reportedly installed a custom-made ice bath in his office. Shortly before the pandemic he announced a somewhat bizarre plan to have a gap year overseas, while remaining CEO. Lately, he appears to have become obsessed with cryptocurrencies, and had begun to claim they were in some way integral to Twitter’s future.
None of that is to say Twitter hasn’t shown real forward progress in the past year. It tried and then (sensibly) abandoned a copycat version of Instagram Stories – a failed experiment perhaps, but at least a sign of life. It has built in Twitter Spaces, a much faster me-too version of rival social network Clubhouse.
It has also bought up several interesting potential rivals, including the newsletter company Revue, which it is integrating with its own social network as a bid to start a Twitter creator economy – something Instagram and Twitch are excellent at, but which has been largely lacking on Twitter.
The problem is all of these developments felt – fairly or otherwise – as if they happened in spite of Dorsey, rather than because of him. An indifferent and uncommitted chief executive is rarely going to be a driver of dynamism. The Dorsey of 2021 seemed largely uninterested in his mid-2000s brainchild.
In a rare moment of public self-awareness, Dorsey’s departing email to Twitter staff noted that a founder retaining too much control of a company can be a “single point of failure” – a term systems engineers use to describe a critical weakness. In that, it seems, he was correct.
The market’s enthusiasm for his departure was short-lived, however: investors don’t seem all that happy with Twitter’s choice for Dorsey’s successor, which was announced alongside the news of his departure. The company has promoted from within, with Parag Agrawal – Twitter’s chief technical officer – filling the CEO role.
The concern appears to be that Agrawal, who has been with Twitter since 2008, might be more of the same. He appears to share Dorsey’s fixation with cryptocurrencies and NFTs, seeming to believe these are somehow integral to the future of the social network.
Twitter still has the potential to be a distinctive and successful social network. It is stronger on news and current affairs than its competitors, it has a high proportion of engaged, influential users, and it can spread ideas and memes more quickly.
But to achieve its potential, it deserves a CEO who appears actually to use the services it provides. In more than a decade, Agrawal has sent just over 3,000 tweets – fewer than one per day, and nine times less than Jack Dorsey. That cannot be a good omen.