Wiser! Essay: Jack Dorsey has quit for the 2nd time as the CEO of Twitter. But he still has a day job because he's also CEO of Square, aka Block.
Back Story: Twitter founder Jack Dorsey announced his resignation this week from the social media platform he launched in 2006.
This was Dorsey's 2nd stint as CEO having been ousted from this role in 2008 only to return to the helm in 2015. The 45-year old CEO is also the boss of the payments platform Square and it was this dual CEO lifestyle that caused the crypto-advocate grief from shareholders who questioned his commitment to running Twitter.
This grief primarily came from shareholders Elliot Management and Silver Lake, who were both given a board position last year in an act of appeasement by the Twitter board. They made no secret of their demands for Dorsey to solely focus his efforts on Twitter...and for Twitter to grow its user base, speed up revenue growth and gain digital ad market share.
The TakeAway: The question I find myself asking is "why did it take him so long?" (assuming he made the decision himself, as he said he did).
Twitter was great and cool and innovative...when it was launched in 2006. But since then, Twitter has hardly been at the forefront of innovation. It missed the opportunity to be TikTok before TikTok (TikTok now has 1 billion users compared to Twitter's 800 million). And to be Clubhouse before Clubhouse (although Twitter Spaces is doing a good job as a Clubhouse look-a-like).
And looks like it will screw the transition to a subscription-based business model as an alternative to the ad revenue model that is causing social media such harm. The recently announced subscription service looks like a dude before it's even got going. It shows an absence of imagination about how to price and package it. As a product, Twitter Blue is totally underwhelming. On a more positive note, Super Followers looks sound and Twitter's acquisition of newsletter service, Revue appears to be a success in the battle against Substack.
But...user numbers have been stagnant for years and Twitter stopped reporting them in 2019. Their share price has been on a disappointing journey since floating in 2014, enjoying a short renaissance thanks to Trump's preference for brain dumping in 240 character tweets...and the bull run on tech stocks throughout the pandemic.
And the big issue for Twitter shareholders has been its inability to benefit from the huge shift of digital advertising spend online throughout the pandemic. In 2020, Twitter grew its Trailing Twelve Month ('TTM') revenue by just $1.3 billion compared to Snap who grew its advertising revenues by over $2.1 billion in the same period.
Twitter has now had 5 CEOs in 16 years. It's easy to blame Dorsey (who still owns 2% of Twitter) for his lack of focus. But maybe there are other issues at Twitter. The business model for one certainly looks like it needs an overhaul. Can the new boss sort it out...time will tell!?
Fun Fact: Twitter was publicly launched in July 2006. At launch, its defining features were the tight limits placed on each post, known as a tweet. Originally, users could only use 140 characters, although that was doubled to 280 in 2017. The micro-blogging platform was founded by former Odeo employees Jack Dorsey, Noah Glass, Evan Williams and Biz Stone. Twitter originally used SMS to send tweets onto the network. It received its first boost of users at SXSW 2007, when the founders showed all the tweets hitting the network in real-time.
Parag Agrawal: the new boss at Twitter
As Dorsey was walking out the door carrying his box of personal possessions, Parag Agrawal was moving in. Agrawal has been with Twitter for 10 years, most recently as Chief Technology Officer. He has emerged from behind the scenes to take over one of Silicon Valley’s highest-profile and politically volatile jobs.
Agrawal has become the youngest CEO in the S&P500, replacing Facebook's Mark Zuckerberg. He also becomes the latest high profile tech CEO with Indian heritage, alongside Google's Sundar Pichai, IBM's Arvind Krishna, and Adobe's Shantanu Narayen.
For more on Agrawal, read this profile in The Guardian.
Square to change its name to Block
Back Story: Meanwhile, Dorsey was unpacking his box at his other day job as CEO of Square, a mobile payment company focused on credit card processing and merchant solutions (in Q2 2021, the gross payment volume for Square was $42.8 billion!).
Within days of stepping down from Twitter, he announced his intentions with Square by changing its corporate name to Block. This signals a push beyond its main sales and payments products into businesses like music, cash transfers and the blockchain.
The TakeAway: It's no secret that Dorsey has long wanted to extend Square from being a digital-payments company into a broader organization with a number of standalone business units.
Square recently acquired Tidal, the music streaming service led by rapper Jay-Z, and started a financial services division focused on Bitcoin called TBD54566975 (the name was derived from a positive numerology report linked to the number.)
In recent months, Dorsey has revved up Square’s efforts in several cryptocurrency-related areas. He tweeted this thread about Square building a Bitcoin-mining system and last month, Square published a white paper describing plans for a decentralized cryptocurrency exchange.
IMHO, Dorsey is a smart cookie. Crypto, commerce and BigTech are converging and there's a massive gap in the market for the West's first SuperApp. You only have to look at China to see the massive opportunity when a payments platform (Square) is combined with a range of other products and services into a single app experience. By ditching Twitter, he can focus on building Square into a significantly bigger and better business than it is today.
Twitter key statistics
- Twitter generated $3.7 billion revenue in 2020, an 8.8% increase year-on-year
- 86% of Twitter’s revenue came from advertising in 2020
- Twitter posted a net loss of $1.1 billion in 2020, which was the company’s first annual loss since 2017
- Twitter has 186 million daily active users and 38 million users in the United States
Twitter User Numbers
Twitter Demographics show 70% of users are Male
Source: Business of Apps
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