Today Twitter announced that its founder Jack Dorsey (@Jack) will step down as CEO. His replacement, interestingly, is the company’s current CTO, Parag Agrawal. We will get to some thoughts on why this choice is interesting in a moment.
Twitter did not mention Square, the other company that Dorsey is CEO of, in its announcement today. Yet Square was no doubt the first thing that came to mind for many as they read the news today (perhaps on Twitter).
Investors have so far reacted with a mild Twitter selloff (down 1.24% as of about 1 pm ET). And on the other side, with a mild Square rally (up 0.66%).
Inevitable Move
This decision really isn’t a huge surprise for a number of reasons. Dorsey’s dad-with-two-families routine has long frustrated Twitter investors. Since Dorsey signed for his second stint as CEO in 2015, Twitter’s stock is up around 85%. Square has seen its shares jump by a cool 1,566% since its 2015 IPO. Now we know which family gets the nicer Christmas presents.
And when you compare Twitter to the social media field, the story isn’t much prettier. Twitter’s market cap sits at $37.1 billion. Snap — a close but not perfect comparison given Twitter’s unique place in the social media ecosystem — is now worth $78.8 billion. Evan Spiegel and Bobby Murphy founded Snap in 2011, five years after Twitter.
None of this has been lost on Twitter investors. They have long seen Twitter as an underperformer that lacks Snap’s innovative edge. Or, for that matter, Square’s.
Dorsey’s decision may have come from the board. Or it may also be a case of @Jack just following his heart. If Twitter (founded 2006) was Dorsey’s first love, then Square (founded 2009) must be his one true love. At least if we are to use the two companies’ comparative performance as the measure of devotion.
Dorsey’s personal wealth is mostly tied up in Square (market cap $98.7 billion). And many of his personal interests (aside from yoga, fasting, hipster beards, and nose rings), seem to align with Square’s future more so than Twitter’s. One example is cryptocurrency. Jack is a certified crypto bro. Another is Africa. Square’s designs on that massive continent are more closely tied to fintech (e.g. Square) than media (e.g., Twitter).
Why the CTO?
So why do we think Agrawal is an interesting choice? Dorsey pointed to Agrawal’s central role at the firm over the past decade.
“I’ve decided to leave Twitter because I believe the company is ready to move on from its founders. My trust in Parag as Twitter’s CEO is deep. His work over the past 10 years has been transformational. I’m deeply grateful for his skill, heart, and soul. It’s his time to lead,” said Dorsey in the announcement of the leadership change, issued today.
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CTO isn’t always the most likely path to CEO. Though there is evidence that this is changing in an era where technology leadership matter more than ever. So it is possible that Twitter sees this as the core competency that it needs to lean into in the near future.
Here’s a flyer. What if Agrawal has been put in place to make keep things humming until the next shoe drops. After a pause, which may include further erosion of Twitter’s value, Square buys Twitter as part of a super app strategy. Let’s wait and see if I am right.
