Well, it looks like Jack Dorsey’s return to Twitter (TWTR) might not be plucked from a fairy tale after all.
In a statement on Monday, the TWTR board of directors issued what some might call a veiled ultimatum, casting some doubt on how long the co-founder’s business card will read “Jack Dorsey, CEO of Twitter.”
While Mr. Dorsey will become the interim CEO on July 1 after predecessor Dick Costolo’s sudden departure, his current job as CEO of Square might preclude him from a more permanent position.
In other words, Twitter’s board basically just told Jack Dorsey that if he wants to be the new CEO of Twitter, he’ll have to do it full-time.
Reading between the lines, it sounds like the board is asking @jack to do something they know he’s vehemently opposed to, essentially disqualifying him as a CEO candidate.
If true, that would be bad news for TWTR stock.
What the Board Said
Here’s the precise phrasing of the Twitter board’s Monday statement:
“The Committee will only consider candidates for recommendation to the full Board who are in a position to make a full-time commitment to Twitter. The search is proceeding with a sense of urgency but the Committee will take the time necessary to find the right CEO to lead the next phase of Twitter’s growth.”
Don’t get me wrong, this is a fair request … under normal conditions. But these aren’t normal conditions. Jack Dorsey helped grow TWTR from a startup to a social media phenomenon, only to be ousted as CEO in 2008 by another co-founder, Evan Williams. In 2010, Dorsey launched Square, a mobile payments company recently valued at $6 billion.
His return has inevitably sparked comparisons to the late, great Steve Jobs, the co-founder of Apple (AAPL) who was ousted from his own company only to return in 1997 after turning Pixar into a wildly successful animation studio in the interim. As we all know, he went on to grow a company on the brinks of financial ruin into what is today the most profitable company in the world.
And when it comes to pulling double-CEO duty, Tesla (TSLA) CEO Elon Musk, who is also CEO of SpaceX and Chairman of SolarCity (SCTY), proves that the task is not impossible. I don’t think that Jack Dorsey is yet in the ranks of these two visionary tech billionaires, but let’s give credit where credit is due: He is a visionary tech billionaire.
TWTR definitely needs to get back on the right track — the stock is trading near 52-week lows after a disastrous whiff on first-quarter revenue and the unceremonious ouster of Dick Costolo. Perhaps most worrisome is the decelerating growth of Twitter’s userbase, which was up just 5% quarter-over-quarter to 302 million in the last quarter.
Twitter’s decision to box Dorsey into a corner is a mistake. I’m not saying he’s the end-all problem solver, guaranteed to turn TWTR stock around … but who else is a more qualified candidate? I have a feeling Dorsey won’t take too kindly to his board’s ultimatum, which could prove disastrous for the TWTR stock price in the longer term.
As of this writing, John Divine did not hold a position in any of the aforementioned securities. You can follow him on Twitter at @divinebizkid or email him at editor@investorplace.com.
