Twitter may finally start evolving now that founder and CEO Jack Dorsey has stepped down after 16 years at the company.
Besides Mark Zuckerberg, Dorsey was one of the few remaining as CEO of a major tech company that he helped found. But Dorsey was split running another public company, Square, and many have questioned his effectiveness in helming two companies. With Dorsey resigning on Monday, we may see the company lean into more monetization strategies, whether that be exploring payment integrations or doubling down on the creator economy.
“This is emancipating and freeing up for opportunities like fintech,” Peter Csathy, chairman of CREATV Media, told TheWrap. “Not having the founder as CEO opens up a new life for it. They have been slow in rolling out monetization features, and that needs to change for them.”
To push into its next growth phase, the company has said it aims to double its revenue to $7.5 billion by the end of 2023. In Q3, the platform added 5 million daily users and now counts 211 million monetizable daily active users, with some 350,000 of those being verified accounts — but the real challenge that remains is how to effectively monetize its product.
Dorsey’s replacement is Parag Agrawal, Twitter’s current chief technology officer, who has worked on cryptocurrency technologies and whose Twitter account quickly gained some 40,000 followers after Dorsey’s resignation. Agrawal appears to be laser-focused on monetizing, and Twitter has the right crowd of an engaged audience to introduce crypto features, Csathy added.
But Agrawal is an unknown quantity on Wall Street — and Dorsey spent much time in his farewell email to staff praising Twitter’s new chair, Salesforce COO Bret Taylor, as someone who “understands entrepreneurship, taking risks, companies at massive scale, technology, product and he’s an engineer.”
That uncertainty about the company’s future led to an unexpected result. On Monday, shares of Twitter jumped as much as 10% in pre-market trading following news of Dorsey’s departure — but ultimately dropped 2.7%.
Given Twitter’s pressure to grow and monetize, it’s not surprising that there is new leadership. In fact, Dorsey was fired from Twitter in 2008 over his management style and clashes with the board. After starting Square, he later returned in 2015 even as investors questioned his ability to focus on running two organizations.
“I did have concerns about having one person being the CEO of two publicly traded companies, especially when one, Square, was thriving in the market and one, Twitter, was failing to live up to its revenue potential,” media expert Dave Pell said.
Even Dorsey acknowledged in his resignation tweet that a company led by its founder can be limiting: “There’s a lot of talk about the importance of a company being ‘founder-led,’” Dorsey wrote on Twitter. “Ultimately I believe that’s severely limiting and a single point of failure. I’ve worked hard to ensure this company can break away from its founding and founders.”
Another potential area of growth for Twitter is the introduction of additional subscription models as Twitter Blue matures. As Csathy notes, typically subscription models offer different tiers of services based on price. It could be that Twitter will roll out other options beyond its $2.99 per month premium service, such as a more basic version and more advanced features for other power users.
While critics have questioned why it took so long for Twitter to add subscription models, it is unclear how much of that is due to Dorsey’s leadership. The company just rolled out its subscription service in November, introducing features that many power users have been requesting for years.
“The two companies he ran have divergent priorities,” Csathy said. “It’s never optimal when a CEO is part-time. … (Dorsey) has been kind of a punching bag in the media, so there’s a lot of reasons for him to go.”
Much like its social media rivals, the Twitter exec has also been facing growing pressure from lawmakers over the platform’s role in the 2020 election. Dorsey had defended former President Trump’s ban from Twitter and said that the Jan. 6 Capitol riot and Trump’s tweets threatened public safety. Republican lawmakers especially have criticized Twitter and Facebook for suppressing their voices on social media.
As Ryan Detert, CEO of influencer marketing firm Influential, observes, Twitter has been making more effort to create new programs catering to content creators.
“We’re seeing a lot of positive changes at Twitter and that this ‘changing of the guard’ is part of an effort to reinvigorate the platform, reengage users, and capture new ones,” Detert told TheWrap. “With the emergence of NFTs and the Metaverse, it only makes sense that (Dorsey) will be spending most of his time and resources in these rapidly growing industries.”
In March, Dorsey notably sold the first tweet ever as an NFT, or non-fungible token, for 1,630.58 ether. With the cryptocurrency trading for $1,746 per ether at the time, that amounted to more than $2.8 million for Dorsey’s tweet.
Although Twitter’s revenue and user growth have been relatively stagnant recently, the social network maintains a strong user base and remains a major source of information in real-time, especially for engaged social media users and journalists. Its live audio feature, Spaces, is also competing with the popular app Clubhouse, and its newsletter service Revue is offering an alternative to rivals Substack and Facebook Bulletin. As a social media tool, experts believe Twitter still has a lot of potential to grow its reach and influence.
“Until this day, Twitter is still the only major platform for real-time discussion of politics, sports, television, and breaking news,” Simon Owens, tech and media expert, said. “Wall Street judges the company based solely on the number of logged-in users, but think of how often you see tweets embedded in articles or displayed in TV broadcasts. Twitter’s influence reaches far beyond its own website.”
This year, Twitter’s U.S. ad revenue is expected to surpass $2 billion, according to Insider Intelligence, with growth driven by more product launches, sports and live events. Twitter’s stock gains, however, have been roughly the same compared to a year ago. In Q3, its revenue grew 37% from the previous year to $1.28 billion after a loss of $537 million following a settlement over misleading investors about its user growth.