Friday 30 September 2016

Twitter co-founder Jack Dorsey confirmed as chief executive

Published 05/10/2015 | 14:06

Twitter has ended its three-month search for a new chief executive by appointing Jack Dorsey (Twitter/PA)
Twitter has ended its three-month search for a new chief executive by appointing Jack Dorsey (Twitter/PA)

Twitter is embracing Jack Dorsey as its chief executive in the hopes that its once-spurned co-founder can hatch a plan to expand the short messaging service's audience and end nearly a decade of financial losses.

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The hiring revealed on Monday in a regulatory filing ends Twitter's three-month search for a new leader.

It marks Mr Dorsey's second stint as chief executive since he helped start the San Francisco company more than nine years ago with Evan Williams, Biz Stone and Noah Glass.

Twitter dumped Mr Dorsey first time around, but its board of directors now appears convinced he has the maturity to fix the problems that have caused the company's stock to lose nearly half its value in the past five months.

Mr Dorsey, 38, has already had a dress rehearsal for the job, having become Twitter's interim chief executive in July after former stand-up comedian and veteran entrepreneur Dick Costolo stepped down amid shareholder discontent.

Twitter is believed to have considered its chief revenue officer, Adam Bain, and several other candidates before settling on Mr Dorsey.

Mr Dorsey will no longer be Twitter's chairman, but he will continue as chief executive of Square, a company he co-founded in 2009, as he prepares the firm for its initial public offering of stock.

In doing so, Twitter's board recanted on a pledge issued in late June when it vowed to pick a chief executive who would be able to make a "full-time commitment" to the company.

As chief executive of two companies simultaneously, Mr Dorsey can draw more parallels to Apple co-founder Steve Jobs - a comparison that Mr Dorsey has never discouraged.

After being ousted from Apple in the mid-1980s, Mr Jobs came back as the company's interim chief executive in 1997 and then stayed on to oversee the creation of the iPod, iPhone and iPad.

While running Apple, Mr Jobs was also chief executive of computer animation pioneer Pixar until the company was sold to Disney in 2006.

The headquarters of Twitter and Square are within a street of each other, possibly making it easier for Mr Dorsey to split his duties at the two companies.

Mr Dorsey's biggest challenge at Twitter will be finding a way to make the site easier to navigate and broaden its appeal beyond media junkies, athletes, celebrities and politicians.

The short messaging service has amassed more than 300 million users, but its growth has been slowing, to the frustration of investors, even as people spend more time online, particularly on their smartphones.

Facebook has hooked 1.5 billion people on its online social network and even its photo-sharing application, Instagram, has surpassed Twitter in size. Unlike Twitter, Facebook has been making money for years and its stock has more than doubled from its IPO price. In contrast, Twitter's stock is barely above its IPO price of 26 US dollars nearly two years after its market debut.

Mr Dorsey should be highly motivated, given he owns a 3% stake in Twitter currently worth about 600 million dollars (£395 million).

Mr Dorsey might attempt to draw more traffic to Twitter and engage more people by lifting the 140-character limit that he originally imposed on tweets so they would fit under the restrictions imposed at that time on phone texting. Since Mr Dorsey became interim chief executive, Twitter has already tossed out the 140-character limit for private messages sent through Twitter.

Increasing the length of tweets, though, might alienate some of Twitter's most loyal and active users, who have embraced the 140-character limit as an exercise in eloquence.

Mr Dorsey must ensure that Twitter's steadily rising revenue begins to produce profits relatively soon. Although the company generated 938 million dollars (£617 million) in revenue during the first half of this year, Twitter still lost 299 million dollars (£196 million). That raised Twitter's total losses since its inception to 1.9 billion dollars (£1.25 billion).

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