After years of stumbles and underperformance, Twitter co-founder Jack Dorsey is finally stepping aside as chief executive. The long-awaited move creates an opportunity for the social media platform to regain its footing, but there is much to be done.
On Monday, the company’s board announced that Twitter veteran Parag Agrawal, who has served as chief technology officer since 2017, will succeed Dorsey as CEO, effective immediately. Dorsey will remain on the board until his term expires next year.
Twitter shares initially surged on the news of Dorsey’s departure but turned lower as the market digested the news that an internal candidate was chosen. Investors are right to be concerned. Twitter’s deep problems will require leadership that is willing to act aggressively to right the ship, a tall order for an executive with deep ties to the previous regime.
It has been a difficult year for Twitter. During the company’s analyst day in February, Dorsey talked a big game, vowing to “double development velocity” of features and setting new long-term financial goals. But Wall Street has grown skeptical of the company’s ability to deliver on its ambitions after a series of disappointments. U.S. user growth has been weak. The social media app’s domestic, monetizable daily active users fell in the June quarter from the previous three months. Despite the benefit of the Summer Olympics in Tokyo, Twitter didn’t add U.S. users in the three months that ended in September, either, compared with the June quarter.
Meanwhile, the early results for the company’s new initiatives have been underwhelming. Twitter shut down Fleets, its clone of Instagram Stories and Snapchat Stories, just months after launch amid lack of interest. Its highly anticipated Super Follows program, which enables users to charge a monthly fee for subscriber-only content, and its Twitter Blue paid subscription offering are off to slow starts. And it doesn’t help matters when rivals are thriving. Google parent Alphabet Inc., for example, grew at a faster rate than Twitter in the latest reported quarter even though its revenue is more than 40 times larger.
It isn’t just financial performance. As easy as it is to question Mark Zuckerberg’s metaverse ambitions, the Facebook parent company is serving up the type of potentially transformational product vision Twitter has lacked.
It’s possible Agrawal has the skills to grow the platform to expand beyond its core users. To jump-start that process, he must fundamentally change the way the company does product development.
First, listen to users and prioritize features they care most about, including direct-messaging search, better analytics and a long-coveted tweet edit button. For whatever reason, Twitter has ignored the cries of its biggest adherents. It’s time for that to change.
Second, get basic product execution right. I’m befuddled by glitches with Communities — a promising new feature designed to compete with Facebook Groups — given that it is just more tweeting, organized differently. The releases for Fleets, the since-abandoned Snap rival, and live audio tool Spaces were riddled with technical problems, leaving new users with a bad impression of the service. Features like Tips and subscription service Blue offer far from a best-in-class user experience. Twitter needs to recognize that competent product execution is a minimum requirement to compete in social media, and that a handful of big bets have more chance of moving the needle than a stream of half-baked features.
Third, develop a better short-form video strategy. The world is shifting toward the short video format popularized by TikTok. YouTube and Instagram are changing their apps. Despite Twitter’s unsuccessful history in the category with Vine, it must figure out a way to participate.
A strange quirk about Dorsey’s tenure is that he also is the top executive at Square Inc., which competed for his attention. The financial payments company and Twitter will now both benefit from having full-time CEOs.
Other than minor incremental changes, Twitter’s main service hasn’t changed much over the last decade. Agrawal has an opportunity to make a fresh start. If he makes the right moves, it could be a turning point investors have been clamoring for. –Bloomberg