To understand the speed with which the Twitter board accepted Elon Musk’s $44 billion takeover offer, look no further than Wall Street’s vague opinion of Twitter’s ability to achieve lofty financial goals announced after demands of activist investor Elliott Management in 2020.
When Twitter reports quarterly financial results on Thursday, analysts expect user growth to fall short of what they need to meet the aggressive 2023 growth targets that Jack Dorsey, the co-founder and then CEO of Twitter, promised Wall Street. According to data from Refinitiv, Twitter is expected to fall short of this target and not stay on track for the rest of the year.
Two weeks before announcing the deal, Michael Nathanson, an influential tech and media analyst at MoffettNathanson, advised shareholders to “take the money…and run.”
The board of Twitter came to the same conclusion. Directors were not confident in new CEO Parag Agrawal’s ability to deliver higher returns than what Musk was offering, paving the way for the decision to sell just four days after Tesla’s CEO announced his financing. according to sources familiar with the deliberations of the board of directors.
Handing over the CEO role to an untested leader, Agrawal, five months ago created additional risks for Twitter, said Ryan Jacob, chief investment officer at Jacob Asset Management, which owns $7.7 million worth of shares in Twitter.
“They have aggressive goals out there, and there’s a lot of skepticism about whether they can hit those numbers,” Jacob said. “The CEO has no criminal record.”
Eight current and former Twitter employees, including both executives and employees, described to Reuters long-standing problems of internal dysfunction, indecisiveness and a lack of accountability, which one current employee said was exacerbated by the pressure to deliver promised results.
After it was announced Monday that the deal would be taken privately, Dorsey thanked Musk and Agrawal in a tweet thread for “taking the company out of an impossible situation,” which he blamed on being “owned by Wall Street and the ad model.” “.
Twitter declined to comment. Tesla and Musk did not immediately respond to requests for comment.
Workers brace again for more change under Musk.
Current and former employees told Reuters that Twitter’s history of shaking up executives since its inception in 2006 has made it difficult for the company to commit to long-term plans, often leaving projects stalled once they begin to bear fruit. throw. The last major reorganization was in December under the new CEO.
Move to live sports, entertainment and news in 2016 to capitalize on the power of Twitter as a real-time platform. Twitter had made high-profile deals with partners like the NFL to stream games and promoted the feature widely.
Dorsey joined other executives at New York’s Digital Content NewFronts to promote the service’s lineup to advertisers.
A 2018 reorganization split Twitter among 10 leaders who oversaw aspects of the company, such as technology, product and revenue, who divided responsibility for projects like the live video push, a former executive and current employee told Reuters.
Without a clear owner in the increasingly competitive space, and with hearings in Washington, DC, new privacy regulations in Europe, and financial pressures vying for executives’ attention, live video languished, they said.
Lack of coordination at the top meant senior executives often pursued their own agendas without working together, four sources said.
The problem was particularly acute among executives responsible for product, engineering, technology and revenue, known internally as the “experience team,” the sources said. After Elliott’s arrival, the pressure to meet the 2023 growth targets exacerbated those problems, said one current employee, who likened the environment to a “pressure test.”
Fleets, Twitter’s short-lived Snapchat copycat product, was one such example.
Launched in late 2020 and championed by Agrawal and product director Kayvon Beykpour, the feature was mocked by Twitter users as a belated attempt to jump on the disappearing message train.
The company assigned hundreds of engineers to work on building Fleets, but Agrawal and Beykpour didn’t team up with revenue-driven counterparts and launched the feature with no plans to take up ad space, two people familiar with it said. project.
“It was a real mess, to be honest,” said a former director. “It was the typical ‘hey, push it out, we’ll change it later.'”
Twitter shelved Fleets eight months after launch and just a month after introducing a limited ad rollout for the feature.
HANDS OFF MANAGEMENT
Mismatches between products and revenues might have been less frequent had Dorsey held those teams to account, but the chief executive embraced a management philosophy that caused him to shy away from making specific decisions, four former Twitter executives told Reuters.
One of these former executives said Dorsey’s approach was inspired by former Disney CEO Bob Iger, who was known for hiring strong executives and encouraging them to take risks.
“One of the criticisms around Jack is that sometimes he takes a long time to make decisions, he was hesitant to involve himself in the decision-making,” said the former director. “Jack sees himself getting involved in a draw as a leadership failure because it means the management team didn’t fix it on their own.”
Some thrived under this autonomy, especially developers motivated to invent new things. But others said the company had gone adrift.
“Everyone agrees that we need better accountability for decision-making at management level,” said one current employee.
On Monday, hours after the announcement of the acquisition, employees at a company-wide meeting complained about Musk’s “questionable ethics” and wondered what would happen to Twitter’s work to curb hate speech on its platform. In response to a question about whether Donald Trump, the former US president who has been permanently banned from Twitter over the risk of incitement to violence, would return, executives admitted they were in the dark about the company’s future.
What is clear is that Twitter will soon have a new leader with outspoken views on what to do with Twitter, whatever that may be.