Jack Dorsey leaves one company, helps out two

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Twitter CEO Jack Dorsey addresses students during a town hall at the Indian Institute of Technology (IIT) in New Delhi, India, November 12, 2018. REUTERS/Anushree Fadnavis

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WASHINGTON, Nov 29 (Reuters Breakingviews) - Jack Dorsey’s departure from one of the companies he created helps both of them. The Twitter (TWTR.N) founder stepped down as chief executive on Monday, making room for Chief Technology Officer Parag Agrawal to provide some strategic direction for the $38 billion social network. Dorsey can pay more attention to his other company, financial technology firm Square (SQ.N), which is facing more competition.

Dorsey was fired as CEO of Twitter in 2008, then returned as a steadying influence in 2015 amid executive and board departures. But as Square went public at a valuation of $3 billion that year, he split his time between the two. Since then, his companies have taken divergent paths. Twitter has been bogged down by regulatory scrutiny, with Dorsey testifying multiple times in Congress about misinformation and election interference. Square has rapidly grown into a $98 billion company.

Twitter seems at a loss about its next move. It acquired podcasting app Breaker and copied audio social app Clubhouse through a voice message board. But the bulk of the business is still tweets. Meanwhile, Facebook on Oct. 28 renamed itself Meta Platforms (FB.O) to focus on merging the virtual and real worlds. However abstract that plan, shares in Mark Zuckerburg’s firm are up 7% since then, while Twitter’s before Dorsey’s announcement were down by 14%.

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Equally concerning is that Twitter lags in performance as well as ambition. It had average monetizable daily active users of 211 million in the third quarter while on similar metrics, Facebook had 1.9 billion and disappearing message app Snap (SNAP.N) had 306 million read more . Over the last year, Twitter stock was nearly flat while Facebook was up 22% and the S&P 500 Index gained 27%.

Agrawal, who has been Twitter’s tech chief since 2017, is now free to make bigger moves without being slowed down by Dorsey, who tended to make major decisions slowly. The question is whether Square will benefit from its founders’ undivided attention. The payments firm is being challenged by rivals like PayPal (PYPL.O) and Shopify (SHOP.TO), and Square is acquiring buy-now-pay-later specialist Afterpay (APT.AX) for $29 billion. Dorsey, an avowed bitcoin fan, may be more passionate about payments than tweets anyway. Focusing on that should leave both of his offspring in a better place.

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CONTEXT NEWS

- Twitter announced on Nov. 29 that Jack Dorsey is stepping down as chief executive. He will remain on the board until his term expires at the 2022 shareholders’ meeting. Chief Technology Officer Parag Agrawal will succeed Dorsey.

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Editing by John Foley and Amanda Gomez

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