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Can Jack Dorsey stay on as CEO of both Twitter and Square?

Daniel Roberts
Graphic by David Foster/Yahoo Finance

As the CEO of Twitter, Jack Dorsey had to testify on Capitol Hill in September before the Senate Intelligence Committee and the House Energy and Commerce Committee for hearings on foreign influence over social media platforms. Twitter stock fell 6% on the day he testified. The stock is up 12% this year after the company beat on revenue and profit in Q3—but also revealed a drop of 9 million monthly active users for the quarter.

As CEO of Square, Jack Dorsey has had a very different year, with far fewer headaches. Square shares are up 70% in 2018. Square managed to release three new hardware devices in the past 13 months. Square’s Cash App surpassed PayPal-owned Venmo in cumulative downloads in July. All of this led us to name Square our Company of the Year.

The question that Wall Street has about Dorsey moving forward: how much longer can he keep pulling double-duty?

[Read about why Square is Yahoo Finance’s 2018 Company of the Year.]

Dorsey co-founded Twitter in 2006 with Ev Williams and Biz Stone, and Dorsey was CEO until 2008, then stepped down, and took the role again in 2015. At Square, on the other hand, Dorsey has been CEO since its inception in February 2009.

Square and Twitter shares in 2018, through Dec. 21.

Scott Kessler of CFRA Research thinks Dorsey’s double-duty is not sustainable for much longer. In his recently released predictions note for 2019, he forecasts that Dorsey will step down as CEO from one of the two companies, perhaps staying on as chairman.

“These companies are becoming so big and so far-flung in many respects that they do require more CEO attention than he’s probably able to afford,” says Kessler. “And at both companies, the people who were his No. 2 executives have left: Sarah Friar [Square CFO who left this year to be CEO of Nextdoor] and Anthony Noto [Twitter COO who left this year to be CEO of SoFi].”

Then again, Kessler acknowledges, “We made this prediction last year, too. It didn’t work out.”

Dorsey gets praise for his executive bench at Square

The people who work closely with Dorsey at Square paint a different picture.

“I think if I didn’t use Twitter and read about Twitter, I wouldn’t even know,” says Square’s hardware lead Jesse Dorogusker, one of five senior executives at Square who report directly to Dorsey. “We meet three days a week, Jack is always there, he runs those meetings. I don’t see him every day, but I wouldn’t expect to see my CEO every day. It’s a non-thing to me.”

Square’s seller lead Alyssa Henry, who previously worked at Amazon and Microsoft, compares Dorsey favorably to the iconic founders of those two companies. “I was at Amazon and prior to that Microsoft, and both Bezos and Gates ran pretty large companies with disparate business units within them, and Jack runs a broad company with multiple business units within it,” says Henry. “And I think he operates pretty similarly to those leaders. He’s super thoughtful, and he’s really good at empowering others to go build, and he’s not too deep in the weeds, because that’s a failure pattern.”

Of course, the story executives frame to the public and to the media often differs from what the rank-and-file say. But one current Square employee, who wished to remain anonymous, says, “When it comes to him running two companies, it doesn’t matter to people here at all. Jack is really special. His main talent is definitely nothing technical—he’s special in the way that he’s genuine. He walks his talk. He sets ideals and then tries to live by them. His main distinguishing skill is hiring people of very high caliber.”

Indeed, Wolfe Research analyst Darrin Peller says he was “skeptical about it at first” when Dorsey took the CEO job at Twitter again in 2015. But what inspired confidence is that “he’s very good at letting other talented individuals lead the business on a day-to-day basis. That’s one of the underappreciated things about Square: it has an amazingly talented bench.”

The bench Peller means are the five executives who each lead a different business at Square and all report to Dorsey. They are the five most senior people at Square below Dorsey and CFO Sarah Friar before she left: sellers lead Alyssa Henry, hardware lead Dorogusker, Cash App lead Brian Grassadonia, Square Capital lead Jackie Reses, and Caviar lead Gokul Rajaram. (Yahoo Finance spoke to all five for our Company of the Year story on Square.)

Because of that strong executive bench, Peller wasn’t worried when Sarah Friar left, even though the news of her departure sent Square shares tumbling. Friar was so popular with investors and analysts that KeyBanc Capital Markets analyst Josh Beck says if Dorsey stepping down as CEO “was really a high priority, Sarah Friar would have stepped into the CEO role. Investors would have supported that.”

Twitter’s 2018 characterized by controversy

Even the news headlines Dorsey garners when the context is Twitter are markedly different in tone from those about Square news. As Twitter has faced vocal backlash this year over abuse on its platform and, at times, its failure to monitor harassment on the service, Dorsey is the target of many angry tweets sent to @jack. When he tweeted earlier this month about his 10-day silent meditation trip to Myanmar, he cheerily recommended people visit Myanmar, and got roundly castigated for looking tone deaf about the massacres happening in Myanmar.

Just this week, Amnesty International concluded that Twitter is a “toxic place for women,” leading Citron Research to write that Twitter “has become the Harvey Weinstein of social media.” Might Dorsey want to back away from Twitter and focus on building his non-controversial payments company, which is growing like a weed?

Many compare Dorsey’s situation to one other very prominent entrepreneur currently running multiple companies: Elon Musk, who is actually CEO of three different companies (Tesla, SpaceX, and The Boring Company). But there’s a key difference: Square and Twitter are both publicly traded. SpaceX and Boring are private.

Glenn Solomon of GGV Capital, which invested in Square’s Series E round, throws cold water on any concerns about Dorsey’s dual roles, though he hints that things went a lot better for him in 2018 at Square than they did at Twitter.

“They’re very different stories,” says Solomon. “Twitter has become an important part of the social fabric of the world, but as a business, the model has clearly had to adapt over time. Whereas with Square, Jack has been CEO since day one and has been extremely consistent and intentional in his vision.”

If Dorsey does step away from his CEO role at one of the two companies in 2019, Twitter looks like a more plausible candidate. But it’s more likely, for now, that nothing changes.

Daniel Roberts is a senior writer at Yahoo Finance who closely covers fintech. Follow him on Twitter at @readDanwrite.

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