‘Take the money…and run’: Musks quick deal for Twitter highlights weaknesses

div classBodysc17zpet90 cdBBJodivpBy Katie Paul, Dawn Chmielewski and Sheila Dangp

pReuters – To understand the speed with which Twitter‘s board accepted Elon Musk’s 44 billion buyout offer, look no further than the dim view Wall Street holds over Twitters ability to reach lofty financial goals announced after demands by activist investor Elliott Management in 2020.pdivdivdiv classBodysc17zpet90 cdBBJodiv

pWhen Twitter reports quarterly financial results on Thursday, analysts expect user growth to lag behind what they need to reach aggressive 2023 growth targets that Jack Dorsey, the cofounder and thenchief executive of Twitter promised Wall Street. According to data from Refinitiv, Twitter is expected to miss this target and remain off track for the remainder of the year.p

pTwo weeks ahead of the deal announcement, Michael Nathanson, an influential tech and media analyst at MoffettNathanson, advised shareholders to “take the money…and run.”p

pTwitter‘s board reached the same conclusion. Directors lacked confidence in new CEO Parag Agrawal’s ability to deliver a higher return than what Musk offered, clearing the way for the decision to sell just four days after the Tesla CEO detailed his financing, according to sources familiar with the boards deliberations. p

pHanding off 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 holds 7.7 million worth of shares in Twitter.p

p“They have aggressive targets out there, and there‘s a lot of skepticism they can hit those numbers,” Jacob said. “The CEO doesn’t have a record.”p

pEight current and former Twitter staffers, including both executives and employees, described to Reuters longstanding issues of internal dysfunction, indecision and a lack of accountability, which, in the view of one current employee, were exacerbated by the pressure to deliver promised results. p

pAfter the deal to be taken private was announced on Monday, Dorsey thanked Musk and Agrawal in a tweet thread for “getting the company out of an impossible situation,” that he blamed on being “owned by Wall Street and the ad model.”p

pTwitter declined to comment. Tesla and Musk did not immediately respond to requests for comment.p

pANOTHER REORGp

pEmployees are bracing again for more change under Musk.p

pCurrent and former employees told Reuters that Twitters history of executive shakeups since its founding in 2006 has made it difficult for the company to commit to longterm plans, often leaving projects dangling just as they start to bear fruit. Its last major reorganization was in December under the new CEO. p

pTake the push into live sports, entertainment and news in 2016 aimed at capitalizing on Twitters strength as a realtime platform. Twitter had signed highprofile deals with partners like the NFL to stream games and promoted the feature widely.p

pDorsey joined other executives at the Digital Content NewFronts in New York to tout the services lineup to advertisers. p

pA 2018 reorganization divided Twitter under 10 leaders overseeing aspects of the business like technology, product and revenue, which spread responsibility for projects like the live video push, a former executive and current employee told Reuters.p

pWithout a clear owner in the increasingly competitive space, and with hearings in Washington, D.C., new privacy rules in Europe and financial pressures vying for executives attention, live video languished, they said.p

pLack of coordination at the top meant senior executives frequently pursued their own agendas without working together, four sources said. p

pThe problem was particularly acute among executives responsible for product, engineering, technology and revenue, known internally as the “experience” team, the sources said. Following Elliotts arrival, pressure to hit the 2023 growth targets exacerbated those issues, one current employee said, likening the environment to a “pressure test.”p

pFleets, Twitters shortlived Snapchat copycat product, was one example.p

pLaunched in late 2020, and championed by Agrawal and product director Kayvon Beykpour, the feature was mocked by Twitter users as a late attempt to jump on the disappearing messages bandwagon.p

pThe company assigned hundreds of engineers to work on building Fleets, but Agrawal and Beykpour failed to collaborate with counterparts responsible for revenue, and launched the feature without plans for incorporating ad space, said two people familiar with the project. p

p“It was a real mess, to be honest,” said one former executive. “It was the typical ‘hey, just push it out there, we’ll alter it later.”p

pTwitter shelved Fleets eight months after its launch and only a month after introducing a limited ad rollout for the feature.p

pHANDSOFF MANAGEMENTp

pProduct and revenue mismatches may have been less frequent had Dorsey held those teams to account, but the chief executive embraced a management philosophy that led him to shy away from making specific decisions, four former Twitter executives told Reuters. p

pOne of these former executives said Dorsey‘s approach was inspired by Disney’s former CEO, Bob Iger, who was known for hiring strong executives and encouraging them to take risks.p

p“One of the critiques around Jack is that sometimes he takes a long time to make decisions, he was reluctant to insert himself in decisionmaking,” said the former executive. “Jack views himself getting involved in a tiebreaking as a failure of leadership, because it means the management team hasnt solved it themselves.”p

pSome thrived under this autonomy, particularly developers who were motivated to invent new things. But others said it left the company adrift.p

p“Everyone agrees that we need better accountability for decisionmaking at the management levels,” a current employee said.p

pOn Monday, hours after the buyout announcement, employees at a companywide meeting complained about Musk‘s “questionable ethics” and wondered what would happen to Twitter’s work limiting hate speech on its platform. In response to a question about whether Donald Trump, the former U.S. president banned permanently from Twitter for risk of inciting violence, would return, executives admitted they were in the dark on the companys future.p

pWhat is clear is Twitter will soon have a new leader with strong views on what to do with Twitter, whatever they may be. p

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pp Reporting by Katie Paul in Palo Alto, Dawn Chmielewski in Los Angeles and Sheila Dang in Dallas Editing by Kenneth Li and Lisa Shumakerp

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