Dive Brief:
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Jack Dorsey on Monday was named permanent CEO of Twitter, the company he co-founded and led until 2008, and that may be a conundrum for payments startup Square, where he’s also CEO.
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Dorsey maintained that he’ll remain as Square’s CEO “no matter what,” and that continuity is important as the startup reportedly is preparing to go public.
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However, Square employees, and potentially investors, are reportedly concerned, according to The New York Times.
Dive Insight:
Jack Dorsey’s permanent appointment as Twitter’s CEO comes at an awkward time for Square, which is readying an initial public offering.
He and other Square representatives have sought to quell those concerns, and advocates say he’s up to the job — er, jobs. But the optics of the move may shake potential investors to the point that the company may end up settling for a lower initial share price.
“The market would assign a discount associated with him being head of two companies,” John Hancock Asset Management portfolio manager Michael Scanlon, told the New York Times. “It poses a challenge to him, in terms of management, with two companies that are in different life cycles of their business.”
Dorsey’s strongly stated commitment to Square presents a quandary: The position should quell some concerns, but it also interferes with any plans for succession.
The tension around Dorsey’s position could derail Square’s IPO, expected as early as this year, for the time being, especially in light of other concerns, experts say.
Some are skeptical of Square’s prospects due to its thin margins. But others have great faith, not just in Dorsey himself, but also in the company’s executive team, which includes former Google executive Francoise Brougher as business operations chief, and CFO Sarah Friar, who was a financial analyst at Goldman Sachs and McKinsey.
However, Dorsey's predicament does have a precedent: When Steve Jobs returned to Apple as CEO in 1997, he held on to his CEO position at computer animation studio Pixar.
“Jack has built a deep bench of talented senior executives,” Square spokesperson Aaron Zamost said in a statement. “He has shown for the past several months he has the ability, passion and commitment to lead both companies effectively.”