Could Twitter's Dorsey Gain Be Square's IPO Slump?


Just when talks of Square’s IPO are gaining momentum, its CEO Jack Dorsey is finding himself at a crossroads — to be or not to be the head of his payments startup Square and Twitter, which reportedly is planning to announce him as its permanent CEO soon.

While in the past four months the 38-year-old CEO has been generally applauded for juggling the two companies without breaking one, things might just be about to get a lot more difficult with Square reportedly planning to go public later this year.

"Management and management focus are the single most determining factor of the success, or lack thereof, of a company pursuing an IPO," Lise Buyer, an IPO consultant with Class V Group in Silicon Valley, told Reuters.

"Were I a [Square] investor, I would want to be compensated for the cost of a part-time CEO who already had a full plate. And by compensated I mean I would expect a lower valuation,” she added.

Twitter, which hired Dorsey as an interim CEO after Dick Costolo stepped down, earlier last month hinted that he could handle the demands of running both mammoth companies.

"The Committee will only consider candidates for recommendation to the full Board who are in a position to make a full-time commitment to Twitter. The search is proceeding with a sense of urgency, but the Committee will take the time necessary to find the right CEO to lead the next phase of Twitter’s growth," read Twitter's update on its search for the next CEO.

While Square has been climbing up the market ladder with new products and an expansion in its software business line, Twitter has seen somewhat of a sequential decline in stock value as the company has been soul-searching about its future and leadership, among other things.

Last Thursday (Oct. 1), the company's share value plummeted by 8.4 percent, went under $25 in intraday trading and has so far seen a decline of 52 percent over last year.

To get Twitter back on its feet would, of course, demand a lot more of Dorsey's attention, which might well be spent globetrotting for Square's IPO.

And if Dorsey does finally decide to keep his position as the top dog at the two companies, it might come at a risk of disappointing Square's investors, who would rather back the company's IPO filing under a determined and focused CEO.

"There is so much uncertainty and so much attention needed at Twitter that it certainly should not inspire confidence in potential investors about Square,” Buyer told Reuters.

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