Bernstein Vice President and U.S. Internet Analyst Mark Shmulik spoke with Yahoo Finance Live about Twitter's leadership change as Parag Agrawal replaces Jack Dorsey as CEO.
AKIKO FUJITA: Let's turn our attention to the other big story of the day, at least in the markets. And that is the news that we got out several hours ago from Twitter. CEO Jack Dorsey stepping down with current CTO, Parag Agrawal, named as his successor. We've got Mark Shmulik, who has been patiently standing by for us, Bernstein VP, US Internet. Mark, I think we still have you here. Appreciate you standing by here as we listen to the president. But let's talk about what this means for Twitter specifically. How big of a change is this likely to lead to in strategy for Twitter? Or is this pretty much Parag Agrawal continuing what Jack Dorsey has left behind?
MARK SHMULIK: No, of course. And, you know, I think the president's speech puts everything into context. But, you know, for Twitter specifically, I think a lot of this is really arond continuity and culture. You know, and for a lot of, you know, investors, I imagine when the news broke, there was perhaps some optimism that they would get an outsider to disrupt the culture, because recall that, you know, Twitter's stock performance since their IPO is more or less flat.
Now it appears that they're following a playbook that perhaps others like Google and Microsoft have followed to promote an engineer internally that knows and understands the culture. And recall, Twitter also has their own history of bringing in an outsider CEO, which Jack Dorsey then replaced. So it's a very complicated situation over there where, you know, perhaps despite investors looking to shake things up, you actually probably need somebody internally that can understand, guide the culture, you know, and keep folks effectively moving in the direction.
And recall, they set a very ambitious target to double revenues in the next three years, growing users at 20% per year. And so, you know, we'll see how things look with the new CEO and what trajectory and plans they have in place. I still believe they're probably missing somebody on that leadership team to drive, you know, advertising sales and operations decisions. But at least, at first glance, it's understandable why they were looking perhaps internally for somebody to fill the seat.
DAN HOWLEY: Mark, this is Dan Howley. I want to ask what you think we'll see as far as changes to the company in terms of product, right? We know that they had recently been introducing different features, upgrading some of the offerings that they have, Twitter spaces being one of them. Do you think Agrawal will add anything new or make any surprising differences to Twitter that could drive user growth going forward?
MARK SHMULIK: I guess the short answer is, I hope not. You know, there's a lot of new things effectively being done at Twitter these days. And you mentioned a few of them. Perhaps what I hope for is some level of prioritization and focus. We've certainly seen a laundry list of initiatives that have been launched at Twitter, which is very impressive, considering, I guess, the lack of product shipments that we've seen over the past couple of years. And so, you know, I'm curious to see what he says. And I believe he will be speaking at a conference in the next few weeks or so.
But my hope is that we get clarity on some type of prioritization and which of those initiatives, you know, they're most excited about driving forward and effectively creating that communication and that synergy where, you know, what I want to see is if you ask 10 different employees at Twitter, what's priority number one? You know, I hope to get the same answer from all 10 folks.
AKIKO FUJITA: And Mark, as we look at shares of Twitter, we saw that huge surge on the initial announcement. It's pulled back since, down about 6/10 of a percent right now. What do you think this leadership change means specifically from a stock perspective? And does it change your base case at all?
MARK SHMULIK: No, it doesn't change my base case. I'll probably start there with that answer. But, you know, I think that the stock movement speaks to the optimism investors were hoping for to perhaps bring in some new blood into that CEO seat and perhaps the realization that, you know, picking somebody off of the leadership bench might lead to a little bit more of the same. And the same wasn't necessarily great. And I think that's where investor expectations have effectively muted, you know, since the announcement.
And so it doesn't change my base case. It doesn't change the way I'm thinking about it. As I mentioned, I'd still like to see somebody on that leadership bench that effectively takes the role of what we saw over at Snapchat, where they brought in Jeremy Gordon to effectively lead up revenue growth. Facebook obviously has Sheryl Sandberg, and Google has Bill Schneider. But to me, that's the seat that I think needs to be filled in order for me to have more clarity on, is there anything new taking place with how investors should be looking at the future of Twitter?
DAN HOWLEY: Mark, this is kind of a larger kind of context question. But in his email to staff, Dorsey had said that a founder-led company can be severely limiting and a single point of failure. Obviously, the big social media company that we know that now is still run by its founder is Facebook. Do you see this as kind of a shot at Facebook and that, like, basically saying that, you know, it can be problematic when these founders stay on as leaders for so long?
MARK SHMULIK: Look, I think it can be. I don't know if it was necessarily a shot across the bow. But it perhaps speaks to just the own internal conflict that Jack was feeling. And, you know, we've heard him speak publicly at several conferences where he effectively declared that his passion these days is Bitcoin, you know. and we also know he's been splitting time across two public companies with both Twitter and Square. And so, you know, if you are a founder and a founder-led company, and your attention is split elsewhere, I could certainly imagine how that could be a hindrance, because it's a product that you drove from birth.
And so, folks, even if you want to be decentralized and allow more autonomous decision making across the organization, folks still feel like you have to go through perhaps Jack to get anything approved. You know, I think it's a different situation over at Facebook, where it's clear, you know, Mark not only believes so much in the product that he's building, but where he's spending time and investing is clearly where we're seeing, you know, Facebook and now Meta invest their capital dollars as well. So I think it can be a hindrance if your attention is focused elsewhere. And, you know, I absolutely understand at least that sentiment from where he was coming from as it relates to his role at Twitter.
AKIKO FUJITA: Well, Mark Shmulik, I appreciate your patience today. Sticking around a little longer than you probably expected, but good to get your insights, Bernstein VP, US Internet.