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February 9, 2017 10:00 pm

Maybe It's Time For Jack Dorsey To Pick a Company

To Jack Dorsey, running two high-profile companies -- Twitter and Square -- at the same time doesn't seem like a problem. In an earlier interview with The New York Times, he said, "I can split my time and be present at both companies every single day." But despite how confidently Dorsey seems about his leadership roles at both the companies, investors and journalists keep asking him this question. And there's a reason why, both the companies are unprofitable (for now, at least), and pretty much every social media app that emerges on the face of the Earth is able to gain more users and figure out a better business plan than the decade-old Twitter. In a column on The Outline, Adrianne Jeffries writes: This question popped up again this week on Twitter's earnings call. Twitter missed its fourth quarter revenue targets. The stock is down and advertising revenue is down. User growth plateaued a year ago. Bloomberg estimated that Twitter has about 140 million daily active users, which was recently surpassed by the much-younger Snapchat. [...] Unlike Twitter, Square has real competitors, including PayPal, Intuit, and Stripe. "Twitter's got a niche where it owns that niche," said Jay Ritter, a professor at the Department of Finance at the University of Florida who specializes in IPOs. "Square, on the other hand, has competition. It is not something where it owns a niche. There are other ways to have easy electronic payments. And consequently, investors are more concerned about, is Square going to be able to get sufficient size that it then becomes profitable? Or is a competitor going to wind up dominating the market?" That's one reason why investors, and probably Dorsey himself, are still seduced by Twitter. While Twitter has seen user growth stall -- a very bad sign for a social network -- it's still able to capture a lot of mindshare, and some investors believe that that means there is still a windfall to be made. Facebook, after all, saw its stock cut in half after its IPO only to rebound and march steadily upward. At this point, it's clear that Facebook has a solid business and terrifying staying power. That's what Twitter investors want: to dominate a market, trap advertisers, and conquer the world. The possibility that maybe Twitter has no competitors because there is no money to be made in microblogging is sidelined. As Ritter said, "Just because it's a winner-take-all market doesn't mean it's a profitable winner-take-all market."

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