Things are almost never what they seem when there are management changes at companies.
Earlier this week, David Marcus left his leadership job at PayPal to become a VP at Facebook. Was it because – as was the dominant narrative in the press – he was attracted to a better job at a more successful company? Or was it because Marcus’ boss, John Donahoe, got tired of PayPal’s performance and told Marcus he was fired but could save face by taking a job elsewhere and saying he was resigning? Unless we’re inside the company, we will probably never know the answer.
We can speculate of course but we will never know.
It’s the same with what really happened with Scott Forstall and Tim Cook at Apple.
And it’s also the same with Twitter ex-COO Ali Rowghani who either quit this morning or was forced out.
If you thought the Game of Thrones was a great fictional tale which doesn’t happen in real life, the last 24 hours at Twitter show you otherwise.
Last evening, a tantalizing post from Kara Swisher at Re/Code came out discussing how Twitter was mulling some management changes including Rowghani thanks to the recent poor growth and engagement of its users which has caused Wall Street to gut the value of the stock since January (by about half).
You cannot read the Swisher post without coming away from it scratching your head about what a dysfunctional organization Twitter must be today. I still love the Twitter service and will continue to be an active user. And it appears that the company is doing a bang up job of making money from it as it continues to push ads in between our various comments and pictures of the ham sandwich we ate for lunch.
But Twitter’s not attracting new users and its engagement has been dropping off. It’s been this way for about a year now.
It didn’t seem to matter in the run-up to the Twitter IPO – even though all the stats in the S1 pointed to it then. Investors still wanted in to the deal because of the potential upside.
And it didn’t seem to matter when Twitter’s stock performed well on its first day or two months later when the stock traded up to $74 a share.
But since January, the stock has dropped like a stone and – as seen in the Re/Code story last night – the back-biting and hurt feelings inside the company have now spilled outside the company.
People apparently didn’t like that Rowghani – or someone else – referred to him as “Mr. Fix-It” in a Wall Street Journal article. Folks at the quaintly titled weekly all-hands meeting, “#TeaTime,” complained that Rowghani sold some of his stock in May. And I read today that people didn’t like Rowghani because he was a finance guy promoted to oversee product.
I won’t defend Rowghani since I don’t know him and don’t work inside the company. However, the fact that this kind of complaining was going on to the point where it’s leaking out to the press is obviously a sign that there is something deeply wrong inside the company. I’ve followed Yahoo closely for a long time and this last 24 hours has reminded me of the days when Jerry Yang was in charge and all kinds of gossip was spilling out into the press.
So, I have three conclusions about this mess.
1. People are as ruthless in real-life as they are in the Game of Thrones – it’s just that they don’t use swords.
There was a funny – and ironic – tweet that CEO Dick Costolo (a former stand-up comic) sent out 5 years ago before his first day on the job at Twitter reporting to Ev Williams as COO:
In Shakespearean plays, it’s often the fool who ends up speaking the truth about a particular situation.
Don’t forget that Cersai Lannister said this in the Game of Thrones:
Dick Costolo is still winning the game. Ali Rowghani is no longer playing the game. Maybe Rowghani’s departure has nothing to do with Costolo. It’s possible but I think unlikely. He would have to sign off on it so at the very least he’s a party to it.
2. Even if everything you have read about Rowghani being a bad fit or bad promotion is true, there’s still blood on the hands of Costolo from all this.
Costolo ultimately hired Rowghani. Costolo promoted him to COO. Costolo is the final guy charged by the board to grow users and engagement. If one of Costolo’s direct reports fails to deliver on something, there is a final responsibility at the feet of Dick.
Whether Rowghani’s gone or not, Twitter still faces the challenge of increasing its users and engagement unless they of course turn their back on this strategy altogether and relegate themselves to a niche strategy. A niche strategy would be like the Starks saying they only wanted to rule the North instead of the entire Seven Kingdoms in Game of Thrones. It’s perfectly legitimate (as I’ve argued here).
The problem is that they’ve just IPO’ed, telling Wall Street that they will rule all the Seven Kingdoms. And Wall Street gave them a lot of money to execute that strategy. Twitter management can’t and won’t turn back now.
Rowghani’s departure today buys Costolo some time but Dick still probably only has until the end of the year to show some real meaningful progress.
3. Twitter’s growth and engagement problem won’t be easily fixed.
The problem which sunk Rowghani and may sink Costolo isn’t an easy one to solve. We can put anyone’s head on a spike out front of the castle and the fundamental problem is not going to change.
If Twitter increasingly Facebook-ifies itself, it risks losing its core users. If it stays with the status quo that its core users love, grandmas won’t onboard.
Don’t let the bouncy balls, good cafeteria food, and pets sleeping between the cubicles fool you, Silicon Valley is just as ruthless as any Game of Thrones episode.