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Twitter Shareholder Sues CEO and Board Members Over Inflated Share Price (fortune.com)
118 points by sergiotapia on Oct 26, 2016 | hide | past | favorite | 41 comments



No, it's not just you...I'd say Twitter is a sick little bird right now.

It's one thing to be CEO of two companies that are doing well, with a well-established strategy and strong teams of A-grade players that are executing well.

What I don't understand is how Jack Dorsey could believe he could successfully manage two companies, Square and Twitter, at the same time at such critical points in their growth. I just shake my head at the unbridled hubris and over-estimation of one's own abilities that one must have to make this decision. It's very frustrating, because I believe both companies could be so much greater at what they do; they've just touched the tip of the iceberg.

It's hard enough to turn around one company successfully. But even if Dorsey is successful in the end, splitting 50% of your time somewhere else is a needless way to slim down your odds, kind of like smoking a pack of Marlboros a day and hoping to make it to 100. It happens, but that doesn't make it a good idea.

Or to paraphrase from elsewhere: "It could be that the purpose of Dorsey's career is to serve as a warning for others."

https://despair.com/products/mistakes


> What I don't understand is how Jack Dorsey could believe he could successfully manage two companies, Square and Twitter, at the same time at such critical points in their growth. I just shake my head at the unbridled hubris and over-estimation of one's own abilities that one must have to make this decision.

Blame the board, too. They are the ones who decided to approve the hiring of a CEO who wanted to keep his other full-time CEO job. If Twitter fails, the board will be just as much to blame as Dorsey.

I'd be pretty unhappy about this if I were a shareholder. I don't care that Dorsey was a founder. It's just not responsible for a board to hire a CEO who isn't dedicated 100% to the company.


What I don't understand is how Jack Dorsey could believe he could successfully manage two companies, Square and Twitter, at the same time at such critical points in their growth. I just shake my head at the unbridled hubris and over-estimation of one's own abilities that one must have to make this decision. It's very frustrating, because I believe both companies could be so much greater at what they do; they've just touched the tip of the iceberg.

The gentle explanation: He's an external figurehead, and he has 3 rock star execs supporting him, each of whom has CEO-level capabilities. (Noto, Bain and Kordestani)

The less gentle explanation: If you think you're the second coming of Steve Jobs, part of securing your legacy is starting a company simultaneous to turning around your old company. It ain't easy being Steve Jobs!

Either way, it doesn't look like it's going to end well.


> The less gentle explanation: If you think you're the second coming of Steve Jobs, part of securing your legacy is starting a company simultaneous to turning around your old company. It ain't easy being Steve Jobs!

Wait, does this mean Twitter is going to buy Square?


If I knew that answer I could stop working. :-)


Did Apple buy Pixar?


It bought NeXT.


The book Hatching Twitter doesn't speak too highly of Dorsey, his attitude, and the way he conducts himself.

Having said that, I can't speak to how accurate it is. I don't know him, not do I know anyone who knows him. Like many books, it probably has its own angle/spin on the events it describes, even if the author was trying to be unbiased.

Keeping that in mind, it's still an interesting read. Can anyone suggest other books, articles, or blog posts that discuss Twitter's history?


I worked at Twitter during both of his "comebacks." He's a clown.


I'm very curious, can you explain in what ways? Examples?


All you need to do is watch Dorsey's girlfriend's instagram to know what he prioritizes- fashion shows, parties, scenesters, film festivals, music festivals, art basel, jet setting, oversharing... with all the shooting stars, gallery openings, rooftop parties etc he's making appearances at it's doubtful there's much CEOing of one let alone two companies going on.


Biz Stone's Things a Little Bird Told Me gives the perspective of twitter from Stone himself. I thought hatching twitter was the most informative however.


Next


do you have the same opinion of Musk?


I'm undecided on Musk. As I alluded to in my second paragraph, I think it depends on whether you've got a team and a plan that's working out. Specifically:

First, it does seem that Musk has had a plan for at least two of those companies: Solar City and Tesla. It could still fail, but at least there is some plan and soon they will be one company.

Second, I think my opinion would also depend on the bench strength of the rest of the company's team as well the other leadership. Basically, these will be the people who will be there to make the important decisions and make sure your company hits its results while you are working on your other company(s). I haven't learned enough about Musk's team to have an opinion on that yet.

Finally, there is the question of the overall company vision/mission. I would say that Twitter's mission is under siege and in need of revisiting, far more than Musk's companies. This is can be confirmed by Twitter's consistently poor user growth numbers and feckless monetization efforts.


The Musk biography made it seem like SpaceX & Tesla only survived by the skin of their teeth and he was considering pulling the plug on one to save the other.

I'm sure we're all happy they didn't fail, but he didn't increase the chance of success with that move.

Unlike Tesla/SpaceX at the time, Twitter is rolling in money and can afford to get almost anyone they want.


Musk isn't perfect, but he is a great engineer. You should only need to listen to him talk for a few minutes to know he's on a different level.


Gwynne Shotwell is the CEO of SpaceX.....


She appears to be President and COO; Musk is CEO and CTO.


So this lawsuit is really 90% Ev Williams selling some shares in 2015. If I am not mistaken he didn't work there anymore and had already started Medium.

Also all this was public information at the time. All these insiders would have filed a notice with the SEC when they sell shares.

Still, Twitter is run quite poorly and lawyers will make a lot of money on this weak ash lawsuit.

Ironically this lawsuit will likely just lower the stock price even further if it has any effect at all, which I doubt it will.


Is it me or is there an influx of negative news about Twitter as of late?


There's certainly plenty to form the basis for a negative story and, once these story cycles get started, they tend to feed on themselves--if only because they pretty much write themselves at that point. That said, failing to find a buyer, no apparent strategy for moving forward... Hard to find a lot of positive things to say however large their user base.


Typical death pangs of a company in trouble. Everyone is going to try and squeeze what money they can get back from their investment while company value slowly dwindles to nothing. Get ready for more layoffs to reduce enough costs to make the company look like a good buy, then once bought get ready for more layoffs.


There are a lot of negative things about the current state of Twitter, more people are realizing that. If you're implying an astro-turfing campaign I'd have to say that's unlikely.


I agree. Twitter has had some bad, public things happen to them, which pretty much guarantees a slew commentators will pile on to prophesize their doom. It doesn't help that Twitter is a high profile company that was once the symbol of the great new age of technology companies, and that they have been known for some time now to be struggling. The narrative just fits together too well for the media at large to resist.


Eh, the sky has been falling on Twitter ever since Arrington shat on Blaine.


My circles have had voca l bearish views on Twitter longer than their bearish views on Yahoo. But the bear view of Yahoo started before the Twitter IPO.

Both are in a tight spot. T is just more recently "high-flying" than Y.


The big difference is that Yahoo makes money. The disappointment with them is more in the vein of they coulda, woulda, shoulda been Google or whatever and they're not and never will be through various iterations of high profile execs. But with some exceptions (such as Flickr, maybe Finance), not that many would really care if Yahoo shut down next month.

Twitter, on the other hand, operates infrastructure that a lot of people care about but can't make money and seemingly has no plan for how to change that.


Don't they have a negative net-worth after you take out the Alibaba stake? And I think they were trying to split off that part of the company.


They did if you assumed the IRS was going to approve a tax-free spin-out of the Alibaba stake (and at the price Alibaba was trading at at the time). As it transpired the IRS did not approve such a spin-out and Alibaba's price has dropped post-IPO.


They don't (as evidenced by the non-Alibaba part being sold for 4.8b).


There's a lot, sure. To me it feels like the dam has finally burst. I don't know why we never saw any negative stories about it for so long.


To me it feels like the Yahoo story is done, and people picked on the next company to hate.


The hype bubble of Twitter is being deflated.


I'm skeptical of a shareholder lawsuit succeeding this way. If the SEC isn't joining in, any concealment by the CEO or board, even if totally unethical, isn't illegal. If you're a shareholder and don't like how things are going it pretty much seems to me your narrow path is selling the stock and finding something more to your liking - in particular if you don't have enough shares to affect the make up of the board.


> don't like how things are going it pretty much seems to me your narrow path is selling the stock

I don't know the law or the precedents, but it seems concealing info might be an the exception that proves the rule here. The point being you need non-lying results if you are going to decide whether to sell the stock.are lying about results, you can't


The lawsuit need not succeed for the company to settle to make this bad news go away, depending on how sensitive they are to bad news.


Whenever I see twitter's share price mentioned, I think of Damodaran's valuation of Twitter stock - $18. His academic approach may be more accurate than hyped up numbers. See http://aswathdamodaran.blogspot.com/2016/02/management-matte... -

> The best that I can say about Twitter, at the moment, is that at $18/share, it is fairly valued, but if the company continues to be run the way it has for the last few years, both price and value could move in tandem to zero.


because it should be $3 a share at a $2 billion market cap?

oh it is about the ever changing engagement metrics that social media companies woo dollars with.


with all the bots on the platform, how can they accurately report any user number (mau dau)?


We've updated the link from http://vesselnews.io/twitter-shareholder-sues-twitter-ceo-ja..., which points to this.




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