The Decentralists

Hot Topix: So long Jack…again

December 30, 2021 Mike Cholod, Henry Karpus & Geoff Glave
The Decentralists
Hot Topix: So long Jack…again
Show Notes Transcript

Jack Dorsey, the co-founder of Twitter recently announced that he was resigning as CEO of Twitter - again. This is not the first time Jack has departed Twitter’s CEO role, but at least this time it was his choice, apparently.

Just like Steve Jobs when he was ousted as the CEO at Apple, Jack again proved his tech visionary credentials by forming the online payments firm, Square (now named Block).

Unlike Steve Jobs however, Jack Dorsey will not oversee the potential renaissance of Twitter…but maybe that’s a good thing.

Why did Jack Dorsey resign from Twitter? Will this time be the last time? Henry, Mike and Geoff have a few ideas.

Henry : Hey, everyone, it's Henry, Mike, and Geoff of The Decentralists, and welcome to another Hot Topix; all about Jack Dorsey, the co-founder of Twitter; so he announced he was resigning as CEO. This is not the first time Jack has departed that role at Twitter, but at least this time, it was apparently his choice, now Jack was the founding CEO, but he left the company back in 2008, allegedly, because he was more focused on yoga and fashion design than on making money for shareholders. He's a very interesting guy and I don't know, Mike, Geoff, let's start with you, Michael, what do you think is going on here? Why do you feel he would step down from such an influential position?

Mike : My gut tells me that last line in your intro, the yoga, and fashion design is part of it; I think that there's part of this, of Jack leaving Twitter, that is his decision, I don't feel really sorry for the guy, he's a billionaire. It's not like he's going to have a lot to worry about in his retirement should he retire, but I think there's a part of that, but I think there's also a part of Jack leaving that is kind of a little bit like his first time he left Twitter, it's very funny, there's kind of a good analogy between Jack Dorsey and SteveJobs, they were both visionaries, they were both a bit quirky, they both founded successful companies, and then they both got kicked out at one point.

Henry : Oh, right.

Mike : Right, and they both, when they got kicked out, went out and founded other companies that became more successful than the one they were in, all right, Jack Dorsey founded Square and Jobs did NeXT, I think and Dreamworks, not Dreamworks, what was the animation one? Yeah, Dreamworks animation, they did Toy Story and all this stuff, and so what you have is that in both of those cases, those guys were forced out simply because the shareholders wanted to make more money.

Henry : In other words, the companies became more mature and it was now all about making money. But, that's funny, you should mention Square because I can recall first seeing Square, I think it was a taxi driver, but the point is small retailers would use this for credit cards and it was really simple and it was intuitive, and I said to myself at the time, wow, this is a great idea, I wonder how successful this will become, and it became huge.

Mike : Right, and that's part of Jack's problem, he kind of, he left and then he did Square and he came back and he said, okay, because Twitter had, I guess, lost its way again or whatever, and so he comes back again and he's co-CEO. So, he's CEO of Twitter and he's CEO of Square at the same time, and in the last stint as Twitter CEO, Twitter's grown something like a hundred percent, it's doubled in value, and Square's grown like 2000%. And so, you have people saying, well, geez, Jack, are you focusing on this? And then let's add the third kind of piece into this is, would you want to be the CEO of a major social media company?

Henry : Not really.

Geoff : Yeah, I think that's the key point is being the CEO of Twitter, particularly Twitter as sort of tier two or has been compared to the big monster of Facebook, maybe even the tier two compared to YouTube. It is a really difficult job because you're being attacked all the time, you're being attacked by Ted Cruz, arguing that you are engaged in censorship and you hate the right and you are being attacked by the Left because so and so is obviously breaking your terms of service and why haven't you kicked them off. 

And you're being told to go report to Congress, and you're sort of like, why would I want to keep doing this, and it's also kind of important to put Twitter in a historical context, particularly when you talk about a founding CEO like Jack, where when Twitter first came along, it was limited to 140 characters, and why is that? Well, I'll prove my gray hairs in my beard that's because back then an SMS text message was only 140 characters, and so it was an interface between SMS and, and your phone. And the idea was you could write out a tweet saying, Hey, we're all going for pizza at Malone's before we go and watch the matrix, and I think it originally said something like, what are you doing as the prompt on the screen.

Mike : That's right.

Geoff : And so, it was meant for this little social tool where your friends could say where you were going, and if you happen to be going for pizza, a pizza place could insert a tweet saying, Hey, come for us for 10% off. And Twitter just grew and grew and grew and now, it's toppling governments in the Middle East, it's responsible for arrests in Myanmar, it's causing all of this social upset, some grandmother decides to try it out sometime, she posts that AOC seems like a nice young woman and suddenly a thousand Alt-right lunatics hurdle profanity at her and just kind of trying to own that, justify it, manage it and explain it, it's just a very difficult thing. 

And if all you want to do is weird diets and grow your beard and do yoga and just be kind of this Silicon Valley tech bro, then I think something like Square is a much better place for you, where it's like, yeah, man, we're helping Rickshaw drivers in India move to electronic payment. And it's a much tidier message than trying to defend why Alt-right nuts can leap all over grandma, so particularly if you're a billionaire, why wouldn't you quit?

Mike : Well, and let's face it, part of what's also is fairly unique about the Silicon Valley kind of behemoth tech bro thing, is that if you're the CEO of one of these companies, it is literally all on you, and you're like a movie star. Everybody knows who Mark Zuckerberg is, everybody knows who Dorsey is, everybody knows, and let's say, when I say everybody, I'm meaning a majority but people know who the CEOs are of the big tech companies, maybe that's because they see them on CPAC in front of congressional subcommittees so often, or maybe it's just because that's the mystique of the Valley. 

And so, what you have with Twitter is let's also look at what's looming on the very, very, very future horizon for Twitter, think about what's next for these guys, in 2024 there's another presidential election and the big megaphone is Twitter. And one of the candidates we shall not speak his name has been banned and his ban is going to come back up where they're going to have to make a decision as to whether they reactivate him or not. 

And that is going to be a flashpoint that nobody's going to want to deal with, and the problem is, that the only human that anybody will take the answer out of if you're Twitter and you're Jack Dorsey and the CEO is Jack Dorsey, and so this is a big problem. When a Ford F-150 has a crappy wiring harness and blows up, you don't see, oh, there's whatever his name or her name, the familiar CEO of Ford in front of a congressional committee, and who would want to step into that job? And so if you had the opportunity to get out, I'd take it.

Geoff : Yeah, and also what we talked about at the top in terms of the expectations of growth by shareholders, is Twitter's growth has stalled and has been stalled for a long time. So, Twitter has this because everybody in the media is on Twitter, all the politicians are on Twitter, celebrities are on Twitter, Twitter has this power that kind of exceeds what it should have with its user base because the user base is still quite, it's millions and millions of people, but it's still quite small compared to say Facebook or YouTube, or what have you. 

And its growth has largely stalled, and if you've ever tried to use it, especially if you're a newbie, it's a confusing experience with, it doesn't handle threading very well, you want to say something and suddenly you're out of character limit. You have these people that are writing these blog posts broken into 30 pieces that they post up that with each piece, having separate replies to it, and it's just a mess and based on a foundation of you being able to say, Hey, I'm going to Malones for pizza. 

So, whether Twitter can ever deliver what investors want of it based on the architecture it has, that may also be where the CEO's going to say, ah, forget it, I can't give you what you want based on this platform that we've built and the fact that it's being used in a way that my vision 15 years ago never envisioned.

Mike : Right, well, and I think that's an important part, sorry, Henry, I don't mean to interrupt, but I think that's another important thing that differs Jack, at least from what I've seen over the years on the surface from say a Zuckerberg and this issue about growth with Twitter. Twitter's one of these anomalies because Facebook, when you talk about growth with Facebook, you can clearly point that Facebook is losing users every year, whereas Twitter's actually gaining them, generally, I think. 

The difference is Facebook makes so much money because maybe it's the architecture to Geoff's point or just the decisions made by the CEO to focus on monetizing the Facebook timeline has made Facebook, is 10 times more valuable than Twitter right now. And so, I think the problem is Jack's always been more focused on this kind of purity of the dialogue and this Twitter as this channel, that to Geoff's point that can be relied on by journalists and politicians and things like this to be an open microphone.

And so, because of that, he's been focused more on that saying, look, it's about making sure Twitter survives, whereas Facebook had to turn itself into a metaverse company to provide a channel for future growth. And so, this is something I think, where you just end up in this ideological thing where you're like, look, if I'm going to be the guy that has to step in front of every microphone and go in front of every committee and go to every jurisdiction where we're getting sued for genocide, then I'm going to be the guy that's going to call the shots.

Geoff : And if you log into Twitter and you log into Facebook and you have them open side-by-side, it's evident that in Twitter, there is some algorithmic stuff going on, but nothing to the degree, to which you're seeing it in Facebook, wherein Facebook, every time you hit refresh, it's a totally different screen. Whereas in Twitter, it's, it's mostly static, and I'm sure that there's pressure on the Facebook management team to create groups and to cultivate the feed more and to do algorithmic stuff, and if you don't want to go there as Michael just said, or you want to try to remain pure, then you might just say, ah, I'm out of here.

Henry : Right, so another question for you guys, I can recall a year ago we did a Hot Topix regarding Twitter and Jack Dorsey's announcement that his goal was to decentralize Twitter, and maybe that, Mike, has something to do with the purity vision that he has. But do you feel that his stepping down has anything to do with the fact that perhaps the shareholders or excuse me, the board or whatever has no interest in changing what they have, what do you think about that?

Mike : Okay, so the first thing I think is, I think Jack, from what I've been able to discern, okay, Jack he did come out in December of 2019 and he put one of Geoff's kind of multi-tiered tweets together and he basically announced that he was founding this project called Blue Sky, where they wanted to investigate building a decentralized social media platform that Twitter could be a client of, I think is the way that he phrased it, to paraphrase. But he also mentioned in this initial tweet that the reason why he wanted to do it was that he did not see a sustainable future for Twitter as a social media platform, as long as they needed to be tied to user data.

Okay, he said social media's value, and this is another, just to Geoff's previous point, in this announcement, he talked about the fact that what social media really is, is an algorithmic artificially intelligence generated recommendation of a piece of content for you to look at. So, when you click refresh and it refreshes, it's an algorithm that puts that in there, and that's what Twitter is, that's what Facebook is, that's what YouTube is, that's what Netflix is, that really is all they are, okay. 

And so, he said, we need to decentralize and get rid of the user data because the user data is a liability and I don't need it in order to provide a recommendation, okay, great, that was a very laudable goal, and it's what we've been talking about for years, so I was actually kind of a little clappy for Jack there.

Henry : Yeah.

Mike : But then over the last kind of year and a half as this project, Blue Sky has generated attention and it's been mentioned in the press and stuff, and Jack talks about it, it's more about crypto, he's talking about Bitcoin, he's talking about Ethereum, he's talking about this token-based, ICO-based kind of scammy world.

Henry : In regards to Blue Sky.

Mike : Yeah, well, the conversation rhetoric that comes out of Dorsey and Twitter and all of this stuff since the Blue Sky announcement is all about crypto overwhelmingly, it's not about decentralizing the user experience. So, it could still be the same business problem they're trying to solve but what they clearly started to focus on was how do we make a Twitter coin?

Geoff : You've heard me say in past podcasts that I'm always suspicious of apps and platforms that are air quotes free, where you don't have to get out your credit card in order to sign up for them because it means you're paying for them in some other way. And if Jack is trying to create Blue Sky, if he's trying to create a decentralized social media network where users can anonymously communicate, but advertisers don't know who you are, and he's not asking 20 bucks per year per user, or his models have said, nobody's willing to pay 20 bucks per year per user. 

Then it sort of flames out quickly because the investors say, well, show me the money, and I agree, I will say that a lot of tech stuff in Silicon Valley, there are great promises of revenue that never happened for a long time, I think Clubhouse, was that the name? Is kind of the most recent example of that, but nevertheless, that's the other thing you have to wonder is the fact that he never talked about how you might fund this thing is one of the reasons that investors may have pushed back.

Mike : Yeah, I would think that but I don't know how necessarily to answer that because part of the challenge is that the new guy, I think his name is Parag Agrawal, who's the new CEO, he was the CTO, so he's now the CEO of Twitter. He was the guy that was in charge of Blue Sky, so he was the guy that was part of this transition into this crypto thing, and then Jack takes it out, changes the name of Square to Block.

Geoff : Well, that's a whole other question; it's like, what's going on there.

Henry : As in blockchain.

Mike : Exactly, right, and so you know what I mean, it seems to me that basically what I would guess is that we're both kind of right, I think Geoff you're right, I think what it is, because basically, they announced Blue Sky in December of 2019, and you didn't really hear a lot about it for eight months. And I'm betting that during those eight months, they were literally going through revenue models, actuarials, things like this, trying to figure out, could they make money if they decentralized it, and they figured out that they couldn't just charge 20 bucks for the decentralized version of Twitter, as Geoff said, in the app store. 

And so, they basically said, the only way we can do it is if we basically have tokens and coins and all this other kind of stuff that's associated with decentralization. And I think that's likely what happened is they said, look, somebody's going to have to pay for it, and it became a crypto thing because Facebook's still doing it, so they used to have Libra now they have DM or whatever it is.

Henry : Yeah.

Geoff : And just to wrap up, the other unknown I would say about that is, there's always been this concern that the regulators are circulating these social media sites. And that one day soon, especially as they're more and more becoming publishers, one day soon, they may be liable for the content that's posted on their site, right now they're not, but that could change with the stroke of a pen in Congress. And if you decentralize and you don't have central servers, it's all peer-to-peer and so on, then suddenly all your liability disappears again because you don't have a central server, a central place that's going after all this. 

So, they may have felt a year ago that there was legal pressure but that the legal pressure had perhaps let up, and so they didn't need to be decentralized anymore.

Mike : Yep.

Henry : Gentlemen, thank you for discussing it because, well, the thing is, there are a lot of questions that we've asked that we don't really know the answers to, but it just goes to show you just how interesting and how deep this really is but of course, how could we know? All we can do is speculate.

Mike : Well, one thing it does tell you, Henry, is how crappy it is to be a CEO of a social media company.

Henry : Except for the money, Michael.

Mike : Exactly.

Henry : Anyway, thank you so much, guys.

Mike : Thank you.

Geoff : You're welcome, thanks, Henry.