Problems are mounting at Twitter (TWTR). The company's sequential user growth seems to be slowing to a crawl and its CEO stepped down in June to an unprepared succession plan. Oh -- and the stock is down about 46% in the past twelve months. To say the very least, Twitter is under some immense pressure.
Amid the company's current problems, some investors and analysts have complained that Twitter's search for a CEO is taking too long. But are these worries overdone?
Twitter's CEO search
It was June 11 when Twitter first announced Costolo was stepping down and Twitter co-founder and chairman of the board Jack Dorsey was chosen to serve as the company's interim CEO.
Dorsey would have been an excellent choice for Twitter's permanent CEO position, too. Few refute his capability for running the company. After all, Dorsey also successfully co-founded payments and financial services company Square, which is planning to go public soon; Dorsey's double success with Twitter and Square is a testament to his skills at building valuable businesses.
But if Dorsey would make such an excellent permanent Twitter CEO, why was he given the interim title? The main reason: Dorsey is also the CEO at Square.
"The Committee will only consider candidates for recommendation to the full Board who are in a position to make a full-time commitment to Twitter," Twitter said in an update to its CEO search on June 22, clearly aiming the statement at Dorsey.
Does this mean Dorsey is completely out of the running for the CEO position? Not necessarily. Dorsey would simply have to resign from his role as CEO of Square if he wanted to take the position. And herein lies the most important reason Twitter's board shouldn't be rushing a decision to choose a CEO.
Getting the right CEO takes time
Twitter's board has been very clear that the company would take all the time it needs to choose the right CEO.
"The search is proceeding with a sense of urgency but the [search] Committee will take the time necessary to find the right CEO to lead the next phase of Twitter's growth," Twitter said in its June 22 update on the CEO search.
Twitter's board is right to take all the time needed to find the right CEO. Expecting a proven executive like Jack Dorsey to make a decision to resign from a company he co-founded, which is currently readying for an IPO, and then jump right into a full-time position at Twitter during a transitional time for the company in a matter of a few months is unrealistic.
Looking beyond Dorsey, Twitter's dedication to the CEO search and its willingness to diligently consider its best options proves the company understands how crucial having the right CEO will be. Twitter is truly facing a transitional period as user growth slows; the next CEO will have the pertinent job of transforming the social media company into one that appeals to the masses.
Meanwhile, investors with a long-term time horizon should accept the fact that a few months will likely have little affect on the company over the long haul. Sure, nearsighted, quarter-to-quarter focused, news-driven traders may have reason to fret about the timeline for Twitter's decision. But investors can rest easy in the fact that the company has arguably the best intermittent CEO shareholders could ask for running Twitter in the meantime.
And, for what it's worth, Twitter isn't doing all that bad anyway. When the company announced Costolo's departure, it also reaffirmed Q2 guidance for 50 to 55 percent year-over-year growth in revenue.
Twitter shareholders will get their CEO. It just might not happen on Wall Street's timeline.