The Face of The Tech Bubble
Jack Dorsey is the personification of the current tech cycle
Jack Dorsey is currently the CEO of two companies — social networking company, Twitter (NYSE: TWTR), and mobile payments company, Square, which is about to have their IPO. He’ll be breathing some rare air with Elon Musk, who currently is the CEO of TESLA, SpaceX, and the Chairman of SolarCity and in my and other’s opinions, the Da Vinci of our times.
Like it or not, he is the personification of this current venture capital and startup hype cycle. He and, as an extension of himself, his companies are living, breathing examples of everything that has happened in the past 9 years. He is the hero, villain, and victim of the story we see unfolding currently.
It is almost cliché how many things just fit:
- He started programming at a young age and grew up in the Midwest;
- He dropped out of school (like Gates, Jobs, Zuckerberg, etc.) and moved to California;
- He used to dress grunge/punk, but now is a trend-setting, stylish hipster;
- He co-founded Twitter out of a pivot from failed podcasting startup Odeo;
- Twitter was one of the few who survived and thrived during the downturn (2008–2009) and one the big 5 tech darlings (Facebook, Twitter, Linkedin, Groupon, Zynga) that actually took off in 2009–2012 during the secondary market run up prior to IPOs;
- During this time period, he made his first windfall of cash, bought a nice place in SF, and invested in a coffee shop;
- Twitter was loved by the media, but he floundered to live up to it’s hype and gain mass adoption;
- He founded Square with no financial services or FinTech experience and proceeded to raise a lot of money from top-tier VC investors, despite not being able to decouple the incumbent players (credit card processors) from the process or breakthrough the stranglehold PayPal (Venmo/Braintree) and Stripe have on the consumer and developer markets, respectively;
- He, alongside Apple’s Jony Ive and Airbnb’s Brian Chesky, has been the most adulated design thinking that most young founders try to emulate and most investors point to and say “make it like Jack would!”;
- He was pushed out of Twitter only to triumphantly return as the hopeful savior after starting another company (like Jobs);
- With the final impatience of public market investors and key employees heading for the doors, he is making critical employee and cost cuts and refocusing Twitter to a much more limited set of product initiatives in the attempt to attain a more solid product-market fit;
- With this pullback in current late-stage venture funding, he is currently attempting to take Square public and having to price below their previous round.
I write this, not to knock Jack, but to use a single person’s timeline as synonymous with this current venture capital hype cycle — both at a macro level and what is happening across the board with all the unicorn companies.
The problem with being a media darling is that your peak of inflated expectations that is built up by the media is much higher and you have much further to fall to the trough.
As a fellow entrepreneur, albeit one who has tried and failed multiple times, I empathize with him at this very moment. He has two good sized, well-known, and well-funded companies with a bunch of high-quality employees. He, his management teams, and his boards know they need to make some difficult decisions in order to come out the other end successfully.
Externally, Dorsey seems to have matured and gained the necessary experience and perspective while away from Twitter to be much more effective as a leader. The decision to make cuts (and there should be many more to come) and to eat the near-term valuation hit at Square to get public and out of the exceedingly turbulent private markets are the right calls. In the future, this might even be celebrated as the key decisions that saved both companies and took them to the next level.