Twitter’s restructuring: a tough start for Dorsey

Twitter announced today that it will lay off 336 employees, or 8% of its workforce, as part of a restructuring designed to slim Twitter down as it works toward profitability. The comment below may be attributed to Jan Dawson, Chief Analyst, Jackdaw Research. Jan may also be reached at (408) 744-6244 or for further comment.

Jack Dorsey would doubtless have preferred not to begin his tenure as permanent CEO in a different way, but today’s move was necessary. It’s a tough way for Jack Dorsey to introduce himself to the company, but Twitter needs to tighten its belt until it can figure out its user growth problem. Monetization has been going really well, but it’s still not close to being consistently profitable and it’s been hiring pretty aggressively, so some cuts should help get things in better balance. But it’s unlikely to endear Dorsey to the staff, even the ones that stay. It’ll be important to make clear that this is a once-and-done move and not something that’s going to become a regular occurrence at Twitter. And over the next few weeks Dorsey needs to find ways to tell more good news stories, especially when it’s time to report earnings.

The good news is that it looks like Q3 earnings are at or above the company’s guidance, which is a good sign that the positive trends in at least some areas are continuing. And the remaining employees will be refocused on the things that matter most. I would hope that this also means that new features will be pushed through development more quickly than they have in the past – Twitter has suffered of late from a problem of pre-announcing features that then take ages to arrive in the product. Renewed focus should hopefully allow Twitter to move more quickly in making the changes it needs to make to return to user growth.

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