While nobody knows what technology entrepreneur and payments executive Jack Dorsey will do next, a series of circumstances are making Twitter a possible permanent move.
Dorsey, Square's CEO, is currently serving as interim CEO during Twitter's top executive search in the wake of current CEO Dick Costolo's scheduled departure on July 1.
It's not likely that Dorsey could be CEO of both companiesTwitter's board says it is considering only CEO candidates able to make a full-time commitment to Twitter.
Twitter's foray into payments and industry doubts about Square's long-term growth might lead Dorsey to consider a return to Twitter, a company he helped create, prior to leaving in 2008 and eventually launching Square in 2009.
Square is "not really disruptive and won't topple anybody," said Eric Grover, payments industry consultant at Minden, Nev.-based Intrepid Ventures. At its core, Square "essentially does what an ISO does in serving small merchants, and there is nothing wrong with that business model," Grover added.
In the past couple of years, Square has added small business services in an attempt to generate recurring revenue and/or entice its merchant base to stay with Square as a payment processor and payments hardware provider. Square has postponed an IPO, leading to speculation in the financial media that it would have a hard time reaching its $5 billion valuation in the public market. Square is also challenged to adjust to EMV cards, which are more expensive to process than mag stripe cards.
In addition, Twitter has recently entered the payments fray, incorporating a buy button for advertisers and testing the concept with payments company Stripe Inc.
Square did not respond to PaymentsSource inquiries about Dorsey's future plans prior to deadline. Dorsey has indicated an interest in the Twitter lead role under the right circumstances, but has also been quoted as saying his role as CEO of Square won't change.
Dorsey has stayed active with Twitter, serving as a board chairman and adviser to the CEO. It would not be far-fetched to consider Dorsey might swap his roles, taking a CEO job with Twitter if offered and remaining involved with Square as an advisor or board chairman, said Gil Luria, analyst with Los Angeles-based Wedbush Securities.
"I don't think it is possible to be full-time CEO of both companies," Luria said. "It's going to have to be one or the other."
Both companies would be better off having someone completely dedicated to the company, Grover said.
"I don't know Jack Dorsey, but my suspicion is that this is an understandable case of ego because the companies are his two babies and it's just human nature [to want involvement in both]," Grover said.
Since Twitter and Square do not have obvious synergies, a Dorsey-led alliance or partnership between the two companies is not likely, Luria said.
"They are two of the most innovative companies that have come to be in the last 10 years and Dorsey deserves a lot of credit for that," Luria said. "But the types of businesses they are in, it doesn't seem like there would be much benefit in heading up both."
For now, the Twitter board has delivered a vote of confidence for its current and future leadership.
"The board has the utmost confidence in the strong management team Dick has assembled and in Jack Dorsey's ability to lead the company on an interim basis while we identify a permanent CEO," Peter Currie, Twitter's lead independent director and chair of the search committee, said in the company statement. "We are confident in Twitter's product roadmap and excited by the current pipeline."
The company is seeking a CEO that will be "a bold thinker and proven leader capable of helping Twitter fully capitalize on its unique platform for the benefit of users, advertisers and employees, and to maximize value for investors in the years ahead," Currie said.