Twitter Brings Back One Of Its Co-Founders, Plus Yet Another Rough Day For Retail

By 05.17.17

morning brew

Here’s what you need to know for today, May 17th.

QUOTE OF THE DAY“We will not simply roll over.” — Sears Chairman and CEO Eddie Lampert. This man refuses to go out without a fight.

Market Snapshot

  • Stocks were mixed on Tuesday, with the Nasdaq reaching its 33rd record high this year as oil and the dollar slipped.
  • U.S. treasury yields were down slightly as investors shifted their money to Europe—where they’ve bought $67 billion worth of British and French bonds since Macron’s victory.

Back in Biz, Baby

In perfect @Jack fashion, Twitter’s CEO Jack Dorsey announced the return of Biz Stone—not to be confused with the lead guitarist of an 80’s metal band.

Quick refresher—Biz was one of the four brainchildren that brought Twitter to life in 2006.

After leaving in 2011 to re-start The Obvious Company and selling his Q&A app Jelly to Pinterest, Stone has re-entered the spotlight.

 

But, is it too little too late?

TBD, but let’s first make sense of the high-stakes game of musical chairs Twitter has been playing since the get go.

First, there was Dorsey.

Big Daddy Jack held the reins at inception, until his uncanny ability to rack up six-figure text message bills and several other missteps gave the board enough ammo to say “You’re Fired.”

That was in 2008.

Next up, Ev Williams. It took the now-CEO of Medium only two years to leave, citing (among other things) that his mind “started to wander.”

Over to you, Dick Costolo.

Still following? Good. Co-founder #4 championed Twitter all the way to an $18 billion IPO in 2013. But, he folded under the pressure of slowing user growth and revenue, only to step down in 2015 like his predecessors.

Jack “the OG” Dorsey then assumed interim CEO status, and is now hopping back on the Biz bandwagon, hoping for that much-needed turnaround.

 

It can’t be that bad.

Oh, but it is.

$40 billion. That’s what Twitter was worth back in 2014. Now? Almost a third of that.

Since its 2013 IPO, the President’s favorite social media platform has yet to post a profit. Mix in a plateauing user base, a 9% workforce cut and the collapse of Vine—you’ve got yourself one nasty corporate cocktail.

Dorsey hopes that Stone (aka evangelist-in-chief) will bring back his salesmanship and swagger as the company looks to reboot.

China Kickstarts Its Currency

People’s Bank of China, the largest central bank in the world, tried to calm anxious investors and reverse falling stocks by pumping $24.7 billion into the country’s financial system (via money markets)—its largest single-day injection in four months.

This move comes on the heels of strict new regulations, which aim to curb debt-fueled speculative trading. Smart from a risk perspective, but Chinese stocks are feeling down, literally. In the past month alone, the Shanghai Composite has fallen 5.4%.

Yet Another Rough Day for Retail

As a dozen retail executives met with Treasury Secretary Mnuchin to oppose the proposed border tax (again), the industry suffered some hefty blows:

  • Rue 21 joined the bankruptcy club. The teen fashion chain said it will close all 1,179 of its stores.
  • Dick’s Sporting Goods (-13.75%) barely met earnings estimates, but the stock still saw its biggest single-day drop in 3 years after the chain said it would cut 160 jobs and slow store expansion substantially.
  • Staples (-3.54%) also missed expectations due to disappointing same-store sales (seeing a theme here?), but says its cost-cutting plan to close 70 stores this year is still on track.

There is some good news! Home Depot (+0.59%) is doing just fine. (Lumber and appliances aren’t things people order online, after all.) The chain’s same-store sales were 1.5% higher than expected.

Etsy Crafts Some Hope

Shares of the Brooklyn-based craft marketplace spiked as much as 23% Tuesdayafter two funds, TPG and Dragoneer, who worked together on Spotify, disclosed a combined stake of 8%. They’re both requesting “strategic alternatives” for the struggling website—code for ‘get your sh*t together.’

A few months back, Etsy (+21.29%) narrowly missed first quarter revenue estimates, forcing the company to cut 8% of its workforce and replace its six-year CEO with Josh Silverman—a former Skype and Ebay exec.

Fred Wilson of Union Square Ventures (the firm behind Twitter, Stripe and Soundcloud, just to name a few), will now chair the board.

Perhaps, all Etsy needs to do now is hang on the coattails of other e-tail success stories.

What Else Is Happening…

  • Facebook found another bug in its ad platform and will reimburse advertisers
  • Flight delays were down slightly in March, with just under 80% arriving on time
  • Jack in the Box (+2.34%) may spin off its Qdoba burrito arm to keep its stock afloat
  • A first look inside Apple’s new spaceship campus is here

Economic Calendar


Water Cooler

You’re More Than a Number

Performance reviews have been around (at least, in some form) since the second century, when China’s Wei Dynasty implemented a nine-point system for evaluating officials.

Not much has changed since. Jack Welch, legendary CEO of General Electric (-0.50%), would fire the bottom 10% of employees based on their reviews back in the ‘80s.

Research shows that women face systemic bias at work. Here’s how employers can improve the arcane system:

  • Stanford researchers identified four key ways bias affects women in reviews: Shifting goalposts, extra scrutiny, double standards and a “likability” penalty for acting outside an expected gender norm.
  • Rater bias” is also at play in any review. People hire employees they like (naturally) and generally rate those employees higher than the others.
  • How can it be fixed? The group says firms should redefine and clarify the organization’s leadership values and create a more consistent and objective process for evaluating talent.

The Breakroom

Interview Question of the Day

You have a thousand $1 bills and 10 envelopes. How can you configure those 10 envelopes, (that is, to put various numbers of dollar bills in those 10 envelopes), so that you can come up with any requested amount using some combination of the envelopes?

Hint: You’ll want to dust off those other number bases from way back when.

(Answer)

Video of the Day

Do you understand how YouTube algorithms work? We certainly don’t. It turns out, no one does. YouTube uses Google’s advanced research into machine learning and neural networks to serve up your feed of cats, makeup, music and more.

But, don’t take it from us, take if from British comedian and gadget guru Tom Scott, who breaks it down into terms we can understand (whew).

Stat of the Day

$166,000—that’s how much the French data protection regulator fined Facebook for violating privacy laws and sharing user info with advertisers. A small slap on the wrist when considering Facebook’s $8 billion in quarterly revenue.

 


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