Wrong place, wrong time: How things went so badly for Twitter’s new CEO so quickly
CNN
By Clare Duffy, CNN Business
When Parag Agrawal took over as Twitter’s CEO last November following co-founder Jack Dorsey’s surprise resignation from the role, he was little known outside the company.
Ten months later, Agrawal has featured prominently in a whistleblower disclosure, been rebuked by name in a Congressional hearing and fielded criticism from the world’s richest man (and his possible future boss) both publicly and privately.
The complications are not letting up. Elon Musk this week proposed following through with the deal to buy Twitter at the originally agreed upon price of $54.20 per share, according to a Tuesday securities filing. The move could bring to an end the ongoing legal battle over Musk’s attempt to pull out of the $44 billion acquisition deal, which is set to go to trial in two weeks. If Twitter decides to move forward with the proposal, Agrawal could soon either be out of a job or be working for the billionaire with whom he’s spent months quarreling.
Even for a company accustomed to periods of upheaval, Agrawal’s tenure leading Twitter has been marked by an unusual degree of chaos: a nightmare acquisition battle with Musk; a former executive alleging serious security vulnerabilities; and an economic downturn hitting its core advertising business.
That would be a lot to navigate for even the most seasoned chief executive. But Agrawal, a decade-long veteran of Twitter who previously served as its CTO, had never previously run a company — let alone one of the world’s most important social media platforms.
“I think Parag was elevated because they thought everything would be status quo,” said Bill Klepper, management professor at Columbia Business School. The past year has been anything but that.
Despite the challenges, Agrawal has managed to continue growing the platform’s user base and has launched various new features, including testing the long-awaited edit button. But there are sincere doubts about whether Agrawal will survive another year, whether because Musk buys the company and then removes him, or because the board replaces him if the deal falls through.
Meanwhile, some lawmakers and regulators are suggesting Agrawal could be probed in the wake of the whistleblower allegations, which directly implicate Agrawal, both as CEO and in his previous role at CTO.
“I’m sure when he goes home at night, he says to himself, ‘What the hell did I get myself into?'” said Klepper.
Twitter declined to comment for this story.
How Agrawal’s year went to :poop emoji:
From the start, Agrawal had a daunting task. The company’s existing goal was to somehow add 100 million additional daily active users by 2023, a 45% increase from the fourth quarter of 2021, and grow its annual revenue to $7.5 billion, up from just over $5 billion in 2021. At the same time, it was exploring new revenue opportunities, such as its Twitter Blue subscription service and cryptocurrency-related features.
“The challenge for Twitter is that they still have not been able to grow their user base and improve their monetization to the level where their monetization is on par with their influence,” Forte said.
Then came Musk.
In March, after months of quietly amassing Twitter shares, Musk met with Dorsey, although he was no longer Twitter’s CEO, to “discuss the future direction of social media,” according to a company filing. In the days that followed, Musk met with Twitter’s board and some of its leadership team, including Agrawal; publicly announced that he’d become Twitter’s largest shareholder; and accepted a seat on the company’s board.
Days later, Musk tweeted, “Is Twitter dying?” Agrawal texted Musk later that day to say the tweet was making his life difficult as CEO.
“You are free to tweet ‘is Twitter dying?’ or anything else about Twitter,” Agrawal said in the text to Musk, revealed in a court filing last week, “but it’s my responsibility to tell you that it’s not helping me make Twitter better in the current context. Next time we speak, I’d like you to provide [your] perspective on the level of internal distraction right now and how [it’s] hurting our ability to do work … I’d like the company to get to a place where we are more resilient and don’t get distracted, but we aren’t there right now.”
Musk responded tersely: “What did you get done this week?” In two follow-up texts, he rescinded his agreement to join the board, saying, “I’m not joining the board. This is a waste of time.”
Musk then abandoned the board seat, threatened a hostile takeover and ultimately agreed to buy Twitter for $54.20 per share, a significant premium to the company’s share price at the time, only to then attempt to withdraw from the deal months later, citing concerns about the number of bots and spam accounts on the platform. Twitter sued him to complete the deal — and now must decide whether to accept Musk’s proposal to suspend the litigation process and move forward with completing the deal. (Twitter said Tuesday it had received Musk’s letter and intends “to close the transaction at $54.20 per share.”)
Throughout the dispute, Agrawal has had to reassure shareholders, advertisers and employees about an acquisition by a billionaire who has been publicly critical of the platform while also confronting public jabs from someone who could be his new boss.
In May, Musk and Agrawal appeared to openly feud on Twitter over the Tesla CEO’s claims about bots. Agrawal posted a tweet thread attempting to explain the prevalence of false and spam accounts on the platform and the company’s efforts to quantify and address them; Musk responded with a poop emoji.
Twitter — which many legal experts say has the stronger case if the dispute goes to trial — has sought to have a judge force Musk to follow through with the acquisition agreement. In that case, it seems unlikely Musk would keep Agrawal as CEO or that Agrawal would choose to stay.
In a text message exchange with Dorsey in April after the deal was signed, Musk suggested he would be unable to work with Agrawal. “Parag is just moving far too slowly and trying to please people who will not be happy no matter what he does,” Musk said in a text.
If Musk takes over the company and Agrawal is removed, Agrawal could receive a payout worth tens of millions of dollars, including compensation for his stock options.
But even if Musk wins, or the two sides agree on a settlement that allows Musk to get out of the deal, Klepper said Agrawal remaining as CEO could be a longshot. In the event Musk walks, Twitter’s stock could take a hit. The company would also still be facing the same challenges to its business, compounded by attrition amid the uncertainty with Musk.
“They’ve got a lot of stuff to clean up,” he said. “The first thing they’re going to do is bring in a new leadership, someone who has turnaround experience.”
Whistleblower throws another curve ball
As the legal battle with Musk heated up, Twitter was hit with another blow: Peiter “Mudge” Zatko, the company’s former head of security and a highly regarded figure in the information security world, went public with a whistleblower complaint.
Zatko accused the company of having serious security vulnerabilities that threatened users, investors and US national security. He also alleged that the company is at risk of foreign interference and that its executives, including Agrawal, have misled regulators and the company’s own board.
The first months of a new CEO’s tenure are typically spent meeting with various parts of the company and discussing strategy with their board, Klepper said. But according to internal documents included in Zatko’s whistleblower disclosure, in December and January, Agrawal was also fielding concerns from Zatko that the new CEO and other executives had presented false information about the company’s security posture to the board, in what Zatko alleged could amount to fraud. In January, the Twitter board’s audit committee launched an investigation into Zatko’s worries.
Twitter says that the investigation concluded Zatko’s allegations were unfounded and that he was fired for poor performance; Zatko maintains he was fired in retaliation for speaking up. Twitter has said the whistleblower disclosure paints a “false narrative” of the company that is “riddled with inconsistencies and inaccuracies and lacks important context.”
Still, the whistleblower’s claims have placed an even greater spotlight on the company and Agrawal. Earlier this month, leading members of the Senate Judiciary Committee sent Agrawal a letter seeking information, and requested responses by Sept. 26. It’s not clear whether Twitter has responded to the letter.
During a Senate hearing with Zatko, Sen. Chuck Grassley blasted Agrawal for not accepting an invitation to testify alongside the whistleblower. Twitter declined to make Agrawal available amid its concerns that his testimony could jeopardize the company’s ongoing litigation with Musk, according to Grassley.
Grassley didn’t stop there. If Zatko’s claims turn out to be accurate, he said, “I don’t see how Mr. Agrawal can maintain his position at Twitter.”
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