Tough challenges ahead for Twitter CEO Jack Dorsey

Job No. 1 for the new CEO: Revamp the stagnating microblogging service to make it more inviting for regular folks.

Seven years after he was ousted as Twitter’s chief executive, Jack Dorsey has another shot running the social network.

Dorsey’s first priority: Make Twitter more appealing to more people. It’s a tall order. His to-do list includes a simpler, more visually appealing interface so that regular folks can more easily follow topics, people and live events. He has to launch a marketing campaign to convince average users that Twitter is as essential to their daily lives as Facebook. And he has to boost revenue by attracting more advertisers.

Twitter is “still confusing not only to novice users, but even to medium-level, sophisticated users,” said Morgan Downey, the chief executive of Money.Net, a New York-based financial information service for investors.

Dorsey told investors Monday that he’s already made improvements over the summer while interim CEO. These include the ability to use more than 140 characters when directly sending a message to a specific person, and making it easy for users to purchase products by clicking on a new “Buy Now” button. He said teams have been “plotting out ambitious road maps for 2016,” across Twitter and its video-streaming services, Periscope and Vine. Dorsey is also the chief executive of Square, the mobile payments company he founded in 2009.

Dorsey, who has been interim CEO since July 1, was namedpermanent CEO after demonstrating “product innovation,” “execution cadence” and leadership ability, said Twitter board member Peter Currie, who led the CEO search.

“Frankly, the board’s view is the entire team has found a new gear under his leadership,” Currie said on Monday’s conference call. “Over time it became clear to us that Jack was not only meeting, but surpassing our expectations of him as interim CEO while running Square.”

Investors appear to be comfortable with the new CEO. Sharesrose more than 7 percent Monday on the news.

“Now that Twitter’s CEO drama is over, the company can get back to building products that users want to use,” Forrester analyst Nate Elliott said in a note to customers. “Twitter is stagnating because its product looks almost exactly like it did when it launched.”

In July, Twitter said the number of people who log into its service at least once a month rose 3 percent to 316 million in the second quarter of the year. In comparison, about 1.5 billion people regularly turn to to Facebook.

Facebook has been able to add users because it’s constantly offering new features, said Elliott. The user base matters because companies naturally want to invest their advertising dollars where they can reach the biggest audience.

“They need to make a very slight, but critical adjustment to [Twitter’s] user interface to make it more intuitive,” Downey said. “That alone will bring in a lot more users.”

Investors are also eyeing Twitter’s so-called “Project Lightning” to help grab new users. Project Lightning will highlight curated streams of tweets, photos and videos from live events, including concerts, breaking news and sports. The company is expected to offer these new features within the next few months.

“We remain optimistic on Lightning’s potential to attract new users to the platform through curation, better organization of content and a live feed” that integrates videos from Twitter’s Periscope and Vine video-streaming services,” JP Morgan analyst Douglas Anmuth wrote in a note to investors Monday.

Now it’s up to Dorsey to show investors Twitter’s potential is as high as executives say it is.

“No one is more determined than I am,” he said.

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