Twitter is about to get its third CFO in a bit less than two years. It had a former consultant, swapped him out for an accountant, and is now going try its luck with a banker. Twitter announced today that its current CFO, Mike Gupta—a certified accountant who worked as an auditor at KPMG and in finance roles at Yahoo and Zynga—will lead “strategic investments” at the firm, freeing up the finance post for Anthony Noto after only a year and a half in the role.
Noto, a former Goldman Sachs dealmaker, is no stranger to Twitter. He was the lead banker on Twitter’s blockbuster IPO in November last year, when shares jumped by more than 70% on their first day of trading. It hasn’t been such a smooth ride since then, with the company’s share price down by more than 30% so far this year. Stiff competition, sluggish user growth, and worries about profitability are behind the slide, as well as the recent management reshuffle.
The finance role at the social media company is starting to resemble a poisoned chalice, albeit a gilded one—Gupta made $25 million last year, and incoming finance chief Anthony Noto will receive stock and options worth more than $80 million. But with the euphoria of the IPO long past, the hard reality of showing progress from quarter to quarter has set in. What sort of company does Twitter want to be? The CFO merry-go-round provides some clues.
Noto has some CFO experience, as finance chief of the National Football League for nearly three years between stints at Goldman. It was a high-profile job, to be sure, but it’s also worth noting that the NFL is technically a non-profit organization. The daily grind of running the finance function at a prominent listed company like Twitter is a different sort of proposition. Former bankers who become corporate CFOs have a mixed record, as one headhunter told me:
Investment bankers who have sold to CFOs, treasurers and other executives all think they can be CFOs. They’ll call me and say so. They are very smart, but it’s presumptuous because they don’t have the operational experience.
Another job of the CFO is sweet-talking investors. Noto was able to get them on board for Twitter’s well-received IPO. But Gupta was no slouch in that department either, winning plaudits as the “architect” of the listing (paywall). So it’s not as if Twitter is upgrading to a CFO with markedly better powers of persuasion. And no amount of Goldman-honed smooth talking can distract investors from the worrying trends in Twitter’s financial statements.
But in addition to their investor-relations acumen, the thing that bankers-turned-CFOs bring to a company is deal experience. This is a particularly intriguing subplot to Noto’s appointment. Twitter is already an acquisitive company, but putting a former banker in charge of the checkbook could signal more deals in the future. And Gupta’s “strategic investments” job is one that didn’t exist before.