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Can Dorsey hit the jackpot with Twitter and Square?

Jack Dorsey is now CEO of both Twitter and Square. Running one big company is tough. Now he has two.

Jack Dorsey will run Twitter and Square, joining a small group of people who have run two big companies at one time. Mike Blake/Reuters/Corbis

One Jack. Two companies.

Jack Dorsey has been given a second shot at running Twitter, the struggling social media company he co-founded. Dorsey will be doing double duty at the top spot, also running Square, a mobile payments company he co-founded in 2009.

The appointment thrusts Dorsey into an elite group of visionary business people. Only a handful of executives -- think Steve Jobs, Elon Musk, Carlos Ghosn -- have simultaneously run two significant companies.

There's a good reason it's exceedingly rare for one person to run two companies at the same time. CEOs are required to inspire their staff, reel in new customers and manage the expectations of investors. That's a lot when a CEO's focus is one company. It takes a special personality to run two enterprises at the same time.

Musk, the CEO of both electric car maker Tesla and space transportation company SpaceX, on Tuesday warned Dorsey shouldn't take on dual roles.

"I wouldn't recommend running two companies. It decreases your freedom quite a lot," said Musk during a panel discussion at the Vanity Fair New Establishment Summit in San Francisco. Musk said he spends about 70 percent of his time on engineering and design, and about 2 to 3 percent on press events and speaking engagements. He wants to cut that down to about 1 percent, he added.

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Running two companies can also raise conflicts of interest. In Dorsey's case, Twitter is expanding into online commerce and recently partnered with Square on a political donation service. Square, which is expected to file for an IPO soon, takes a cut of those donations.

"The problem with a CEO running two companies simultaneously [is] the interest is divided," said James Post, a professor of management at Boston University's Questrom School of Business.

Of course, it has been done before. Jobs ran both Apple and Pixar at the same time, while Musk is currently CEO of both electric carmaker Tesla and rocket company SpaceX. Ghosn runs France's Renault and Japan's Nissan, both carmakers.

Post said Dorsey's first task will be to determine how to spend his time. Then he needs to communicate that clearly to employees and shareholders.

Square expressed optimism about the dual role, noting that Dorsey has already been serving as interim CEO at Twitter. "As he has shown for the past several months, he has the ability, passion, and commitment to lead both companies effectively," Square spokesman Aaron Zamost said in a statement Monday.

Twitter declined to comment.

Some management experts dismiss the conflict of interest issue, saying Dorsey might serve as a symbolic head of Twitter but leave many of the business decisions to his senior staff. That would also leave him time to run Square as it readies for an initial public offering of its shares.

Jeffrey Sonnenfeld, a professor at the Yale School of Management, said Dorsey's main role will likely be serving as Twitter's voice to the outside world, though he might also have some oversight of Twitter's technology. That will limit the demands on him, Sonnenfeld said.

"He can't do two jobs at once," he said.

On Monday, investors seemed to differ with Sonnenfeld, sending Twitter shares 1.5 percent higher to $26.70 in early trading. The stock has lost more than half its value since it hit a recent high of almost $53 in April.

Size matters

Some experts say that because Twitter and Square are relatively small companies -- combined, they employ a little more than 5,000 people -- running both is possible. They point to CEOs of some companies that have multiple divisions that could easily be big standalone enterprises.

Larry Page, for example, runs Alphabet, formerly Google, a vast 57,000-person conglomerate that has operations ranging from Internet search to self-driving cars.

And Joe Jimenez runs Novartis, a sprawling Swiss pharmaceutical giant that has operations around the globe and makes everything from biotech drugs to contact lenses. Jeffrey Immelt runs General Electric, a conglomerate involved in health care, power and transportation, among other endeavors.

Twitter's board likely concluded Dorsey's strengths as a Twitter founder outweighed the complications his other responsibilities could bring, said John Challenger, the CEO of Challenger, Gray and Christmas, a consultancy that specializes in executive matters.

Challenger said Dorsey will likely have a vision for Twitter that an outsider might not because he has such a deep knowledge of the product.

"There are certain brilliant people that have something that no one else does," he said. "Better to have them than not."

Jobs, who rescued Apple and turned it into the world's most valuable company during a second turn at the top, proved bringing back a founder can work wonders. Now it's up to Dorsey to show he can hit the jackpot at Twitter.

Update: On October 6, added comments from Musk.