It has been announced that Todd Morgenfeld, CFO, has resigned from the company.
As a result of Pinterest’s fourth-quarter earnings report, its stock dropped. A mere 4% increase in revenue missed estimates, and profits plummeted as well.
In the current quarter, Pinterest is expected to be hurt by the slowdown in the advertising market, along with other social media stocks. Investors, though, should be more concerned about the stock because of a larger reason.
Let’s Pin This
As of July 1, Todd Morgenfeld will leave the company as its CFO and head of business operations. As an architect of the company’s business strategy, Morgenfeld guided its IPO and guided the company to where it is today. He will assist Pinterest in finding the next chief financial officer and ensuring a smooth transition.
Morgenfeld hasn’t specified what business opportunities he will pursue after leaving. The fact that he has left should not raise any major concerns on its own, but his departure is not an isolated event. The company is experiencing a larger pattern that is becoming increasingly problematic.
Pinterest had seven named executive officers when it became public in 2019. As a result of Morgenfeld’s departure, none of them will be involved in day-to-day operations.
Ben Silbermann, co-founder and former CEO, remains as executive chair but has stepped down as CEO in favor of Bill Ready, a former PayPal and Google executive. Silbermann left the job without explanation, but analysts said Ready’s e-commerce and payments background made him an ideal candidate for the company’s next steps in monetization.
The company’s reputation as a friendly workplace was tarnished during Silbermann’s tenure due to allegations of discrimination. In 2020, Francoise Brougher, the former COO, sued the company for gender discrimination.
During her resignation from Pinterest in October, General Counsel Christine Flores said that she left “to focus on her personal interests.”
Former Strava Chief Accounting Officer Lily Yang is now Strava’s Chief Financial Officer. Evan Sharp, former Chief Creative and Design Officer of Strava, quit working with Apple’s previous top designer Jony Ive.
Last but not least, former SVP of Product Lawrence Ripsher no longer works at the company.
Despite the fact that turnover is an unavoidable part of business, it can often be a negative phenomenon. It is possible that revolving doors at the executive level are indicative of more fundamental issues. Why do Pinterest’s leaders not want to stay with the company if Pinterest’s future is so bright?
There is no way to know why each one left, except for Brougher, and they could have perfectly valid reasons. Yang and Sharp might have found better jobs, although it’s strange to see a cofounder leave for another company.
A company’s IPO process and serving as a top executive in the early years may have worn them out. Perhaps the early years were grueling, or maybe there were personal reasons for leaving, such as health issues or family obligations.
The complete turnover in the C-suite inspires suspicion, especially given the recent accusations of discrimination and the complete turnover in the C-suite.
According to the job review site Glassdoor, Pinterest, however, rates well, with 80% of respondents recommending it and 84% approving Ready as CEO. Among the most desirable workplaces in Canada in 2022, Pinterest was also ranked third.
There might be an anomaly in executive departures based on those numbers.
What Else?
Seeing so many executives leave is disappointing, but it doesn’t necessarily mean that the company has slipped downhill.
Despite the macroeconomic headwinds Pinterest faces, the company still has tremendous potential. The platform’s uniqueness and the synergism between image-based discovery and advertising make it unique. Users who come to the company’s website with purchase intent tend to like seeing ads, according to the company. People tend to look for clothes or home decor when looking for something like this. In addition to having shoppable pins, it could also lead to an effective e-commerce platform for the company, and it has already taken steps in that direction.
Ready has remained on the job for the last year. A healthy advertising market would give him the opportunity to show what he can do with the business.
Stay put until ad demand bounces back since there is a great deal of upside potential. Should Ready leave or there is further evidence of discrimination in the company, be ready to walk out with the former executive team.