Investors were not happy to learn that Square Inc.’s (SQ) Chief Financial Officer Sarah Friar is leaving the company to become CEO at Nextdoor, a social network for local neighborhoods.
Shares in the payments processing company plunged 10.34% in extended trading after CEO Jack Dorsey broke the news of Friar’s departure on Twitter, despite having already fallen 10.12% during Wednesday’s broader market sell-off.
Really proud of @thefriley for taking the big step to fulfill her lifelong ambition to be a CEO. Thank you Sarah. We love you and I’m going to miss building Square with you, but I’m so happy for you. ❤️❤️❤️
— jack (@jack) October 10, 2018
Investors Mourn Friar’s Departure
In a note shared with the Square team, Dorsey spoke of Friar's "lifelong ambition" to run her own company and how his happiness that she is fulfilling her dream outweighs any sadness he is feeling. However, the negative reaction shows just how highly Friar is thought of by investors. The former Goldman Sachs Group Inc. (GS) research analyst and Salesforce.com Inc.(CRM) executive was considered the most likely candidate to take over the reins of Square from Dorsey, should, as many expect, he eventually decide to run his other company, Twitter Inc. (TWTR), full time.
Some even viewed Friar as the real leader of the San Francisco-based firm, given that Dorsey already has his hands full running another public company.
Friar joined Square in 2012. During her tenure, she played an important role in the company’s expansion into financial services, leading the charge as it began lending to small businesses and letting consumers buy and sell bitcoin through Cash App, Square’s money-transfer service.
She also guided the payments processing company through its tricky initial public offering in 2015. Since then, the stock has more than quintupled in price.
Dorsey’s announcement of Friars departure led to backlash from some people on social media. Dan Primack, business editor at Axios, described Dorsey as “the vision” and Friar as “the execution,” adding that her exit represents a “big” problem for the company.
Square’s CEO responded by playing down the importance of individual figures at the tech firm. “I’m so happy for Sarah. She’s going to be great at running a company. Square is different tho,” Dorsey wrote. “We’re organized by business unit, like Cash, Caviar, Seller, Capital…and a lead/CEO for each. They are the execution, not me or Sarah. Square is built to be a durable ecosystem.”
The company confirmed that a search for Friar’s successor is now underway and will be led by David Viniar, a Square board member and the former finance chief of Goldman Sachs. Friar will remain in her current position until December.