Did Jack Dorsey jump, or was he pushed out of Twitter?
Jack Dorsey was sitting in his kitchen listening to an endless stream of US senators attacking his company and leadership. Wearing a black suit, nose ring and a scraggly beard, the co-founder of Twitter looked frustrated.
After yet another politician asked him to answer “yes or no” to one of the complex problems of hate speech and misinformation caused by social media, Dorsey posted a question mark on Twitter and a poll: “Yes/No”.
“Your multitasking skills are impressive,” one senator quipped, as Dorsey “liked” a series of Tweets critical of the hearing and confirmed to one follower that he was barefoot.
But Dorsey had been battling much wider criticism for far longer as he attempted to juggle responsibilities at Twitter with other business and personal interests. The 45-year-old has also led payments company Square, valued at $100bn, since returning as chief of Twitter in 2015.
For more than a year, activist investor Elliott Management has been applying pressure for him to step down. On Monday, the hedge fund led by billionaire Paul Singer finally got its wish.
Dorsey, who goes by the Twitter handle @jack, emailed staff to announce his departure which comes 16 years after he helped launch the app. “I want you all to know that was my decision and I own it,” he wrote. He will be replaced by outgoing chief technology officer Parag Agrawal.
Elliott was quick to welcome the news: “Having gotten to know both incoming chairman Bret Taylor and incoming CEO Parag Agrawal, we are confident that they are the right leaders at this pivotal moment for the company.”
The departure comes at a curious time with Twitter starting to record consistent financial growth, begging the question of whether Dorsey was ousted or bowed out of his own accord.
not sure anyone has heard but,
I resigned from Twitter pic.twitter.com/G5tUkSSxkl
— jack⚡️ (@jack) November 29, 2021
Bruce Daisley, who spent eight years at Twitter and was head of its European division, says Dorsey “tended to act as a guide and a philosopher. He would often be the most quiet person in the room, he doesn’t dominate conversation.”
Defenders argue he had a hands-off leadership style that delegated to lieutenants, preferring to deal with big picture issues. But this style didn’t always work at a social media company fighting fires on multiple fronts including a crackdown from regulators.
“I suspect there are a few people in the organisation over time who wished he was more of a chair than a chief executive. There are times where they wanted a more direct impact”, Daisley adds.
Very much a “hacker” rather than a manager, Dorsey frustrated his co-founders by clocking off at 6pm for hot yoga classes or fashion school. Despite being forced out in 2008, Dorsey engineered a return as executive chairman in 2011 ahead of Twitter’s float in two years later. In 2015, after a later share price slump, was hoisted into the chief executive role once again.
Still Dorsey, a passionate advocate of Bitcoin, insisted on dividing his time between Square and Twitter. An in-joke among staff at both companies was that each side complained Dorsey spent too much time at the other, according to tech website the Verge.
This perception was not helped by Dorsey’s personal schedule of eclectic interests such as a 10-day silent meditation retreat and plans to spend six months in Africa.
By February 2020, hedge funds Elliott and Silverlake had taken note. Elliott, notorious for its hardball activist strategies, snapped up a $1bn stake – around 4pc at the time.
It demanded Dorsey be replaced at the helm and Twitter set a series of aggressive growth targets. Eventually, a ceasefire was reached: the hedge funds grabbed board seats and secured a $2bn buyback, while Twitter agreed to try and grow daily users by 20pc, along with revenues and market share.
Brian Wieser, an advertising analyst at GroupM, says that while Twitter has improved its results, the company remains a relative minnow against trillion-dollar rivals.
“Twitter has done reasonably well all things considered, people forget it is a niche platform,” he says. “There are far too many in the investment community who assume because it is a social network that it has the capacity to be a Youtube or a Facebook”.
The social network has grown its “monetisable daily users” from 166m people in 2020 to 211m. However it reported a $537m loss in its most recent quarter on the back of a court settlement with shareholders, while rivals have been quicker at seizing market share.
Shares surged 11pc on the news Dorsey was stepping down, before the appointment of an insider left them 2pc down by close.
Ben Thompson, a technology analyst, says this is because the market fears more of the same. He argues Twitter should explore alternative business models, such as subscriptions, to boost revenues.
Internally, staff are divided on whether Dorsey was pushed or whether he jumped.
Axios reports Twitter launched a “year-long succession plan” to replace Dorsey last November and that Jesse Cohn, Elliott’s board representative, had been in talks with Dorsey over his exit. In a stock market filing last November, Twitter said it had “updated the CEO succession plan in line with best practices”, working with Dorsey.
Nick Bilton, who wrote Hatching Twitter about the company’s founding, said a search for a new boss may have picked up pace during the summer.
In May, Elliott bought $200m in Twitter stock after its shares slumped. “Looking back now, it appeared that Dorsey’s death knell had been rung,” Bilton wrote in Vanity Fair.
In his resignation note, Dorsey sought to frame his exit on his own terms and said he had put the company ahead of his “ego”.
Daisley, the former Twitter executive, says the co-founder’s laconic attitude was always going to be at odds with the plans of the hedge fund investors. “I suspect the Elliott investors wanted a gung-ho leader with a body count of fired executives behind him. That’s most certainly not Jack’s style.”
As he steps into his new role, Agrawal will have tough decisions to make and lofty growth ambitions to reach – all with Elliott in the background. But for the first time in five years, the social network has a boss who will be giving it his undivided attention.