Twitter’s newest major investor wants to oust CEO Jack Dorsey

Twitter co-founder and CEO Jack Dorsey at the Indian Institute of Technology (IIT), on November 12, 2018 in New Delhi, India.
Enlarge / Twitter co-founder and CEO Jack Dorsey at the Indian Institute of Technology (IIT), on November 12, 2018 in New Delhi, India.

A massive private equity firm has taken on a large stake in Twitter with a clear goal reportedly in mind: kicking company CEO Jack Dorsey to the curb.

Bloomberg late on Friday was the first to report that Elliott Management Corp. acquired a “sizable” amount of Twitter shares in order to push for changes in the firm.

Elliott is known far and wide in the money world as an activist investor firm. Basically, that means it buys large stakes in businesses with the intent of pushing changes through rather than just acquiring shares and sitting on them. (Carl Icahn is likely the best-known activist investor.) Unlike many other firms, Twitter only issues one class of stock, which allows an investment firm like Elliott to more easily build up a significant volume of voting shares. That structure is significantly different from, for example, Facebook, where CEO Mark Zuckerberg retains an enormous amount of voting power, as compared to the specific number of company shares he holds.

Elliott has nominated four potential directors for the eight-member Twitter board; three seats will be available for filling at the company’s annual shareholder meeting in April. Elliott put forward an extra to “ensure that it nominated enough directors to fill all three seats or any other vacancies that may arise,” sources familiar with the matter told Bloomberg.

Dorsey was one of the co-founders who launched Twitter back in 2006, when the idea that you could post a Tweet by SMS, using your mobile phone, was a neat, new idea. Like many services launched in the first decade of this century, Twitter really took off after 2008 as smartphones went mainstream, bringing everyone the mobile Web and burgeoning app marketplace.

Cofounder Evan Williams took over the CEO role from Dorsey in 2008, though Dorsey remained as chairman of the company’s board. Williams in turn was replaced in 2010 by Dick Costolo. Costolo was CEO through Twitter’s initial public offering of stock in 2013 and also through a long period in 2014 and into 2015 when “Twitter” became synonymous with campaigns of abuse against prominent figures, especially (though not exclusively) women.

“We suck at dealing with abuse and trolls on the platform, and we’ve sucked at it for years,” Costolo told fellow employees in February 2015, admitting that the platform was hemorrhaging “core users” because of it. Costolo left the company a few months later, clearing the way for Dorsey to return as interim CEO before the position was finalized that October. Dorsey has remained at the helm since, as the company becomes more strongly associated with current US President Donald Trump‘s unpredictable tirades.

Dorsey is also CEO of mobile payments firm Square, which he co-founded in 2010 alongside Jim McKelvey, who now works for the Federal Reserve. Splitting his time between the two firms, however, has never sat well with some investors. Sources told Bloomberg and Reuters that Elliott was open to Dorsey keeping the Twitter job if he quit the Square one instead, but they did not think he would be willing to do so.

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