Surely if the Coronavirus crisis were not on the table, much more would be said about other matters. And maybe one of those was that Jack Dorsey, CEO of Twitter And one of the ‘brains’ of the hatching of the most popular but also controversial tech companies is getting closer to leaving the company he founded.
Elliott Management, a North American investment fund, expanded its shares in Twitter a few weeks ago to the tune of about $ 1 billion, which in practice allows it to own 4% of the firm. As Bloomberg initially reported, Elliot was looking to have some action control to drive change on Twitter, perhaps the great company of the era of ‘big-tech’ that despite its general knowledge has never managed to extract great benefits.
In his plans, according to the same reports, he is also taking out Dorsey from his position as CEO, understanding that his long-term vision for the company is not sustainable. Well, after a few days of negotiation, Elliott, Dorsey and the Twitter management team seem to have reached an agreement. As explained by the company in a statement, Twitter’s board of directors will have three new positions, one transferred to Elliott Management, another to Silver Lake, another private equity firm that will invest another 1,000 million, and a third yet to be debated that it will have independent character. But what is perhaps more important, the members of this board will form a committee that will seek “Mid-term Evaluate a CEO Succession Plan” Jack Dorsey.
On the same note, Twitter also announced plans to increase its daily active income in 2020 and beyond by 20% or more., accelerate revenue growth year after year and gain market share in the digital advertising market. That is, a committed commitment to increasing profits – as any private company would, although this was not Dorsey’s common position until recently.
But, How did we get here? Let’s analyze each one of the actors that are involved and how this step could change – or not – one of the social networks preferred by users, but it also seems evident that it has been very difficult for them to find the path to sustainability.
Dorsey, a CEO of two companies with their own idiosyncrasy
Jack Dorsey’s story connects with that of the creator of Silicon Valley, original, creative and to a certain extent obsessive with the objectives of their products. After creating the social networks in 2006 with Noah Glass, Biz Stone and Evan Williams, Dorsey took the rank of CEO from the start. However, he was removed from that post in 2008. After going through different levels of involvement, he left Twitter entirely for a few months and then returned, until in 2015 the board again elected him as CEO.
Along the way, biographies, interviews and articles have made famous also their particular lifestyle. Dorsey has said on several occasions that she practices fasting and eats only once a day, she has been accused of being more focused on her yoga classes than on the company’s own management, or traveling too much to be focused on the future. from Twitter.
Twitter today has 330 million monthly active users, just 28 million more than five years ago
All this has contributed in some way to that Dorsey’s vision as an entrepreneur is not the best. The Wall Street Journal introduced it in 2017 on their list of worst managers of the year, and Twitter’s profitability has never taken off since it went public in 2013. Since its return in 2015, Twitter shares have fallen 6.2%, while Facebook shares have risen 121%.
Image: Wired | Youtube.
Despite this, Twitter has managed to gradually turn towards profitability. After focusing the first years on increasing the period of time that Twitter users are online, Dorsey seems to have given up part of the land to promote markets such as ads within the platform, a business path that may soon also be incorporated. shopping. With this, in 2018 and 2019 Twitter finally managed to enter profits after more than a decade of existence and an already considerable history in the stock market.
Dorsey shares the leadership of Twitter and Square, an online payments company
However, what they most accuse Dorsey the investor groups that have joined the board is to be the CEO of two companies at once. Dorsey founded at the time he moved away from Twitter Square, a financial services platform and mobile payments that he also runs. The truth is that it is strange that two listed companies share leadership. In addition, Dorsey, in another chapter of his life as a free soul, reported through Twitter that in 2020 he plans to live from three to six months in Africa to analyze the cryptocurrency market on the continent, something that seems be more interesting to Square than Twitter.
Elliot, an investment group that has already disrupted AT&T
And who has Dorsey in front of him? Well, one of the investment groups that has made the most noise in recent years. Elliot Management is a fund whose key man is Paul Singer, a Republican Party donor billionaire which media like the New Yorker have described as “one of the most powerful and inflexible investors in the world. Singer is best known as an “activist” investor, who uses the resources of his fund, some $ 35 billion, to buy shares in companies where he detects weaknesses. Elliott then puts pressure on the company to make changes to his business, with the goal of improving the stock price. Elliott executives say most of their investment campaigns happen without significant conflict, but a remarkable number seem to end up mired in drama. A distinctive Elliott tactic is the release of a letter severely criticizing the CEO of the target company, which is often followed by the resignation of the executive or the sale of the company. ”
The Elliot group has already done this tactic for example with AT&T, the telecommunications giant, and ended up achieving its goal, achieving the sale of up to 9,000 million assets to continue with the remodeling roadmap that it proposed.
In a nutshell: a bohemian-looking CEO against a company shark. The thing promises.
We will see in a few months how this particular power struggle continues, if Dorsey is truly involved in keeping Twitter under his point of view, a social network, it should not be forgotten, that he has very loyal users, but that he no longer engages as before. new profiles. Twitter today has 330 million monthly active users, just 28 million more than five years ago. And it is also not a tool where the community perceives the changes well: neither the increase in characters from a few years ago, with the aim of increasing just the retention time, nor the changes in time-line, nor the new ‘fleets’, Messages that are deleted after 24 hours and that push the league of the ephemeral that Snapchat invented successfully and that Instagram plagiarized and exploited.