At a time when India woke up to the news of Yes Bank founder Rana Kapoor’s arrest amidst a crisis of confidence that’s plaguing the Indian economy, the story about Twitter’s under fire CEO Jack Dorsey may appear to be a totally specious one involving an invading investor attempting to throw out the man who founded a company.
However, the point is not about one investor or one CEO facing the boot for non-performance, real or imagined. It is about accountability of the person to the larger world that comprises not just the shareholders but a much bigger universe of customers / users who suddenly find themselves holding the can of worms.
In the United States and some other economies, shareholder representatives keep close tabs on the management team is par for the course. But, with India the story is exactly the reverse where high profile CEOs have the board members dancing to their tunes most of the time, or at least up until the poop hits the ceiling.
For those of you still confused about the Yes Bank muddle, check out this simple and easy to understand explanation from Akash Banerjee on YouTube. Meanwhile, let’s take a closer look at what’s ailing Dorsey and Twitter on the other side of the world.
Activist investor Elliot Management Corporation, which reportedly picked up a 5% stake in Twitter, has made no bones about that ails the company. Foremost is its weak market performance where its stock fell 6.2% since July 2015 where Facebook grew 121%. Then there is the issue of executive turnover leading to a slowing down of product development.
The bigger issue concerns Jack Dorsey’s African safari. Elliot Management, which has in the past gone after eBay, AT&T and triggered CEO departures, believes that Dorsey’s interest in running fintech giant Square would mess up with Twitter’s progress. All of this has forced the under-fire CEO to respond in kind using his company’s investor relations Twitter account.
However, before delving into the latest, it may be worthwhile to step back into history for a brief moment. This isn’t the first time that Dorsey is facing an acrimonious period as CEO of the company that he co-founded alongside Evan Williams, Biz Stone and Noah Glass in 2006.
Dorsey, who was given the CEO role at Twitter, was perceived as a bad manager who took credit for everything and blamed others for failure in Nick Bilton’s book Hatching Twitter. Some of us may also recall that the company’s pig-headed perception of the 140-characters as sacrosanct was also Dorsey’s baby.
As just as his African safari is making news now, Dorsey was reportedly drawn more to his hobbies outside of Twitter even during the early days. He took sewing and drawing classes, made high-profile party appearances and kept early investors on tenterhooks, resulting in the board sacking him in 2008 and handing over charge to key investor Evan Williams.
Now History Repeats
Many in the industry couldn’t but help notice Dorsey’s attempt to mould himself in the Steve Jobs format. He began quoting Mahatma Gandhi and the Beatles, donned a uniform at the workplace, kept reinforcing the design principles of Apple’s founder while founding Square in 2010 and was known to have poached some Apple staffers too.
There were reports doing the rounds around this time that Dorsey began leaking stories about Twitter and even launched a whisper campaign to get his fellow founder Williams fired. And he succeeded in the process when the Board replaced him with Costolo the same year and made Dorsey the Executive Chairman.
Critics say that his attempt to toe Jobs’ line went well with the general narrative of American investors being profit-chasers at the cost of company principles. After all, hadn’t Jobs been fired from Apple and didn’t he create Pixar in the interim before coming back stronger and leading the company on to its current global status?
In 2015, when Dorsey returned as CEO, he told investors in the first of many earnings calls that his mission was to make Twitter the “most powerful microphone in the world”, which is what Elliot Management is now questioning after five years.
Apart from his series of tweets, Dorsey took pains to explain to delegates at the Morgan Stanley investor conference last week that Twitter was indeed doing better than perceived. Here are some of the issues he brought up during his speech:
- Twitter has prioritized healthy conversations and the key initiatives now revolve around integrity of conversations around the (US Presidential) elections. He noted that the platform is using humans and machine learnings to weed out misinformation
- He stressed that Twitter would complete the rebuild of the core ad server in the first half of 2020 and the enhanced mobile app install ads would enhance its advertising revenues
- Referring to shutting down of products, especially Vine, Dorsey got on to the highest of his horses to suggest that “five years ago we had to do a really hard reset and that takes time to build from… we had been a company that was trying to do too many things…”
- On the slow pace of product development, he said, “Some people talk about the slow pace of development at Twitter. The expectation is to see surface level changes, but the most impactful changes are happening below the surface”
There were comments around talent retention, Twitter’s inability to keep trolls at bay and on his own purported move to Africa for six months a year. It looked like a point by point response to matters brought to fore by the new investors.
The question though remains whether these rebuttals would save the Twitter CEO or would it prove to be his second fall from favour at the company he co-founded.
In case that happens, Dorsey can claim that he’s one better than Steve Jobs!
As we hit our publishing cycle, there is news that Dorsey is indeed staying as Twitter announced a billion dollar investment from SilverLake and a cooperation agreement with Elliott Management.