We take a closer look at the reasons for Jack Dorsey’s resignation from Twitter
Jack Dorsey announced publicly on Monday by tweeting his resignation letter that he was stepping down as CEO of Twitter, the social media company, after almost 16 years at the company. We explore the reasons behind his decision to leave.
In his letter, Dorsey stated that the importance companies currently place on being ‘founder-led is “severely limiting,” and creates a “single point of failure,” reassuring Twitter’s near 400 million users that he has always planned to step down having created his vision of a company that can break away from its founding.
Dorsey’s plan of action is to stay on the board until May of 2022 to ease any tension on the change in power dynamics and ensure a smooth transition. His resignation from the role as CEO is, however, effective immediately. This sudden change leaves us wondering why this was done now, or more curiously, why it was released on a company holiday while everyone was out of the office for the Thanksgiving holiday period.
Parag Agrawal (former CTO) has been named as his successor to become CEO. With ten years of experience at the company, he is already a well-respected leader amongst the employees. Furthermore, Dorsey named Bret Taylor in his public letter as the new board chair, giving Taylor a glowing review: “understands entrepreneurship, taking risks, companies at massive scale, technology, product, and he’s an engineer. All of the things the board and the company deserve right now”.
Many have argued that this is not a surprising decision from Dorsey given how distracted he has been while running his other company, Square, building his new project decentralizing the internet with blockchain, and disappearing off for long travel breaks. It’s not surprising that many saw him more as a part-time CEO. One cannot help but speculate: did Dorsey choose to leave or was he ousted by Twitter’s board of directors for his neglect of duties?
No comment has been made yet by any representative for Twitter on the reasons for this change, but the history of Dorsey jumping in and out of the CEO chair presents him as a very inconsistent leader. In the past, Dorsey has stepped down as CEO (or been ousted) to take a less integral role in the board; over time, he has then worked his way back up to be in charge again. His short leaving time on this occasion for the company’s board suggests that he will not be able to work his way back into the CEO seat for the third time.
Last year, Elliot Management, a well-known activist investor, demanded many changes in Twitter after purchasing a massive US$1bn in twitter stock. It demanded the removal of Dorsey and repeatedly lobbied for him to step down as CEO.
In May Elliot increased its stock shares in Twitter by just over $200mn, and it has been reported that some rumors were circulating in the company of a CEO search happening internally. These have now been shown to be more than workplace rumors, and it seems Elliot Management may have finally got their wish.
There is the possibility that Dorsey stepping down was solely his own choice; however, an informant from Twitter has suggested that the resignation was suspicious, and we have to agree that the way it was announced and handled is very peculiar. The lack of transition with Dorsey spending a training period working alongside Agrawal as CEO is very out of the norm.
As an original Twitter founder, you would expect Dorsey to stay for a while longer to guide the company and keep them on track with his plans for the future of the company; many similar companies such as Facebook would not be the same without the constant guidance of their creator (though Mark Zuckerburg has taken a much more hands-on approach than Dorsey).
Twitter stock value has fluctuated since this announcement on Monday, with an initial 11% increase on Monday morning (29th November) spiking at $50.2 to then drop again to $43. This spike was a clear reaction to Dorsey’s announcement but the 25% fall of stock since their October report means Agrawal is going to have his work cut out for him to get Twitter back on track. Though Colin Sebastian, Baird Analyst commented that “We think appointing a technology leader as CEO makes a lot of sense,” showing faith that Agrawal’s knowledge will be a great asset to the future of the platform.
Though the sudden change in leadership may cause some unsettlement within the company, some respect has to be given to the flair in which Dorsey left. As he prepares to move full-time onto his other projects, Dorsey ends the letter directed at his employees in the spirit of the company. The sentence read, “PS, I’m tweeting this email. My one wish is for Twitter inc to be the most transparent company in the world. Hi mom!”