(SAN FRANCISCO, Calif.) Jack Dorsey, the infamous founder of the social media platform Twitter, stepped down from the company's leadership role Monday.
According to a letter he posted to his Twitter account, he wrote that the company should "break away from its founding and founders" expanding that reliance on its founders is "severely limiting."
Current chief technology officer, Parag Agrawal will take over for Dorsey as CEO. Dorsey will, however, remain on the board until his term expires in 2022.
After an initial drop, Twitter shares rose roughly 10 percent following Dorsey's announcement.
According to reporting from The Financial Times, this announcement was somewhat expected internally as vulture fin-tech firm, "activist investor" Elliot Management, founded and run by right-wing investor Paul Singer, has pushed for Dorsey's removal since taking a substantial stake in the company in the Fall of last year.
Additionally, in a regulatory filing from November 2020, the tech giant noted that it had "updated the CEO succession plan."
Within the letter, Dorsey outline three reasons why he felt this was the right time: the first being Parag succeeding Dorsey as CEO, the second being Bret Taylor, Salesforce's president and chief operating officer, agreeing to chair the board and the third being "all of you." Dorsey pointed to Parag as an example of the internally mobility and ambition that makes Twitter distinct.
While this resignation may come as a surprise to the public, investors and the financial world as a whole are breathing a sigh of relief as the bohemian founder heads for the exit. The contention between Dorsey and Elliot Management, which over the past two years has garnered a 4 percent stake in the tech giant, began when the hedge-fund argued that Dorsey had become too distracted in part by his chief executive role at payments company Square and cryptocurrency ventures to focus on the needs of Twitter.
Tensions boiled over when the hedge-fund tried to remove Dorsey after he notified them and the board of a roughly six month trip to Africa to explore cryptocurrency investing. He eventually canceled the trip amid reported condemnation from board members and investors.
Elliot, which garnered a roughly $200 million profit since taking its stake in Twitter, outlined some challenging performance goals for Dorsey in early 2020 after a "management structure committee" reviewed his leadership and structured a cease-fire agreement with the hedge fund.
Dorsey was outted once before, in the early days of Twitter, after being deemed unfit to lead by early investor Fred Wilson. Wilson expressed vocal and vociferous support for Dick Costolo when he stepped down from Twitter's lead role in 2015 as Dorsey returned to the top spot at the tech giant.
In that early battle, the board cited a habit of Dorsey's to leave early to attend yoga classes as one of the drivers of the leadership change.
This battle, much like the battle between Steve Jobs and Apple's board more than a decade ago, reflects the push and pull between often eccentric and creative tech founders and financial institutions that want no part of the instability that comes with "creative genius."
Dorsey's second stint as leader of the social media behemoth was more tumultuous. He was consistently embattled with questions of censorship and big tech overreach during the early days of former President Donlad Trump's campaign and term. By 2017, Twitter shares had dropped to its lowest price at under $15.
Obviously, Paul Singer and Elliot Management were unhappy with this lack of return on their substantial investment. Notably, Dorsey will remain on as chief executive at Square where he maintains a 12 percent stake in that company compared to his roughly 2 percent stake at Twitter.
Parag Agrawal being named as CEO, however, reflects a confirmation of Dorsey's leadership approach to Twitter employees who spoke to The Financial Times.
“I see it as a validation of Jack’s approach to leadership inside the company," one employee said. When discussing Agarawal, the same employee said "He’s very heady and cerebral — he’s not going to be a bombastic Amazon CEO."
The leadership change also reflects the aforementioned struggle between eccentric tech billionaires and their management board. Leaders like Jobs, Dorsey or Musk may have the "creative genius" to build up a company but when those eccentricities become too much for the market, investors like Elliot are quick to take back the reigns.