Jack Dorsey, one of Silicon Valley’s most controversial CEOs, announced that he has resigned from his position at Twitter and added that CTO Parag Agrawal was to replace him as Chief Executive Officer, effective immediately.
Dorsey announced the news in a statement released by Twitter: “I’ve decided to leave Twitter because I believe the company is ready to move on from its founder. My trust in Parag as Twitter’s CEO is deep. His work over the past 10 years has been transformational. I’m deeply grateful for his skill, heart, and soul. It’s his time to lead.” Dorsey plans to remain on Twitter’s board for the next six months or so to help with the transition before fully departing the company.”
Not the first time Dorsey leaves Twitter
Back in 2009, Dorsey left Twitter to pursue building a digital payments company called Square. By 2011, he was back at Twitter as Executive Chairman, and eventually took up the role of CEO again. At this point, Dorsey was in charge of running both companies.
According to an inside source, the succession has been planned for over a year. One of Twitter’s investors, Elliot Management, has insisted on Dorsey’s removal for a while now. This is because Dorsey has been running Square, parallel to working at Twitter, something that investors believed was “far from ideal” and that they needed a CEO who would be fully invested in Twitter. Elliot also argued that Dorsey was distracted by his other interests, such as Bitcoin, when the CEO planned to spend half of his year abroad exploring opportunities in cryptocurrencies.
Initially, Dorsey defended himself and insisted that he was fully invested in both companies, “I have enough flexibility in my schedule to focus on the most important things and I have a good sense of what is critical in both companies.”
Eventually, stakeholders agreed to keep Dorsey onboard as long as he met his performance targets, despite Elliot Management insisting on having him replaced.
An eccentric leader
Dorsey’s leadership style was considered contentious by some members of Twitter’s board, particularly his ‘hands-off’ management style and his shifted focus due to his desire to pursue other interests and projects. The CEO also faced multiple ‘grillings’ from US regulators for his approach on free speech, particularly after Twitter banned former US President Donald Trump from their platform following the riots at the Capitol.
In his resignation letter, Dorsey stated that founder-led companies suffer due a “single point of failure” and that he has worked hard to ensure Twitter can break away from its founding and founders. Some thought that was a dig at another famous Big Tech CEO, Mark Zuckerberg, who founded Facebook 17 years ago and has no plans to step away from the company.
Dorsey’s involvement in Twitter has no doubt been pivotal for the company. As it’s initial creator and leader, Dorsey has always advocated for offering as much transparency as possible at least in comparison to Twitter’s competitors. The platform became a key portal for influential figures, such as celebrities, journalists, and world leaders. At the same time, Dorsey’s approach on ‘not focusing on money’ has caused the company’s revenue generation to lag significantly behind other major social media giants, including Facebook, Tik Tok and YouTube.
What does Jack Dorsey’s resignation mean for #TWTR?
Immediately upon Jack Dorsey’s announcement of his departure from Twitter, the company shares tumbled by 1.7%. Analysts, however, stated that Dorsey’s departure could be a positive shift for the company’s stock in the long term as they believe the new CEO will focus on expanding the company’s advertising business.
Mizuho Securities’ analyst, James Lee, commented that Parag Agrawal holds the necessary credentials to further improve Twitter’s management team. Another analyst, Mark Mahaney from Evercore ISI, also positively welcomed the new Twitter CEO, saying “Perhaps having a ‘full-time’ CEO will improve this track record,” adding that “It’s hard to know. And we don’t believe we’ll have great insight for many quarters to come. Our bias is that Twitter probably needs a more dramatic management change.”
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