Enlarge /. Jack Dorsey, co-founder and CEO of Twitter at the Indian Institute of Technology (IIT), on November 12, 2018 in New Delhi, India.
A massive private equity firm has taken a big stake in Twitter with the goal of having a clear goal: to throw the company's CEO, Jack Dorsey, on the roadside.
Bloomberg first reported late Friday that Elliott Management Corp. acquired a "substantial" number of Twitter shares to push for changes in the company.
Elliott is well known in the money world as an activist investor. Basically, this means that large stakes in companies are bought to make changes instead of just buying and sitting on stocks. (Carl Icahn is probably the best-known activist investor.) Unlike many other companies, Twitter only issues one share class, which makes it easier for an investment firm like Elliott to build a substantial volume of voting shares. This structure differs significantly from Facebook, for example, where CEO Mark Zuckerberg retains enormous voting power compared to the specific number of company shares he holds.
Elliott has nominated four potential directors for the eight-member Twitter board. Three seats will be available at the company's Annual General Meeting in April. Elliott proposed an extra to "ensure that enough directors were appointed to fill all three seats or other vacancies," Bloomberg told sources familiar with the matter.
Dorsey was one of the co-founders who launched Twitter in 2006 when the idea of texting a tweet using your phone was a nice new idea. Like many services that were introduced in the first decade of this century, Twitter really prevailed after 2008, when smartphones became mainstream and brought everyone the mobile web and the burgeoning app marketplace.
Co-founder Evan Williams took over Dorsey's CEO role in 2008, although Dorsey was still the company's chief executive officer. Williams was replaced by Dick Costolo in 2010. Costolo was CEO of Twitter's IPO in 2013 and also for a long period in 2014 and until 2015, when "Twitter" became a synonym for abuse campaigns against prominent personalities, especially (though not exclusively) women.
"We are sucking into dealing with abuse and trolls on the platform and we have been sucking on them for years," Costolo told colleagues in February 2015, admitting that the "core users" platform was bleeding because of this. Costolo left the company a few months later and paved the way for Dorsey to return as interim CEO before the position was finalized in October. Dorsey has remained at the top since then, as the company is more associated with the unpredictable tirades of current U.S. President Donald Trump.
Dorsey is also CEO of the mobile payment company Square, which he co-founded in 2010 with Jim McKelvey, who now works for the Federal Reserve. However, the division of his time between the two companies has never been good for some investors. Sources told Bloomberg and Reuters that Elliott was open to Dorsey keeping the Twitter job if he quit the Square job instead, but they didn't think he would be willing to do so.