On Monday, Twitter co-CEO Jack Dorsey announced his resignation from the company he co-founded in 2006. The news follows nearly two years of conflict at the social-media giant, which started when Elliott Management, the activist hedge fund that owns a $2 billion stake in Twitter, tried to oust Dorsey and flip the company’s board in its favor.
Unlike his counterpart Mark Zuckerberg, Dorsey had a reputation as a hands-off CEO, seemingly more interested in cultivating his billionaire beatnik aura than evolving his platform, which counts some 400 million users. While Twitter weighed the most consequential decision of Dorsey’s tenure — whether to boot President Donald Trump from the platform — its CEO was on a private island in French Polynesia. He walked five miles to work every day; said bitcoin is good for fighting climate change; took ten days off a year to sit in silence; and considered moving to Africa. Then there was the fact that he didn’t work on Twitter full-time: Since becoming co-CEO in 2015, Dorsey has also served as CEO of Square, the $98 billion payment platform he co-founded in 2010.
Among those cheering Dorsey’s resignation was Pivot co-host Scott Galloway. In 2019, Galloway penned an open letter to Omid Kordestani, who was then the chairman of Twitter’s board of directors, begging him to push Dorsey out. “Mr. Dorsey demonstrates a lack of self-awareness, indifference, and yogababble that have hamstrung stakeholder value,” wrote Galloway, who owned a considerable stake in Twitter at the time. “The real culprit is directors who enable this reckless behavior and render themselves flaccid fiduciaries for shareholders.”
Intelligencer spoke with Galloway about Dorsey’s legacy, a conspiracy theory that might explain his resignation, and why Galloway is bearish on Twitter’s future.
You’ve been keen on getting Dorsey out of the CEO role at Twitter for a while. Why do you think it happened now?
Twitter’s stock is about where it was ten years ago. Basically, I would imagine what happened was that the folks on the board, specifically Elliott Management, said this shit just doesn’t work for us. Do you realize there was a report, someone went on background, saying that Jack was spending about 10 percent of his time on Twitter? Ten percent. So the board probably said enough is enough. This can be your idea or it can be our idea, but you have to go.
But I think it’s more likely that Jack was out a year and half ago. Something happened back then that wasn’t really talked about. Part of the settlement agreement with Elliott was that Twitter would move toward de-staggering its board. A staggered board is a weapon of mass entrenchment. CEOs are very charming people. Typically they establish very strong relationships with the board and Twitter’s board had turned into professional apologists for Jack. If a hedge fund comes in and says we want Jack out, the people who back the CEO circle the wagons and they can delay and obfuscate because, with a staggered board, you can only remove one-third of the board at a time. So it takes at least three years to make any big changes at the board level. With the board de-staggered, Elliott probably could have come in and replaced the entire board and the CEO. So that’s the key moment in all of this, 18 months ago, which shows that corporate governance is important and does work. It’s like democracy. It’s effective and gets to the right point; it’s just slow.
What do you think his legacy will be?
Since he became CEO, what was Twitter’s major innovation? Some might say Twitter Blue, the subscription model, but I think that was dead on arrival. A subscription offering has to be really clear and really compelling. You pay $12.99 a month for Amazon Prime and get a ton of commercial content and 48-hour free delivery. Clear and compelling. You pay $8.99 for unlimited coffee at Panera. Clear and compelling. Twitter Blue is neither of those things.
The only innovation since Jack became CEO is increasing tweets from 140 characters to 280. I can’t imagine that it took more than two or three engineers working 48 hours to make that happen. So people are saying that’s his big innovation, which is like saying the big goal of the George H.W. Bush administration was to increase the speed limit from 55 to 65 in certain rural areas. Wow, that took leadership.
Since he became CEO, Facebook’s stock has quadrupled, Google has quintupled, the New York Times is up 240 percent. Twitter? It’s up 33 percent. If he were a full-time CEO, I wonder if he would have been fired sooner. Him being at Twitter 10 percent of the time almost created an excuse for the company’s lackluster performance. That’s how perverse this whole thing is.
Over the past year, Dorsey seemed to be trying to innovate with things like audio chat and tipping. Should we chalk those innovations up to failures?
What innovation stands out? Nothing moved the needle. Nothing got near the needle. Twitter Spaces? Fleets? It is not easy to point to innovation since Jack took over as CEO or anything resembling innovation at this firm.
How can Twitter innovate now that Dorsey is gone?
There are tens of billions of fallow shareholder value here. It’s simple. They need to start charging people. Overnight, this company could double its market cap by announcing some sort of subscription model that includes neater pricing based on followers. They should call it a subscription, but it should basically be follower-based pricing. Zero to 100,000 followers would be free. 100,000 to 1 million followers would be $100 a month. 1 million to 10 million followers would cost $1,000 a month. More than 10 million would cost $10,000 a month. The reality is that a lot of people would bitch and moan, but if you’re Kara Swisher and you have 1.4 million followers, you’ll pay $1,000 a month. You roll it out with more sophisticated features and algorithms that favor some content over others or whatever it might be. But it would all just be window dressing to charge people based on the number of followers they have. Every corporation in the world now communicates through Twitter. Reuters, with 24 million followers, would pay in a second. You don’t think the Gates Foundation is going to pay to keep its 2.1 million followers? Ninety-nine percent of the people on Twitter would still be free. Sure, a few high-profile celebrities will leave, but you don’t think Elon Musk, who has 65 million followers, would pay $10,000 a month to continue to act like an 8-year-old? What would his hobby at night be after he takes an edible? That’s worth $10,000 a month to him.
Dorsey has obviously heard these sorts of ideas before. Why hasn’t he done it?
The honest answer is that I don’t know. My suspicion is that it would involve a lot of work and he’s got another job. It’s as if he had two families, one he adored and loved and one that was dysfunctional and he spent one weekend a month there. I just don’t think he gave a shit. You are where you spend your attention. So what was Jack Dorsey? Someone who didn’t give a shit about Twitter. He says he loves it, but he wasn’t loving it very much.
What kind of CEO should run Twitter?
I know nothing about Parag Agrawal, but it’s interesting that they chose a tech guy and not a media guy. I can tell you one thing: If he’s spending 100 percent of his work time on Twitter, even if he’s just okay, he will be better than Jack. It’s impossible this won’t be a big improvement.
Here’s the thing: All of this is going to be moot by the end of 2022 because Twitter is going to be acquired. There are few firms that do a worse job of commanding the space they occupy. It’s a firm with global reach, global influence. It’s become one of the most important parts of our global dialogue. There isn’t an organization or individual with a ton of influence and power who doesn’t interact with or use Twitter, and it has a $38 billion market cap. When you have companies like PayPal with a $219 billion market cap, Strike with a $215 billion market cap, or Salesforce with a $280 billion market cap, someone is going to come in and figure out a way to monetize the attention and influence Twitter commands. I wouldn’t even be surprised if private equity firms are now looking at Twitter. Take it private, clean it up, take it back out. It’s too tempting a target.
So you still think Twitter could be part of a super-app?
That’s a really interesting thought. Super-app is the Iron Throne, right? One app becomes the internet. I think there’s a nonzero probability that Jack tries to reunite his sister-wives and makes an acquisition attempt at Twitter to make a junior version of Tencent in the U.S. Whoever pulls together transportation, e-commerce, payments, and social in the U.S. under one umbrella will attract a lot of attention and value. It’s not unthinkable that Jack could make an offer. Maybe there’s a conspiracy theory that he did this as a means of giving him more regulatory maneuvering room?
You held a large stake in Twitter a while ago. Where does your investment stand?
It’s one of the few stocks I trade around. I bought two and a half years ago at $32 and it ran to $45. I wrote that letter and they didn’t respond to me, so I sold at $45 and it went down to $32 again. Then, I bought again and sold at $55. But it’s getting back to the point where I may buy again. If it goes to anything with a three-handle on it, I’m absolutely going to buy. This company is now in play.