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An activist hedge fund has considered pushing out Twitter CEO Jack Dorsey.
- Hedge fund Elliott Management Corp., which has a $1 billion stake in Twitter, will consider ousting CEO and co-founder Jack Dorsey, Bloomberg reported.
- Dorsey increased Twitter's revenue and users, but sources say his leadership style is too slow compared to competitors.
- Business Insider analyzed Dorsey's comments on leadership, and found his management style consists of delegating, doing away with distractions, and driving the company on an over-arching mission.
- Visit BI Prime for more stories.
Despite increasing Twitter's revenue and users in the last two years, CEO Jack Dorsey's job is now in jeopardy.
Elliott Management Corp., an activist investor with a $1 billion stake in Twitter, has mulled the idea of removing Dorsey from the helm for the second time. Dorsey took over as CEO of Twitter in 2015 after Evan Williams, the company's co-founder, ousted Dorsey as chief executive in 2008.
Bloomberg reported that Elliott thinks Dorsey spends too little time focusing on Twitter by splitting his time running Square, where he is also CEO.
Dorsey's well-reported management style consists of delegating, doing away with distractions, and driving the company on an over-arching mission. His leadership can be viewed as both successful and not: Dorsey helped increased Twitter's revenue to $1 billion, yet has failed to curb Twitter's rampant harassment and misinformation problems.
Twitter might make a fraction of money Facebook makes, but it outperforms other social media platforms like Snap, which has never been profitable.
Investors at Elliott think Dorsey's management strategies aren't effective to running Twitter. Here's an in-depth look at what they are.
"True invention doesn't happen in a single person's head."
In interviews, Dorsey defines his leadership style by delegating decisions to other teams, running on "missions" rather than quarterly goals, and managing time evenly to run both Square and Twitter. Dorsey sees his style as beneficial to Twitter's overall impact; Elliott sees the same traits as hindering the company's ability to grow, sources close to the hedge fund tell Bloomberg.
Elliott sees Dorsey's lack of control over Twitter as a reason for why the company makes decisions slower than its competitors. The decision to double Twitter's character limit took "years," Bloomberg reported, and the company has struggled for years to ward off online harassment.
Twitter reported 145 million monthly active users in late 2019, up 17% year-over-year. Facebook has billions of users, but reported just a 2.5% year-over-year growth in North America.
Unlike Steve Jobs and Jeff Bezos, Dorsey deliberately refrains from micromanagement.
Dorsey said he takes a hands-off approach to management, believing that a leader does not need to be involved with every decision. For the company to remain sustainable in the long term, Dorsey reportedly encourages his team to operate meetings without him.
"If I have to make a decision, I believe there is something wrong organizationally and it's on me to fix it," Dorsey told Bloomberg in 2019, "and what that does is decentralize decision-making, so we don't have dependency on one person, including myself."
Dorsey's decentralized method extends beyond decision-making. Rather than closing himself off in a corner office, Dorsey works side-by-side with engineers, and meets one-on-one with employees at nearby coffee shops, according to Barron's tech reporter Jon Swartz. Last year, Dorsey embarked on a global tour of every Twitter office, with the purpose of introducing himself to every employee.
"I just don't think that's scalable, I don't think that's healthy, and I don't think it's going to lead to true invention," Dorsey said of micromanaging at a Fintech Australia breakfast in 2019. "True invention doesn't happen in a single person's head."
Dorsey runs his business centered around a mission, rather than goals.
Dorsey said in 2019 he'd pass on a "superstar" hire for one that was devoted to Twitter or Square's mission.
At the Fintech Australia breakfast, the CEO said he would ask job applicants why they wanted to work for Square. If someone mentioned a personal reason, like a family member who owned a small business but couldn't take credit cards, Dorsey would hand them a job.
Dorsey extends his "conviction-focused" theory beyond hiring. He told Bloomberg that it's "rare" to do anything important in a quarter; rather, real change takes three to five years.
"If we get too concrete around a particular vision or direction, a new technology might come along that completely makes what we thought was right irrelevant," Dorsey said.
Some say Dorsey's dual-role as CEO of two companies can distract him from the day-to-day of running a company.
Since Dorsey splits his time running Square and Twitter, he capitalizes on every spare moment. The dual-CEO holds "highly regimented" meetings and sticks to a specific agenda, Swartz reported. He holds weekly check-ins and meetings at the same time on the same day each week.
And he even situated his two companies across the same San Francisco street, so that his commute to-and-from each headquarters is just 2 minutes by foot.
"I benefit from number one: a lot of structure, [and] number two: realizing it's not about the amount of time I spend at one thing but how I spend the time and what we're focused on," Dorsey said at The New York Times DealBook conference in 2017.
Sources at Elliot told Bloomberg that they felt his dual-role kept the focus away from Twitter. Former employees told Business Insider in 2017 that while Dorsey can get closely involved with projects and come up with big ideas, he struggles with everything else.
"He's comfortable high in the clouds and deep in the weeds," an ex-employee said. "It's the in-between that gets him tripped up."