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There were a lot of problems the last time Jack Dorsey was CEO of Twitter

Jun 12, 2015, 03:57 IST

Jack Dorsey, Twitter's new interim CEO, has been CEO of the company before.

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The last time around, he got pushed out and he later said that felt like a "punch in the stomach." It's been nearly a decade since Dorsey's ousting at Twitter, but here's what happened back then.

Dorsey was the person who actually came up with the idea for a micro-blogging site like Twitter. He sketched it out on a piece of paper in the early 2000s, called it Stat.us, then shelved it to pursue a career as an engineer.

He joined Evan William and Biz Stone's podcasting startup Odeo, but when it began to go sideways, the startup looked for other ideas to pivot into. Dorsey and another engineer named Noah Glass (who was later pushed out of the company) presented the idea for Twitter and began working on it with Williams' blessing.

When Twitter finally spun out of Odeo in 2007, Dorsey was named CEO. He was only 30 years old then.

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But under Dorsey, Twitter wasn't the most stable place. It gained significant traction but both the product and the team began to crumble.

"Jack is crazy-smart and a product visionary and all that," one person familiar with Jack's early work there told Business Insider in 2013. "But Jack wasn't ready to be CEO at that time."

Dorsey struggled with the transition from engineer to boss. He wasn't leading teams well, and employees weren't happy working for him. He wasn't hiring new people fast enough.

The site constantly crashed, making the Twitter "fail whale," which appeared when the site went down, a more prominent mascot than Twitter's blue birds. In 2007, the year Dorsey became CEO, Twitter's total downtime was six days. The constant crashing was a source of stress.

"Jack's role was that of a founder and a heavy influencer at the board level," said the person who worked there. "But he is not operational...he's not broadly effective."

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"Jack is very smart, but he is not a leader," said another. "He can inspire investors more than employees."

Dorsey's interest in and facility with the financial side of the business left much to be desired. Dorsey, according to Nick Bilton's book Hatching Twitter, made mathematical errors while keeping track of Twitter's expenses. He set up partnerships with texting companies but SMS fees were so high, Twitter was spending nearly 6-figures per month.

Dorsey had also not yet focused entirely on Twitter: He wanted to be a fashion designer, and he'd often leave work to take night classes. He also left early for art and yoga classes. His extracurriculars eventually became such a distraction, Bilton reported, that Williams eventually sat down with Dorsey and said, "You can either be a dressmaker or the CEO of Twitter. But you can't be both."

Sometime during 2008, Odeo founder and financial backer Evan Williams got fed up. He decided that he should be - and would be - the CEO of Twitter.

Williams had more money than Dorsey and three or four times as much Twitter stock. As Twitter's majority shareholder, when Williams made a decision, it was final. The Twitter board agreed that Dorsey wasn't working out, and they backed the decision to remove Dorsey.

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When Williams came after Dorsey's position in the fall of 2008, it was an ugly "violent exchange," a source told Business Insider.

"Jack wanted to be CEO, but it wasn't really the right call," this person said. "It was very clear Ev wanted to be CEO and it was pretty clear to people in the company that Ev was a better choice."

Unlike Dorsey, Williams was a proven entrepreneur. "Ev had more credibility than Jack," says the source. "He wanted the job. He got the job. That's why their relationship is a little touchy...He made it happen."

Publicly, Williams lay Dorsey's firing at the board's feet. And, ultimately, the board may have done the dirty work. Two of its members, Bijan Sabet and Fred Wilson, took Dorsey out to breakfast and delivered the blow, Bilton reports. They told Dorsey he'd receive $200,000 severance and become a silent chairman; Williams would be Twitter's new CEO.

On October 16 2008, the news was made public. "While the board of directors and the company have nothing but praise for where Jack has taken us, we also agree that the best way forward is for Jack to step into the role Chairman, and for me to become CEO," Williams wrote then.

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Dorsey knew who had sacked him. For the next four years, Dorsey and Williams barely talked. Dorsey nearly joined Twitter's greatest competitor, Facebook, out of spite. Dorsey later told Vanity Fair's David Kirkpatrick his ousting felt like "being punched in the stomach."

"Twitter held all my desires in the world," he said.

Dorsey learned a common startup lesson the hard way: Coming up with an idea doesn't mean you own the business.

"I let myself be in a weird position because it always felt like [Evan Williams's] company," Dorsey later said. "He funded it. He was the chairman. And I was this new guy who was a programmer, who had a good idea. I would not be strong in my convictions, basically, because he was the older, wiser one."

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One year later, in 2009, Dorsey founded another company, Square, with a new group of investors. It was a startup no one would be able to rip away from him, and it's grown to become a multi-billion-dollar company.

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