On Thursday, after Jack Dorsey’s first public comments since he was targeted by activist investor Elliott Management,
I suggested that the real drama was just beginning. On some level, for reasons we’ll get into, this may be true. But on another level it was dead wrong. The fight some of us expected between Elliott and Twitter did not materialize. Instead, Twitter folded like a card table.
Twitter Inc. will appoint three new directors to its board and create a committee to review its leadership and governance, as part of an agreement with activist investor Elliott Management Corp. and private equity firm Silver Lake. The pact leaves Chief Executive Officer Jack Dorsey in place.
Silver Lake will also make a $1 billion investment in the social media company, which Twitter plans to use to fund part of its first ever share buyback, set at $2 billion.
The lone, notable concession there is that Dorsey will remain CEO … for now. Twitter now has two new independent board members — Elliott’s Jesse Cohn, who had been leading the company’s charge against Twitter, and Egon Durban, the co-CEO of Silver Lake. A third new board member is coming later.
Among the new board members’ tasks will be the formation of a committee “that will evaluate a succession plan with Dorsey.”
Twitter presented this news as a victory.
“Twitter serves the public conversation, and our purpose has never been more important. Silver Lake’s investment in Twitter is a strong vote of confidence in our work and our path forward,” Dorsey said in the statement.
“We welcome the support of Egon and Jesse, and look forward to their positive contributions as we continue to build a service that delivers for customers, and drives value for stakeholders,” he added.
To the extent that you consider Dorsey’s continuation critical to Twitter’s future, it is a victory. But there’s reason to believe that the victory could be short-lived.
Scott Galloway, a New York University professor, podcaster, and Twitter shareholder, had called for Dorsey’s ouster last year. In a (sadly broken) Twitter thread, he laid out his own view of what’s likely to happen.
Noting the lightning speed at which Twitter capitulated — giving up three board seats within five business days of the first reports that Elliott had targeted the company — Galloway speculated that
the new investors would press their advantage. What might that mean? Hiring a recruiter to find a new CEO, goes one thought.
Taking the company off the public market, goes another. “Silver Lake does not buy shares in tech firms, it takes them private,” Galloway tweeted. “This was first step toward that end.”
In the meantime, Dorsey’s board has given him aggressive new goals: growing its user base by at least 20 percent this year, accelerating revenue growth, and gaining market share as a digital advertiser.
Perhaps Dorsey will hit all those numbers and save his job. Twitter has, to its credit, been absolutely indispensable as a source of reliable information during the spread of COVID-19. Twitter shines when it’s amplifying high-quality news during times of crisis, and the past couple weeks it has largely lived up to its potential.
At the same time, the stock market suffered its biggest drop on Monday since 2008, prompting fears of a global recession. (Italy, the world’s eighth-largest economy,
entered a mandatory lockdown for nearly all citizens.) Twitter may have the wind at its back from a product perspective, but the larger economic trends could be working against it.
And that’s why I think that, on balance, Elliott’s Twitter gambit is far from over. The barbarians once at the gate are now in the boardroom. And if the past five days are any indication, it may not be long before they’re running it.
