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Jack Dorsey lost control of Twitter a long time ago

Reports that an activist investor is agitating for the Twitter CEO's removal follow Dorsey's years-long mea culpa tour.

Jack Dorsey, chief executive officer of Twitter Inc. and Square Inc., speaks with members of the media following an Empowering Entrepreneurs event at Ryerson University in Toronto, Ontario, Canada, on Tuesday, April 2, 2019. Dorsey said he hopes the companies he co-founded won't be tethered to their headquarters in San Francisco. Photographer: Cole Burston/Bloomberg via Getty Images

Jack Dorsey has spent the last two years apologizing for his platform, but what it may come down to for him is money.

Photo: Cole Burston/Bloomberg via Getty Images

The biggest problem with Jack Dorsey's apology tour, which began in 2018, was that it had no end. The Twitter CEO was sorry for the Nazis, sorry for the ways the platform was gamed in the 2016 election, sorry for all the harassment, the disinformation, the bots. Sorry that threading tweets didn't always work. In interviews for the tour, he often said he was sorry for what the like button incentivized, for the bad behavior the site seemed to subtly encourage.

It was obvious he was most sorry that there were no easy answers. Despite some successful design changes over the last year — which emphasized conversation and de-emphasized things like follower count — and some promising safety changes, Twitter remains an incredibly difficult product to moderate and monetize. The Nazis remain. The bots remain. Profits remain small. Dorsey remains sorry.

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When news broke on Friday that conservative activist investor Paul Singer and his firm Elliott Management are trying to force Dorsey out of the company, it felt like a potentially natural end to the tour. A final thing Dorsey could be sorry for: losing control of the company he co-founded and had arguably lost control of long ago.

And after all the apologizing and pledging to make Twitter a better healthier place, what it may end up all coming to for Dorsey is money.

It's unclear what Singer wants in the long-term for the company, though one can assume profits are top of mind. The management fund was not immediately available for comment. Sources told Bloomberg and CNBC that the investor, which has taken a large stake in the company, is focusing on jockeying for enough board seats to vote out Dorsey, who has faced criticism for spreading himself too thin running two companies. If it happens, it'll emphasize just how little control Dorsey actually had over Twitter, which he co-founded in 2006. Unlike Mark Zuckerberg's situation at Facebook, the stock structure at Twitter is such that Dorsey never has had full voting control of the company.

Twitter isn't and probably never will be a tech giant that makes money like Facebook. (Anyone who calls them rivals is confused.) But as observers have occasionally noted over the last few years, it's endured problems like abuse and attacks from politicians and managed to become a profitable company. And if activist investors are looking for anything, it's probably for a chief executive who can turn what's been a stumbling trend upward into something a little more stable.

Take the last two quarters. In October, the company's stock plummeted following weaker than expected earnings caused by slow sales and advertising bugs. In January, the company reported strong growth in monetizable users, but its earnings missed analyst expectations. Yes, profits! But always with qualifiers.

The stock was up more than 7% in after-hours trading on Friday after the news that Singer wants to remove Dorsey.

Twitter's loudest critics have traditionally also been some of its most devoted users: people who love and rely on the platform for work, for information, for friendship. These are the folks Dorsey has been attempting to appease on his tour, the people who just want to use the site without being harassed, without encountering harmful lies, without being erroneously blocked.

Whether those desires are on Singer's agenda remains to be seen. Platform abuse may be the furthest thing from Singer's concern. Singer, who has taken an activist role in many big companies, is a devoted supporter of President Trump (arguably Twitter's most devoted fan, or at least its biggest beneficiary).

But the two problems Twitter faces — platform abuse and slow growth — are not completely unrelated. When advertising depends on the health and widespread adoption of the platform, the two issues are tied up together.

Another vocal shareholder who's pushed for Dorsey's removal, Scott Galloway, made this point in December in an open letter to the company's board after Dorsey announced he would relocate to Africa for six months. "Twitter has, on every metric, underperformed peers for several years," he wrote, pinning the blame squarely on Dorsey. "Fake accounts, GRU-sponsored trolls, algorithms that promote conspiracies and junk science, and inconsistent application of your terms of service have resulted in a firm that not only underperforms, but is dangerous."

Galloway argues that by getting rid of Dorsey, Twitter could fix some of the very serious problems plaguing the health of the platform and also earn more money for its shareholders. He sees Dorsey as the roadblock to innovation that might modernize the platform.

"It's not Mr. Dorsey's plans to move to Africa that constrain stakeholder value, but his plans to move back," he wrote. "Mr. Dorsey demonstrates a lack of self-awareness, indifference, and yogababble that have hamstrung stakeholder value."

That yogababble has infuriated investors and Twitter users alike. But it doesn't appear to be an attempt to wriggle out of anything; it's who Dorsey is. He's idiosyncratic. His quirks are well known — the shaggy facial hair, the silent retreats, the all-black outfits and hats, the insistence on walking to work. He's been criticized for it all.

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Over the course of his apology tour, the "anti-CEO," as he's been called despite being literally at the helm of two massive companies simultaneously, has appeared genuinely pained. Many observers would not have been surprised if Dorsey had quit in the past few years. When he announced his temporary Africa relocation, it felt like a possible soft exit. Now, his exit may come against his will.

And much as he has pledged to fix Twitter, it's not hard to imagine leaving coming as some relief.

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