Jack Dorsey is stepping away from Twitter—and its board.
Unlike many founders, who exit the CEO job only to hang on as executive chairman or a director for years, Dorsey is leaving both roles. He wrote Monday that after handing the reins to Twitter Chief Technology Officer Parag Agrawal, he plans to serve on the board through “May-ish” to help with the transition. The company also named director Bret Taylor, who is Salesforce’s president, as board chair.
As Dorsey wrote in a memo to employees (shared, of course, via a tweet), “I believe it’s really important to give Parag the space he needs to lead.” The billionaire, who is on the Forbes 400 list with an estimated $11.9 billion fortune, added that he believes “it’s critical a company can stand on its own, free of its founder’s influence or direction,” noting that he’s “worked hard to ensure this company can break away from its founding and founders.”
To be sure, Dorsey has long had a peculiar approach to leading Twitter. He co-founded the social media platform in 2006 and led it briefly in its early days before being pushed out; he rejoined as executive chairman in 2011 and returned as CEO in 2015. In the interim, he launched Square and then took the highly unusual step of being CEO of both companies, an arrangement that left Dorsey running Twitter part-time, sparking heavy fire from some investors.
Since then, he’s become known for having an extremely hands-off management style, with eccentricities such as taking silent retreats and ice baths and suggesting he’d move to Africa amid the heated 2020 election cycle, which he later called off.
Governance experts say a swift board departure after a CEO exit by a founder is unusual, especially if they’re as enigmatic as Dorsey. But they also say it’s exactly the right move for founders who step down, even though some questioned why it took Dorsey so long to make it.
“He’s dead on,” says Charles Elson, a professor of corporate governance at the University of Delaware. “As long as they retain a seat on the board, and especially if it’s a leadership role [on the board], they become a de facto CEO. It gives the underling very little running room. It’s always a mistake.”
Twitter’s stock immediately rallied on the news before falling off later in the day; the company also named director Bret Taylor, who is Salesforce’s president, as board chair.
Yet Noam Wasserman, dean of Yeshiva University’s business school and author of The Founder’s Dilemmas who says Dorsey’s board departure follows advice he’d give, wondered “why is he finally getting religion now? Why hasn’t he done this [already]?”
In his memo, Dorsey said his trust and confidence in Agrawal, Taylor and employees drove the timing. But whether other factors may be influencing his departure from the board at the end of his term is unclear.
Perhaps Dorsey, a bitcoin evangelist, wants to zero in on the opportunities at his fintech company Square. He could be drawing from the experience of being Twitter’s executive chairman while Dick Costolo was CEO, and what might happen when a CEO is working amid a founder’s shadow.
And some have suggested a clean break may be what’s desired by investors. In early 2020, activist investor Elliott Management was pressuring Twitter to make changes, concerned about Dorsey leading two publicly traded companies at the same time. Twitter’s stock performance has trailed other social media platforms.
The company reached an agreement with Elliott and the private equity firm Silver Lake to leave Dorsey in place, but formed a board committee that would review governance practices and succession plans, as well as add three directors to its board, including Silver Lake’s Egon Durban and Elliott’s Jesse Cohn (who left earlier this year). In late 2020, the committee decided to keep management in place, but proposed changing Twitter’s bylaws so directors served one- rather than three-year terms.
In a Twitter Spaces conversation Monday night, author and NYU business professor Scott Galloway, a Twitter investor who wrote a sharply critical open letter to Twitter’s board in late 2019 titled “Enough Already,” speculated the board may have wanted Dorsey to move on, calling the company under Dorsey’s leadership an “indulgent display of corporate governance.”
A Twitter spokeswoman, asked about Galloway’s comment, pointed to Dorsey’s memo, the company’s press release and a tweet from Dorsey’s successor, Parag Agrawal. In his memo, Dorsey also wrote that “this was my decision and I own it,” saying “there aren’t many founders that choose their companies over their own ego.”
Whatever the reasons behind his decision to leave the board next year, governance experts say the move is right. “It’s a wise move, regardless of inspiration,” Elson says.
Many founders who remain on the board after stepping down as CEO, such as Lululemon’s Chip Wilson or fashion legend Ralph Lauren, have disagreed with their successors. Experts point to other examples such as Nike founder Phil Knight’s short-lived passing of the torch to outsider Bill Perez, who was yanked from the job after just over a year while Knight remained chairman.
“Founders are very attached to their original vision, especially when in the early days they had success. That makes them more ingrained,” Wasserman says, noting research shows that particularly in early stage companies, founders remain on the board about 70 percent of the time.
David Larcker, director of the Corporate Governance Research Initiative at Stanford University’s Graduate School of Business, says “the specificity was refreshing” in Dorsey’s memo. What he’s basically saying, Larcker says, is “I’m not going to be looking over your shoulder and second guessing anything. Here’s kind of a social contract for how it’s going to play out, so there’s no uncertainty.”