How Elon Musk and Jack Dorsey aligned behind Twitter deal

At a Twitter staff retreat in early 2020, Jack Dorsey, the company’s co-founder and then chief executive, invited a star guest to speak to his employees: Elon Musk.

The Tesla chief executive complained to the audience via video about the proliferation of spam bots on the platform — the same issue that he is now wielding to stall his $44bn offer for the social media company.

Beyond Musk’s continued obsession with the fake accounts, the appearance was also testimony to the close relationship between Dorsey and Musk, a billionaire “bromance” that has already dramatically shaken up the future of Twitter.

The pair’s alliance has fuelled speculation about whether Dorsey might play a key role in the company if a deal closes. But it has also angered many Twitter staffers who regard it as a betrayal of the social network, which is facing upheaval in the form of hiring freezes, cost-cutting measures and low morale and whose employees have been repeatedly mocked by Musk.

Regulatory filings earlier this week revealed that after Musk was first invited to join Twitter’s board in early April as a major shareholder, Dorsey “shared his personal view that Twitter would be better able to focus on execution as a private company”. Dorsey quit as Twitter’s chief executive last November but still remains on the board, whose members also include Salesforce chief executive Bret Taylor, tech entrepreneur Martha Lane Fox, and former Google chief financial officer Patrick Pichette.

According to people close to the situation, the advice stemmed in part from growing tensions between Dorsey and fellow Twitter board members over how the company should be run and issues including content moderation.

In the past, he had clashed in particular with activist fund Elliott Management, which previously held a seat on Twitter’s board. Dorsey saw the fund as too commercial and focused on the short term, according to several people. Some board members, meanwhile, grew increasingly frustrated by what they perceived as Dorsey’s lack of engagement.

Just a week after Dorsey said Twitter would be better off if taken private, Musk announced his plans to do just that. Upon the board agreeing to the takeover, Dorsey tweeted: “Elon is the singular solution I trust. I trust his mission to extend the light of consciousness.”

In principle, I don’t believe anyone should own or run Twitter. It wants to be a public good at a protocol level, not a company. Solving for the problem of it being a company however, Elon is the singular solution I trust. I trust his mission to extend the light of consciousness.

— jack (@jack) April 26, 2022

“Jack’s philosophy was to negotiate a peace settlement with Elliott and then to build up to taking the company private, so those people would never be able to have their incentives impact a product as important to society again,” said a person close to him.

Dorsey maintained a professional relationship with board members but felt personally challenged by Elliott, which took a board seat at Twitter after investing in the company in early 2020, according to several people familiar with the meetings.

Elliott was concerned at the time that Dorsey was distracted by his second chief executive role at payments company Square and demanded a faster pace of product innovation. Dorsey was embracing notions such as decentralisation and blockchain technology and rejected Elliott as too capitalistic.

Throughout the deal process, Musk has taken public swipes at the board over some of its content moderation decisions, as well as the number of fake accounts on the site. Dorsey has joined him in criticising Twitter’s board and tweeted in April that it had “consistently been the dysfunction of the company”.

These comments can be attributed to Dorsey’s growing disdain for Wall Street and US politics, which dates back several years, according to people close to him.

Dorsey became disenchanted following multiple congressional hearings in which he was called to testify about content moderation issues and began to feel the company was being used as a political pawn, one person said.

At the same time, the board put Dorsey under more pressure to discuss and address big content moderation issues — such as the banning of former US president Donald Trump — which he was reluctant to do, people familiar with the matter said.

After the board called on Dorsey to devote his efforts full-time to leading Twitter in the wake of the January 6 assault on the US Capitol last year, he declined and eventually resigned from his position as chief executive, two people said.

These tensions did not manifest into rows or raised voices. According to those with knowledge of the situation, Dorsey remained unemotional and passive during board meetings, which irritated the more aggressive, highly engaged personalities in the room — although he has grown more brusque with the board in recent negotiations over the deal.

Twitter declined to comment. Square, which is now known as Block, and Elliott Management did not immediately respond to requests for comment.

While Dorsey recently said he would never return to the company as chief executive, he has discussed with Musk whether he may continue to “hold equity of the surviving corporation or one or more of its affiliates following the merger”, according to Twitter’s regulatory filings.

Outside of their shared interest in Twitter, the two entrepreneurs have found common ground on topics such as cryptocurrencies, open source technology and free speech. Both have achieved success as Silicon Valley founders who have run multiple companies at the same time.

“Jack was obviously ‘team Elon’ from day one,” said Stefano Bonini, a corporate governance expert at Stevens Institute of Technology.

The developments have unsettled many staff inside Twitter, according to three employees and former executives. The filings revealed that the pair were closer than employees had originally realised, one person said.

Some staffers feel that Dorsey, once a guru-like figure revered internally, is rewriting the history of the company by publicly criticising decisions on content moderation that happened while he was chief executive, and not backing the new chief executive, Parag Agrawal, who he played a large role in hiring.

Many are upset that he did not defend Twitter’s policy and legal chief Vijaya Gadde when, just days after the deal was agreed, Musk started to post criticism publicly of her moderation decisions, including blocking a news article about US president Joe Biden’s son Hunter. This prompted Gadde to receive a barrage of harassment and racist insults.

Nevertheless, some question the sincerity of the relationship. “Jack genuinely believes that taking the company private is the right thing. And if there’s an avenue to do it, and quick, that it’s worth it,” said one person close to him. “[But] these relationships are tentative. They’re built on men protecting their legacies.”

Source: Financial Times