Dorsey temporarily saved his CEO job or pushed Twitter to privatise

Twitter yesterday struck a deal with Silver Lake and hedge fund Elliott Management to ensure that CEO Jack Dorsey will remain as CEO. But Scott Galloway, a professor at New York University, thinks the move could lead to Twitter going on the road to privatization.

Dorsey temporarily saved his CEO job or pushed Twitter to privatise

Twitter announced yesterday that Silver Lake would invest $1billion in the company. With that money, along with the company’s cash, Twitter will buy back $2 billion in stock. Meanwhile, Silver Lake and Elliott Management, which owns about 4 percent of Twitter, will each get a board seat on Twitter. As part of the agreement, Twitter’s board will set up an interim committee to evaluate its leadership structure and CEO succession plans, and will announce the results by the end of the year.

Earlier this month, activist investor Elliott Management called on Twitter CEO Dorsey to step down and nominate four new directors. After the agreement, Dorsey will continue as CEO, meaning the two sides have reconciled. At the same time, Twitter saw the arrangement as a victory in its statement.

But we have reason to believe that this victory may be short-lived. Media published an article today saying that for CEO Dorsey and Twitter, the real drama is just beginning.

What does this arrangement mean, says Mr Galloway, a professor at New York University. One idea is to hire recruiters to find new CEOs; “Silver Lake won’t buy shares in tech companies, it will privatize them,” Galloway wrote on Twitter. This is the first step towards that goal. “

At the same time, the board has set ambitious new targets for Dorsey: grow its user base by at least 20 per cent this year, accelerate revenue growth and win a share of the digital advertising market. Many Wests have been able to do these things and keep their jobs, but it remains to be seen whether the new board wants him to succeed.

Meanwhile, stocks on Monday posted their biggest drop since 2008, raising fears of a global recession. From a product perspective, Twitter may be going well, but the bigger economic trend could be bad for it.

That’s why Elliott’s idea of Twitter is far from over, and the barbarians who used to be at the gate are now in the conference room (joining the board). If the performance of the past five days is a sign, they may not be able to run Twitter for long.