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Photo Illustration: Sarah Grillo/Axios; Photo: James Brickwood/Fairfax Media via Getty Images

Activist investor Elliott Management has acquired nearly a 5% stake in Twitter, and believes the key to unlocking value is to replace Jack Dorsey as CEO. Bloomberg first reported the news, which Axios has since confirmed with multiple sources.

Why it matters: Elliott has become the top agitator in tech, and often gets what it wants. In this case, it's striking straight at the cult of the founder.

Elliott's complaint appears to be twofold:

  1. Dorsey only can devote part of his attention to Twitter, given that he also runs payments company Square (in which he has a larger financial interest). And this is only exacerbated by Dorsey's plans to spend much of 2020 in Africa, to better understand the continent's fintech revolution (i.e., something that is much more pertinent to Square than to Twitter).
  2. Twitter under Dorsey has experienced consistent executive turnover and has repeatedly dropped the product innovation ball (particularly in mothballing Vine, which was TikTok before TikTok).

The top counterargument is that Twitter's financial performance under Dorsey has steadily improved, even if not to levels of Elliott's liking.

  • Revenue topped $3 billion for the first time in 2019, and the company has been profitable for each of the past two years.
  • The stock price hasn't soared with some other tech bulls, but it's been consistently in the $30's after spending most of 2016 and 2017 in the teens.

This could become very personal, very fast.

  • Dorsey is an unusual manager, even beyond his double-sided business cards. He's particularly pensive and eager to delegate. As one former Twitter exec told me, "Jack becoming full-time doesn't help anything. ... He'd be the same if he were physically there 12 hours per day or for just a few hours each day."
  • From what I gather, Elliott might sort of agree. Even if Dorsey were to completely give up Square, or at least his Africa plans, Elliott likely would still want a full-blown Twitter CEO search where Dorsey would be a candidate, not a presumptive favorite

In terms of timing, it's unclear how long Elliott has been speaking with Twitter's board. But, for some context, its eBay campaign only lasted five weeks from beginning to end.

  • A forcing mechanism would be Twitter's annual shareholder meeting. There's no official date set yet, but last year's took place in late May.

The bottom line: We can't know what canning Dorsey would mean for Twitter without knowing his replacement.

  • But it could have ripple effects in Silicon Valley, where CEOs have been under increasing pressure to abandon dual-class stock structures. Dorsey isn't the typical founding CEO, given Twitter's tortured leadership history, but he would be held up as a poster child for eschewing traditional corporate governance.

Note: I was scheduled to interview Dorsey on stage at SXSW later this month, but Twitter yesterday canceled all conference appearances due to coronavirus.

Go deeper

6 hours ago - Health

FDA advisory panel recommends Pfizer boosters for those 65 and older

A healthcare worker prepares a dose of the Pfizer-BioNTech Covid-19 vaccine at the Key Biscayne Community Center on Aug. 24, 2021. Photo: Eva Marie Uzcategui/Bloomberg via Getty Images

A key Food and Drug Administration advisory panel on Friday overwhelmingly voted against recommending Pfizer vaccine booster shots for younger Americans, but unanimously recommended approving the third shots for individuals 65 and older, as well as those at high-risk of severe COVID-19.

Why it matters: While the votes are non-binding, and the FDA must still make a final decision, Friday's move pours cold water on the Biden administration's plan to begin administering boosters to most individuals who received the Pfizer vaccine later this month.

6 hours ago - World

France recalls ambassadors from U.S. and Australia over submarine deal

Secretary of State Antony Blinken (L), French Foreign Minister Jean-Yves Le Drian (C), and French ambassador to the U.S. Philippe Etienne. Photo: Nicholas Kamm/AFP via Getty Images

France has taken the extraordinary step of recalling its ambassadors to the U.S. and Australia after both countries blindsided their French allies with a new military pact and submarine contract, the French Foreign Ministry announced on Friday.

The backstory: While sealing an agreement with the U.S. and U.K. to acquire nuclear submarines, Australia ripped up an existing $90 billion submarine deal with France. That led senior French officials to accuse the U.S. of a "stab in the back."

Updated 6 hours ago - World

In reversal, Pentagon now says drone strike killed 10 Afghan civilians

Caskets for the dead are carried towards the gravesite as relatives and friends attend a mass funeral for members of a family that is said to have been killed in a U.S. drone airstrike, in Kabul on Aug. 30. Photo: Marcus Yam/Los Angeles Times via Getty Images

A U.S. drone strike launched on Aug. 29 killed 10 civilians in Afghanistan, including seven children, rather than the Islamic State extremists the Biden administration claimed it targeted, the Pentagon said Friday.

Why it matters: U.S. Central Command said at the time that officials "know" the drone strike "disrupted an imminent ISIS-K threat" to Kabul's airport, and that they were "confident we successfully hit the target."