Twitter is in the market for a new chief executive after ousting Dick Costolo. Investors lost faith in his ability to grow revenue.
The Wall Street Journal story by Yoree Koh had these details about the company’s decision:
Dick Costolo is stepping down as Twitter Inc.’s chief executive after five years, as Wall Street began losing faith in him and the social-media company’s future growth.
The move puts a spotlight back on co-founder and Chairman Jack Dorsey, who will serve as interim CEO while he remains chief executive of payments startup Square Inc. Mr. Dorsey was Twitter’s first CEO from May 2007 to October 2008.
Twitter said it would be looking both inside and outside the company for a new chief.
Notably, Mr. Dorsey isn’t part of the search committee, which will include board members Peter Currie, Peter Fentonand co-founder Evan Williams.
Slate’s Alison Griswold said the move shouldn’t be a surprise since investors have been calling for his head:
Investors might beg to differ. They’ve been calling for Costolo’s resignation for several months now, and have criticized him for tepid leadership and an apparent lack of vision. In November, the Wall Street Journal ran a brutal profile of Costolo that described him as “a reactive thinker who bounces from one idea to the next.” During his tenure, Twitter has bled top talent. Over the last year or so, the list of departures included Vice President of Product Michael Sippey, Creative Director Doug Bowman, Senior Vice President of Engineering Chris Fry, Chief Operating Officer Ali Rowghani, Vice President of Engineering Jeremy Gordon, and Head of News Vivian Schiller. Still, the announcement likely caught some off-guard. On Wednesday, Twitter co-founder Biz Stone dismissed rumors that Costolo would step down as “crazy.”
Twitter has tried to work through its identity crisis and management churn. In April, the company released a major homepage redesign intended to open its platform to the masses. Costolo has also adamantly maintained that certain metrics Wall Street traditionally uses to evaluate the success of social media companies—namely monthly active users—are not fair when it comes to Twitter, as tweets can reach far beyond people who have active accounts. In Costolo’s view, Twitter isn’t Facebook, and shouldn’t be measured like it either.
Dorsey told investors that he intends to “ensure the continuation of all the good work Dick and his team have underway” and that he doesn’t “foresee any changes in strategy or direction” for Twitter. In the chief executive search, Dorsey said the company will seek “someone who really uses and loves the product in every single way.”
Kurt Wagner wrote for Re/code that despite the move, the company didn’t have any candidates on tap to take over:
The company has not yet named a permanent CEO replacement. Dorsey said that the search process “has not begun yet.” Board members Fenton, Peter Currie, and co-founder Ev Williams will lead the search committee, he added, and they will consider both internal and external candidates.
Dorsey will return to the helm of the company he ran in its earliest days. He will continue to work with Square. According to the filing outlining Dorsey’s employment: “Prior to your start date on July 1, 2015, we will develop and agree on a Conflict of Interest Policy as it pertains to your work with Square, Inc.” Dorsey said on the conference call that he would “split time” between the two companies for the immediate future.
Costolo made the announcement to company employees at Tea Time on Thursday, Twitter’s weekly all-hands meeting. Sources within the company say the meeting time was initially scheduled for 10 a.m., then bumped to 1 p.m., or after the markets closed.
Dick spoke to the staff followed by Twitter board member Peter Fenton and new CEO Dorsey. Very few members of Twitter’s top brass spoke during the meeting, these people said.
CNN Money pointed out in a story by Hope King and Sara Ashley O’Brien that the company has tried to innovate under Costolo:
Dorsey launched Twitter as a micro-blogging platform in 2006, as social media networks were gaining massive popularity. It quickly took off as an easy and efficient tool to chat and share information online, especially among the tech and media communities, but failed to gain traction among new users. People said they just didn’t “get it,” and found Twitter difficult to use.
The company, under Costolo, has tried to persuade investors and analysts that innovation was coming, but those efforts didn’t come quickly enough and weren’t big enough to make a difference.
Most recently, Twitter redesigned its log-in page, created automatic timelines so new users would have something to browse when they first created an account, and toyed with different kinds of timelines for existing users that show tweets from people they weren’t already following.
Twitter’s first-quarter performance was the latest illustration of stagnation and slowing user growth.
Sales missed forecasts even though earnings were better than expected and user growth was in line with Wall Street’s forecast.
Twitter also announced it now has 302 million active monthly users, up 18% year-over-year — the slowest growth ever.
With so many options for getting information, social media companies need to continue to innovate to attract users. Twitter is missing projections on some fronts, but doing better in other areas. And it’s betting that a new vision will help craft the way forward.
