Outspoken Twitter CEO Dick Costolo Step Down amid stalled growth troll troubles
The outspoken Twitter chief executive Dick Costolo will step down in July, the company’s top brass said on Thursday, even as he insisted the sudden departure – which arrived after years of stalled user growth and amid a storm of controversy – was his own decision.
An immediate search for Costolo’s successor was barely underway, but Jack Dorsey, the company’s co-founder, chairman of the board and first CEO, will take over as interim chief executive when Costolo leaves the top post on July 1. Dorsey will continue to run credit card payment concern Square during a major transition that sent immediate shockwaves across Silicon Valley.
Costolo, who will remain on Twitter’s board of directors, repeatedly characterised the departure as his call, in a briefing with shareholders on Thursday.
“I initiated conversations with some members of the board at the end of last year about CEO succession as I contemplated what was next for me,” said Costolo. “And ultimately following discussions with the full board and at February meeting and then at our meeting last week, we agree that now is the right time to begin this transition.”
Dorsey echoed the sentiment. “One thing I do want to make clear”, he told investors, “is that this transition is not the result of anything more than Dick deciding to move on from his role as CEO.”
Twitter has been in the middle of major controversies recently, among them widespread piracy of the Mayweather v Pacquiao title fight using the company’s new streaming video platform, Periscope, and sustained issues related to trolling and bullying on the service, which critics say it has been slow to address.
Costolo seemed to agree with the latter charge in memos obtained by tech site The Verge in February. “We suck at dealing with abuse and trolls on the platform and we’ve sucked at it for years,” he wrote. “It’s no secret and the rest of the world talks about it every day. We lose core user after core user by not addressing simple trolling issues that they face every day.”
Costolo said the issues were “nobody’s fault but mine”. “I am tremendously proud of the Twitter team and all that the team has accomplished together during my six years with the company,” Costolo said in a press release on Friday.
“There is no one better than Jack Dorsey to lead Twitter during this transition. He has a profound understanding of the product and Twitter’s mission in the world as well as a great relationship with Twitter’s leadership team.”
Dorsey praised Costolo’s “dedication and vision”. Peter Currie, lead independent director of Twitter’s board, said Twitter was “fortunate to have Jack – one of our founders – step back into a management role and help lead Twitter as we continue executing on our strategic priorities”.
It was a surprising move, to say the least. Kara Swisher of recode.net wrote shortly after the news broke that as recently as two weeks ago Costolo told her he and the eight-member board – which also includes former CEOs Ev Williams and Dorsey – were “completely in sync”.
On the investors call Anthony Noto, Twitter’s chief financial officer, answered a question about the financial impact of Costolo’s departure by affirming that the CEO had left of his own volition. “There’s no financial impact from the departure – Dick decided to step down and resigned so there’s no severance package tied to someone volunteering to step down,” he said.
But the change is certainly sudden: Dorsey confirmed that the CEO search is barely under way. “The search committee expects to retain a search firm shortly and to begin a thorough process to identify a new CEO,” he said on the investors’ call. “That process has only just begun and there is no timetable. That firm will take the time it needs to identify candidates within the company and outside.”
Shareholder confidence in Twitter has waned in the recent past, and in the five minutes after the news hit, the company’s stock spiked in after-hours trading (the announcement was made just after the market closed) from $35.75 to $39.29. Twitter said its second-quarter financial projections would not change on the news.
Twitter’s user base is massive – 255 million worldwide – but its growth has slowed and is slowing further: eMarketer estimates that Twitter’s monthly user base will grow by just 14.1% this year. Two years ago, growth topped 30%. The company predicts it will be down to 6% by 2019.
One thing that has not diminished is the social network’s penchant for M&A. Twitter has purchased at least six companies a year since 2011, including several marketing, analytics and advertising software firms – notably Trendrr and Bluefin – as well as former competitor Vine.
But it still lags behind Facebook in ad revenue: the company accounted for less than 1% of the $145bn spent on digital advertising worldwide in 2014, eMarketer said, though it had nearly doubled its take in the past year. Facebook controlled 7.93% of the market last year.