Dick Costolo is stepping down as chief executive of Twitter, the company has announced, with co-founder Jack Dorsey taking his place as interim CEO.
Dorsey will take over on 1 July and stay until a replacement can be found, while Costolo will stay on Twitter’s board. The firm’s failure to deliver on the expectations of investors has most likely caught up with Costolo, who has been under pressure to grow the firm’s user pool, industry experts said.
In a statement, Costolo said he was tremendously proud of the Twitter team. “I am deeply appreciative of the confidence the Board, the management team and the employees have placed in me over the years.”
In the letter that was sent to shareholders no details were given on why he was stepping down or his future plans, but during a call shortly after the announcement Dorsey said the transition was simply a result of Costolo deciding to move on from his role as CEO.
Twitter announced that its board had formed a committee to undertake the task of finding a successor. Following the announcement, shares in the company jumped seven per cent in trading after US markets had closed.
Dorsey is returning for the second time to Twitter, after he returned to lead product in 2010 after Costolo became CEO. Industry commentators have said that although many of Costolo’s appointments have been successful, its product leadership has not been.
In an interview two weeks ago at the Code Conference, the now-former CEO said his job was safe. “I don’t worry about that at all. The board and I are completely in sync. Believe me, I don’t worry about that at all.”
The problem with Twitter is that despite achieving mainstream awareness, it has not been adding users as fast as investors hoped. In April, the firm missed Wall Street’s forecast for revenue growth and posted a net loss of $162m. Its share price has seen a near-30 per cent decline since then and is currently trading below the price it debuted at in 2013. Analysts remain pessimistic about Twitter’s growth prospects, compounding a difficult situation.
Questioned on what the board was looking for in its next chief executive, Dorsey said the search team would take as long as necessary and the candidate could come from inside or outside the company. He added that they knew one thing for sure: he or she should be a Twitter user.
Dorsey said the most important attribute was that they “really use and love the product in every single way”.
Twitter's financial woes infographic