News broke Thursday that Twitter (NYSE: TWTR) CEO Dick Costolo will step down effective July 1. Returning to the CEO role on an interim basis is Twitter co-founder and former CEO Jack Dorsey.
Twitter stock jumped more than 7% in after-hours trading Thursday on the news, though those gains were more than halved by the time trading opened on Friday. Indeed, it seems the market is relieved to see Costolo go, perhaps in the hope that a new CEO will be better able to monetize Twitter and can send the stock higher.
Twitter stock has struggled recently. Shares closed Thursday at $35.83 per share, down about 50% from a peak above $70 per share, and down 20% from the closing price on the day of its November 2013 initial public offering.
The longest-serving Twitter chief, Costolo will have served as the Twitter CEO for around five years. He oversaw a successful round of funding, the acquisition of video sharing service Vine, Twitter’s IPO and much more.
Dorsey, who founded and is currently the CEO of mobile payments company Square, was Twitter’s first official CEO until his ouster in 2008.
After reading a book about the inner workings of Twitter and its management team, “Hatching Twitter,” I have a somewhat cynical view of Jack Dorsey. The book reveals well-cited examples of Dorsey playing politics within Twitter and overstating his role as Twitter “founder.”
Not only did Dorsey leave the CEO job against his desires, he has since indicated interest in returning to the CEO position. This is certainly not lost on the market. Business Insider’s Jay Yarow spoke with both Costolo and Dorsey on Thursday after the announcement, and came away with the impression that Dorsey would attempt to become Twitter’s next full-time CEO.
“Based on my conversation with them, it sounds as if Dorsey is interested in being CEO of Twitter full time,” Dorsey wrote. “I asked him directly, twice, whether he wanted to be full-time CEO. And he didn’t say no. He just said he was focused on his job as interim CEO.”
Perhaps this is a different Jack Dorsey than the one ousted in 2008. Dorsey has become a relatively well-seasoned tech executive and clearly understands the role of Twitter in today’s society. He famously attended and live-tweeted protests and rallies in Ferguson, Mo., near his hometown of St. Louis, following the killing there of an unarmed black man by a white police officer.
Dorsey may very well have what Twitter needs.
He has a high profile, understands the ethics and principles on which the technology was created, knows the inner workings of Twitter, and is already running a technology company. Though he intends to remain CEO of Square while serving as interim CEO of Twitter, surely he would have to choose one or the other eventually.
Perhaps he’ll have Twitter buy Square, spearheading a major push into mobile payments for Twitter that will also bring Dorsey back as full-time Twitter CEO.
Though Costolo’s time as Twitter CEO has not been without its low points, I think few would argue that he has been a bad chief executive. As Yarow points out, Costolo “took a company with no revenue, valued at $1 billion, and helped steer it to billions in revenue, a $24 billion valuation, and a successful IPO.”
The problem is that we haven’t seen Twitter live up to its promise.
With 300 million users, Twitter certainly isn’t small. But when you compare it to WhatsApp’s 800 million users and Instagram’s 300 million users, Twitter seems much less significant. Consider that Facebook (NASDAQ: FB) owns both WhatsApp and Instagram outright and has 1.4 billion users of its own.
I consider Twitter to be integral to the way we find and share news and experience popular culture. But that doesn’t mean the service is lucrative. Facebook seems willing to sell the souls of its users (or at least their locations and everything about them). Twitter does not, or perhaps, has simply lacked the ability to do so.
I don’t think Dick Costolo has been bad for Twitter. But certainly something has to change if Twitter is going to remain as relevant in the future as it is today.
Is Jack Dorsey the Twitter CEO that can grow Twitter to its full potential? Certainly not as Twitter’s “interim” CEO – the task is much greater than what can be accomplished during the average CEO search. We could very well be witnessing the triumphant return of Jack Dorsey to Twitter.
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