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What Does the Future Hold for Twitter as CEO Costolo Steps Down?

By Casey C. Sullivan, Esq. on June 12, 2015 4:01 PM

Dick Costolo, the embattled CEO of Twitter, announced his exit from the company yesterday. Costolo had manned the company for the past five years, but faced increasing criticism as Twitter failed to increase its user base. Twitter co-founder and ex-CEO Jack Dorsey will replace him on an interim basis.

Costolo had long been criticized for failing to realize the full potential of the 140-words-or-less messaging platform, but his departure is still a surprise. Costolo's voluntary exit has lead to speculation as to how Twitter will evolve in his absence, or whether it will simply be sold to another tech company.

You Can't Fire Me, I Quit!

Costolo went of his own accord, according to The New York Times. Frustrated by constant second-guessing by investors, he first proposed his departure in January, but stuck around in order to install a new management team before he left.

Costolo wasn't the only one who thought he should go, though. Chris Sacca, an activist investor and one of Twitter's largest shareholders, published an article calling for a leadership change last Thursday. According to Sacca, Twitter hadn't been moving fast enough to add new features or react to slowed growth.

Though Twitter's stock jumped at the news of Costolo's departure, it's unlikely that his exit will drastically change the problems facing the company. Twitter has long faced difficulty increasing its user base. Though 300 million users log in every month, that's only about a third of the total registered users. Many blame the sight's interface and steep learning curve for lower engagement. Unable to grow users at a quick pace and to keep them engaged in Facebook-like levels, Twitter will still face trouble with advertisers.

Where Do You Go From Here?

Twitter's future might lay in live events -- or Google. Twitter is well positioned to grow as a breaking news platform, according to commentators. The company recently bought Periscope, a live video streaming app, which allows users to broadcast events, meetings, or their lunch, across Twitter.

Sacca, likewise, argued that the company needs to implement more event-specific tools. Imagine, for example, going to a single webpage to see all the tweets about the State of the Union, unrest in Iran or the newest episode of "The Bachelor." Not having to pull those bits out of a constant stream of tweets could make the site more appealing to casual users.

Or, Twitter could simply be sold. Costolo's exit set off speculation that the company might be looking for a buyer, with Google's name thrown around quite a bit. That remains speculation, however, and Twitter's $23.5 billion evaluation would make it a pricey acquisition even for a deep-pocketed company like Google.

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