Twitter Inc., the social-networking service with more than 165 million users, elevated Chief Operating Officer Dick Costolo to chief executive officer, turning to a manager who is more focused on building revenue.
Evan Williams, the previous CEO, will concentrate on product strategy, according to a blog posting today. Costolo joined San Francisco-based Twitter in September 2009, helping the company introduce advertising services and make licensing deals with Microsoft Corp., Google Inc. and Yahoo! Inc.
“During his year at Twitter, he has been a critical leader in devising and executing our revenue efforts, while simultaneously and effectively making the trains run on time in the office,” Williams said in the blog.
Twitter, founded in 2006, spent its early years focused on attracting users, rather than making money. Now it’s trying to turn its popularity into advertising dollars. In April, the company started an ad program for its search service and has since expanded it to other parts of the site. Early advertisers included Best Buy Co. and Starbucks Corp.
Last month, Twitter revamped its site to make it easier to post photos, video and maps directly on the page. The redesign also gives marketers a new way to use multimedia in online promotions.
‘Keeping Twitter Twitter’
Costolo, 47, has the difficult task of keeping Twitter users happy and engaged while still adding more advertisers to the site, said Augie Ray, an analyst with Forrester Research Inc. in San Francisco.
“The biggest challenge for Dick is going to be to balance the increasing expectations and needs for revenue with keeping Twitter Twitter,” Ray said. “He’s been around for a long time, and that makes him a great candidate to do that.”
Twitter is valued at about $2.4 billion, according to SharesPost Inc., an exchange for privately held companies. Earlier this year, Costolo said that an initial public offering is still “way out” for Twitter.
“It seems they are not interested in rushing into an IPO,” Ray said. “There is no timetable from what I can tell.”
Since Williams took over two years ago from Jack Dorsey, who is now chairman, the company has grown to 300 workers from 20, and increased its user base by more than 50-fold. Users create 90 million Twitter posts, or tweets, a day, up from 1.25 million in 2008.
Twitter now ranks third globally among social-networking sites, topping News Corp.’s MySpace, according to ComScore Inc. in Reston, Virginia. Facebook Inc. is No. 1, and Windows Live Profile is second.
“You couldn’t ask to take a job like this at a better time,” Costolo said in a statement. “We’re ready to accomplish more in the next two years than we’ve accomplished in the last four.”
Costolo founded and ran FeedBurner, a news feed service bought by Google in 2007. He is a long-time friend of Twitter co-founders Williams and Biz Stone. Williams also sold a company to Google, Blogger, in 2003.
“Evan’s been one of Twitter’s visionaries,” Forrester’s Ray said. “The job of running the day-to-day of a very complex, very large business can get in the way of being a visionary.”
The site has continued to grapple with service outages. Soon after the CEO announcement, Twitter said it was “experiencing major site issues.” By 3:30 p.m. New York time, the company said the number of errors was declining.[via Bloomberg]