Twitter CEO Dick Costolo is stepping down from his post after months of mounting pressure from investors, the social media company announced on Thursday. Co-founder and chairman Jack Dorsey will serve as interim CEO beginning July 1.
Costolo, who joined the San Francisco company in 2009 as COO after two years at Google, will remain on Twitter's board. Dorsey will continue to lead Square, the payments company he started in 2009, while Twitter conducts its search for a permanent leader.
In a call with investors on Thursday afternoon, Costolo explained that he began discussions with the board late last year about his departure from the company, but it wasn't until a meeting last week that he decided the timing was right. "There is never a perfect time for a transition like this," he acknowledged. But he was quick to add that Twitter is well positioned for the change because it "will be supported by the strongest management team" that it has ever had. "You want to do these things when the organization is stable, when it's robust, when there's a clear plan and a clear path forward against that plan. That's where we are today."
Welcome back, @jack !! https://t.co/3papmyUKg0
—dick costolo (@dickc) June 11, 2015
Costolo, who became CEO at Twitter in 2010, helped shepherd Twitter from startup to public company during his five years at the helm, but he has faced pressure from investors in recent months after Twitter has struggled to grow its user base and seen a revolving door of executives. The company lost both COO Ali Rowghani and head of media Chloe Sladden last year.
In April the company announced first-quarter revenue of $346 million, about $20 million shy of Wall Street's expectations, leaving investors unimpressed. At the time, Twitter also announced that it had 302 million monthly active users, about 18 percent higher than the same quarter a year previous.
Despite sluggish results, Twitter executives have remained positive about Costolo's performance at the company, pointing to revamped products — including a logged-out Twitter experience — as opportunities to grow the company's core user base. Costolo spoke publicly in late May about his future at Twitter, telling attendees at the Code Conference that "the board and I are completely in sync. Believe me, I don't worry about that at all."
So why leave now? On the conference call with investors, Dorsey was emphatic that Costolo made the decision to leave on his own. "This transition is not the result of anything more than Dick deciding to move on," he said, adding that "there is no connection to our near-term results."
Costolo also noted that he did not want the company to try to conduct a CEO search under the veil of secrecy. "We wanted to conduct an open process to find the company's next CEO," he said, adding that scrutiny of the company would only intensify if he remained CEO while the search was conducted. "It's not in anybody's interest to have that distraction."
News of his departure sent Twitter's stock up more than 7 percent, or about $2, to more than $38 in after hours trading on the Nasdaq.
Twitter's search committee will be led by independent board member Peter Currie and will include Peter Fenton and Twitter co-founder and ex-CEO Evan Williams. The group will look at both internal and external candidates to fill the role.
Dorsey said the company is looking for someone "who really uses and loves the product in every single way."
"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 statement released earlier on Thursday. "We have great leaders who work well together and a clear strategy that informs our objectives and priorities. There is no one better than Jack Dorsey to lead Twitter during this transition."
"The future belongs to Twitter thanks in large part to Dick Costolo's dedication and vision," Dorsey said in the previously released statement.
Twitter announced the management change at one of its all-staff meetings, known as Tea Time, where Costolo received a standing ovation. The hashtag #ThankYouDickC began to trend on Twitter following the meeting as employees posted messages of support.
The tweets & standing ovations don't express how much @dickc has impacted @twitter #ThankYouDickC #OhCaptainMyCaptain pic.twitter.com/H3IynPkB2f
—Ashley Ramirez (@SmashHawk) June 11, 2015