Twitter's Task, Post-Dick Costolo: Transform Into a Media Company
The CEO's exit puts the popular yet slow-growing social platform on notice to adapt for video and recruit regular users.
This story first appeared in the June 26 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.
Twitter is beloved by entertainment companies and personalities, but it's not yet a media powerhouse. A new CEO could change that.
After five years at the helm of the microblogging platform, CEO Dick Costolo, 51, announced June 11 that he will step down. Beginning July 1, co-founder and chairman Jack Dorsey, 38, will assume the interim CEO role as Twitter's board searches for a leader with a fresh vision. Costolo helped transform Twitter from a venture-funded startup into a public company with $436 million in revenue during its most recent quarter. But he was facing pressure from investors as Twitter's base languishes at 302 million monthly active users and revenue growth has slowed.
The solution, say analysts, is a CEO who can communicate better to everyday people — not only celebrities and brand marketers — why they need to be on the platform. "Twitter needs a leader that understands media," says Gartner analyst Brian Blau, adding that the company can aid businesses that "want to leverage mobility in a world where everything happens in real time and is being amplified through social networks."
During an investors conference call, Dorsey noted that the right CEO would be "someone who uses and loves the product in every single way." That could be Dorsey, or it could be someone else from inside Twitter. Two likely candidates — CFO Anthony Noto and president of global revenue Adam Bain — have emerged, and it's Bain whom Hollywood should be eyeing. A former Fox Interactive Media executive, he oversees Twitter's monetization strategy through promoted tweets and other advertising products and is said to have established strong media relationships. Observers also have floated the names of such outside contenders as former Yahoo interim CEO Ross Levinsohn (formerly CEO of THR parent Guggenheim Digital Media) and Facebook COO Sheryl Sandberg. Whoever takes the job will be tasked with turning Twitter's feed of short messages into a contender in a landscape dominated by photos and video. As RBC analyst Mark Mahaney notes, Twitter monetizes its user base at half the rate of Facebook, and "advertisers appear unconvinced about potential ROI."
In an essay in early June, investor Chris Sacca detailed how that could be done. Among his solutions was the potential of recent acquisition Periscope, the live-video app he predicted will be "supported by a YouTube-scale business monetizing some of the most valuable and engaging content archives in history."
But Blau says the company still has work to do: "[Twitter's] large brand presence just does not match how well the company is performing."