Dick Costolo Resigning From Twitter Is A Problem

In recent news, Twitter CEO Dick Costolo announced he would be stepping down from his post. At first, investors rejoiced. Wall Street has recently grown tired of the embattled CEO as his company has struggled to maintain satisfactory user growth numbers over the past couple of years. Shares were up 7% on the news.

Ding dong, the witch is dead

But before investors could get too excited, Costolo said that co-founder Jack Dorsey would fill in as an interim CEO while the company finds a new one. On the surface, that doesn’t sound too bad. As a co-founder, Dorsey should naturally have the passion necessary to bring Twitter out of its free-fall, right?

Wrong.

Three problems

There are three big problems with what’s going on with Twitter right now. The first is that Dorsey won’t be giving Twitter his full attention. He also happens to be CEO of mobile payment company Square, so it’s likely that the other executives will run Twitter until a new full-time CEO can step in.

The second problem is that Dorsey has said that Twitter doesn’t plan on changing its strategy. That’s an odd statement, considering the circumstances. It leads investors to ask, well why is Costolo stepping down then? If the company isn’t planning on changing its game plan at all, then it doesn’t matter whether Costolo, Dorsey or Mickey Mouse is in charge. The company has been struggling lately and it direly needs something to show investors that it’s serious about getting itself back on track.

The third problem is that Twitter seemingly doesn’t have a plan at all regarding the whole executive shakeup. Costolo said he plans to stay on Twitter’s board of directors as an active member. But there’s no plan to move the company forward. It begs the questions: Why did Costolo resign without naming a successor first? And what’s happening that makes the executive team think they are still ahead of the curve?

Dorsey has talked about the importance of Periscope in Twitter’s future. But while Periscope is a solid product, there are very few barriers to entry in the market and I’m not so sure it has the potential to be a strong enough product to really get Twitter going again.

Solution?

A few months before Costolo announced his resignation, an internal memo was circulated outside the company and picked up by the media. In it, Costolo says, "We suck at dealing with abuse and trolls on the platform and we've sucked at it for years. It's no secret and the rest of the world talks about it every day. We lose core user after core user by not addressing simple trolling issues that they face every day. It’s nobody’s fault but mine."

There’s a product problem. How do they solve it? So far, we haven’t seen much of an effort in that area. The fundamentals of Twitter’s product are solid, but there are certain things that just aren’t working. Instead of having an "all is well" attitude, Twitter’s management needs to pinpoint problems like Costolo did in this internal memo and then provide actionable solutions. Until then, don’t count on Wall Street being on board.