Former Twitter CEO Dick Costolo has criticized Wall Street for its short-term expectations. He is believed to be stepping down from the post due to the micro-blogging firm’s weak financial performance and user growth.
Wall Street focused on the short term
In his five years as chief executive, Twitter promoted itself from a private firm having 300 employees and valued at $3.7 billion to a public company with 3,900 employees and valued at $23 billion. Costolo was the man behind the idea of taking the social media company public and promoted its advertisement business.
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In an interview with The Guardian before his last day at the company, Costolo said the actual problem is that Wall Street is hyped or preoccupied with the short-term picture. He added that the company should be ready to encounter short-term thinking as it is a tough task to meet Wall Street’s expectations on a quarterly basis. He also made it clear that the company has followed a “cohesive long term strategy,” including adding many new features and focusing on live events such as sports.
“You always want to keep focused on the long-term vision, yet when you go public you’re on a 90-day cadence and there’s a very public voting machine of the stock price that accelerates that short term thinking,” Costolo said.
Costolo’s advice to the next Twitter CEO
When Twitter announced the exit of Costolo, many thought he succumbed to pressure from investors over slow growth and disappointing revenue. However, on being asked about the reason for his departure, Costolo said that he had developed a strong team and that “it is the right time.”
Costolo admitted that he misjudged the pressure, and advised his successor to take care of all the increasing complex set of geopolitical challenges and gain Wall Street’s trust. Making an example of Iran, Costolo noted that there, authorities access the site to communicate, while citizen’s access are blocked.
Twitter’s share price is down dramatically by approximately 35% from its 52-week high. The company’s board is on a quest to find Twitter’s next permanent CEO. Starting today, Twitter co-founder Jack Dorsey will be working as interim CEO along with his full-time position as CEO of the payment company Square. Even though Costolo’s successor is yet to be named, it is very clear that whoever takes his place will have to face a far more extensive set of challenges.