Was Letting Go of Dick Costolo As Twitter Inc (NYSE:TWTR)’s CEO Logical?

Recently Dick Costolo stepped down from his position as CEO of Twitter Inc (NYSE:TWTR). However, this looks be to be a wrong move by Twitter’s board. Even though investors were not pleased with Twitter’s share value, under CEO Costolo’s stewardship the company was experiencing healthy growth and making substantial profits. Costolo will leave office on July 1.Twitter’s co-founder; Jack Dorsey will be interim chief executive till a replacement is found.

Although multiple reasons are attributed to Costolo’s exit, it appears to do more with company politics. As a result, investors have good reason to worry. During his tenure, Twitter was much ahead of the competition in terms of performance. Revenues were growing and relatively faster as compared to older and larger organizations such as Facebook Inc (NASDAQ:FB) and Amazon.com, Inc. (NASDAQ:AMZN). The company is also getting more revenue per user compared to the latter two firms that are boosting profits.

Twitter’s revenue per user has increased over 9-fold in the last four years which translates to 75% compounded growth per year. In the same period, Facebook enjoyed 25% revenue growth per yera while Amazon experienced 4% per year during the same period. These statistics indicate that Mr. Costolo has done well helming Twitter as CEO. Also, Mr. Costolo’s performance is better when benchmarked against CEO Zuckerberg’s at Facebook and that of CEO Bezos’ at Amazon.

Costolo was confronted with two main problems during his Twitter stint. Unluckily for him they blunted his good work in the firm’s mobile advancements and distinct ad offerings. The first flaw was Costolo’s attempt to make Twitter be much like Facebook instead of leveraging Twitters unique position as a microblogging website. The first flaw exacerbated the second which was Twitter’s lesser user engagement when benchmarked against Facebook.

As CEO, Costolo put the long term results as a priority over achieving an immediate improvement of Twitter’s financials. This involved ramping up investment in R&D and delivering a high-quality user experience. Overall he did a fairly good job as CEO.

The present interim CEO of Twitter was himself fired in the past. Also, Twitter experienced a host of technical snags during his tenure. It is surprising why the person who was the top performing CEO in Twitter’s history has been shown the door.