Twitter Stocks Climbed Up 5% After Announcement of New CEO

The news which came today of Dick Costolo stepping down as CEO of Twitter is a long awaited change which was seen coming. This is Due to the fact thatTwitter's stock price is down about a third since late April, and it missed earnings expectations in the first quarter of this year.. Twitter got into mobile before Facebook but it seems not to know how to monetize it. This makes investors worried and the company has had hard times acquiring new users. Jack Dorsey who was co founder will surely come with some vibe as the markets responded favorable with the news.

The old Twitter CEO will become the new Twitter CEO: Twitter cofounder Jack Dorsey will apparently replace current head Dick Costolo, according to Twitter.

Many stories are being written at the moment and journalist trying to analyzing today's big news at Twitter: the resignation of Dick Costolo, the company's chief executive officer. This is not one of those stories. This is a story about the small news today at Twitter, namely its decision to end the 140-character limit on direct messages. It's not the sort of change that sends a company’s stock price up 5 percent in a half hour. But Twitter’s next chief executive will need to make lots of little changes like this to get the company humming again. 

Costolo, who had previously been at Google, took over Twitter in October of 2010 and oversaw the company's initial public offering in September of 2013. But, despite the site's popularity with celebrities, journalists, and young people, its modest profits (the site was unprofitable for a long time) have turned off investors, which could be one reason for Costello's ousting. Twitter has also failed to grow at a rate investors would like, and it has just one fifth the active users of Facebook.

The buildup to Costolo’s resignation has been long and loud. A lengthy essay published last week by Chris Sacca, an early and large Twitter investor, chided the company for failing to explain to new users why they should use the service—and somewhat paradoxically, also failing to tell Wall Street how well things are going. As a product, Sacca wrote, Twitter was built “by and for its power users.” That earned it significant loyalty while also making the service seem difficult, scary, and lonely to everyone else.  

“The good news is this is all fixable,” wrote Sacca. “However, an incremental and iterative approach to improving Twitter will not work. Instead, Twitter will need to take huge risks, deeply question its key assumptions, and launch materially new stuff early and often.” These fundamental changes, he wrote, could include moving away from the reverse chronological nature of the Twitter feed and showing users more content from accounts they don’t follow.

The reverse chronological feed is pretty much the entire idea behind Twitter, and changing it would lead to plenty of grumbling from the base. Yet, even though some users would rail against the idea of algorithms picking the content they see online, most people put up with it just fine. Facebook has hardly suffered by providing a heavily edited view of the posts people are putting up.

Netflix likewise redesigned its interface and tested a feature whereby people could simply browse through a master list of its entire catalog rather than seeing curated lists based on their past activity. People had been calling for exactly this feature. When Netflix presented some users with the unedited feed, however, it found subscribers watched far fewer videos. “It’s the difference between what people say they want, and what they actually want,” Todd Yellin, Netflix’s vice president of product innovation, told the Verge last month. “Customers say they want to see every title in a catalog, but who the heck has the time to go through every title.” 

Sacca thinks Twitter’s key advantage is being a great platform for live events. If it wants to win over new users every time Matthew Dellavedova steps onto a basketball court, it is going to have to start slaughtering some sacred cows. 

It is not as if Twitter has been standing still. Its launch of Periscope has been arguably the year's buzziest launch in tech, with many observers gushing about a fundamental shift in the way we experience boxing matches and other people’s breakfasts. Twitter has added Instant Timelines to make things easier for new users, as well as a feature that shows people the tweets they may have missed in those rare moments they weren’t staring at their phones.

Compared to these things, breaking away from the 140-character limit on private messages is an insignificant change. Direct messages have never been particularly functional on Twitter, and the reluctance that led the company to ignore obvious fixes is indicative of the blind spots that have persisted. 

Not that tweaking Twitter’s products will be enough to solve investors' lack of confidence. Wall Street has always had trouble understanding Twitter. Part of the job facing Jack Dorsey, a co-founder set to become interim chief executive (and whoever comes after him) will be to get the folks with the money to focus more on such things as its rapid revenue growth than on turmoil amid its management. Still, to get the raw material to tell a good story, the company is going to have to keep pecking away at the features its core users are used to—and which everyone else finds intimidating, bafflin.

What does this mean for you? Well, we're not sure yet. Twitter is planning on having a conference call later today to explain the move, but, at the moment, it looks like Twitter cofounder Jack Dorsey will take back the job he was ousted from five years ago. Dorsey will serve in an interim role, at least at first.

Dorsey was popular with users and, along with Ev Williams, Biz Stone, and according to some accounts, Noah Glass, was the brains behind the founding of Twitter.

But Dorsey apparently didn't have all that much interest in pushing the company toward profitability—instead, he wanted to make it more functional first.

"It wasn’t so much that the ship was sinking, but more ‘Great job, Jack—we’ve got to up our level of experience and lay some foundation for a much bigger organization,’”Williams told Vanity Fair in 2011.

“It was like being punched in the stomach,” Jack Dorsey, Twitter's cofounder, told the magazine.

In Nick Bilton's book, Hatching Twitter, Bilton claims that Dorsey's problems weren't just inexperience. He was ousted because he skipped out of work early and had odd interests, investors said.

He "habitually left around 6 PM for drawing classes, hot yoga sessions, and a course at the local fashion school," Bilton wrote. "You can either be a dressmaker or the CEO of Twitter," Williams told Dorsey, according to Bilton. "But you can't be both."

 To view Stories like this Check at Financialbells.com