Twitter CEO Dick Costolo resigns as founder Jack Dorsey returns to the top

Costolo was in charge of Twitter when it went public in November 2013

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Dick Costolo, the man in charge of Twitter when it went public in November 2013, has announced that he will leave his post on 1 July.

Twitter founder Jack Dorsey is stepping in as interim CEO, returning to the company for the second time after a stint running Square, a mobile payments company he founded in 2009, while board members search for a permanent replacement.

A management shake-up has long been expected due to investor jitters over Twitter’s performance as a publicly listed company. Its growth figures – both in terms of users and revenue – have not compared favourably to Facebook since it floated. Growth rate of users has slowed and it missed revenue estimates last quarter.

Shares jumped between 6 and 7 per cent following the announcement of Costolo’s departure, but moderated to just 2 per cent higher after Dorsey stated that there would be no change in strategy.

"Twitter CEO Dick Costolo has bowed to pressure and resigned but his leaving solves nothing," said Richard Windsor, an analyst at Edison Investment Research. "The biggest problem that Twitter has is its narrow focus. Edison estimates that users can spend just 9 per cent of their time with Twitter."

Richard 'Dick' Costolo along with Jack Dorsey, Mike Gupta and Christopher Isaac 'Biz' Stone applaud as trading starts at the New York Stock Exchange

Employees inside the firm give Costolo an 88 per cent approval rating as CEO, down from 94 per cent in 2014, according to a survey of 220 staff by Glassdoor.

Dorsey is said to have been eying a return to the top spot at Twitter ever since he left the post of CEO. The New York Times reports that as Chairman during Costolo’s tenure, Dorsey has tried to weigh on the direction of the company. He is reportedly continuing in his role as CEO of Square.

Twitter has 300 million monthly active users – around the same number as Instagram, but both are dwarfed by Facebook, which has 1.4 billion active users. With other companies like Snapchat competing for the same social media advertising revenue, the pressure is on for Twitter to build products that will snag more sign-ups.