Twitter's new CEO expected to show them the money

Costolo takes over Twitter leadership and puts focus on business

The switch in leadership at Twitter is signaling that the company is ready to turn what has been something of an online adventure into a real moneymaking business.

On Monday, the microblogging site announced that Evan Williams will step down as the company's CEO. Williams will focus his efforts on "product strategy," while Twitter's COO, Dick Costolo, will take over as CEO.

It's a significant switch for the company, which just months ago took the wraps off its first, long- awaited business plan. With Costolo -- who is known as a tech entrepreneur and overall business type -- in charge, Twitter may be about to go out and really start making some money, industry analysts say.

"Costolo has a good reputation in the industry as a leader and, as some have described him, a 'money man'," said Dan Olds, an analyst at Gabriel Consulting Group. "This is the biggest signs so far that Twitter's focus has shifted to making money and building a sustainable business model. Costolo is more of an executive type than Williams, and they need that kind of leadership at this stage of their growth as they try to make some serious money."

Twitter has been under the microscope for not making bigger, faster moves into the business arena. A year ago, Williams told an audience at the Web 2.0 Summit in San Francisco that the company wanted to focus on developing the site rather than on a business model. That's what the company spent the next several months doing -- much to the consternation of technology pundits and the blogosphere.

Then, in April, Twitter took a step into the business world, launching its first advertising model. It was the beginning, analysts said, of Twitter becoming less a project or a hobby and more a real-world business.

Now Costolo, 47, is at the helm of the company, bringing with him considerable business experience. He has headed three other companies, including FeedBurner, a news feed service that Google bought in 2007. After leaving Google, where he had spent a few years after the FeedBurner acquisition, Costolo moved to Twitter in September 2009, where he worked on the company's advertising services and licensing deals with companies like Microsoft, Google and Yahoo.

"That's hugely relevant experience that he's bringing to the table as the new CEO at Twitter," Olds said.

Brad Shimmin, an analyst at Current Analysis, said the change in Twitter's leadership this week signals a realization that it's time for the social network to get down to business.

"I think this is a recognition by Twitter's leadership that innovation and monetization are very different but closely interdependent disciplines," Shimmin said. "Twitter has been serious about creating a profitable business plan for some time now. However, the company's efforts have so far seemed more exploratory than business-changing, as Twitter has danced around fears that it might alienate its users in a rush to capitalize upon its popularity. Because Dick was behind Twitter's earlier monetization efforts, his promotion simply signals Twitter's desire to continue and expand those efforts."

So, now that Costolo is in the CEO seat, what kinds of changes might be expected at Twitter?

Rob Enderle, an analyst at Enderle Group, said he suspects that business will begin to take priority.

"A hard focus on revenue generation suggests that ideas that drive more revenue and profit will probably now take precedence over other areas of creativity for a while," Enderle said. "I would also expect them to explore things like mergers and acquisitions more aggressively going forward."

But in whatever direction Costolo leads Twitter, he'll have one major hurdle: to not alienate Twitter's user base. And that could be a tough job all on its own.

"They need to make sure that whatever they do -- be it advertising, data mining or whatever -- it doesn't hurt usability or upset the users," Olds said. "That's going to be key."

Sharon Gaudin covers the Internet and Web 2.0, emerging technologies, and desktop and laptop chips for Computerworld. Follow Sharon on Twitter at @sgaudin or subscribe to Sharon's RSS feed . Her e-mail address is sgaudin@computerworld.com.

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