Twitter’s next trick is to prove it can actually become a stable, grown-up company

Image: AP Photo/Lionel Cironneau
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Twitter, which has seen no shortage of drama in its short life-span, is at a fascinating point in its history. When it went public last November the markets rejoiced, then its share price collapsed as reality set in, and now it has increased again, up one-third in value since late May. Over the next year or so, Twitter will show whether it can continue its transformation into a huge, highly functional, independent company—or whether it is destined to merely become the social media division at Google.

A grown-up company

It’s always worth pausing to appreciate just how far Twitter has come. For years, it was the butt of jokes: How could such a simple, silly-seeming idea as publishing 140-character messages on the internet ever make money?

In 2010, following its first two shaky regimes, Dick Costolo, previously the company’s operations chief, took over as CEO. Costolo, who had twice tried to build social advertising businesses—at FeedBurner and at Google—soon planted the seeds for something similar at Twitter. Under his careful leadership, Twitter has grown to support more than 250 million active users, who are on pace to generate more than $1 billion in revenue this year. Its advertising business, tailor-made for the ongoing mobile revolution, is working: Twitter generates almost twice as much revenue per “timeline view” (which is each time a registered user visits or refreshes Twitter or its search results) as it did a year ago.

Twitter’s driving factor, as Costolo articulated over the years, was to remain an independent company. It has—and it’s now a publicly traded one, with a market capitalization near $25 billion.

A lot of turnover

Twitter’s year has been marked by several high-level management changes. Today it named a new CFO, Anthony Noto, a former Goldman Sachs banker who helped take Twitter public. A few weeks ago its COO abruptly resigned. Its head of media, Chloe Sladden—the woman who helped make Twitter the discussion topic nearly every time you turn on a television—has left as well.

But there’s also been a quieter and more gradual turnover among its longer-tenured rank-and-file. Seemingly every week, Twitter employees I’ve followed for years are also leaving—some to travel the world, others to join promising startups, many to simply relax for a while.

Costolo’s opportunity now—and, really, his responsibility—is to keep taking Twitter higher despite this turbulence.

A strong team

Hiring Noto is a power move: He seems a “Costolo guy,” much like Twitter’s long-time revenue boss, Adam Bain, who was recently put in charge of business development as well. Twitter has also made smart-looking purchases lately in advertising technology, such as New York-based TapCommerce this week and MoPub last year. Both of these could grow Twitter’s ad business well beyond Twitter itself.

Soon we might see the launch of Twitter’s online shopping product—a potentially lucrative chance to diversify its business—run by Nathan Hubbard, previously CEO of Ticketmaster. And new consumer product head Daniel Graf, who joined from Google in May, has a chance to make Twitter better and easier to use, which is crucial for its growth, both for its existing and future users.

The challenge to meet

Twitter is simply too good an idea—and too successful already—that it shouldn’t someday have billions of users and billions of dollars in revenue. Facebook already has more than 1 billion mobile users per month; there’s no reason that Twitter—arguably a better way to get news on your mobile phone—couldn’t reach that level with a better product and good marketing. The challenge will be to make the product and the business work in harmony, at much greater scale than it does today. Making that harder will be the fact that new leaders—many of whom aren’t long-time, die-hard Twitter users—are now in charge.

So this is the interesting stretch for Costolo. He has looked mostly good in his years atop Twitter, but skepticism is never far away. Now that Twitter’s already big and already public, can it become a stable giant, despite so many changes? This coming year will be telling.