Twitter COO resignation a symptom of challenges

Twitter's (TWTR) chief operating officer Ali Rowghani resigned from his position Thursday, announcing his departure in a message on the social network. According to a regulatory filing, he won't be replaced. He will remain an employee and other managers will pick up his responsibilities.

The move fits into a pattern of fewer companies employing chief operating officers, a role meant to free CEOs to focus on strategy. However, the specifics of Rowghani's exit likely has more to do with Twitter's current growth challenges and pressure from investors.

As the Wall Street Journal reported, the percentage of large companies with COOs has been trending down since 2001, according to an analysis by executive search firm Crist|Kolder Associates. The number is down to 35.2 percent overall. That's roughly on pace with the tech sector, where more than two-thirds of large companies don't have COOs.

Rowghani had been COO of Twitter since 2012, where previously he had been CFO. But major responsibilities had been stripped away. For example, former Google exec Daniel Graf, who was hired last April as vice president of consumer products, has been reporting directly to CEO Dick Costolo.

In addition, Rowghani recently sold a large chunk of his Twitter stock. That may well have irked top company executives who vowed not to sell shares when the prohibition for employees to do so ended in early May.

Twitter has been facing increased pressure from investors. In its first two reported quarters as a public company, user growth has missed analyst expectations. That has been chalked up to a lack of product innovation.

Another problem Twitter faces is that most of its messages come from a smaller percentage of users. Perhaps some novel service offering might turn things around and drive up user growth. But, unlike Facebook, Twitter users typically have no personal connection with the accounts they follow. As a result, there are fewer personal ties to keep them on the service.

Twitter's stock climbed nearly 4 percent on Thursday as investors apparently cheered Rowghani's departure. But on Friday, the stock is slipping and in mid-day trading and was down 1 percent to $36.44. The slightly negative reaction one day after Rowghani's departure suggests that investors aren't convinced that the user growth issue is easily solved.

  • Erik Sherman On Twitter»

    Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.

Comments

Market Data

Market News

Stock Watchlist