Peter Kafka

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Twitter Replaces CEO Ev Williams With Deputy Dick Costolo

In a move that tech types have been murmuring about for some time, Twitter CEO Ev Williams is stepping down and will be replaced by Dick Costolo, the COO the company brought in last year.

Williams says he will focus on “product strategy,” leaving Costolo to handle the nuts and bolts of the business Williams co-founded four years ago. This makes plenty of sense, because that’s essentially the way the company has been running for some time: Williams spent the past few months consumed with the new redesign, while Costolo has been in charge of everything else.

“I am most satisfied while pushing product direction. Building things is my passion, and I’ve never been more excited or optimistic about what we have to build,” Williams writes in his note announcing the move, and that rings quite true: When I saw him in San Francisco last month, he was positively vibrating with pride over the new launch.

Internally, the team referred to the project as “Phoenix,” and the overdramatic code name gives you a sense of how much importance Williams and others placed on the redesign. It’s the first real product launch Twitter has put out in a long time.

But running Twitter is about a lot more than product now. It’s about scaling a team that’s already grown to 300 people. And it’s about figuring how to generate revenue to pay for all those bodies–and to satisfy investors’ very high expectations.

Outsiders haven’t gotten the sense that Williams has been that interested in that kind of stuff for quite some time, and there have been rumblings that Williams would need to take a different role sooner or later.

When Costolo came in from the outside to handle revenue and other non-product projects last year, this became an easy set of dots to connect.

(Actually, Costolo, who has a sense of humor honed as an improv comic in Chicago, did some of the dot-connecting himself a year ago: “First full day as Twitter COO tomorrow. Task #1: undermine CEO, consolidate power,” he tweeted back in September 2009. Thanks to Matt Barash for reminding us.)

Meanwhile, if you’re betting that Twitter ends up selling to a big guy–Google (GOOG) is really the only logical choice, though you could theoretically see Microsoft (MSFT) entering the fray–today’s move makes that option that much more likely.

Williams has already done the first hard part, by handing his company over to a professional manager. Handing the whole thing over to a new owner is a logical next step.

UPDATE: I ran that theory by Costolo and Williams. They disagree!

“I think it’s the opposite,” says Costolo, who argues that he’s taking over the company so that they can increase their chances of keeping it independent “for a long time.”

And Williams says he really does want to build more stuff, and he sounds convincing saying it.

“I never had any absolute ideas that I was or was not the long-term CEO. My goal has always been to play the role in the company that I thought was most important at the time,” he said.

I still think that role will be “guy who sells his company.” But happy to be wrong…

Here’s the text of Williams’s blog post announcing the change:

By all accounts Twitter is on a roll. We’ve redesigned our web site to great user feedback. Our user and usage numbers are growing at a rapid clip all around the world. We’ve launched an early, but successful, monetization effort. And, many top engineers, product designers, sales people and other key folks have joined our quickly growing team.

In fact, there are 300 people working at Twitter today–compared to about 20 when I took the CEO job two years ago. Back then, people were creating about 1.25 million tweets a day–compared to 90 million today. In those same two years, we grew from 3 million registered users to more than 160 million today.

The challenges of growing an organization so quickly are numerous. Growing big is not success, in itself. Success to us means meeting our potential as a profitable company that can retain its culture and user focus while having a positive impact on the world. This is no small task. I frequently reflect on the type of focus that is required from everyone at Twitter to get us there.

This led to a realization as we launched the new Twitter. I am most satisfied while pushing product direction. Building things is my passion, and I’ve never been more excited or optimistic about what we have to build.

This is why I have decided to ask our COO, Dick Costolo, to become Twitter’s CEO. Starting today, I’ll be completely focused on product strategy.

When I insisted on bringing Dick into the COO role a year ago, I got a lot of questions from my board. But I knew Dick would be a strong compliment to me, and this has proven to be the case. During his year at Twitter, he has been a critical leader in devising and executing our revenue efforts, while simultaneously and effectively making the trains run on time in the office. Dick can be even more effective at this now because Ali Rowghani, Adam Bain, Mike Abbott, Katie Stanton and Kevin Thau joined our leadership team this year and are having a big impact. Given Dick’s track record as a three-time successful CEO, I’m confident we can make this a smooth transition.

I’m extremely proud of how far Twitter has come in the last two years. And, I couldn’t be more excited about where our amazing team will take it next.

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I’m a giant vat of creative juices.

— David Pogue on why he’s joining Yahoo