What Prompted Twitter’s COO Rowghani’s Exit?

by CXOtoday News Desk    Jun 13, 2014

Ali Rowghani

In a short notice, Twitter’s COO, Ali Rowghani, has resigned. Hours later, another senior executive Chloe Sladden, the vice president of media who reported to Rowghani has also announced his departure. The reason for this abrupt departures is said to be the lack of growth and innovation – something Twitter has been criticized of in the recent past. But there is more to it, according to sources familiar with the company’s development.

A source told Reuters that “Ali Rowghani, once seen as an influential No. 2 who oversaw Twitter’s product development, finances and dealmaking, departed after clashing with Chief Executive Officer Dick Costolo over whether he should continue to oversee product innovation.”

At the face of it however, both the senior execs seemed cordial. Rowghani tweets his departure:

“Goodbye Twitter. It’s been an amazing ride, and I will cherish the memories.”

and pat came the reply from Dick Costolo 

“Thank you for being an incredible executive & partner. Twitter could not have succeeded without you.”

Technology news website Re/code first reported that Twitter was considering a shake-up in top management, including a possible shift in Rowghani’s responsibilities. Read: Twitter’s Man In Question Is COO Ali Rowghani

Rowghani was not asked to leave directly, said a source, factors such as Twitter’s hiring of Google executive Daniel Graf in April to lead its product development further soured the relationship between the CEO and COO, as Re/Code reported that Graf directly reported to CEO Dick Costolo, which clearly indicated a demotion for Rowghani, who in a way has been held responsible for the micro-blogging site’s lackluster growth and lack of product innovation.

The recent row resulted in showdown talks between Rowghani and Costolo over his role, according to Reuters.

Although Rowghani had his shares of praises too - orchestrating a series of financing deals for Twitter that culminated in a successful initial public offering in 2013, there were rising pressure within the company to revamp their products and strategy as it repeatedly failed to attract new users.

Formerly CFO at Pixar Animation Studios, Rowghani joined Twitter as CFO in 2010 and was appointed COO in 2012. While sources reveal Rowghani was held responsible for the micro-blogging site’s flagging growth and lack of innovation, with many even questioning whether Twitter needs a COO at all. Meanwhile Rowghani, was tasked with increasing Twitter’s user base and revenue, with high-ranking executives such as former vice president of product Michael Sippey reporting to him rather than Costolo.

However, stakeholders, including users, investors and even employees do not seem to be satisfied. user growth was started to decline, despite tall promises made by the company. While Costolo projected last year that Twitter would reach 400 million users by the end of 2013, the company reported only 255 million users as of early 2014.

Twitter employees also questioned Rowghani’s long-term plans after he sold $9 million worth of shares in April. According to various reports, employees were perturbed as Rowghani had asked early employees to sign agreements that would prevent them from selling their own shares, even though the plan never materialized.

 “If [Rowghani] had nailed growth, that would have been great,” said one source to Re/code. “But he did not, and it was not clear he was the one that could.”

Although Twitter’s top management reshuffle may appear to be a sort of revamp, some analysts warned that would not be enough to spur growth at the company. Reuters quotes Hudson Square Research analyst Daniel Ernst who said: “The issue for Twitter is not per se the management team. I think they are doing all the right things. The issue for Twitter is not Twitter, it’s that the expectations Twitter could become as big as Facebook were incorrect.”

As Rowghani steps down, much of the responsibility for setting expectations and communicating about Twitter’s successes will now be shared by Graf and Costolo, who also has the additional responsibility of managing top executives.

Some however are supportive of this realignment as they believe “it’s a good thing to upgrade now and maybe bring in some new people,” which they believe would help the company evolve.