October 5, 2010 12:25 am

Skype and Twitter name new chief executives

Twitter and Skype, two of the fastest-growing private internet companies, have appointed new chief executives as they look to reinforce their leadership ranks with more experienced business managers.

Dick Costolo, who has won recognition in Silicon Valley for bringing a sharper business focus to Twitter since joining as chief operating officer a year ago, was named chief executive on Monday. He succeeds Evan Williams, a founder of the micro-blogging service, who said he would now focus all his attention instead on product development.

Meanwhile, Skype has hired Tony Bates, formerly a rising star at Cisco Systems, as its new chief executive. The appointment is the latest twist in the growing competition between the two companies, and comes as Cisco moves deeper into Skype’s consumer communications business while Skype tries to push deeper into the business market.

Mr Williams, who has held the title of chief executive for two years, depicted the decision to elevate Mr Costolo as his own. In a blog post, he credited Mr Costolo both with leading its efforts to generate revenue through advertising, as well as “making the trains run on time in the office”.

“When I insisted on bringing Dick into the COO role a year ago, I got a lot of questions from my board,” Mr Williams wrote. “But I knew Dick would be a strong complement to me, and this has proven to be the case.”

Mr Costolo this year was credited with launching Twitter’s first plans for generating advertising from its service, and has since taken the lead in promoting the service to advertisers.

“Competition in the social space is getting fierce and Twitter needs to step up its game,” said Ray Valdes, an analyst at Gartner.

He said that by putting an executive with more experience of operations, finance and business negotiations in charge, the company has shown that it realises it needs to move much faster to build a solid commercial foundation.

While the appointment was seen as a way to reinforce Twitter’s management and free Mr Williams, a serial internet entrepreneur, to spend more time on developing the service, it is unlikely to signal any early move towards an initial public offering.

Twitter executives have said repeatedly that they are in no rush to go public with the company.

Mr Bates, meanwhile, was most recently in charge of Cisco’s enterprise, commercial and small business division. He brings both business leadership experience and strong engineering credentials to Skype.

The move comes a year after the company was the subject of a buy-out from Ebay, and as it prepares for an IPO of its own.

A plain-speaking and affable UK native who never graduated from college, Mr Bates was a major contributor to one of the crucial formulas governing how internet traffic is moved about, known as the Border Gateway Protocol.

As a top manager at Cisco, Mr Bates has risen to responsibility for more than half the company’s revenue, in charge of the switching and routing business as well as the collaboration and increasingly important datacentre offerings.

“He really understands carriers and Skype mobile is a huge push for us,” a Skype investor said.

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