Breaking: Twitter Founder Steps Down, Costolo New CEO

Updated: Twitter founder Evan Williams announced today in a post on the company’s blog that he is stepping down from the CEO position at the rapidly growing social-networking startup, and that former chief operating officer Dick Costolo will take the CEO position, effective immediately. Williams said he will focus on product strategy rather than overall corporate direction, and that Costolo — the former co-founder of Feedburner, which was acquired by Google (s goog) in 2007 — has been “a critical leader in devising and executing our revenue efforts,” including the advertising feature the company launched today, known as Promoted Accounts.

Update: Earlier this year, there were rumors of a power struggle within the company between Williams and Costolo, but in his blog post the former CEO — who took the top job in 2008, after it was spun off from his earlier company, a podcasting service called Odeo — gave the impression that he is confident handing the direction of the company over to his former COO. “Twitter is on a roll,” Williams said. The recent redesign of the website has been popular with users, he added, and “user and usage numbers are growing at a rapid clip all around the world,” while the company has added “many top engineers, product designers, sales people and other key folks” to its staff, which Williams said now numbers 300 (compared with just 20 two years ago).

Meanwhile, in an emailed statement about the transition, Dick Costolo — who joked after joining the company last year that his first task would be to “undermine the CEO and consolidate power” — said:

I love working with Evan Williams… I completely respect his decision to focus on product strategy and vision. As we’ve all seen with the new Twitter, when Ev focuses on product, something amazing can happen. I’m certainly excited to be taking on this role. You couldn’t ask to take a job like this at a better time – the team is incredible, we have awesome stuff in the pipeline, and we’re ready to accomplish more in the next two years than we’ve accomplished in the last four.

In his blog post, Williams added that “the challenges of growing an organization so quickly are numerous,” and that “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.” On thinking about these challenges, the former CEO said he came to a realization that “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 and Costolo told TechCrunch that the executive change was triggered by the design and rollout of the new Twitter, while Union Square partner and Twitter board member Fred Wilson called the decision “a very smart and gutsy move by Ev.”

Twitter may also have to move its headquarters again soon, judging by a recent trip to its offices in SoMa. Despite having taken over a second floor in May and having several dozen empty desks, communications staffer Carolyn Penner said that at the rate the company is growing “we will probably be full again soon,” and that the startup would likely have to move in the spring. Twitter moved into the new building less than a year ago. The move to install a seasoned CEO like Costolo in the executive suite is bound to increase speculation about a possible public offering by the company, which raised almost $100 million last year, giving the startup a $1-billion plus valuation.

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Post and thumbnail photo courtesy of Flickr user Evan Williams