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My case for Elon's Twitter
3 steps to make the bird app fly high
Elon Musk is now, in his own words, Chief Twit. And while it is too soon to know what’s coming for the new Twitter, Elon started by “cleaning up the house”. Old executives are out, and new help is in. Just in the last few days David Sacks (founding COO of Paypal and long-time VC) and Sriram Krishnan (Partner at a16z and former Twitter Product Lead) have joined the team.
I’m a big Twitter fan. I find it the most interesting and valuable social network. The only place where entrepeneurs, independent journalists, public intellectuals, shitposters, politicians and you and me share our thoughts and perspectives about the world.
And yet, most people don’t “get Twitter”. Do a quick search on Google, Youtube and Reddit and you’ll find your fair share of articles on how to use the bird app, what it is for, and how to make the most of it.
In this post I offer my thoughts on what I’d do if I was Chief Twit. Plenty of very smart folks have written about it (see Packy’s essay on it), and I’m not pretending to offer the definitive - or even comprehensive - view of everything that should change. Just one way of approaching the problem, and (perhaps) a few good solutions.
Twitter’s biggest problem
Some say it’s the bots, others that it’s too many managers. But what’s the limiting factor to Twitter’s business? One can certainly make the case that the bots hinder advertiser’s confidence in the ROI from its ads dollars and worsen the experience for content creators, who are frustrated by flood of bot in replies and don’t bother to engage with their (real) audience. Or that the overhead in people makes product innovation slower while ballooning OPEX.
I’d argue that Twitter’s problem is more than anything, a market one. If we look at the publicly traded US social media companies - Twitter, Snap, Meta and Pinterest - what stands out is not what’s unique about them, but what’s common. With the exception of Meta, running a social media is not a very lucrative business (spreadsheet with the data):
The gross margins of ~60% are good but not extraordinary (Pinterest’s margins are impressive by comparison).
High opex costs relative to revenue of more than 65%. This includes R&D and G&A expenses. Twitter and Snap’s Opex/Revenue is ~90% in the last 4 quarters.
EBITDA and Net income margins of less than 15% (sometimes negative). That’s lower than the average EBITDA margin for the SP500 in the past 8 quarters (18-20%)
Recapping: social media is a hard business. And insofar as that is true, Twitter is actually not that ill-positioned. 7 of the its last 10 quarters had positive EBITDA (albeit only 4 with positive net income), and given its high opex/revenue ratio and well documented product problems (the bots, the verification of accounts), one can see a future where with a few changes, it can become profitable on a recurring basis, and perhaps even command the $44B price tag that Elon paid for it.
It just isn’t a massive business. One look at its #1 engagement metric and we see why. Twitter is only the 17th social platform with most monthly active users, with ~400 MAUs, of which ~240 are mDAUs (monetizable daily active users). Contrast with the rest of the social media landscape:
So to build a Meta type business one needs Meta-like engagement numbers. And that is where my first recommendation as Chief Twit comes in. Enters, Twitter - “Where it happens”
Twitter - Where it happens
Underneath Twitter’s engagement issues I see a positioning problem. Its About page is the canonical example of why. In it, after the tagline “Twitter is what’s happening and what people are talking about right now.” one can see a list of seemingly random tweets from folks, followed by their aspiration to “serve the public conversation.”
This falls squarely into the “don’t get it” problem. By and large people look for utility in the products they use everyday. That might be checking what my friends or celebrities are up to on Instagram, texting my friends and family on Whatsapp or learn about something/laugh at/watch sports highlights on Youtube. They all serve a clear, utilitarian purpose that my homo economicus mind can prioritize and pick.
Twitter, on the other hand, makes its utility unclear. It takes using the product recurrently to “get” why spending time on a public square where random people tweet is a good use of my time.
But that’s why I think the missing opportunity is. There is a clear, utilitarian reason to use Twitter, one that can be improved significantly to bring more value to millions of people, and maybe push it closer to the 1B MAUs mark: Twitter as the place to consume real-time news and coverage from anything, anywhere.
Let’s look how changing the positioning increases Twitter addressable market, by analyzing this recent brand awareness campaign. In it, Twitter featured (current) celebrities’ old tweets where they announced to the world that one day they were going to make it. It’s a cool campaign, but I struggle to understand how it is relevant to most of Twitter’s potential audience. My parents, most of my friends and millions of people couldn’t care less if Twitter today is where future stars that nobody knows saying share their thoughts. That is only interesting in retrospective.
Instead, I’d run the same campaign with a different twist. Instead of celebrities, the tweets would be from (for example):
Trusted media publications covering breaking news - e.g “Sources confirm that Russia mobilized troops inside Ukrainian territory”.
Sports personalities announcing player trades, acquisitions seconds after they happened.
Financial analysts announce the summary of quarter financial results from company X right after they’re released.
Instead of placing Twitter in the consumer’s mind as the public town square where people talk it out, it becomes the place to-go to see “it happen” - where “it” is what is relevant to me: it might be sports news from his favorite soccer team for my dad, it might be the latest funding rounds of hot Generative AI companies for my friends, or it might be the latest on Portuguese internal politics in Portugal.
Now is the best time to re-engage the Twitter audience and invite them to experience what they can get from Twitter. The spotlight is on them, the media coverage is ubiquitous, and I’d take this advantage for a large scale brand marketing campaign.
So step 1: Reposition Twitter.
Incentivizing content creators
At the heart of this change lies a conflict of interests. Twitter’s most impactful product innovation of the recent years are threads. Sure, they gave birth to the threadboi, but in it they solved a long-standing problem in Twitter’s experience: communicating an idea beyond 140 (280) characters.
Now blogposts, on the ground reporting, and geopolitical analysis are summarized into Twitter threads. For individual creators, it’s a win-win-win: the creator gets recognition (followers) for posting valuable content, the audience gets valuable content and Twitter keeps its audience in-platform.
But the conundrum is: those who have the most to say - media publications, newspapers - have the least incentive to do it inside Twitter. If you’re The New York Times, you monetize off-platform and have no interest in summarizing your article on a Twitter thread, and resort to tweets that link stories out to the NYT site. And that is a lose-lose-lose proposition: the tweet is less relevant because the Twitter user does not have immediate access to the information, which drives less engagement for the publication. For Twitter it’s also a losing proposition because those who do click to read the story move off platform. No eyeballs, no Ads, no revenue.
Solving this Gordian knot is critical to increase the utility function of Twitter and get those mDAUs up. And that requires incentivizing creators to share in-platform. Here would be my first 3 approaches:
Integrate with publication’s subscription services: Expand on what was done with Revue and allow publications to integrate their subscription offering on Twitter, allowing them to convert Twitter readers to their paid product offering in-platform. That would incentivize media to share more on their tweets to increase its engagement and drive conversions up.
Build creator tools: One thing Tiktok taught us is that helping creators build engaging content is valuable. This is another area where Twitter falls on its face. If you ever tried to create a thread on the web client, tried to use drafts or felt exasperated after finding out a glaring typo seconds after pressing tweet, you know what I mean. Table stakes are to fix the thread experience, search and step up the capabilities of web Twitter. But more, I would invest in creating a set of tools to help creators build better tweets. My favorite would be an AI companion - robobird? - that you can use to do two things:
Turn your blogpost/media articles/long-form content into a thread.
Rewrite a tweet to make it clearer, more eloquent, punchier.
White-gloving: Finally, I’d spent some time on good-old white gloving and BizDev work with the top creators, helping them see the benefits of sharing more in-platform, and make the most of its new capabilities.
Step 2: Incentivize brand name publications to share in-platform
1 app 2 (verification) systems
Step 3 is a two-puncher: it attacks the bots and adds a new revenue stream to the business.
For the former, I’d break the current binary “blue check vs peasant” verification system and would introduce an a new level - I’m calling it the grey-check - to go after the bots. The new system:
No verification: this is where anynomous users, dissidents and bots would live.
Grey-check: Requires a third party verification - e.g via credit card - to verify one’s human identity. Profile gets a grey check.
Blue-check: Continues to be the aspirational verification for those most valuable to the network.
If the grey-check turns out to be a good filter for bots and malicious actors, a positive side-effect might well be a more wholesome Twitter experience. By devaluing engagement from non-verified accounts one could actually reduce the fighting and abuse that predominates today and make the experience more enjoyable to the rest of us.
As for monetization, I would not add a subscription to get the blue check. There’s something magical about the mysterious unattainability of the blue check. If anybody can have it for $8/mo, it instantly becomes less desirable. I’d work on making the process more transparent, but not under a paywall.
Instead, I’d monetize on other product features that would make the Twitter experience better. A few examples:
No Ads on the timeline.
Option to pick your feed algorithm.
See who viewed your profile/tweets.
Access to excluside methods/capabilities of the API.
At a $8-10 price point I don’t see why this shouldn’t add a few tens of millions of dollars in yearly revenue.
Step 3: Add a new layer of verification and monetize on new UX features
This is it. The 3 ideas I’d love to seen on Elon’s version of Twitter.
Got any feedback? Let’s move the conversation to the public town square and hit me up.