Elon Musk’s Many Twitter Failures and the Need for Public Goods
Social media has tended towards monopolization.Coindesk
On Thursday, a newly amended 13D filing revealed that Elon Musk assembled the team to take $7.1 billion out of his $44 billion Twitter takeover offer.
This is interesting for several reasons.
First, it means that Elon's claim that he "doesn't care about the economy" no longer holds true. He now needs to care about the economy. Twitter will need to generate enough capital to pay off Elon's debt and generate returns for investors including venture capital firms such as a16z and Sequoia. VCs don't typically chase 2x returns; however Elon and Twitter made this a special case, and their participation shows that economics do matter.
Second, it cut Elon's margin loan from $12.5 billion to $6.25 billion, lowering the debt load and giving him more room to experiment from a cash flow standpoint. In this case, he can be more aggressive.
Third, there are rumors that Elon is telling investors that he will serve as interim CEO.
Finally, crypto exchange Binance got on board, notably with founder CZ tweeting “Private it, tokenize it, decentralize it” last month. While I think Elon is unlikely to decentralize Twitter anytime soon, Binance's involvement means more decentralized solutions are likely.
Speaking of which... Elon should give the DAO, made up of Twitter power users, a seat on Twitter's cap table and on its board. Call it TweeterDAO.
Giving TweeterDAO a board seat is a step toward token issuance and full decentralization. This is one step away from the direct democracy he believes humans should use to rule Mars. But it's a big step in the right direction for a board made up of people who have little ownership and little use of the product.
In a TED interview last month, Elon told Chris Anderson that he wants to retain as many shareholders as the law allows so they can share in the platform's governance, which he believes the SEC will limit. Within 2000 people. This DAO structure might be a workaround.
Not surprisingly, I think investing in equity in a new private Twitter, directly or through a DAO, is a compelling bet.
I don't know the internals, just a long-term belief that Twitter can and should do better than it does. Predicting Twitter's future on Not Boring is a valuable pastime. In July 2020, I wrote "If I Ruled Twitter". In February 2021, I continued writing "How Twitter Got Its Best". In March 2021, Mark Rubenstein and I even defended Jack in "Double-Faced Jack."
In If I Ruled Twitter, I wrote: "Twitter is the least monetized product in the world because it doesn't know what it is." Although its ad business has grown and improved since then , and eventually introduced a handful of subscription services, but this still holds true. The gap between Twitter's importance and its commercial performance is enormous.
But the company has seemingly limitless opportunities to try and turn the business around because its power users are incredibly sticky and it's home to great online games.
Elon, a power user himself, has some ideas on how to turn things around. Over the weekend, The New York Times shared a leaked presentation document that Elon used to raise money for the deal. The plan reportedly includes:
Revenue quintupled to $26.4 billion by 2028.
Reduce Twitter's reliance on advertising to less than 50% of revenue.
Generate $15 million in revenue from payments, reaching $1.3 billion by 2028.
Increase average revenue per user by $5.39 to $30.22.
The number of users will reach 931 million by 2028.
Mystery "X" will have 104 million subscribers by 2028.
Hired 3600 employees (after laying off hundreds).
Of course, he also expects Twitter Blue to reach 69 million subscribers by 2025.
While these predictions are starkly aggressive, and Twitter's potential product ("X") is unclear, I don't doubt Elon's ability to make Twitter's business grow exponentially. You don't even have to be an Elon fan to believe this; you just have to admit that Twitter has been losing value that a strong management team should be able to capture.
While Elon talks a lot about free speech, and I think he really thinks that's a key reason why he does it, when he buys Twitter, Elon is also buying one of the rarest assets on earth: one of the few large-scale One of the social graphs where more of the world's decision makers shape minds and let their own minds be shaped.
This presents both an incredible financial opportunity and a largely unprecedented governance challenge. Twitter users should be able to engage in both activities at the same time.
So today, we're going to talk about three things:
How does Twitter see itself, and what is Twitter actually?
what new twitter should build
Twitter's problems stem from confusion about what it is, and the ad-based business model choices it has made as a result.
In If I Ruled Twitter, I wrote that Twitter's main challenge is its confusion about its own identity:
Twitter thinks it's Facebook, but it's really LinkedIn.
Twitter thinks it's an advertising product, but it's a subscription product. It thinks of itself as an aggregator, but really it's a platform. It considers itself a social network, but it's a professional network: a network built for an economy of passion, based on the power of ideas, not past experience.
It was early 2020, and I had just become a full-time "creator" at a time when the passion economy was hot, so my focus might have been a little too narrow, but two years later, the main points were backed up. Twitter is not so much a social network as it is a professional network.
In How Twitter Got Its Back, I summarize why understanding what Twitter is, who it is for, and what business model is so important to Twitter:
If advertisers are customers on an advertising-supported social network like Facebook, users are products, but on LinkedIn, most users are products, and advanced users are customers. Before being acquired by Microsoft, only 18% of LinkedIn's revenue came from advertising; the rest came from selling tools to premium users, both companies and individuals.
For Twitter, its power users and supposed customers are the 10% of users who generate 80% of tweets. We call them creators. Creators are tasked with getting their ideas, products, newsletters, courses, videos, podcasts, investment ideas, and whatever else they sell, in front of people.
Rather than an aggregator that operates like a social network and monetizes advertising, Twitter should be a platform that operates like a professional network and monetizes subscriptions.
Still, with years of evidence and wisdom accumulating, I think I underestimated it. Because for LinkedIn to be such a strong and focused business, Twitter needs to be much more focused and narrow. Twitter is addictive, engaging, and valuable to users, while LinkedIn is not.
addictive. Twitter can sometimes act like a professional network, but it's also where many of the world's most powerful people go when they're curious, active, inspired, or just plain bored. I don't know anyone who checks LinkedIn as compulsively as Twitter.
Participatory. Ben Thompson included this image in his recent book Back to the Future of Twitter, and it's a great example of how users interact with Twitter and Instagram differently.
valuable. There’s a question that’s been circulating on Twitter “for how much would you use Twitter?” I asked myself that question as I wrote this, and the answer was jaw-dropping, but not surprising. I did a very unscientific survey, and out of 1100+ responses, 40% of respondents said they would need to be paid over $10,000 a year to not use Twitter.
Again, this isn't scientific, but I think for Twitter's most valuable user base -- the "creators" who send 80% of all tweets -- especially those whose business or income benefits from Twitter, This is directionally accurate. For that 40%, Twitter is earning so much that you can't even see its current ARPU on the graph unless I draw it so high.
I don't think twitter should start charging superusers $10k a year, but between the $0 twitter currently charges and the $10k users are willing to pay, twitter could charge its users to get better users Experience and get better products from (or built on) Twitter.
Twitter doesn't need to build the world's largest network to be hugely successful. It just needs to make sure it can better serve a smaller group of high-value users and monetize it better than it does now.
This perspective illustrates what I think the new Twitter should be built on.What the new Twitter should build
With a new owner, especially this new owner, the new Twitter will certainly be different from the love/hate Twitter we're all familiar with. What it will look like is still up for debate.
There are several main views on what Twitter should do:
Tend to subscribe.
The open camp argues that Twitter should go back to what it used to be: open APIs and microservices, which Ben Thompson lists as follows:
User Service (for listing users' timelines)
Graphics service (for tracking the web)
Publish service (for posting new tweets)
Profile service (for user profiles)
Timeline service (for displaying your timeline)
Third parties can build clients and algorithms on Twitter as follows:
Ben goes a step further, arguing that Twitter should be split into two companies:
TwitterServiceCo is responsible for operating all services and selling them to third parties; while TwitterAppCo will build a competitive application product on the basis of Twitter's services and social graph.
In Elon is Right: Twitter Should Open Up the Algorithm, Nathan Baschez makes a strong case if Twitter open-sources the algorithm that organizes tweets into a timeline, as Elon suggests, and creates A market, then Twitter will be better.
Nathan argues that it would be better for Twitter to let anyone create and market their own algorithms through "the classic law of technology: commoditize your complement." Like Ben, he also believes that Twitter's core product is its network of users and tweets, rather than a user-facing client or a tweet ranking algorithm. By allowing more algorithms to compete, Twitter will actually make its core product Create more demand.
In Ben and Nathan's view, Twitter users get more choice, and Twitter itself can push all the hassle of controlling algorithms and content moderation to third parties who can independently develop content for all types of people, markets, and content. product of the legal system.
While Elon has discussed making the algorithm open-sourced and cited the rationale for human-vetted decisions, he has not said he will open it up to third-party customers or add developers. In fact, his leaked plans put him more in the "Lean Into Subscriptions" camp.
tend to subscribe
Thanks to a leaked presentation, we now have a better idea of Elon's plans:
Reduce the proportion of advertising revenue to less than 50% within five years.
Twitter Blue, a $3-a-month service, grew to 69 million users.
Introduce payment function.
Released the mysterious X product and gained 104 million subscribers.
Elon also believes that Twitter needs to reduce its reliance on advertising and turn to a subscription business.
Twitter Blue, which currently has 69 million users and charges $3 a month, will generate $2.48 billion in additional revenue in 2025. Currently it's a strange mishmash, including an untweet button, color options, and an ad-free article feature. Adding another 104 million $5-a-month X users (assuming this is a higher-end product) would generate an additional $6.2 billion in annual revenue by 2028.
Also, the reason for Twitter optimization seems to be that the ad model has led to a lot of bad things happening on the platform. Moving to a subscription model, especially if users pay $3 a month to get a certified blue badge and filter conversations with certified users, could make Twitter a more civilized, healthier place.
When I wrote "If I Ruled Twitter," I was more inclined to join the subscription camp. Based on suggestions from other Twitter users, my four recommendations are:
Table Stakes: Verify identity to clear the conversation.
Twitter+ Subscription: Provides paid tools for creators to find, create and share ideas.
Creation of Twitter: Twitter should be the place to build a subscription business.
Home for Makers: Developing the most underdeveloped real estate on the web.
Two years later, with Elon at the helm, I think it's the right direction, but the opportunity for Twitter goes beyond that.if i ruled twitter
Here are a few guiding principles that I think Twitter should follow:
Keep super users happy and they'll get others involved.
Power User wants to do more in Twitter's ecosystem.
The Twitter Graph is one of the most valuable and under-monetized assets in the world.
Twitter is more than just a social network.
With that in mind, here's what I do.
First of all, I will start by verifying all real people and legitimate business users.
A truly odd outgrowth of Twitter's messy history of only certain people being able to be verified, it's more of an elite status symbol. In the early days of Twitter, the verification technology wasn't great, but it's pretty good now. Today, every cryptocurrency exchange and fintech product verifies the identity of users through third-party software; Twitter could integrate something similar.
My friend Dror came up with this idea in 2020 in response to my original question:
Executing this philosophy, and charging authenticated users $3 per month, should be the zero-priority exercise from which every other initiative starts. By allowing filtering by authenticated users, Twitter can both keep bots away from people who don't want to see them and make the $3-a-month subscription a must-have for power users.
Adding verification information to Twitter's social graph also makes it more powerful. It could become the world's largest database of ID-verified users, which third-party developers will happily take advantage of (with personally identifiable information hidden, of course).
Speaking of which, I agree with Ben and Nathan that Twitter should reverse its 2012 decision to restrict (and eventually cut off) 3rd party access to its API.
Twitter could also charge third-party developers to access its microservices APIs -- such as users, graphs, timelines, and posts -- and let them build standalone third-party clients for Twitter, as Ben suggests. Giving people the right to choose an alternative experience would ease concerns about content moderation and Twitter’s centralization.
It would also allow developers to build services that are completely different from core Twitter, but could leverage Twitter's database of authenticated users and interest graphs to build recommendation services or dating apps, among other things.
However, I don't actually agree with spinning off the Twitter app into a separate company. I think Twitter should do the opposite and quadruple the effort on the product experience of the Twitter app.
Part of that, as Nathan suggests, could be creating an algorithmic marketplace so people can take control of their timeline experiences. It would also reduce concerns about free speech and content restrictions; if I wanted a feed with only crazy political views, I could create it or buy it. Twitter might even allow people to build algorithms that give them access to tweets from "banned" users.
But I think Twitter is thinking much more than that, based on two clues in the leaked promotional material:
As many people who actually understand what they call re:engineering have pointed out, Twitter could run its current product with a much smaller team of engineers than it currently employs. But while Elon does plan to lay off a bunch of people in the short term, he plans to hire many more over the next six years.
He also plans to achieve $1.3 billion in payment revenue by 2028, using his experience at PayPal to build a payment product that is better than the current payment service.
There is no precedent for combining social/professional networking and payment products in the US, but in China there is: WeChat.
I think Twitter should not only be open to developers who want to fine-tune the current product, but should and will build an ecosystem of apps like WeChat Mini Programs, all within the app.
Promotion is king, and while Twitter hasn't done a good enough job monetizing it, it's where most information-based businesses find and communicate with users. Twitter needs to capture that value, and the Twitter App Store can not only help it do that, but also provide a better, richer experience for power users who prefer to stay at home.
The interesting thing about building platforms and primitives is that this group of people will come up with more attractive projects than I can imagine, but the benefits of Twitter are clear: no more people discovering things on the platform and buying them off the platform . Some obvious examples include:
Better DMs. Twitter could invest in better DMs itself, or it could allow third parties to build DM clients on top of the Twitter app. I, and many others, are willing to pay top dollar for a good Twitter DM client, and Twitter takes a small cut of it. The beauty is that all clients are interoperable and even external protocols such as SMS, SMTP and XMTP can be brought in to provide a communication hub.
Podcasting and messaging apps. After acquiring newsletter app Revue, Twitter's value proposition for writers is clear: We'll get you more readers by inserting a chart. The problem is, the product itself wasn't very good last time I checked. I'd rather pay a little more to plug my substack more directly into the Twitter graph and profile. Likewise, a native podcast app might do a better job of connecting discoveries on Twitter to the listening experience, and even making it more social.
Notes and knowledge application. Every once in a while, a product like Roam goes viral, and that happens almost exclusively on Twitter. This is where those who like to organize their notes gather. Twitter could make it easier for people to discover knowledge applications, better integrate them into products, and even connect the global knowledge graph like Roam wants to do.
Customer service chat. Instead of angrily tweeting at the company, people can communicate directly with the company through a chat interface designed for customer service, like a walkie-talkie inside Twitter.
NFT market and cryptocurrency exchange. Cryptocurrencies are another prime example of purchases made off-platform, spotted on Twitter. Twitter makes it easy for you to see NFTs or tokens in your feed, buy them on the market or an exchange, and use them for token threshold transactions, all within Twitter. I think an open Twitter can play a role in building better ingress and egress and a more seamlessly integrated wallet experience.
Turn your profile into a social home. Shared spaces have been successful for Twitter. It should redouble its efforts to let third-party developers create a variety of social experiences on the platform, which I once called "the most underdeveloped real estate on the Internet." I can host an open world through Cyber, where Not Boring readers can work together in a room here, or even a space with Teamflow. A Twitter profile can be a portal to an open metaverse. Likewise, I'm willing to pay for my profile to better reflect who I am, what I care about, and make it a cool place to be.
Some people will likely continue to use Twitter for free, while many of Twitter's power users will happily pay more for a better, richer experience within the app and the broader Twitter ecosystem. I know I will.
I'm not a product developer. While I can imagine Twitter wanting many of these products to be available within the app, there's also a case where they're built as standalone apps launched from within the main app, or completely standalone.
In the core Twitter app, I think it's crucial to keep the Twitter Feed interface simple, but there's more room for experimentation and innovation.
While I don't think Twitter will become as central to people's lives as China's WeChat—it's hard to imagine why I would order food or hail an Uber on Twitter—it could better serve the needs of superusers and allow more Potential users see its value and capture some of the value it creates and loses today. Who knows, there might be a way to make ordering food or hailing a ride as easy as sending a tweet, and that didn't occur to me.
If Twitter can clean up validation, open up its API, build a thriving app ecosystem on top of its microservices, and reap more and more of the $10,000+ that power users are willing to spend on the platform, then Egypt Long's $44 billion acquisition of Twitter would have looked cheap.
But these are just my random thoughts. I'm not supposed to rule Twitter -- and neither should anyone, including Elon -- but I think Elon needs a way to keep power users at the heart of the conversation and get them to share the positive. I think we need a TweeterDAO.TweeterDAO: If We Ruled Twitter
Power users are Twitter's lifeblood: 10% of users create content that everyone else can consume. They need a seat at the negotiating table.
Twitter board members are known for sending out their first tweets the day they announce their appointment to the board. They also don't own much of Twitter. From a financial or product point of view, they didn't have a lot of stake in it, and it showed in the product.
Given the chance to design a new board from scratch, Elon should give a group of Twitter superusers a seat. The easiest way to coordinate is through a DAO.
I once joked about using the DAO to buy Twitter:
That was a joke. While I think decentralizing Twitter is a good long-term goal to pursue, for now, Twitter needs to stay focused on turning the business around. In order to build a healthier, stronger platform, it needs to make tough decisions that are easier for small groups to make than large ones.
But I do think there is merit to the idea my friends Sahil Bloom and Mario Gabriele have come up with: using a DAO to allow Twitter users to invest in companies and get board seats.
Doing so will accomplish several important goals for Elon and the company:
More Twitterr owners. Elon said he wanted Twitter to have more than the 2,000 owners allowed by the SEC, and the DAO could be one way to achieve that.
Easing concerns about centralization... having a representative of The DAO on the board, and therefore willing to share private information with super users, would be a way for Elon to ease concerns about the world's richest man controlling his most influential platform useful way.
Not fully decentralized…. The DAO will have only one seat, so it won't be able to make decisions independently, which leaves room for Elon to make tough decisions.
Super User's voice. In this post, I emphasized how critical superusers are to Twitter's success, and with many changes coming, involving them in decision-making will be one way to ensure that Elon and company don't drive superusers away. While it's great that Twitter will be owned by a power user, his experience may not quite match that of the average power user.
Novel governance structure. While that doesn't matter to most owners, it's clear that Elon bought Twitter in part because it was a new challenge and experience. I think he's one of the most likely to accept giving The DAO a board seat.
Thousands of people are invested in Twitter's success. Giving Twitter's power users a seat and a financial stake in the company's success will build a core team who are motivated by having a voice to help the new Twitter succeed. This could be very important as Twitter makes big changes.
First, the DAO founders need to negotiate with Elon's team and agree on the terms and structure - how much the DAO will invest, what information can be shared with the DAO, how the DAO will choose its representative board members, etc...
With the interim green light, the DAO founders will need to set up the entity and tech stack, determine the governance model, and decide whether their members will actually be able to own shares in Twitter (which may be feasible under the newfound old structure) or whether they will only have governance Get legal advice on rights and governance tokens.
Importantly, it needs to figure out how to filter superusers. That's why it's called TweeterDAO - it's for people who tweet. Perhaps members need to verify that they have tweeted in the past three months. Maybe just going online to know what the DAO is happening and how to contribute, and to contribute is enough.
It needs to raise money to invest in the new Twitter -- probably $50 million to $100 million, but that's negotiable.
And then ... assuming it does all of that, it actually needs to be governed.
The DAO must elect a representative to serve on the board and be present to vote, informing its representatives how to vote on the Twitter board. It must make recommendations to the board. It must organize itself lest it degenerate into a fleeting farce.
This is not a YOLO transaction. The structure under consideration may not even allow transfer of ownership. But this will be an opportunity to influence the future of the platforms many of us rely on professionally and even socially.
"Aren't you creating a public company again?" you might ask. Of course, having a large group of people with ownership and voting rights sounds a lot like owning equity in a public company, but there are a few differences:
Twitter is a public company, but its board of directors, who make decisions, does not represent Twitter users.
Given the much smaller ownership groups involved in the new Twitter, and the aggregation of individuals into a more cohesive DAO, the DAO would have a greater say than a collection of retail investors.
Putting the DAO on the board would demonstrate a commitment to openness, which is important in maintaining or rebuilding trust in Twitter.
Since Twitter will be private, this is the only way to give a large group of users ownership.
There isn't anything out there yet other than a vague idea, but the window is open and Elon is raising money. Governance is at the heart of the conversation. I think a DAO made up of those most invested in Twitter's success would be a great addition to Twitter ownership.
Further reading:Musk says he will reverse Trump's lifetime Twitter ban
Twitter's future owner weighed in Tuesday on the social network's biggest problem, leaving little room for doubt that the platform's doors would be wide open for Trump if Musk had his way.
"I do think it's not right to ban Donald Trump. I think that's a mistake," Musk said in an interview at the Financial Times Future Car Summit.
Trump was permanently banned from the platform for inciting violence in January 2021, when thousands of his supporters violently stormed the U.S. Capitol.
Musk went on to explain that he believes banning Trump "alienated a large portion of the country" and didn't silence the former president -- given that the country has closely tracked Trump's uninterrupted Twitter activity for four years. , this claim is doubtful. Musk said: "...Banning Trump from Twitter will not end Trump's voice. It will amplify this wrong on the right, which is why it is morally wrong, and it is Totally stupid."
For now, Musk appears to believe the former president's assertion that he has no interest in returning to his former social network of choice, where he once communicated directly with his nearly 90 million followers. Currently, Trump is spending his days on Truth Social, his fledgling social app.
In his comments, Musk did not directly address Trump's role in the Capitol attack, but instead focused on the political implications of the decision and his belief that only bot and troll accounts should face permanent Sexual Twitter bans. He also claimed that the permanent ban "fundamentally undermines trust in Twitter as a town square where everyone can have an opinion."
Asked if that meant he would reinstate Trump, Musk asserted that he would overturn the former president's lifetime ban, calling it a "morally terrible decision" and "stupid as hell."
"Obviously, I don't own Twitter yet," Musk said. So it's not like something that's bound to happen, because what if I don't own Twitter? He also cited former Twitter CEO Jack Dorsey. Dorsey's hazy comment that the platform should not issue a lifetime Twitter ban, despite Dorsey's personal involvement in the decision to suspend Trump."
Although his vision centers on "free speech" with little moderation, Musk has voiced his support for some of Twitter's existing content moderation tools, including temporary account suspensions and censorship when content is illegal or "only disruptive." In the case of restricting its post display range. "
Information sourced from Notboring, slightly modified
Social media has tended towards monopolization.Coindesk
Employees have been given until today to comply or leave.Beincrypto
SBF revealed that they passed on Twitter investment because his vision for Twitter didn’t match Elon’s vision.Beincrypto
Elon Musk became Twitter's new owner on Thursday (Oct 27), firing top executives he had accused of misleading him and providing little clarity over how he will achieve the lofty ambitions he has outlined for the influential social media platform.Others
Elon Musk's favorite cryptocurrency settled down after rising on news that the Tesla CEO's purchase of Twitter was back on the table.Coindesk
Following the news, both TWTR and DOGE saw price surges.Beincrypto
Lower volumes and strong resistance levels continue to pose downside risks for DOGE prices despite the rebound.Cointelegraph
The company's board of directors unanimously approved the deal on Monday but added it was still "subject to the approval of Twitter stockholders."Cointelegraph
Binance is among 18 co-investors in Elon Musk's Twitter acquisition alongside firms like Sequoia Capital Fund and Fidelity Management and Research Company.Cointelegraph