Twitter vs Twitter

1st warning: This post is really about Twitter vs Threads, but also about Twitter vs itself

2nd warning: I am not a social media expert

On 5 July, Meta launched Threads and within 5 days, hit more than 100 million users. This is an incredible achievement and one of the most successful launches of all time, if not the most. This is helped by the connection to Instagram, which has 2 billion users. To sign up for Threads, you need an Instagram account.

This result was achieved despite launching a bare-bones version of Twitter. There is no way to search hashtags, it is not available on web browsers, no timeline feed of people you follow, at launch.

An interesting point from the launch

Twitter has lurched from self-inflicted wound to self-inflicted wound since Elon Musk took over. This is not helped by his many, many decisions and actions to antagonize parts of his own user base. This has led to small number of users leaving each time something breaks at Twitter. 

Despite all of this, Twitter remains supreme. The user base and the network effect is incredibly strong. Users who disagree with Elon Musk's politics/personality/worldview have tried to quit Twitter. Some have succeeded, some have not. As a result there is a small minority of users who despise Elon Musk but keep coming back. This points to a very strong business moat.

However, this provides a weak point for rivals to exploit and Mark Zuckerberg is if nothing else, very good at exploiting weakness. As a result, a number of frustrated users have created Threads accounts at launch to explore what is basically a super stripped down version of Twitter. 

Some have taken the step of deleting their Twitter accounts, essentially torching multiple thousands of followers built up over time. The Chancery Daily, who rose to fame tweeting and sharing run-downs of the Twitter vs Musk trial at the Delaware Court of Chancery is one of these (you can find her @chancerydaily on Threads). 

Also notably, some users who may be neutral on Musk's politics/personality/worldview have created accounts. This is in stark contrast to previous Twitter convulsions where they have stayed on Twitter despite existence of alternatives like Mastodon.

Side note, the launch of Threads is also the latest episode in the Zuckerberg vs Musk rivalry. I think Zuckerberg won this round

Predictions of Twitter's demise are overblown... as are predictions Threads is pure hype

This has led to the usual hyperbole about Twitter dying but this is far from the truth. As many have noted, Threads usage has dropped off since it's launch. 

At the same time, dismissals of Threads as a viable competitor to Twitter as pure hype are overblown as well.

Lest we forget, 100 million signups are a big deal, even if only 10% of them are users are active now, barely 1 month into the launch. For comparison, Mastodon has just slightly over 10 million accounts (not users). The user account number has surely exceeded 100 million by now.

Most importantly, this is for an app where many features are not available YET.

What stands out to me now

Putting aside any opinions of Meta or Twitter or Zuckerberg or Musk, this is an interesting comparison of 2 very different rival companies and strategies.

1) The question of size

Twitter is the much smaller competitor in terms of market value. Although it is private, it is definitely worth less than the 44 billion paid by Elon Musk. However, it's moat is the strongest, as many users are using it or are forced to use it despite the many attempts by Elon Musk to push them off.

The success for Threads may be linked to leveraging on the Instagram user base, which is a clever way to push out a product. However, Instagram and Threads are 2 different products, one is video/pictures and the other is text. It remains to be seen how far this can take them.

2) Punching their own faces

This brings me to the incredible scenario of an owner actively waging war on his own users. He has made it clear he will use Twitter as a bullhorn for his politics, regardless of what others might think or the precarious financial position of Twitter.

And this is the part where he consciously makes a choice. Twitter has created unintended and needless self-inflicted wounds. Again, putting aside one's opinion of Musk, this is a very interesting case study in how a company moves the business forwards by introducing new features or if you prefer, unconsciously tries to destroy it's own moat. Or test the resilience of said moat. Or who knows what Twitter is thinking?

3) Different ways of slicing the apple

This is also an interesting contrast in how teams execute product changes. We know from multiple examples that Twitter/Musk implements changes haphazardly without prior announcement. The Twitter team is stripped down to bare-bones after multiple rounds of firing.

In contrast, Threads is run by the Instagram team at Meta, led by a long time veteran of social media. He has communicated to users regularly since the launch of Threads. Including announcing upcoming changes to combat spam.

Will chaotic rollouts trump smooth execution? We shall see.

4) Don't believe the hype

Both sides are trying to hype up their respective products. It goes without saying we should be wary of their announcements. We do not have far to go to find examples of Elon Musk's... hyperbole and both sides will have strong incentives to tout their own products as well as their unusual metrics used to measure users and usage. 

5) Who has more cash to burn?

Meta is profitable with better resources, while Twitter is allegedly in a more precarious state. The word allegedly applies because it is not listed, we do not know the true state. In April 2023, Musk has stated that they are "roughly break even" and advertisers have " either come back or said they’re going to come back, there are very few exceptions" yet in July he tweeted out that cashflow remains negative and there is a 50% drop in ad revenue.

Seen from this perspective, Twitter with its reduced workforce and lesser financial resources is the smaller competitor despite it's established user base.

Ultimately, we have to remember it's just a couple of weeks into the launch of Threads. It is too early to tell the outcome. Another key point to remember is that Meta has a long history of killing products that didn't work out, and the same can happen to Threads.

Whatever the outcome, it will at least be entertaining.

The information provided on this finance blog is for educational and informational purposes only and should not be construed as financial or investment advice. You should always do your own research and due diligence before making any investment decisions. Any reliance you place on the information provided is strictly at your own risk. I will not be liable for any losses or damages that may arise from your use of the information provided on this blog. Remember, investing involves risks and there is no guarantee that any investment will achieve its objectives or that any investment strategy will be successful. Always consult with a licensed financial professional before making any investment decisions.