Meta takes on Twitter with Threads - This Week in Australian Startups #28, 13th July 2023
Meta launched Threads on July 6th, and it’s widely being considered a Twitter copycat. On the surface that does seems to be the case, but as you dig deeper it becomes more evident that the two platforms are quite different and for a few good reasons which I’ll dive deep into today.
Firstly, Twitter has never been a successful business - why would anyone in their right mind want to copy that? Since its IPO, it’s only ever turned a profit ($1.2B in 2018, and $1.4B in 2019 compared to $12.9B raised in capital) in 2 of the 8 years before becoming private again after Musk acquired the business for US $44B. Since the deal it’s reported to only be worth a mere $15B in comparison, less than a third of what Musk originally paid.
Twitter has struggled to build something profitable even with its outsized cultural influence and elite user base for some time, and been in decline well before Musk took over.
The question then becomes is Meta trying to build a direct competitor to Twitter or are they trying to do something else? This isn’t the first, and likely not the last time, Meta has copied other platforms - it would be naive to think Meta doesn’t have a plan and is now in execution mode.
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Secondly, Meta is one the very few big tech companies left that is still founder led and that’s been critical to how they’ve executed the launch. On the other hand to quote 2013 Zuckerberg “[Twitter is] such a mess - it’s as if they drove a clown car into a gold mine and fell in.” He may have said it, but the rest of the tech world thinks the same. Whilst Musk has made things worse, how much has Twitter’s trajectory really changed?
It’s another sign to not discount Meta, and underestimate the importance of having a founder led business - launching early, capitalising on the 4th July holiday week in the US and the on going issues Twitter hitting with limiting the number of tweets users can see. Whether you love or hate Zuckerberg you have to admit the execution has been extremely impressive.
Threads feels as if it was put together in a few months, launched early, and yes whilst its lacking feature parity with Twitter has had little to no performance issues and onboarding 100M+ users in a matter of days (beating ChatGPT’s record).
Thirdly, there’s a compelling reason why Meta has, when copied platforms like Snap and TikTok and done it relatively successfully. No it’s not to completely destroy the competition, although that may be a nice cherry on top. It’s been to ring fence platforms like Snap and TikTok into their corner, limiting their growth and audience. People will almost always do what’s easier, Instagram Stories and Reels are great evidence of this - the friction to use a new app, or click a button or two on my existing one has worked well for Meta.
Ben Thompson, wrote an excellent piece this week going into the Threads and the Social/Communications Map explaining where and why platforms sit across the below axis.
Whilst Meta, or really any social media platform, can’t take the entire landscape what they have excelled in doing is fencing the competition into a corner and limiting their growth.
When Meta launched Instagram stories, Snap was on a great path leading to its IPO - and Meta neutralised this threat in limiting Snap’s potential new user base and limiting movement from Meta to Snap. The same with Reels, although this was a very different challenge for Meta, as TikTok was public platform by nature leveraging all content on its platform to serve the best content to users. Facebook is private in nature and only able to serve content (except for ads) that is within your network of people/pages you follow.
Threads is yet another fence built by Meta, this time limiting Twitter’s growth.
Meta will succeed not by killing Twitter, but by capturing the market they never could and turning them into text based social media users. It’s a huge business opportunity that Twitter has never been able to capitalise on - either due to poor product market fit (in which case Threads will likely fail too) or because it’s been a “clown car”.
Majority of Twitter’s usage comes from news and politics, and as I wrote two weeks ago Meta has taken a clear move to ban news in Canada amidst the Online News Act - signalling a clear intention to have no interest in monetising news. Instagram boss Adam Mosseri made this very clear in a post on Threads:
Once you look under the hood, it’s clear that Threads is not a threat to Twitter’s business - broken record here, Twitter has never been a successful business. The threat to Twitter is the cultural relevance it has. Most people have at one point or another tried Twitter, and majority decided it wasn’t for them and Twitter has not been able to capture this market. Then there’s the next generation of cultural influencers - this is where the war will be won and lost for cultural significance and Zuck thinks they have a good shot after Twitter hasn’t been able to succeed in capturing this market, which largely already exists on Instagram.
It’s only been a few days since Threads launched - more features will come, more conversations will be had and the platform will continue to evolve. What’s certain is that people have been crying out for a Twitter that isn’t run by Musk, we’ve had Mastodon/Bluesky which were not built for the ‘rest of the us’ - Threads is, and the opportunity is there for Meta to build it, and try to bring along the tastemakers from Twitter across too.
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