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With Threads, Meta Has Plenty of Opportunity And Underappreciated Risk
Where does Instagram end and Threads begin?
The updates came swiftly from Mark Zuckerberg. Threads, his Twitter copycat, hit 2 million users within two hours of its launch on Wednesday. Then ten million within seven hours. Then 30 million the next morning. “Feels like the beginning of something special,” Zuckerberg posted. By Thursday afternoon, Elon Musk threatened to sue.
With a fast expanding userbase and support from its parent company, Threads appears destined to stick around for a bit. And while there’s opportunity for Meta, its emergence is not without risk. In its pursuit of cultural relevance and added revenue, Meta’s opened itself to distraction in its fight against TikTok. Threads may also dilute its core apps, weakening their network effects.
As Meta’s hot, new Twitter-clone wraps its first week, here are four opportunities and two risks to consider:
Opportunity: Make Some Serious Cash
Twitter always struggled to grow revenue because its ad system was inferior to its competitors. Meta’s ad targeting and optimization tools are world class, and they could make a difference when applied to a Twitter-esque product. Meta, for context, made nearly $40 per user last year while Snapchat, with similar features, made $12.98. Twitter’s best year was 2021, where it made a bit over $5 billion. With the assistance of Meta’s ad platform, Threads could do much better.
Opportunity: Use The Reels Algorithm To Build A Better Twitter
When Meta copied TikTok, it put a ton of resources into its Reels algorithm. To show you the best videos from across its network, not just posts from your friends. it needed a recommendation algorithm more powerful than the News Feed’s. Already, its effort is spilling over to Threads, where algorithms sort the feed, and there’s no ‘following’ tab. By going all-in on ‘For You’— at least at the outset — Meta is making a point. It believes its algorithm is better at finding posts you might like than you are yourself, and it has Instagram’s follow graph as helpful signal. Meta’s algorithmic feed may work well on a Twitter-like platform, where new and casual users never saw the appeal in building follow graphs from scratch.
Risk: Distraction From The War With TikTok
Meta moved away from public content in favor of ‘friends and family’ posts in 2018. In doing so, it left a void that helped TikTok rise. Then, in 2020, Meta introduced Reels, making public content core to its apps again. Now, with Threads, Meta is creating another app for public content consumption, diluting the appeal of its core apps as it wages war with TikTok. Instagram head Adam Mosseri said Threads is for conversations while Instagram is for simply posting, but the distinction is so subtle it’s almost meaningless. By distracting users, influencers, and its own executives from its core apps, Meta could harm its ability to win vs. TikTok.
Opportunity: The Ex-Twitter Talent Pool
Elon Musk laid off about 80% of Twitter’s workforce and, by one estimate, nearly 15% of its early exits already work at Meta. As Threads takes off, Mark Zuckerberg will have the opportunity to poach more ex-Twitter workers who are eager to take revenge. On Thursday, Musk threatened to sue Meta for poaching his employees. But that’ll be a difficult case to win, considering how gleefully Musk made his cuts. Now, ex-Twitter employees, including former comms executive Liz Kelly, are happily promoting Threads while pulling a Meta paycheck. They should be able to help Threads expand smartly as it moves ahead.
Risk: Another Chaotic Public Forum
Zuckerberg, Mosseri, and their colleagues have promised to build a ‘friendlier’ Twitter, and their product already reflects some of those decisions. There’s no public count for retweets, for instance, which can disincentivize outrage baiting. There’s also an option to hide replies you don’t like. That said, social media platforms have not historically been friendly, and the company is somewhat delusional if it thinks it can build a happy go lucky version of Twitter.
Opportunity: A Potential Wager For the Cage Match
How about this scenario: Mark Zuckerberg and Elon Musk step into a steel cage sometime this fall. A UFC referee is there to make sure the fight is fair. The wager? If Zuck wins, he gets Twitter. If Elon wins, he gets Threads. Now that would be a fight worth tuning into.
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What Else I’m Reading, Etc.
Meta’s history of copycat apps [Axios]
Taylor Swift actually did agree to a partnership with FTX [CNBC]
Google and Meta are blocking local news links in Canada [Variety]
India’s new $12 phone could help millions get online [Reuters]
Why ad-tech powerhouse MediaMath fell apart [Insider]
Tipping culture is out of control, say 30% of Americans [CNBC]
New York Mayor Eric Adams faked a photo of a fallen officer in his wallet [New York Times]
My appearance on CNBC Closing Bell discussing the Threads rollout [YouTube]
Secureframe makes it fast and easy to get SOC 2, ISO 27001, HIPAA, PCI & GDPR compliant. With guided workflows and one-click integrations, the entire process is automated. [Secureframe] (sponsor)
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Number Of The Week
The number of deals backed by U.S. venture capital firms last quarter. It’s about a third less than a year ago, and represents half as much money, a sign that VCs are pulling back from early stage startup investments.
Quote Of The Week
“Must confess to a deep love of fashion & architecture”
Elon Musk, following the launch of threads, showing interest in Instagram’s core verticals.
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This Week on Big Technology Podcast: Big Tech’s Comeback and the Spillover to VCs and Startups – With Elliot Brown
Eliot Brown is a reporter at the Wall Street Journal and co-author of The Cult of We: WeWork, Adam Neumann, and the Great Startup Delusion. He joins Big Technology Podcast this week to talk about Big Tech’s remarkable stock market comeback and how that’s spilling over to VCs, startups, and IPOs. Stay tuned for the second half where we discuss the risks in the commercial real estate market, looking into examples Brown has reported on. We end discussing Evan Gershkovich, a friend and colleague of Brown who is currently imprisoned in Russia.
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