There’s a lot of talk out there right now about how to deal with Twitter, and in particular how to deal with the way Twitter uses a natural monopoly caused by network effects to impose the Spirit of San Francisco on a nation that doesn’t really want that.
President Trump has talked about some sort of regulatory action. Some are organizing advertiser boycotts. A clever antitrust lawyer might actually do something with the concept of network effects leading to natural monopoly, and try to turn some of these companies into regulated utilities. Some look to Gab or Parler for refuge.
We don’t need any of that. This would be more appropriate, and a lot more lucrative… for somebody.
First of all, forget about de-horsing Twitter. Jack has achieved escape velocity, and there is no catching him now. Twitter has about 275 million active (at least once a month) users. Only 50 million of them are in the United States. The good news for us is, that’s probably where a lot of Twitter’s money is: in the United States.
I think it’s possible to relieve Twitter of roughly half of its U.S. income, and to do that within two years.
The first thing we’re going to need is a brand. Some people imagine that Twitter is an instant messaging service, and go looking for one of those. That’s how people find Gab and Parler. Nope. If it were that easy, AOL would have done it. (Actually, AOL did do it. First. What Twitter did to AOL Instant Messenger… can be done to Twitter.)
We’re going to split Twitter’s users off by politics, so we need a political brand. In particular we need a brand that is trusted by conservatives. Twitter is already trusted by liberals… they want ’em, they can have ’em. The plan here is to go after the people who don’t trust Twitter. It’s a good bet that those people are half of Twitter’s U.S. revenue, which is not a bad take.
Ideally the brand is a media company. A media company will already have an advertising sales force, and bundling opportunities to offer advertisers that can help launch the new platform.
Two years ago, I’d have said the ideal candidate to do this was Fox News. Besides the fact that they have since become a brand that conservatives no longer trust, they watched this opportunity float out there for years, and did nothing with it. I suspect that the Murdochs soured on social media after their investment in MySpace turned to dust. It wouldn’t surprise me to find out that more than one person in that company proposed something like this over the years, but it was always shot down.
We need technical infrastructure. Here we’re in pretty good shape thanks to the proliferation of cloud computing vendors in recent years, plus advances in computer virtualization. When Twitter started, companies built and ran their own server farms. Now we can rent as many terabytes and CPU cycles as we need at any given second, and if we need twice as many four minutes from now, they will be there. We probably can’t trust Amazon Web Services, and I wouldn’t trust Microsoft. Either one of them might “Twitter” us at any moment, without warning. IBM probably wouldn’t. IBM does a pretty good job of keeping the politics out of the path of the business. And there are others. In any case, a computer platform that can go from zero to seventy million users in a couple of weeks is quite feasible.
We need risk capital. Since we’re going to try to steal 25 million of Twitter’s 275 million users, I’m guessing we’ll need about 450 people (roughly 9% of Twitter’s workforce) for the first year, at an average cost of $90,000 each, call it $40 million plus the bills for the cloud computing. Whoever does it should probably plan to burn close to $100 million before turning a profit, and more than that before positive cash flow.
We need President Trump. He’s the key to making this work. President Trump is Instant Network Effect. He’s 70 million users who will follow him if he changes social media platforms. We can’t do this if Trump doesn’t sign up, and he isn’t going to sign up until he knows who is behind it and where the money is coming from. And it makes no sense to push the button on it until Trump is re-elected. The 70 million come with President Trump, not Former President Trump.
Twitter just reported $1 billion in quarterly revenue with 150 million monetizable, i.e. active and adult, users. That’s about $27 per monetizable user per year, and that’s after running that business for many years. By the second year, we’d be lucky to see $13 per user per year, from, say, 12 million users. That’s — carry the two — $150 million. Which is enough to float the business while it grows.
This is doable. Taking half of Twitter’s U.S. revenue is doable. Twitter makes it doable by arrogantly insulting half the people in the United States. They get away with it because no comparable platform has enough traffic to make things interesting. 20 or 30 million people is enough to make it interesting. And one person — President Trump — could cause that to happen… and fairly quickly.
We’ll need a name for this thing. It’s a shame that New Jack City is taken.