Twitter’s acquisition strategy: Eat the public conversation

The last few months have been interesting for Twitter.

After years of no innovation at all, Twitter is making big product changes. It has acquired Breaker and Revue, and presumably has more M&A coming. It’s coming out with Spaces. The only thing it clearly isn’t working on is an edit button.

Strategically, though, what is a microblogging service doing buying a social podcasting company and a newsletter tool while also building a live broadcasting sub-app? Is there even a strategy at all?

I humbly propose this: There is a strategy. Twitter is trying to revitalize itself by adding more contexts for discourse to its repertoire. The result, if everything goes right, will be an influence superapp that hasn’t existed anywhere before. The alternative is nothing less than the destruction of Twitter into a link-forwarding service.

Let’s talk about how Twitter is trying to eat the public conversation.

Why now?

Twitter’s problem is pretty simple. It’s this.

Twitter revenue quarterly growth 2013-21. Image Credits: Macrotrends

Another way of putting it is: Twitter is not generating as much money from ads as it used to. Ad revenue has failed to grow because Twitter is generally considered to have a poorly performing product for marketers. As a result, its stock price has been flat for years.

The irony, though, is that Twitter became more socially important during this period of financial stagnation to the point that the president of the United States nearly launched several wars on the platform!

The core reason is that since becoming a public company, Twitter has been considered by most to be one of the most boring tech companies productwise. Yes, people joke about the lack of an edit button, but the platform really has been slow to innovate in any real way.

Twitter was one of the most dynamic companies around, going from the fail whale company to being the company that invented the hashtag and acquiring some of the hottest companies, from Periscope to Vine.

But it all failed. Twitter rarely used acquisitions successfully. It stopped putting out new features and barely even managed simple improvements. Despite describing itself as “what’s happening now,” it missed every boat. Until this year.

What changed?

1. Twitter started to face its first real competition in years due to the social media renaissance. Twitter’s strength has always come from being where the news happens. Podcasts, Clubhouse, newsletters and other new channels are true competitive threats.
2. Good, old fashioned fear in management. Elliot Management, the famously aggressive activist hedge fund, took a huge stake in Twitter and threatened to fire @jack unless he started making product changes.
3. Infrastructure baggage, according to management. On its first analyst call since 2014, @jack claimed that one of the big reasons Twitter was slow was that so much engineering was dedicated to infrastructure but now they just pay for a public cloud and focus on product. This seems like a cop-out, but, if true, has deep implications for all tech companies.

The result is a wellspring of initiatives. New leaders, like Kayvon Beykpour, seem newly empowered. But most notably, Twitter is now competing in all of the hot spaces at once.

For some areas, it has acquired: For example, it bought Revue to compete with Substack and Breaker to compete with Spotify. In other areas, it is building: It is creating Spaces to compete with Clubhouse and Super Follows to compete with Patreon. At this point, the only thing Twitter hasn’t done is build a blogging platform, which perhaps might involve acquiring Twitter co-founder Ev Williams’ company, Medium.

The question is if there is a strategy here, or is Twitter just swinging to see what can possibly revive their growth?

I don’t think Twitter’s just praying for a hit.

A strategy: Omnichannel

The core idea is that Twitter is doubling down on multichannel engagement for creators so that they never have to leave for anywhere else.

Let’s take Spaces as an example. Spaces is an interesting experience  —  it has everything that Clubhouse lacked, like DMs and real-time reactions. It’s only missing better curation and discovery, which will be fixed when Twitter finally gives Spaces its own tab.

Image Credits: Twitter

But what really makes Spaces shine is the fact that it is on Twitter. When you use Twitter Spaces, people will follow you on Twitter. That doesn’t happen anywhere else, and at its core, that is why Twitter can win.

People want to maximize their on-platform distribution. While companies like Substack talk about sovereign writers (and therefore provide writers with their subscribers’ emails  —  but not payment information), what really matters to most writers quite often is the distribution that they own in-platform. Being able to take the user graph off-platform is less of a concern because the interaction modalities are different, so fan-base transfer is uncertain in the first place.

So, when you are on Spaces, people will follow you because your Twitter profile is right there. This is something you can’t get from Clubhouse; all you get there is Clubhouse followers.

As Twitter becomes more integrated and cross-promotional, you can imagine the value this produces throughout the network, because each follow becomes more valuable. For the creator, a Twitter follower becomes more valuable because there is more monetization in-network. From one profile, users can offer paid newsletters, podcast episodes (and eventually paid podcasts, presumably), and fan revenue, along with future initiatives like Spaces tickets.

For the fans, it becomes more valuable to follow someone, because there are so many kinds of content on a single profile. The more Twitter bundles its services, especially on the profile level, the more fans can get lost in a creator’s content. This is especially true when profiles get revamped so that users can, on a single page, subscribe to a podcast, a newsletter and more. I suspect Twitter sees this, and you can already see Twitter starting to cross-promote with Revue.

Image Credits: Twitter

On a deeper level, this is an omnichannel strategy no one has ever successfully tried before. The only real comparable is WeChat, where creators create groups and sell products like merchandise directly to fans in WeChat groups. Here, Twitter is similarly trying to allow creators to make content and then distribute it all in a single place.

Unlike WeChat and other companies like Facebook and YouTube, which try to own the online universe for segments of the population, Twitter is trying to limit itself to a single item: the conversation. That is, Twitter wants to be an omnichannel solution for people who want to influence other people. It does not expect to be the only distribution channel for everything its creators produce, and it may not always be their most valuable one, but it should always be a creator’s most influential one.

Twitter must move fast and think about content

To succeed, Twitter needs to change two fundamental ways it does business: It needs a real content strategy, and it needs to move fast.

Let’s talk about content. Twitter and other companies of its era don’t think of themselves as content companies. They think of themselves as content platforms. To some extent this is for ideological reasons, but it is also due to the state of the internet from their time: The goal was to maximize users, which meant being free, which meant being a platform for content rather than a moderator. The new crop of entrants, most notably Clubhouse and Substack, call themselves platforms too, but don’t quite act that way.

Substack has been very aggressive in getting top people to its platform. Similar to TikTok and Snap, it has creator funds and pays advances, similar to (but not quite like) a publisher. It is also building tools content creators need, like a legal defense fund.

Similarly, Clubhouse is clearly thinking a lot about sustainability for its content creators. It is creating new ways for people to interact, like tickets, subscriptions, tips and other payment-oriented ways of monetizing. Plus, it is very focused on the community-level features of the product, like Clubs.

Historically, this isn’t what platforms like Twitter and Facebook have done. They’ve thought about themselves primarily as hands-off social platforms, and you don’t pay someone to go and hang out with their friends. The celebrity network effects happened by accident; as a result, they don’t think as much about content creators needing a strategy per se.

This is going to have to change if they’re going to compete, because these new growth areas are more about building an audience. The only social networks that seem to understand this are newer ones like Snap, Spotify and TikTok. Twitter doesn’t even have a creator fund, which it desperately needs to keep talent on its platform.

As Twitter builds its product suite, it will need to have interesting vertical integrations. Right now, Twitter is just dipping its toes there, notably with one-click Space tweets, but one can imagine Twitter going much deeper. Pre-recorded Spaces could be instantly cut and put on as a Breaker podcast. Revue newsletters could have Twitter links in the footer. If Twitter bought Medium, essays could be tied to tweetstorms. The list goes on.

Uniquely to Twitter, the profile is going to be a locus of discovery. The very first one is going to be Twitter’s Tip Jar function. But one imagines many similar buttons: One for my newsletter, one for my Breaker podcast, one for my Space, and more, turning every Twitter profile into a rich replacement for a Linktree.

Image Credits: Twitter

This is critical, because social media is going to reface an old problem: discovery. There are two sides to discovery: How do you manage discovery as content increases in scale on a platform (this is particularly hard for synchronous content)? And, how do you get users to discover all your new features?

Both kinds of discovery are intimately tied to verticalization, because influence is increasingly a business of scope and context. Twitter is clearly thinking about this, but their strategy here is least clear, and they are starting with the least auto-curation tools, like subreddits or Clubs.

There’s one other thing Twitter needs to do: Move fast. This has always been their weakness. It’s often attributed to @jack, who likes to deliberate and ask a wide range of opinions. I suspect it is also cultural memory from the fail whale days.

But Twitter is losing out. Bigger and bigger people are moving to other platforms. Elon Musk, a noted Twitter addict, did a Q&A on Clubhouse in a room created by a16z’s Sriram Krishnan, the former product lead of Twitter. This is something that all parties involved would rather do on Twitter. Journalists, who are all Twitter addicts, are putting out long-form content on Substack. There’s no doubt they would rather integrate this with their Twitter profiles.

These are just two examples, but that’s the thing about network effects: They are strong in both directions. A small trickle can quickly snowball into a total collapse. Right now Twitter is just experiencing a trickle, but time is of the essence.

The future of influence

On a more general level, it seems clear that many of these new products are formats, not apps, like stories and swiping before them. Facebook, Twitter, Reddit and more are already working on competitors to Clubhouse, Substack, and even Eventbrite now. Twitter is not the only player in this game; it’s just the most dramatic.

If Twitter works hard and executes fast, it can crush these newcomers. But the longer it waits, the more news actually happens in these new formats on these new platforms, which means the less reason there is to be on Twitter, which means a weaker network effect. People will come for the content, but stay for the community, as Hunter Walk might say.

Twitter needs to act quickly enough to make sure it never has its spell broken. After all, people still use Twitter to market their Clubhouse rooms and Substack newsletters; if Twitter moves fast and integrates, it should be able to win through better native distribution. But if not, it will become a dumb link distribution service, at which point everyone will be better off going elsewhere.