Threads and ‘The cold problem’

July 12, 2023
3 minutes

By Sorin Anagnoste

Strategy | Business Models | Tech

It has been a crazy week for both Meta and Twitter. My impression is that this ‘fight’ started back 10 years ago:

“Twitter is such as mess — it’s as if they drove a clown car to a gold mine and fell in.” – Mark Zuckerberg, 2013

…fast forward on 6th of July 2023:

So, I have 14 points about what happened and here we go:

1/Text-based platforms like Twitter have a limited number of users they can address. Most of the Millenials and Gen Z prefer photos and videos. Critical lesson: the medium matters.

2/ Meta solved “the cold start problem” by using Instagram’s graph, so everyone had from the beginning who to follow and search. Re-use is better than reinventing sometimes.

3/ Many (ie. millions) joined on Threads for two reasons: (a) to see how the platform is [btw, RIP Clubhouse) and (b) to have a real chance to start from scratch their audiences.

4/ Social Media networks like Twitter tend to select the winners over time. Most of those who have followers and paid subscribers will almost never switch to other platforms. If they will switch, probably will be because posting text on two platforms is much easier than posting photo/video content.

5/ Threads looks like an app that was launched one month earlier and this was a good strategy move for three reasons: (a) Zuckerberg understood the capital mistake of Elon’s strategy regarding the limitations of viewing 600 tweets/day and (b) ongoing frustration with Twitter’s overall strategy and (c) a Saturday is the best day to launch an app, especially after additional 2 days off.

6/ Twitter’s strategy to make the app worse for those who don’t pay is the worst possible strategy. A rookie’s mistake.

7/ The social media participation: 90% never contribute, 9% interact and 1% are content creators. If half of those 1 % moves to threads then Twitter might be in danger.

8/ The top 1% of Twitter vs. the 20% of Instagram. Let’s assume that 20% of Instagram users join Threads and start posting and building audiences. Coming from a different medium (ie. photo/video) their output will probably be lower in quality than from the 1% of Twitter.

9/ Business model: Twitter uses an algorithmic timeline (since 2016) where the “For you” tab is now default but in a Social Network context. So, in “For you” most of the posts are from people you don’t follow. On the other hand, on Threads, everything you see, especially in the beginning, is user-generated content just like on TikTok. Why Twitter uses a different approach? Here is the reason:

10/ No ads in Threads feels great.

11/ Twitter should have changed its business model years ago. I propose in one of my first newsletters that the company should have asked for a specific fee/month. Now is too late to do that. What can save the app are: (1) The top 1% to remain here and (2) Twitter become indeed a Super App.

12/ The social media pie will just increase, but Twitter’s ability to grow (ie. new users) is very limited at this point. So, Meta succeeds here with the same strategy that limited the Snap threat. Copy & paste the product and deliver it to your billions of clients.

13/ Joining Threads is so easy and the network is there. Convenience still matters.

14/ In the EU the app will be available in the future (6 months?). Why? Because Meta the company doesn’t know what the Digital Market Act will bring. EU represents 10% of Meta’s users, but my estimation is that the percentage is much more for revenue. Anyway, we will start to see more and more this king of two-phase launches due to bureaucracy. The Verge, Eugene Wei, Ben Thompson

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