When I wrote this piece, making a case that text-based Threads may not do well because most of its native Instagram users are photo-first users, many called me “pro-Musk”, instead of focusing on the thesis of my piece.
Today, early data is showing that my call may be right: “Meta’s Twitter-like platform Threads, has recently recorded a decline in user engagement and daily active users days after its launch. According to data from Sensor Tower, the platform saw a 20% decline in daily active users and a 50% reduction in time spent within a week of a record-breaking 100 million sign-ups.”
Speaking on the decline in user engagement on Threads, the managing director at Sensor Tower, Anthony Bartolacci said,
“The Threads launch really did break the internet, or at least the sensor Tower models. In the 10-plus years, Sensor Tower has been estimating app installs, the first 72 hours of Threads was truly in a class by itself.
“These early returns signal that despite the hoopla during its launch, it will still be an uphill climb for Threads to carve out space in most users’ social network routine. The backing of Meta and the integration with Instagram likely gives Threads a much higher flood than other services, but it will need a more compelling value proposition than simply ‘Twitter, but wiFirsthout Elon Musk”.
In my note when everyone was singing the praises of Threads, I wrote “As an investor, I will not invest in the fact that Threads has 200 million users because it does not.”
Good People, it is a first-scaler advantage and winner-take-all. Text-based microblogging has been won by Twitter. Instagram natives cannot match that, just like LinkedIn cannot add photo-sharing and expect us to migrate to sharing photos. For Meta to compete against Twitter, it goes beyond having just “users”, you need the right users – and those are people who like to write.
I was a Library prefect in secondary school, it was a lot of work to coordinate the school for debates. There, you understand that it was not about being grammar-smart, it was about being aware, to score points before judges. Suddenly, tactics win because you need to give judges points in styles to get points. The same applies to social media; it is about the styles your users prefer: photo, video, text, etc. Most times, you cannot swap those.
A first-mover advantage can be simply defined as “a firm’s ability to be better off than its competitors as a result of being first to market in a new product category”. The first scaler advantage is the advantage which comes to a firm for being the first to become extremely popular and ubiquitous by scaling its services in a category.
But note this: the greatest companies in the world are known for one thing: great products. Interestingly, all great products are known by customers. That typically comes because they are well scaled. Extrapolate, you’re talking of first-scaler advantage, a leverageable compounding competitive advantage which comes with economies of scale as a result of being the first company to achieve scale in that category and improve marginal cost, offering products at highest value and best optimized cost.
Meanwhile, Twitter has started paying creators.
Elon Musk’s company, which is being sued for allegedly not paying some $500 million in severance owed to former employees, began sending out payments this week. But the recipients weren’t the former employees but, rather, influencers and creators who Musk is rewarding for posting on the platform. Many of the recipients who claimed to have received payouts from Twitter live on the far-right side of the spectrum. Andrew Tate, who is being investigated in Romania for allegations of rape and human trafficking, said he received $20,000 from Twitter. (Fortune Newsletter)
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Comment 1: Ndubuisi, your analysis raises an interesting point. If a prominent platform like Instagram, with its photo-first user base, struggles to compete with Twitter’s text-based microblogging, it begs the question: who else can pose a significant challenge to Twitter’s dominance?
It seems like finding the right user base, those who enjoy writing, is crucial for any platform aiming to take on Twitter. I wonder if we will ever witness a worthy competitor emerge in the socio-microblogging space.
My Response: They have the resources to get those users. If they drop $20k to top 20k users of Twitter, they can create a tribe of text-writers there at Threads. At 200m daily users, Threads could generate $8 billion in annual revenue. So, it is a good math.
Threads engagement cools off. The debut of Meta’s Threads may have been unprecedentedly explosive, but the dust has already started to settle. According to a CNBC report, marketing intelligence firms think the Twitter lookalike’s number of daily active users fell by 20-25% between Saturday last week and Tuesday and Wednesday this week, and one (Sensor Tower) said the time the average user was spending on the platform each day had halved to 10 minutes. (Fortune newsletter)
Comment 2: Twitter thrives on its active community, which fuels the spread of words like wildfire through tweets and retweets. Meanwhile, Instagram users prefer dazzling visuals as their mode of expression. Meta smartly tried to move Instagram users onto Threads, the majority of whom are those who aren’t big on words. Matching up to Twitter’s energy, let alone overthrowing it, will require substantial effort.
Comment 3: I completely agree. I never got fascinated about Threads and didn’t make an attempt to download it. Each of the SM networks have built unique communities of users in and around them. Scalability should check the pulse of users to win all. Thanks Prof. Ndubuisi Ekekwe for your business insights and thought leadership.
Comment 4: Spot on Prof!
The hype is already fizzling out. Curiosity got the better of many SM users and the excitement to join what is presently trending is fading. I am not one that follows a popular trend and I am on Twitter more than on Instagram (visit there once in 2 weeks).
But Meta can focus on e-commerce as so many deals go down on Instagram instead of going after Elon
Comment 5: My erudite professor of an Eastern descent. I never thought you less wiser. In fact, not interfacing with your piece in a day is akin to not visiting my LinkedIn page in a day.
Yes! First scaler advantage has a lot to do with swift propagation and leading advantage in competitive businesses. But of more importance is establishing businesses with commercial intercourse. Meta will definitely never do well in micro blogging business even with the massive followers as the initial turnout towards Threads is basically out of curiosity and not interest in particular. But Meta getting involved in an e-commerce or payment platform venture could do a lot better, even beyond the first timers in the businesses due to the commercial intercourse or alignment with the nature of Instagram and Facebook businesses, which have a lot to do with buying, selling and rendering of services.
My little thinking sir.
Comment 6: You’re spot on. Evidently Elon Musk understood this too which was why he invested U$D44B instead spending a fraction of that amount trying to clone Twitter.
I said it from the onset that the rapid user rise Threads experienced was fuelled more by curiousity than any strong fundamentals.
When it comes to micro blogging, Twitter is the absolute category King.
Aspiring Twitter killers should give up already; you don’t make something obsolete by duplicating it. Unfortunately for Meta, they’re not known for innovation as much as copycatism. For Threads to thrive they must create a compelling differentiated element of microblogging.
