Twitter's Acquisition Strategy: A Deep Dive

Twitter's Recent Transformations

Recent months have presented a period of notable change for Twitter.

Following a prolonged period lacking substantial innovation, Twitter is now implementing significant product updates.

The company has completed acquisitions of both Breaker and Revue, with further mergers and acquisitions likely on the horizon.

Furthermore, the introduction of Spaces demonstrates a commitment to new features.

Notably, the development of an edit button remains conspicuously absent from their priorities.

A Question of Strategic Direction

However, a key question arises regarding the underlying strategy.

What rationale exists for a microblogging platform to invest in a social podcasting company and a newsletter platform, while simultaneously developing a live audio broadcasting application?

Is a cohesive strategic vision even present?

The Pursuit of a Discourse-Rich Ecosystem

A potential explanation suggests a deliberate strategy is indeed in play.

Twitter appears to be actively working to reinvigorate its platform by expanding the available contexts for public discussion.

Should these efforts prove successful, the outcome could be a uniquely powerful influence superapp, unlike anything currently available.

Conversely, failure to adapt could lead to Twitter’s decline into a mere link-sharing service.

Expanding Twitter's Role in Public Dialogue

Let's examine how Twitter is positioning itself to dominate the landscape of public conversation.

Key Acquisitions and Feature Developments

• Breaker: Acquisition of a social podcasting platform.
• Revue: Purchase of a newsletter tool.
• Spaces: Development of a live audio broadcasting feature.

These moves indicate a broader ambition than simply remaining a text-based microblogging service.

Twitter is aiming to become a central hub for diverse forms of online communication and content creation.

The Current Situation at Twitter

The central challenge confronting Twitter is relatively straightforward. It revolves around a fundamental issue.

To elaborate, Twitter is currently experiencing a decline in revenue generated from advertising. This stagnation in ad revenue stems from a widespread perception among marketers that Twitter's product delivers suboptimal performance. Consequently, the company’s stock price has remained largely unchanged for an extended period.

Interestingly, despite this financial underperformance, Twitter’s societal influence has grown significantly. It has even reached a point where statements made on the platform by the President of the United States have nearly instigated international conflicts!

A History of Stagnation

Since its transition to a publicly traded company, Twitter has often been viewed as one of the least innovative technology firms. While the absence of an edit function is a frequent point of discussion, the platform has demonstrably lagged in substantial innovation.

Initially, Twitter was a highly dynamic organization, evolving from the era of the "fail whale" to pioneering features like the hashtag and acquiring promising ventures such as Periscope and Vine.

However, these acquisitions largely failed to yield positive results. Twitter struggled to effectively integrate acquired companies and consistently release new features, even basic improvements. Despite positioning itself as the platform for “what’s happening now,” it consistently missed emerging trends – until recently.

Catalysts for Change

What factors have contributed to this shift?

• Increased Competition: Twitter is now facing its first significant competitive pressure in years, driven by the resurgence of social media. Its traditional strength – being the primary source of breaking news – is challenged by platforms like podcasts, Clubhouse, and newsletters.
• Activist Investor Pressure: Elliot Management, a well-known activist hedge fund, acquired a substantial stake in Twitter and threatened to remove @jack from his leadership position unless substantial product changes were implemented.
• Infrastructure Improvements: Management has cited infrastructure limitations as a key impediment to innovation. They claim a shift to public cloud services allows them to refocus engineering efforts on product development. While potentially an excuse, this suggests broader implications for the tech industry.

The outcome is a surge of new initiatives. Newly empowered leaders, such as Kayvon Beykpour, are driving change. Most notably, Twitter is actively competing in multiple emerging spaces.

The company has pursued acquisitions in certain areas, such as Revue (to rival Substack) and Breaker (to challenge Spotify). Simultaneously, it is developing internal solutions, including Spaces (competing with Clubhouse) and Super Follows (competing with Patreon). Currently, the only area where Twitter hasn’t made a move is in blogging, potentially hinting at a future acquisition of Medium, co-founded by Ev Williams.

A Coherent Strategy?

The central question remains: is there a unifying strategy behind these moves, or is Twitter simply experimenting in hopes of finding a path to renewed growth?

It is unlikely that Twitter is solely relying on chance.

An Omnichannel Approach

Twitter is strategically reinforcing its position as a comprehensive platform for creators, aiming to minimize the incentive to seek opportunities elsewhere.

Consider Twitter Spaces as an illustration. Spaces delivers a compelling user experience, addressing shortcomings present in platforms like Clubhouse with features such as direct messaging and live reactions. Further enhancements, specifically improved curation and discovery, are anticipated with the planned introduction of a dedicated Spaces tab.

The true strength of Spaces lies in its integration within the Twitter ecosystem. Utilizing Twitter Spaces naturally drives user growth for a creator’s Twitter profile. This inherent benefit is unique and represents a key advantage for Twitter’s long-term success.

Creators prioritize maximizing their reach within a given platform. While platforms like Substack emphasize creator independence – offering direct access to subscriber email addresses (though not payment details) – in-platform distribution often remains the primary concern for many. The ability to transfer a user base to an external platform is less critical, as engagement dynamics differ, making fan migration uncertain.

Consequently, participation in Spaces directly translates to increased Twitter followers, facilitated by the immediate visibility of a creator’s profile. This is a feature unavailable on Clubhouse, where users only gain Clubhouse-specific followers.

As Twitter’s services become increasingly interconnected and mutually promotional, the overall network value expands, with each follower becoming more significant. For creators, a Twitter follower represents greater potential for monetization within the platform. A single profile can serve as a hub for paid newsletters, podcast content (with paid podcasting anticipated), and direct fan support, alongside emerging features like ticketed Spaces events.

For followers, the value of connecting with a creator increases due to the diversity of content accessible from a single profile. Twitter’s bundling of services, particularly at the profile level, has the potential to immerse fans in a creator’s work. This effect will be amplified by profile redesigns enabling users to subscribe to podcasts, newsletters, and more, all from one location. Twitter’s current cross-promotion efforts with Revue suggest a clear vision in this direction.

At its core, this represents an omnichannel strategy that has rarely been successfully implemented. WeChat serves as the closest parallel, enabling creators to establish groups and sell products, such as merchandise, directly to their followers. Twitter is pursuing a similar approach, aiming to provide creators with a unified platform for content creation and distribution.

Unlike companies like Facebook, YouTube, and WeChat, which strive to dominate broad segments of the online landscape, Twitter is focusing on a specific niche: public conversation. Twitter aspires to be the premier omnichannel solution for individuals seeking to influence others. It doesn’t aim to be the sole distribution channel for all creator content, nor necessarily the most lucrative, but it intends to be the most impactful.

The Imperative for Twitter's Evolution: Speed and Content Strategy

For sustained success, Twitter must fundamentally reshape its operational approach by prioritizing both a robust content strategy and accelerated development cycles.

Currently, Twitter, alongside its contemporaries, predominantly identifies as a content platform rather than a content company. This categorization stems from both ideological considerations and the historical context of the internet, where maximizing user acquisition through open access superseded content moderation. However, emerging platforms like Clubhouse and Substack, while also termed platforms, demonstrate a different operational model.

Substack has proactively attracted prominent individuals to its service. Mirroring strategies employed by TikTok and Snap, it offers creator funds and advance payments, akin to traditional publishing houses. Furthermore, it is actively developing essential tools for content creators, including provisions for legal support.

Clubhouse similarly demonstrates a strong focus on the long-term viability of its creator ecosystem. It is innovating new interaction methods, such as ticketing, subscription models, and direct payment options for monetization. The platform also emphasizes community-focused features, notably through the implementation of Clubs.

A Shift from Hands-Off to Proactive

Historically, platforms like Twitter and Facebook have largely adopted a hands-off approach, functioning primarily as social networks. The emergence of influential networks occurred organically; consequently, a dedicated content creator strategy wasn't deemed essential.

This paradigm must evolve to remain competitive, as new growth areas prioritize audience building. Newer social networks, including Snap, Spotify, and TikTok, appear to grasp this concept. Twitter currently lacks a creator fund, a crucial component for retaining talent within its ecosystem.

As Twitter expands its product offerings, strategic vertical integrations will become increasingly important. Initial steps are being taken, exemplified by the one-click Space tweet functionality, but the potential for deeper integration exists. For instance, pre-recorded Spaces could be seamlessly converted into Breaker podcast episodes.

Revue newsletters could incorporate Twitter links in their footers. Acquiring Medium could enable the linking of essays to tweetstorms, and numerous other possibilities exist.

The Twitter Profile as a Central Hub

Twitter possesses a unique advantage: the profile page can serve as a primary point of discovery. The Tip Jar feature represents the initial iteration of this concept.

However, envision a future with additional buttons linking to newsletters, podcasts, Spaces, and other content, effectively transforming each Twitter profile into a comprehensive alternative to services like Linktree.

This is vital because social media is poised to confront a recurring challenge: content discovery. This encompasses both managing discovery as content volume increases, particularly for real-time content, and effectively introducing users to new platform features.

Both aspects of discovery are intrinsically linked to verticalization, as influence is increasingly dependent on specialization and context. Twitter is addressing this, but its strategy remains less defined, currently relying on less automated curation tools compared to subreddits or Clubs.

The Need for Accelerated Execution

Beyond strategy, Twitter must prioritize speed of execution. This has historically been a weakness, often attributed to a deliberate decision-making process. It may also be influenced by past experiences, such as the infamous "fail whale" era.

The consequences of inaction are becoming apparent, as prominent users migrate to alternative platforms. Elon Musk, a frequent Twitter user, recently participated in a Q&A session on Clubhouse, hosted by Sriram Krishnan of a16z, a former Twitter product lead. This event highlights a desire for functionality currently unavailable on Twitter.

Journalists, heavily reliant on Twitter, are increasingly publishing long-form content on Substack. They would undoubtedly prefer to integrate this content directly with their Twitter profiles.

These instances illustrate the bidirectional nature of network effects. A small outflow of users can rapidly escalate into a significant decline. Twitter is currently experiencing a trickle, but swift action is paramount.

Evolving Dynamics of Online Influence

A broader perspective suggests that the current wave of innovation is focused on new content formats, rather than standalone applications, mirroring the shifts seen with features like stories and swipe-based interfaces. Established platforms, including Facebook, Twitter, and Reddit, are actively developing alternatives to emerging services such as Clubhouse, Substack, and even Eventbrite.

While Twitter is currently a prominent participant in this competitive landscape, it is not alone. Its ability to succeed hinges on swift action and effective implementation. Delaying strategic moves could lead to a migration of activity to these newer platforms.

As more events and content originate within these alternative formats, the incentive to remain on Twitter diminishes, potentially weakening its network effects. Users are initially drawn by the content itself, but sustained engagement is driven by the sense of community, a point often emphasized by Hunter Walk.

To maintain its relevance, Twitter must respond decisively and prevent a disruption to its established user base. Currently, the platform is utilized to promote content hosted on services like Clubhouse and Substack. Integrating similar features natively could allow Twitter to leverage its existing distribution network for a competitive advantage.

However, a failure to adapt risks relegating Twitter to a mere link-sharing service. In such a scenario, users would likely find greater value in directly engaging with platforms offering a more comprehensive experience.