A Musketeer for Twitter

Elon Musk wants to buy Twitter. Regardless of the outcome of his effort, the world’s richest man has made it clear that his motive for the offer is to “defend freedom of expression,” the hot topic with this network, largely thanks to the Trump effect. . However, I don’t think this should be the central discussion regarding Twitter: we should be talking about why—despite being so influential as a social phenomenon—Twitter has been a resounding failure as a company.

I explain. Musk offered $43 billion for Twitter. It sounds like a lot – and it is much, greater than the GDP of more than 100 countries – but you have to put that number in context. Facebook, a company of similar origins and purposes, last year reached a market capitalization value of one trillion dollars – the famous trillion gringo-. Snapchat, another social network with less impact, managed to have a market cap of $131 billion. Twitter, at its peak, barely surpassed $60 billion. That is to say: the maximum market value of Twitter is 6% of that of Facebook. Elon Musk’s offer is just 4.3% of that trillion.

In all of its funding rounds—pre-IPO, IPO, and post-IPO—Twitter has raised about $4.4 billion. However, nothing else in its history as a public company has accumulated losses of $861 million. Like Facebook, the bulk of Twitter’s revenue comes from advertising, but with opposite results: Facebook not only had almost seven times more active users than Twitter in 2021, but also had an average revenue per user of more than three times greater. But in the failure of Twitter’s business model is what is captivating: despite there being no evidence that it can be a consistently profitable business, its social and cultural impact is enormous. Not everyone uses Twitter. In fact, most people who open an account never get hooked. However, the ones that do engage do so deeply, and in this niche they attract a very particular audience: I would estimate that more than half of the most informed 1% in any area (sports, politics, technology, economics, etc.) use Twitter. It is the preferred network of influential people.

Thus, although not everyone reports or consumes news via Twitter, this network does substantially shape the flow of information that we all consume. It is the primary source for disseminating messages from politicians, the one chosen to argue among academics, the network where, by choosing audiences well, one can be informed in the cutting-edge of crypto, Web3 and new technologies. Of course, there are also jokes and memes. But there it also has influence: most memes are born on Twitter.

And this is where Elon Musk becomes particularly intriguing: it’s everything that Twitter stands for. From the pathetic to the influential. Now he wants to go from being one of its main users to trying to exploit all that trapped value that the company has. Paypal, Tesla and SpaceX are already on the list of hits that made him the richest man in the world. On Twitter it is more difficult, but if someone could find the way of the company, it is him

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