What a story this has been… First Elon wanted to buy Twitter, but Twitter didn’t want to sell. Then Twitter wanted to sell, but Elon didn’t want to buy. Twitter sued Elon to buy, then Elon wanted to buy, but Twitter didn’t want to sell and kept suing Elon to buy.
Well, now Elon Musk owns Twitter —he finally acquired Twitter for $44 billion. Immediately after, he fired the CEO and several top executives and tweeted “the bird is freed.”
Elon has more changes in mind and he’s been sharing some of his plans with us through his tweets. He’s consistently said that he wants Twitter to be a more open place and has promised to unban controversial accounts, including former President Trump, and to relax content moderation rules. He’s also talked about stopping ads and turning Twitter into “X, the everything app.”
Compared with its rivals, Twitter is a comparatively small platform with around 300 million monthly users, and it has never experienced the exponential growth of say TikTok or Instagram. But it is considered influential and is widely used by politicians, world leaders, and businesses, to share comments and opinions.
Since going public in 2013, Twitter has only occasionally turned a profit, even if it has a commanding role in the news worldwide. Except for 2018 and 2019 when it made a profit of just over $1 billion, Twitter has posted a net loss every year.
Twitter makes money from selling ads and licensing data. Revenue from ads represents more than 85% of its total revenue and in 2021 Twitter made over $4.3 billion from advertising and $760 million from data licensing.
But, Google, Facebook, and Amazon get the lion’s share of advertising, leaving little room for anyone else. Musk knows that Twitter cannot become a dominant player in the ads business, even if advertising is how it butters its bread today.
This whole free-speech absolutism runs headlong into making Twitter a viable business from ads, which is why Musk has tweeted that he does not want to run ads.
Advertisers care a lot about “brand safety.” If you running ads for your brand, you don’t want to place them for instance next to a Neo-Nazi tweet. If Musk opens up the platform in the name of free speech and lets in a tsunami of bullies, misinformation, and other sludge, advertisers will flee.
Elon is a smart guy and he knows all this, which is why we are hearing him talk about his plans for “X” to make Twitter profitable.
Elon’s inspiration for X is WeChat, used by more than a billion people in China. WeChat allows people to use QR codes to do all manner of tasks, from buying groceries to booking a dentist appointment, hailing a taxi, sharing photos with friends, or playing video games. They can access a government-issued ID card through WeChat too.
Musk is no stranger to the fintech business. In 1999, he founded X.com, an early online bank —customer deposits were insured by the FDIC. In 2000, X.com merged with Confinity, a payments startup led by Peter Thiel, and the combined entity became PayPal. In 2017, he reacquired the domain name X.com from PayPal for an undisclosed amount.
With this new X, it sounds to me like Musk wants to revisit fintech wearing a crypto mask and taking advantage of Twitter’s global user base. In personal texts that were published as part of legal proceedings in the Twitter case, Musk told his brother, that he had “an idea for a blockchain social media system that does both payments and short text messages and links like Twitter.”
You can see why Musk is eager to copy WeChat’s model. WeChat made an estimated $17.49 billion in revenue in 2021, largely by taking a cut on transactions it processes for things like games, deliveries, and a thriving market for digital services. More than half a billion people use thousands of mini-apps inside WeChat every day.
If he truly wants to grow Twitter’s revenues, one way to do it would be to make it part of a platform that hosts lots of payment activity.
But Musk is not alone in this pursuit.
The term super app is nothing new. It was introduced to the world in 2010 by Mike Lazaridis, Blackberry’s founder, and CEO. Already several payment providers have been shifting to support a wider array of consumer needs in the last year to become one-stop shops for consumers’ needs.
Revolut and Klarna stand out, but many fintechs have super app ambitions including Curve, Wise, Lydia, Argent, Nubank, Douugh, and many others.
In the past Revolut has announced its foray outside the realm of finance into hotel bookings with ”Stays” and last week with Shops, making another push into e-commerce and moving closer to becoming a true multi-vertical super app. In the other regions, RappiColombia has raised $500 million ($5 billion valuation), PideYummy raised $4 million from Ycombinator and others, and India’s Paytm had the country’s largest-ever IPO in late 2021.
PayPal, for instance, launched a redesigned app a year ago, that bundles a slew of services, including a shopping hub, a high-yield savings account, and even a fundraising platform. Buy now, pay later (BNPL) providers like Affirm and Klarna have also launched their versions of a super app that integrate their core BNPL solutions with other shopping and financial tools.
One question that comes to mind is why didn’t Jack Dorsey merge Twitter and Block to create a super app. Making a super app is hard.
So far, super apps have yet to take off meaningfully outside of Asia. Most people in the US are used to using different apps for different activities, yet PYMNTS’ research has shown that three-quarters of consumers would be interested in super apps.
I think we can expect to see more crypto features in Twitter, like a token-based voting system that allows users to have more say over what happens on the platform, a blockchain-based identity verification tool or an NFT passport to “authenticate real people, and allowing more cryptocurrencies for tipping —Twitter already supports Bitcoin tipping but they’ll probably add support for Ethereum Dogecoin and other cryptos. The new functionality and services will become available in the Twitter interface and will serve as gateways into the world of X —maybe that world is even a metaverse.
Super apps are one of the hottest trends in tech right now and are the new portals of the web3 era. They are appealing because they solve the issue of choice overload, minimizing the number of apps and digital services consumers need to manage.
For the next decade or so, the trend among consumers and businesses is toward super apps.
Super apps will provide customers with unique experiences based on their preferences and historical behavior. For instance, when a customer wants to hail a ride a widget may present their most frequent destinations, such as their homes, workplaces, or gyms. On the food side, which is usually a more personal experience, the personalization may include the cuisines users like the specific dishes they may be craving or are interested in exploring, and what contextually relevant search content to show.
The big question is whether banks understand how they will deliver value in a world dominated by super apps, crypto, and Defi and whether they can move quickly enough to respond before super apps become a super disruption.
by Ilias Louis Hatzis is the founder and CEO of Kryptonio wallet.
Image Source
Subscribe by email to join the other Fintech leaders who read our research daily to stay ahead of the curve. Check out our advisory services (how we pay for this free original research.
