A look at Threads and what it means for the industry[Finance Fridays]
There is more to Threads than meets the eye.
Hey, it’s your favorite cult leader here 🐱👤
On Fridays, you get posts about money 💲💰💰💲. Expect a mix of posts on personal finance, breakdowns of the most relevant events in the Tech Industry, and insights into the unique workings of the tech industry. 🔍🔍. Use these posts to master the money game, and solidify your finances to ride out the meanest of recessions.
To get access to all the articles, support my crippling chocolate milk addiction, and become a premium member of this cult, use the button below-
p.s. you can learn more about the paid plan here. To learn how you can get this newsletter for free, make sure you read till the end (after the poll).
The social media world is buzzing with the newest development around the Battle of the Billionaires. Mark Zuckerberg has officially launched Threads, with great fanfare. The Twitter-clone has already generated a lot of attention online, and was even Trending on Twitter (can’t think of a more emphatic mic-drop). Several product experts (such as
have even wondered if Threads might beat GPT in becoming the fastest app to reach 100 million users).On the surface, Threads has a lot going for it- Twitter is floundering, Meta is an experienced social media company, and the Instagram integration gives them access to a large pool of potential users with minimal friction. However, there is more to the situation than meets the eye. In this article, I will be going over why Threads is not the slam-dunk move people make it out to be, how it can be improved, and other ventures that Meta might want to consider to improve their revenue verticals.
Looking into Meta’s new app, Threads
Prereq 1- Vertical vs Horizontal Integration: For the rest of this piece it is important to understand the difference between Vertical and Horizontal Integration. Horizontal Integration involves buying/developing products at the same stage of value as your present offering. Think of the makers of Coke making Sprite. The appeal of this clear- done well, horizontal integration allows you to leverage the expertise that your organization has built up in making Coke create an alternative beverage. Ideally, these products would not cannibalize your markets and instead bring more demographics under the umbrella. Acquiring your competitors also comes with another advantage- you can now share R&D and insights b/w orgs, effectively streamlining your processes.
Compared to this, Vertical Integration involves building capabilities in either the prior or the next steps in the value chain. In the case of Coke, this would involve the firm buying Sugar Cane mills and setting up their own shops. Vertical Integration cuts out the middlemen, allowing companies to greatly improve profit margins in operations. When looking at big business moves, it can be helpful to evaluate moves through this lens. Let’s now explore what that means for this situation.
The Challenges Meta is Struggling with- It should be very clear that Threads is an example of Horizontal Integration. Let’s now juxtapose that with the challenges that Meta is currently facing as a company-
Saturated Market- Presently, advertisement-driven social media is a very saturated space. This makes it hard for companies to raise prices since it ends up being a race to the bottom. If you’re too costly, your consumer will switch. This is far from the only problem with Threads, unfortunately. Twitter, was struggling financially, failing to turn a consistent profit, even though they had a monopoly in their Niche. Even if Meta took all of Twitter’s business (doubtful with competitors cropping up)- that’s still a business losing money.
Public Perception- Meta is a wee bit unpopular. Very problematic when getting customers to trust your solutions. Threads has already been met with a lot of suspicion.
Extreme Platform Dependence- Meta relies on the data collected through devices, whether that be smartphones, browsers, or computers. This makes the profits of Meta very fragile (we saw that with Apple causing Meta to lose Billions with a privacy change).
Unfortunately, Threads does nothing to address any of these.
Threads has a huge flaw- As it is, the platform has a huge flaw- it’s mobile only. I tried to create a thread with my computer and was unsuccessful in doing so. Here’s why that’s a problem: it makes it harder for me to create more high-quality threads. For all the problems, Twitter has a large and active community of academics and industry leaders (that’s where I met the amazing
for example). Twitter threads on AI often cite multiple sources, use images and videos, and papers. This is much harder to accomplish with mobile-only platforms. Fixing this will be a relatively high ROI way to improve the value of the platform. I wanted to use threads to share ML content, and so far that’s not totally feasible. As an aside, this is my Threads account, incase any of you are interested in following.The potential of Threads- Should Meta fix this issue with Threads, it puts Threads in prime position to siphon away large sections of the academic circles on Twitter, many of who are already sick of Musk and his antics. This becomes stronger since Meta has announced intentions of integrating other platforms with Threads, allowing them to foster community. I’m still skeptical of the monetization potential of this (especially in the short and medium term) given how Twitter struggled with making a profit. Perhaps Meta’s experience in building platforms at scale would allow them to keep operating costs enough to change that.
Threads, Propoganda and Public Discourse- It would be foolish to look at products from a purely financial lens. Social Media platforms are extremely potent propaganda tools, and Threads will be no exception. It is here that I see the most value for Threads, to control discourse and the information that gets pushed to the social discourse. Twitter and Facebook/IG are for many the primary way of accessing news. By building Threads to replace Twitter, Meta would be one step closer to showing us what they want us to see and further from what is inconvenient. That’s something that governments and corporations would pay big bucks for.
Meta’s next big play- This is a hottake given sentiments online- but I hold that the Metaverse is a great investment for the future, and Meta should continue to invest into that. The Metaverse provides a moat that can’t be replicated, and grants Meta platform independence (it would even give Meta the lucrative Platform-Effects). To those that want to learn more, I have a whole piece dedicated to why the Metaverse is a good business move here. In the meanwhile, there are a few different avenues that I think the Meta leadership should look at refining-
Live Streaming and Gaming- Twitch is presently the market leader in this segment, but they have had a few bumps recently. Meta has the capabilities to disrupt this space, especially given the refined profiles they have on their users.
Corporate Strategy and Consulting- Meta is sitting on a gold-mine of consumer behavior insights, that can be monetized in ways other than ads. By packing this data up as insights and reports, they can eat a lot out of McKinsey and other strategy consulting firms. If you’re skeptical about this, I would suggest reading Facebook Gaming’s page for Marketers here. This website is packed with insights, covering topics such as design, monetization and brand growth. Meta should consider exploring this avenue more deeply, since it has great synergy with their ad-heavy model. For this case, Threads might have some value.
A final verdict- For the most bit, Threads seems to be more sizzle and less steak. The way it has been crafted, it doesn’t seem like it would really add too much to Meta’s goals- aside from looking good for shareholders. However, there is clear potential for the app, one that should be considered going forward. How things play out will be very interesting.
These were my first impresssions on Threads as a platform. I would love to know how see Threads fitting into the crowded social media landscape, and what you think it’s impact will be on Meta as a business, the Tech Industry and Society.
That is it for this piece. I appreciate your time. As always, if you’re interested in working with me or checking out my other work, my links will be at the end of this email/post. If you like my writing, I would really appreciate an anonymous testimonial. You can drop it here. And if you found value in this write-up, I would appreciate you sharing it with more people. It is word-of-mouth referrals like yours that help me grow. If you refer people using the button below, you will get many cool benefits such as magic swords, dragons, and complimentary premium subscriptions
Save the time, energy, and money you would burn by going through all those videos, courses, products, and ‘coaches’ and easily find all your needs met in one place at ‘Tech Made Simple’! Stay ahead of the curve in AI, software engineering, and the tech industry with expert insights, tips, and resources. 20% off for new subscribers by clicking this link. Subscribe now and simplify your tech journey!
Using this discount will drop the prices-
800 INR (10 USD) → 640 INR (8 USD) per Month
8000 INR (100 USD) → 6400INR (80 USD) per year (533 INR /month)
Reach out to me
Use the links below to check out my other content, learn more about tutoring, reach out to me about projects, or just to say hi.
Small Snippets about Tech, AI and Machine Learning over here
AI Newsletter- https://artificialintelligencemadesimple.substack.com/
My grandma’s favorite Tech Newsletter- https://codinginterviewsmadesimple.substack.com/
Check out my other articles on Medium. : https://rb.gy/zn1aiu
My YouTube: https://rb.gy/88iwdd
Reach out to me on LinkedIn. Let’s connect: https://rb.gy/m5ok2y
My Instagram: https://rb.gy/gmvuy9
My Twitter: https://twitter.com/Machine01776819
For what it's worth, I like Meta long term, although they just gapped up in price so it's not such a screaming steal any more. Folks taking profits aren't being stupid here.
Also: I bet Meta has already topped 100 million users. WOW, that was fast.
I also bet this is the last non-AI centered app to hold that particular record (fastest to 100M).
Really enjoyed this Devansh. Something that occured to me based on your Twitter comparison (even if they took Twitter's customers, Twitter still isn't a money-maker)...
Doesn't it seem like the population of Twitter users is pretty different from and smaller than the population of Instagram users (who they cross their fingers will become Threads users)? With that larger scale, I think Threads should have better economics.
Regardless, it's small $$ for Meta's overall business... agree with you there.