Top of Mind. Happy Sunday!
I just got off of a week’s vacation in Paris for some R&R and art exhibitions. I did forget to mention in my last issue that I was going away and taking time off from writing, which is why nothing landed in your inbox last Sunday.
Please accept my apologies!
3 big things:
- Twitter is not making new money
- China takes a page from Nigeria’s playbook
- Twitter’s bitcoin adventure
Twitter is not making new money
The Short: Twitter launched a slew of new products to accomplish two things – generate additional revenue and help creators make money.
However, these products are not living up to expectations.
New monetizable products:
- Super Follows: Allows Twitter users to charge followers and give them access to new content.
- Ticketed Spaces: Allows Twitter users to charge between $1 to $999 to access audio rooms.
- Twitter Blue: Twitter’s paid service for users with access to exclusive features.
By the numbers: Twitter launched Super Follows to iOS users in the U.S and Canada. So far, the U.S has generated $6000 in revenue, with Canada generating $600. Plus, Twitter takes a 3% cut from overall revenue, painting a rather bleak picture for profits.
Why it matters: Twitter currently makes money from ad sales, date licensing and other ventures, netting the company $3.7 billion in 2020. This might seem like a lot of money, but compared to Facebook’s $86 billion in revenue from 2020, you might understand why Twitter is diversifying its revenue streams.
New losses: There’s an $810 million settlement in Twitter’s future. In 2016, shareholders sued the company for false projections on user growth. Twitter promised an uptick in monthly active users to 550 million in the intermediate term and more than a billion in the long term.
Quick stats:
- Twitter’s all-time high monthly active users (MAU) was 336 million, recorded in the first quarter of 2018.
- MAU plunged to 330 million in the first quarter of 2019, forcing Twitter to discontinue reporting metrics on MAUs and choosing instead to report on monetizable Daily Active Users (mDAUs). As of Q2 2021, Twitter reported 206 million mDAUs – a clear departure from the 550 million projection.
…This is why investors are suing.
Final thoughts: $810 million is not chicken change for Twitter. The settlement accounts for 22% of its 2020 revenue. Its shares plunged 3% briefly at the height of this announcement.
However, I am bullish on Twitter’s growth. It’s still early in the game to rule out the success of its new products, because there’s some reward on the other side of product experimentation. And if there’s no reward, there’s a lesson in there somewhere.
China’s central bank bans crytocurrency
The Short: The People’s Bank of China, aka China’s Central Bank, declared cryptocurrency transactions illegal, stating digital currencies are not legal tenders and cannot be circulated as currency in the market.
What China’s saying –
Bitcoin and other virtual currency transactions have disrupted economic and financial order, contributing to a rise in money laundering, illegal fundraising, fraud, pyramid schemes and other illegal and criminal activities.
Sounds familiar.
Why it matters: In a world where countries and tech companies are adopting decentralized financing, China’s war on cryptocurrency is the exact kind of move you expect from a government seeking to maintain control over its citizens.
Can’t stop the crypto train: Cryptocurrencies are a disruptive force for traditional banking. Instead of countries fighting the inevitable, they could try to learn about the DeFi landscape and create systems to facilitate it.
Final thoughts: Instead of an outright ban, China could surprise the world by creating regulatory oversight for cryptocurrency transactions to thrive – just like the US, El Salvador & Cuba are doing.
Fighting cryptocurrency adoption is expending energy on the wrong thing. Better to create oversight than fight what you can’t control.
Bitcoin is coming to Twitter
The Short: Starting immediately, iOS users on Twitter can now include their bitcoin wallets to their profiles to receive tips or payments directly using Twitter’s Tip Jar feature.
What this means: Twitter’s CEO Jack Dorsey is putting his money where his mouth is. Early this year, Jack announced to investors that bitcoin would become a big part of Twitter’s future – integrating cryptocurrency into new and existing services like commerce and subscriptions.
Family of apps: Jack’s bullishness on bitcoin being the native currency of the internet extends beyond Twitter. He founded the digital payments company Square, and its P2P product Cash App allows users to buy and sell bitcoin.
Final thoughts: It’s hard not to notice the irony in this week’s news. The same week China bans cryptocurrency transactions, Twitter adopts it at scale. What a moment.
As Twitter rightly says: “Bitcoin represents one of the best solutions for enabling people transact in underbanked regions of the world”. The same goes for different forms of cryptocurrency.
Market Trends
Market Watch: Here’s how the stocks of companies, which dominated the news this week performed as of market close:
Twitter (Ticker Symbol: TWTR)
- Twitter bounced back from a 3% loss last week following low expectations from its monetizable products. This week, its shares soared nearly 4% higher following news of its bitcoin integration.
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PS – First time in newsletter history with no product or feature spotlights. Tech companies are slacking!
That’s it for the week. See you next Sunday!
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