Welcome to this month’s ✨free subscriber✨ deep dive. Each week I write about startups, fundraising, leadership, or growth and product strategy. If you’re not a paid subscriber, here’s what you missed this month:
Anyway… you just might have heard that Meta launched Threads, their Twitter-clone, on Wednesday night. At press-time, I have a modest 386 followers (I’m @callmehouck) while the platform has over 70 million users.
I’ve seen a lot of discussion about what Threads is and is not, but not a lot about the risks Meta is taking by launching it, even potentially impacting the future of Instagram.
I’ve helped build hyper-growth products at Uber and Airbnb, and multiple communities, so this week I’ve put together a deep dive of the 7 major risks facing Threads, and how likely each is to be a longterm issue 👇
The 7 Risks Facing Threads
“Building a new social platform is very similar to running a country or an economy.”
TikTok’s founder, Alex Zhu, said this onstage during a fantastic talk he gave in 2016. He went on to say that the only way to get people to migrate to a new country is to show them that anyone, including them, can rise to a higher social class in the new country faster than their old country.
TikTok executed this perfectly by building up new stars like Bella Poarch, Charlie D’Amelio and many others who had no audience before. This ability to potentially win the lottery is the primary thing that drives users to adopt a new platform.
Here’s the full clip (go to 10:19):
Anecdotally, I don’t see Threads doing this. Reach seem to be largely proportional to follower count.
This would mean that growing on Threads will be closer to the grind of growing on the now-mature Instagram and Twitter, instead of the early days of TikTok.
Risk Level: High → If the algorithm actually is treating content this way, it’s a big unforced error by Meta. Once users (especially ones coming over from Twitter who don’t have a big IG following) realize growing will be a grind, they’ll simply leave and go back to Twitter.
Instagram Users Don’t Like Text
Twitter only has about 30% of the total users that Instagram does at best, which gives Threads a giant group of users to bring onto the platform. That sounds like a giant advantage, but leveraging users from an ancillary product doesn’t always work.
Quick story… in the early days of Uber Eats, we had a massive global fleet of drivers to offer deliveries to. We thought this would be a great way to save on driver acquisition costs + provide more trip coverage in cities around the world. Drivers were already doing ridesharing, and we were offering extra trips / income. No brainer, right?
Wrong. Even though drivers were on the platform to make money, most avoided Eats trips if they were already doing ridesharing. There were a variety of reasons for this but my point is that DoorDash won the US market despite having to start their driver network from 0. Why? They built the product restaurants, the key users on the platform, wanted first and foremost.
In consumer social there are two main categories of networks:
Text-first → Facebook, Twitter, LinkedIn, etc.
Media-first → Instagram, TikTok, Vine, etc.
For years, users have had a choice of which to spend their time in. Most people choose one type and largely stick with it, even as platforms go in and out of vogue.
Most of the users who spend time on Instagram, including the brands and creators who’ve built large audiences there, don’t also spend a lot of time on Twitter. This isn’t an accident, it’s a choice. For their own reasons, they prefer media-first content.
If Meta is betting that they’ll suddenly enjoy text (a very different type of content creation and consumption experience), they may be in for a surprise.
Risk Level: Medium → The risk here is totally dependent on Meta’s expectations. If they are counting on IG users moving to Threads, it’s high. If they’re treating that as a nice-to-have and are instead trying to first-and-foremost court Twitter users, this becomes less important.
Twitter Has Network Effects
I wrote about why network effects are so powerful a few months ago. The TLDR is that they’re one of the strongest moats a business can have.
Twitter users have built relationships, audiences, and businesses around the platform. It’s not so simple for them to just start using a new one instead, even if it provides the ability to grow quickly. There’s very real inertia.
But getting Twitter users, who are native to text-first social networks moreso than Instagram users, is critical to the success of Threads.
I expect we’ll see Twitter make moves to increase the gravitational pull of the platform for existing users. At a minimum I expect to see:
Native podcast and video capabilities
The relaunch of Vine
Increased virality coefficient
Other features for "X” that Elon hasn’t widely shared yet
Breaking the network effects of a platform with hundreds of millions of users comes down to whether individual communities collectively decide to migrate or not. Tech Twitter, NBA Twitter, Finance Twitter… you get the idea. Users don’t want to lose relationships they’ve invested time into.
So why would Twitter users switch? Simple: Threads might offer the potential for an audience 3x the size of their current one, if Instagram users start using it too.
Risk Level: Medium → I’m bearish that Instagram users will fall in love with Threads and stay on the platform. If I’m wrong, the risk here for Meta is low. If I’m right, it’s high. The lack of potential to build a new, substantially larger audience will make Twitter’s network effects very hard to break. Until it’s clear which will happen, I imagine we’ll see Twitter creators reposting a lot of content on both platforms while most users simply stick to Twitter.
Instagram Usage May Drop
Adam Mosseri, the Head of Instagram, said the difference between Threads and Instagram is that Threads is for “public conversations.”
It’s an interesting framing, it implies both that Instagram is for private conversations, and also for things other than conversations (announcements?).
Right now the two products look very different but feel very similar. Why would I spend time on Instagram if I can post videos, photos, gifs all on Threads and also get to have text-based conversations? Aside from the missing features like DMs, I can’t really think of a compelling reason.
Some will say that’s a case to not build in the missing features, but those features are critical for user retention.
A more likely outcome is that big changes get introduced on Instagram in the next year as Threads grows. It’s too early to say what specifically those should be (I doubt even Mosseri and Zuck know) but a general direction could be to bring Instagram back to its “friends and family” roots while making Threads the “public” town square.
Risk Level: High → Without effective product differentiation Instagram risks a big decrease in user time spent on the platform, which will hurt one of Meta’s biggest cash cows. Of course the alternative here is eventually having Instagram swallow Threads, which consumer social guru Nikita Bier thinks is likely.
Content Moderation Policies
According to his text messages, the reason Elon initially thought about buying Twitter was because of the increases in politicized censorship on the platform. And since he took over late last year, freedom of speech on Twitter has unequivocally improved.
Don’t worry, we’re not going down that rabbit hole here, but we’re already seeing this dynamic play out on Threads.
Regardless of your feelings about this type of content moderation, moderation policies like this are controversial and will alienate some users who enjoy the free environment Twitter offers even if Zuck thinks Twitter isn’t friendly enough.
Risk Level: Medium → This is still a relatively new debate online, so it’s unclear how important this issue is to most users. For some, though, it will make moving to Threads unappealing.
They Don’t Ship Fast Enough
Meta allegedly launched Threads a few weeks earlier than planned, at Zuck’s urging, after seeing how upset users were with Twitter’s temporary rate limits.
(If you’re into game theory, consider that the rate limit crisis may have been an elaborate chess move set up by Zuck.)
Regardless, Meta needs to ship features, fast. The launched version is very clean but missing many things users expect like DMs and a “following” feed, among others.
The quality of the feed, in particular, is a concern for large Twitter creators (additional examples here and here)
Risk Level: Low → Allegedly the “best people” at Meta are already moving in to work on Threads. After taking giant L’s on VR and the metaverse recently, they’ll be motivated to move fast on this.
Twitter’s Lawsuit
Twitter has already sued Meta, claiming they built elaborate data scrapers to reverse-engineer Twitter’s follower graph, among a few other things.
It makes sense why Meta would do this, they want Twitter users to migrate to Threads and being able to recommend content from the people they already follow on Twitter is a great way to make that seamless… but it’s also probably illegal.
Too early to say how this will play out but if there’s evidence of this then Twitter likely has a decent case and can either play it out in trial or take a settlement of some kind.
Risk Level: Low → Even if Meta loses out here, the damage will be done and people will either have migrated (or not). And they’ll be able to afford any kind of fine or settlement payment, the incremental revenue Threads will generate for them will easily cover it.
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