My firm owns a small position in Twitter, and I recently penned a letter to new CEO, Parag Agarwal, that I’m sharing here. A bit of additional commentary on two things before the letter:
Twitter is already the preferred public social platform for web3 creators (Discord is the preferred private one). They’ve created that position, intentionally or not, by embracing the biggest trend of the next decade that we’ve talked about here at length — identity. Twitter is naturally suited for pseudonymity unlike any other social network. The company seems to recognize this as it’s working to include ownership of crypto assets as part of user profile information. Twitter is arguably the closest social platform to a “metaverse” we have today. One of my suggestions to Parag is to bet the company on web3, but it’s really Twitter’s game to lose at this point.
The most important thing Parag needs to do is not let Twitter lose what makes it special, which is the important conversation that happens on the platform and almost nowhere else on the Internet. This comes at the cost of a lot of unintelligent and wasteful conversation, but that’s often the case with the important because the important is so rare and special. Censorship has been a central question for social networks for the past several years, and my message to Parag is don’t give in. Unfortunately, it seems we’re off to a rough start, and both sides still aren’t happy. If Twitter gives in to the demands of any side regarding censorship, it will lose what makes it special. Parag needs to stand up like Jack or he won’t be CEO for long.
Of all the major social networks, the ratio of value that Twitter captures relative to the value it creates for the world is the lowest. Despite the lede, this isn’t another investor letter to chide Twitter’s challenged business.
The company’s ineffective value capture to date is why we think Twitter has the brightest potential future of any social network. It’s your opportunity, and it’s the highest order problem you should focus on fixing in your new role.
You’re going to get a lot of advice as the new CEO of Twitter. You’re going to hear endless commentary from the sidelines, and much of it might be negative. You’re going to be pulled in 100 directions. Many of those advisors and commentators will approach the situation with impatience. They’ll want near immediate results, and their advice and commentary will be oriented as such.
We’re long-term oriented shareholders of Twitter, so we thought we’d offer a different perspective grounded in thinking about the next decade rather than the few next months or years. Given a long-term perspective, the biggest, most important things become simple and clear — but simple and clear often present the greatest challenge.
With that challenge in mind, we offer three pieces of advice:
Defend what makes Twitter special.
Don’t think small.
Act like a founder.
Defend What Makes Twitter Special
Twitter is where the most intelligent people have the most important conversations amidst the noise of trolls, partisans, and fools.
John Stuart Mill wrote, “The public is a few wise and many foolish individuals.” That seems particularly relevant today. So much attention is paid to the fools, but little is given to the intelligent truth seeking that happens on Twitter. It is that intelligence that makes Twitter special and allows the company to create unique value for the world.
The thought may make some shudder, but Twitter is in many ways the last bastion of truth discovery. Traditional media certainly isn’t. Important conversations in pursuit of truth happen on Twitter more than any other social network in world, more than any other place in the world.
Twitter’s advantage here is fragile, and it comes with great political cost. Ideologues focus on the gullibility of partisans and fools attack the company. They demand Twitter police what’s right and what’s fair. They demand Twitter be less free, less thoughtful, and less of a place to explore truth.
Yielding to those demands will diminish the value that Twitter creates for the world and can subsequently capture through its business. For all the criticism leveled at Jack on this subject, he stood up to the varied forces that attacked him and will attack you. He kept Twitter a mostly free space for the exploration and discovery of truth, even if mistakes were made along the way.
Maybe Bluesky is the answer to the challenge of protecting the beauty of free, uncomfortable conversation. Maybe something else is. Maybe there’s no solution.
In any case, you must defend the search for truth when that most fundamental human desire is under attack. Defending the wisdom that emerges from the chaos of freedom is in the best interest of your users, your employees, your shareholders, and the world. The future of Twitter — as a social network and a business — depends on it.
Don’t Think Small
There are some shareholders that would be happy with modest improvements to the existing ad business and products. The company has already set a path to that end with its 2023 goals; however, if you aim to make Twitter a multi hundred billion-dollar company — an outcome we believe possible over the next decade — it won’t happen through your current monetization efforts. Even if you hit those 2023 targets, declaring victory would ring hollow relative to long-term investors looking to meaningfully close the value delta described at the open of this letter.
Facebook’s greatest unlock to capture the value of its network was the News Feed. It was the perfect tool for users to consume the vast content created on Facebook, establishing the company as an engagement juggernaut, competitive with traditional entertainment. Ads in the News Feed were a natural way to capture value from that user engagement. TikTok similarly built its incredible engagement on intelligent personalization of its feed to optimize individual entertainment value, with a similar ad mechanism.
Twitter’s current feed and ad experience is little different from that of Facebook despite the value created by and conversations had on the network being quite different. While this approach “works” in that it generates billions in revenue a year, it may not be the best way to capture the value that Twitter creates. If you only ever focus on making small improvements to the existing product, you’ll only ever generate relatively small improvements in the ratio of value captured to created.
The pace of new product development has been encouraging and must continue with an embrace of bigger ideas, especially ideas that seem terrible but are actually great. Those contrarian ideas generate extraordinary results. One of your most important jobs as CEO is to think bigger and to encourage your team to do the same.
Act Like a Founder
Twitter is not a new company, but it is entering a new time: the Web 3 era. You can be the founder of Web 3 Twitter.
Twitter already has a head start as the primary social network for the Web 3 movement. It’s where creators of digital goods connect with consumers who want to purchase them. It’s where pseudonymity is available to those who want to explore the freedom of flexible identity in the Web 3 world. It’s where everyone says “gm” to one another.
The reason investors love founder-led companies is that founders think bigger, and they have the political capital to bet bigger. Just as Mark Zuckerberg is betting Facebook on the metaverse, you should bet Twitter on Web 3 where creators rule, not corporations.
You may be realizing that these three pieces of advice are inextricably tied together. You cannot do one without doing the other two. To act as a founder, you cannot think small, nor can you cede what makes Twitter special. Being a founder is hard. Being a CEO is hard. Replacing the founder CEO of one of the world’s most important companies might be the hardest thing imaginable, but we want you to succeed.
The world — despite what you may read from some on Twitter — wants you to succeed, too.