FOr Elon Musk buying Twitter to achieve the results he wants, Musk has to find some way to scale the company. Compared to the platform’s cultural and political presence, its business has long been on the small side.
As a model, Musk has at least set his sights on WeChat, the original so-called super app owned by China’s Tencent. During Musk’s first town hall meeting with Twitter employees last week, he made a direct reference to WeChat, saying that building something similar would further propel him to nearly 5x Twitter’s user base to a broader goal of 1 billion people . “There is no WeChat equivalent in China,” he told the conference. “There’s a real opportunity to create it.”
Much of what Musk said may seem outlandish. (At the meeting, he also discussed the possibility of extraterrestrial life.) But his idea of WeChat is not, though not particularly novel. WeChat’s success has attracted many Silicon Valley tycoons; Musk is just the latest. As a group, they envy WeChat’s broad business model — messaging, social media, payments — and its lack of reliance on advertising revenue, the fickle revenue stream that powers much of their business. However, they found it very difficult to make a US version of the super app.
“A super app is an app where you can do many different tasks, even tasks that you might not necessarily think are super related to each other,” said Yuechen Zhao, a partner at GSR Ventures. “It’s all about everyday consumer behavior. related to daily consumption.”
SecondIn 2011, Tencent was already an internet giant, founded 15 years ago by billionaire Ma Huateng. But user behavior is changing and shifting to mobile phones, which has overtaken Tencent’s popular desktop-based messaging app, a software similar to AOL’s Instant Messenger. Tencent developer Alan Zhang pitched Jack Ma the idea of a simple mobile chat app that would bring together Tencent’s many businesses.
Zhang is seen as a visionary today, and WeChat has more than 1 billion users, the same size as TikTok and Instagram (though it’s still half the size of WhatsApp). At a basic level, WeChat offers audio and video calls and one-to-one texting, as well as the ability to create group threads of up to 500 people.
“The first time I downloaded WeChat was in 2013. I was studying at Harvard and met my then-girlfriend—now wife—and she told me about it,” Zhao recalls. “We started texting each other about it. Then I got my parents involved and I realized, ‘Oh my God, for the first time we can really communicate with our family. And when I went to Beijing from 2016 to 2018 to work That’s when I really got to know the system.”
WeChat’s system goes far beyond communication. WeChat is already open to external developers and is full of mini-apps, with more than one million mini-apps attracting 200 million daily users. These and other apps developed by WeChat, such as PayPal-style WeChat Pay, use QR codes to connect every aspect of life in China: hail a car, buy groceries, make an appointment with a doctor, buy insurance. WeChat earns revenue through advertising and collects some of the money that flows through its app.
(It’s worth noting, at least briefly, the trade-offs WeChat accepts. It’s a commercial win, but it has to go hand in hand with China’s censors. The app follows strict government regulations, commonly known as Part of the “Great Firewall,” a barrier between Chinese internet users and foreign websites. In 2020, then-President Trump proposed banning WeChat along with TikTok, citing concerns about how the two companies manage data and their need to meet government regulations Need for personnel. Just remember TikTok as part of Trump’s efforts? Understandable. TikTok has a far greater presence in the US than WeChat, which has most of its functionality only in China. The Biden administration has dropped the idea of a ban, though It said it was considering new rules for foreign applications.)
Twitter’s rivals are already trying to claim some of WeChat’s glory. In 2019, Mark Zuckerberg said he would shift some of Facebook’s attention away from public information to private information, a tacit acquiescence to what WeChat did well. Meanwhile, Evan Spiegel opened the door on Snapchat to encourage developers to contribute projects like augmented reality filters, a move no doubt similar to WeChat’s move to encourage mini-apps.
smallo Why aren’t Facebook or Snap super apps yet? For the most part, U.S. companies have struggled to link the payments part of the WeChat ecosystem with their own systems. They have tried, but the desire remains. Facebook’s failed attempt to use cryptocurrency Project Libra is reportedly working on adding other virtual coins and lending services. Last year, Pinterest considered selling itself to PayPal for $45 billion, a deal based on the same mindset. Instagram takes full advantage of its expanded shopping tools, including the ability to checkout directly through its app. Again, same mindset: payments, media, messaging.
One simple factor may be holding them back from achieving super-app status. The adoption of mobile payments in the US is significantly behind China. More than 80% of adults in China use mobile payments. In the U.S., that number may be less than a third. Therefore, even if Instagram, Facebook and Snap have attractive payment features, they will still face the sluggish demand for mobile payments, which has played a large part in the rise of WeChat.
Jack Dorsey, who runs Twitter twice, must have been acutely aware of the super app’s supposed promise. After all, in his second tenure as CEO of Twitter, he was also CEO of Block, the company behind Square and CashApp. Arguably, these dual efforts give him a greater chance to fuse a super app than any of his competitors have ever enjoyed. He never has.This explains how Dorsey must have viewed the super app’s chances of success in the US
Now, here comes Musk, who has spent most of the past three years thinking about digital payments in addition to lunar orbit and solar cells. (In the first act of Musk, he co-founded PayPal.) That’s it. And, of course, Dorsey does have access to existing fintech infrastructure that Musk cannot. But Musk seems to have something that Dorsey doesn’t have, a potentially more important thing: the fire that makes Twitter bigger.
Yes, Dorsey has plans for Twitter’s growth. But they were driven at least in part by pressure from another outside shareholder, Elliott Management. Even after Elliott forced Dorsey to speed up, Dorsey’s plan was still a few orders smaller than Musk’s plan. Dorsey expects sales to hit $7.5 billion next year; Musk reportedly forecasts nearly $30 billion by 2028. Advertising alone is unlikely to get Twitter to $30 billion, which is never a good outcome for the ad business, especially with the economy seemingly on the verge of a recession. (Also, Apple’s changes to its software made mobile advertising temporarily less profitable, leading to a lingering problem.) Perhaps this made Musk more motivated than anyone else to develop the super-app, thereby improved his odds.
Of course, super-apps also have potential downsides, noted Scott Kennedy, chair of the China Business and Economics Trustee at Beltway’s Center for Strategic and Intelligence Studies. Although this has nothing to do with China’s divisive view of capitalism.
If Musk does do what no one else in Silicon Valley can do and get his super app, it will be a huge business operation. Yes! You said exactly what Musk wanted. Yes, bigger is better. Until, possibly, it wasn’t.
“One of the criticisms of WeChat is its monopoly tendencies,” Kennedy said. “We’ve had this concern with Facebook, Apple and others. I think super apps will run into antitrust and anticompetitive hurdles in the United States.”