No Mercy / No Malice: Threadzilla

As read by George Hahn. https://www.profgalloway.com/threadzilla/ Learn more about your ad choices. Visit podcastchoices.com/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:01Scott Galloway?

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• 0:48Speaker 01

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• 1:18Scott Galloway?

  I'm Scott Galloway, and this is No Mercy, No Malice. Meta's Twitter competitor, Threads, is the most ascendant platform in history. Disruption isn't a function of the disruptor, but the disruptee. Threadzilla, as read by George Hahn.

• 1:46George Hahn?

  Last week, Twitter became MySpace, a social network void of innovation being slowly euthanized by Meta.

• 1:56George Hahn?

  In less than a week, Meta's Threads registered 110 million users, equivalent to the combined population of Germany and Australia, and the most violent corporate disruption in platform history. What can be learned? The business strategy that marked 2023 is not leveraging AI or adopting hybrid work, but focusing on bloat, specifically how to reduce it. Whether you're a critic or a stan, Elon's 80% reduction in the Birds workforce is the most impactful business decision of the year. The Zuck may have coined the phrase "the year of efficiency",

• 2:40George Hahn?

  but it was Elon who inspired the movement.

• 2:43Speaker 03

  Turns out you don't need that many people to run Twitter.

• 2:47George Hahn?

  The result is the Nasdaq's best first half in four decades, fueled by the nitro and glycerin of AI hype and profits increasing thanks mostly to cost-cutting. A new generation of business leaders discovered that a firm with a 20% operating margin can see as big an increase in value by cutting costs $1 billion as it can by increasing revenue by $5 billion. For all the complaints from Musk critics about a buggy site "on the precipice of crashing", he's maintained a minimum viable product while shedding four in five employees in six months.

• 3:30George Hahn?

  The business is running better than it did for most of Twitter's early years as the fail whale. Twitter has held up under the demands of a World Cup, US elections, the collapse of the Valley's Iron Bank, and a Russian mutiny. There's also evidence that trolls, bots, and inappropriate content are more rampant. In some, regarding content moderation, Twitter sucks, but...

• 3:58George Hahn?

  It always has. As I stated at the beginning of the year, Elon didn't fire 6,000 employees at Twitter. He effectively terminated over 300,000 workers across tech. Because every other tech CEO felt they could have the great taste of reduced expenses while avoiding the calories of collapsing revenue. And here's the rub, and what is so insane about the year at Twitter. The decline in revenue there is correlated to its reduction in workforce, but not caused by it. Under adult management, the company could have transitioned from breakeven to a tech business with an enviable operating margin.

• 4:41George Hahn?

  Elon fired people for arbitrary reasons or no reason at all. He was insolent, even cruel, accusing workers of sex crimes and refusing to pay contractually owed severance. He's also refused to pay vendors, including the owner of Twitter's office space and its cloud providers. He's suing the law firm the company used to force him to live up to his contractual obligation to close on the acquisition. And advertisers are still waiting for a cogent explanation of "free speech," according to Elon. So what happened?

• 5:19George Hahn?

  The Dunning-Kruger effect is a cognitive human bias that causes us to overestimate our abilities in domains where we have low competence. This acutely affects some in the venture capital and tech communities.

• 5:36George Hahn?

  Enabled by their public profiles, wealth, and tech bro enablers, these folks shapeshift from one week to the next into geopolitical experts and constitutional law scholars and computer scientists. The less they know about a topic, the more confident their tone. We're all enablers regarding Elon. If Zuckerberg announced he was building an EV or multi-stage rocket, wouldn't we question the industrial logic? The misperception about disruption is that it's a function of innovation or excellence. In fact, disruption is driven by stasis and the incompetence of incumbents.

• 6:22George Hahn?

  Threads is void of any real product innovation. It's a stripped-down Twitter clone pushed into the market by a team not much larger than the Prof G Media team. Memo to self? Challenge team to grow newsletter to 110 million subscribers in a week. And that's the thing. Threads' early success has nothing to do with Threads. It's a function of the dysfunction at Twitter, aka Elon, and Meta's monopoly footprint. Netflix ate cable's lunch, as cable was a fat and happy regulated monopoly, charging hundreds of dollars for several great shows and hundreds of not-great shows meant to

• 7:05George Hahn?

  distract you from paying hundreds of dollars for... several shows. Warby Parker disrupted an industry: sunglasses, dominated by one company, Luxottica, that was also bloated. Market dominance is its own defense, especially in social media, where network effects make existing networks impervious to startups. But Musk's behavior lowered the drawbridge, and Zuckerberg walked through it without any resistance. Twitter's implosion is historic. There has never been a firm in the modern economy that's fallen this far, this fast,

• 7:49George Hahn?

  that has not been accused of fraud. We're not witnessing the unraveling of a firm, but a person. I have written about men's need for guardrails. These can take several forms: an office, a girlfriend, regulation, a board. The erosion of Musk's guardrails, as money and sycophants melt whatever better judgment or grace he had, has resulted in a reputation experiencing the same trajectory as Twitter's revenue. The company's new owner has set a land-speed record for hero to villain.

• 8:28George Hahn?

  Elon and his advisors have proven in record time they have no grasp of how to run a media firm. The new, in-name-only, CEO is an accomplished executive who sells ads.

• 8:43George Hahn?

  Asking Ms. Yaccarino to sell ads on a subscale platform that has fired its entire safety and moderation team is like pouring honey on her and sending her hunting for bears. She's not 30 days into the job and through no fault of her own, looks weak and weird. In a recent tweet, Lynda Yaccarino wrote, "Don't want to leave you hanging by a thread, but Twitter, you really outdid yourselves. Last week, we had our largest usage day since February. There's only one Twitter. You know it, I know it." To be clear, Twitter will not go away. Elon remains the wealthiest man in the world

• 9:26George Hahn?

  and can fund Twitter's operations and the interest on its debt for years, if not decades. There's ample Elon stans and a sizable cohort who don't care about any of this and have communities or identities on Twitter that work for them. Meanwhile, Threads faces many of the same challenges as Twitter. How do you balance openness and diversity of views with standards of decency while generating sustainable cash flow? It's a riddle few firms have solved. History says the nose of this jet will be difficult to pull up. In 2008, MySpace was

• 10:05George Hahn?

  one of the most trafficked websites in the US, with 115 million active users, generating $800 million in revenue in a year. Then, Facebook surpassed its user count. MySpace was sold for $35 million to Justin Timberlake. Friendster also had 115 million users at its peak in 2008. There's a learning here. Social media apps do well until Mark Zuckerberg kills them. There's a bright side to this. If Threads is the new Twitter, there's an opportunity

• 10:46George Hahn?

  for Meta to establish itself as the new Meta. A Meta that takes content moderation, the spread of misinformation, and age-gating seriously. That sees its users as more than just data corpses for organ harvesting. There's an opportunity for Zuck to step back and think about the long term, the direction he wants the business to head.

• 11:12George Hahn?

  If Meta gains significant market power in another segment of the social industry, government scrutiny will be intense. Threads hasn't launched in the EU because Meta hasn't sorted how to get the Instagram and Threads coupling through the EU's regulatory system. The Threads and Twitter saga is another proof point for the FTC and the DOJ. And therein lies the biggest threat to Threads. When we realize it's owned by Meta.

• 11:43Speaker 04

  Is Twitter the same as what you do? It overlaps with a portion of what we do. You don't think you have a monopoly? It certainly doesn't feel like that to me. Okay.

• 11:53George Hahn?

  A few weeks ago, Musk challenged Zuckerberg to trial by combat. This is proof that being in your 30s or even your 50s, and enormously blessed, is still no guarantee that your testicles have descended. However, in the cage match proposed by Musk, thus far, the Zuck is kicking the shit out of Elon. I'm rooting for the fists.

• 12:25Scott Galloway?

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