For Elon Musk’s acquisition of Twitter to work out as he’d like, Musk must find some way to supersize the company. Its business is long-undersized compared to the platform’s presence in culture and politics.
As a model, Musk has set at least some sights on the original so-called “super app,” WeChat, which is owned by China-based Tencent. In Musk’s first town hall meeting with Twitter employees last week, he directly mentioned WeChat, indicating that building something like it would further his broader goal of nearly quintupling Twitter’s user base to 1 billion people. “There’s no WeChat equivalent out of China,” he said at the meeting. “There’s a real opportunity to create that.”
Much of what Musk says can seem outlandish. (At the meeting, he also discussed the possibility of alien life.) But his thinking about WeChat isn’t, though it is not especially novel. WeChat’s success has tantalized many a Silicon Valley mogul; Musk is only the latest. As a group, they’ve looked on with envy at WeChat’s expansive business model—messaging, social media, payments—and lack of reliance on ad revenue, the fickle revenue stream fueling much of their businesses. Yet they have found it devilishly difficult to produce an American version of a super app.
“A super app is an app where you can accomplish a lot of different tasks, even ones that might not necessarily think are super related to each other,” says Yuechen Zhao, a partner at GSR Ventures. “It’s all related to everyday consumer behavior and everyday consumer life.”
Back in 2011, Tencent was already an internet powerhouse, founded by the billionaire Pony Ma 15 years earlier. But user behavior was changing and shifting toward mobile phones, outdating Tencent’s popular desktop-based messaging app, a piece of software akin to AOL Instant Messenger. A Tencent developer, Alan Zhang, pitched Ma the idea for a simple mobile chat app wrapping together Tencent’s many businesses.
Zhang today is seen as something approaching a visionary, and WeChat has over 1 billion users, making it the same size as TikTok and Instagram (though it remains half WhatsApp’s size). On a basic level, WeChat provides audio and video calls and one-to-one text messages, plus the ability to create group threads containing up to 500 people.
“I first downloaded WeChat in 2013. I was studying at Harvard, and I met my then-girlfriend—now wife—who told me about it,” Zhao recalls. “We started texting each other on that. Then I got my parents on it, and I realized, ‘Oh, my gosh…for the first time, we could actually communicate with family. And when I went to work in Beijing from 2016 to 2018, that was when I really got to know the system pretty well.”
WeChat’s system extends much beyond communication. WeChat has opened itself up to outside developers and it is replete with mini-apps, over 1 million of them attracting 200 million daily users. Those apps and others developed by WeChat, like the PayPal-esque WeChat Pay, connect every facet of life in China through QR codes: hailing a cab, buying groceries, booking a doctor’s visit, purchasing insurance. WeChat takes in revenue through ads and collects a portion of the money that flows through its app.
(It is worth noting, briefly at least, the tradeoffs WeChat accepts. It is a commercial triumph, but it must exist hand in hand with China’s censors. The app follows the government’s strict rules, part of what’s popularly termed “the Great Firewall,” a barrier between Chinese internet users and foreign websites. In 2020, President Trump proposed banning WeChat along with TikTok, citing concerns about how the two companies manage data and their need to meet the demands of their government minders. Only remember the TikTok part of Trump’s efforts? Understandable. TikTok’s presence in America far outstrips WeChat’s, much of WeChat’s functionality exists only in China. The Biden Administration has dropped the idea for the ban, though it has said it is considering new rules for foreign apps.)
Twitter’s rivals have already tried to reach for some of WeChat’s glory. In 2019, Mark Zuckerberg said he would shift some of Facebook’s attention away from public toward private messaging, a tacit acknowledgement that what WeChat does works well. Evan Spiegel, meanwhile, has flung the doors wide open at Snapchat, encouraging developers to contribute items like augmented-reality filters, a move unmistakably resembling WeChat encouraging the mini-apps.
So why isn’t Facebook or Snap a super app already? Largely, the U.S. companies have struggled to tie in the payments part of WeChat’s ecosystem to their own. They have tried, and the desire remains. Facebook tried and failed with a cryptocurrency, Project Libra, but is reportedly working on adding other virtual coins and lending services. Last year, Pinterest considered selling itself to PayPal for $45 billion, a deal grounded in the same mindset. And Instagram has made great hay out of its expanded shopping tools, including the ability to check out directly through its app. Again, same mindset: Payments, media, messaging.
A simple factor may be what’s holding them all back from achieving super app status. U.S. adoption of mobile payments has significantly lagged China’s. More than 80% of adults in China use mobile payments. In America, the figure is likely less than a third. So even if Instagram, Facebook and Snap had attractive payments features, they’d still face the lackluster demand for mobile payments, which amount to no small part of WeChat’s rise.
Jack Dorsey, the man who ran Twitter twice, must’ve acutely understood a super app’s supposed promise. After all, in his second time as Twitter CEO, he was simultaneously chief executive at Block, the company behind Square and CashApp. Arguably, those twin efforts presented him a greater opportunity to fuse together a super app than any of his rivals have enjoyed. He never did. Which is telling about how Dorsey must’ve viewed the chances of a super app succeeding in the U.S.
Now, here comes Musk, who has spent the better part of three decades thinking about digital payments in addition to lunar orbits and solar batteries. (In Musk’s first act, he cofounded PayPal.) That’s something. And maybe Dorsey did have access to existing fintech infrastructure that Musk won’t. But Musk appears to have something Dorsey didn’t, a possibly more important something: a fire to make Twitter bigger.
Sure, Dorsey made plans for Twitter’s growth. But they were at least partly driven by pressure from another outside shareholder, Elliott Management. And even after Elliott forced Dorsey to crank it up, Dorsey’s plans were still several orders smaller than what Musk has proposed. Dorsey forecast $7.5 billion in sales by next year; Musk has reportedly forecast nearly $30 billion by 2028. Advertising alone is unlikely to get Twitter to $30 billion, particularly with the economy seemingly about to tip into a recession, which is never a good outcome for the ads business. (Additionally, there’s the lingering problem caused by Apple’s changes to its software that have made mobile ads less lucrative for the time being.) Maybe that makes Musk more motivated than anyone else to develop a super app, improving his odds.
Of course, there’s a potential downside to a super app, points out Scott Kennedy, trustee chair in Chinese business and economics at the Center for Strategic and Intelligence Studies, a Beltway think tank. Though it is not one relevant in China’s fractured take on capitalism.
If Musk did pull off what the rest of Silicon Valley hasn’t been able to and gets his super app, it would be a big commercial operation. Yes! Just what Musk wants, you say. Yes, big is good. Until, possibly, it’s not.
“One of the criticisms of WeChat is its monopolistic tendencies,” says Kennedy. “We already have those kinds of concerns about Facebook, Apple and others. I think a super app would run into antitrust and anticompetition obstacles in the United States.”
Forbes – Social Media