#314: Twitter’s Full Potential Is Waiting At The Gate, & More

To unlock Twitter’s full potential, third party developers should be able to build their own user experiences, algorithms, and designs. Ben Thompson’s recent essay, Back to the Future of Twitter, separates Twitter into two entities: Twitter Service, which would manage the data and social graph, and Twitter User Interface (UI). We believe if third parties were to build applications on Twitter Service, competition would help solve some of Twitter’s complicated and seemingly intractable content moderation problems.

Opening its platform to third party developers also would enable new business models that might improve Twitter’s effort to satisfy more users. Charging platform fees on third-party generated UI revenue is one idea. A “marketplace of interfaces” would allow one user to enjoy Twitter without sports or memes, and another to screen tweets and lower her blood pressure. Users could monetize through ad networks or subscription models.

In ARK’s view, Twitter’s network holds massive information value. Enabling curation to flourish outside its corporate walls could be the best way to realize and ultimately monetize Twitter’s potential.

Bolt, a payments startup that enables online merchants to offer “one-click checkout”, appears to be struggling to retain customers. According to recent reports, in 2021 Bolt’s revenue grew only 10% to $28 million, which put its most recent $11 billion private valuation at 400x revenue, nearly double the $6 billion in its last round in October 2021.[1] In comparison, PayPal’s revenue grew 18% in 2021, and its market cap fell 25% to 9x revenue over the same time period.[2]

In 2019, one year after Amazon’s patent for one-click ordering expired, Fast––one of Bolt’s competitors––was founded. In early 2021, venture capital firms valued it at $580 million[3] ––roughly 1000x its projected $600,000 in revenue as it burned $10 million cash per month. Last month, no longer able to tap into venture capital, Fast shut down.

In our view, during the past ten years, new payment methods have found success first by owning one side of the network––either the consumer or the merchant––and then extending distribution to the other side. Apple Pay owned consumers through the iPhone and WeChat Pay through WeChat, while Shop Pay owned merchants through Shopify’s core merchant product and Alipay through Alibaba.

Consumer-facing payment startups Fast and Bolt learned the hard way how difficult it is to scale into a two-sided product––a check-out solution that must be adopted by both merchants and consumers.

Co-hosted last week by SALT and FTX, Crypto Bahamas showcased crypto builders, investors, and users as they discussed layer-1 smart contract blockchains, decentralized finance (DeFi), Web3, and more. The common thread was crypto regulation.

In a panel which ARK attended, two of the largest DeFi protocols, Uniswap and Aave, encouraged two models of regulatory reasoning:

First, while current financial regulations monitor and manage the risk of intermediaries, crypto networks do not require traditional intermediaries—a key feature limiting the counterparty risk in financial transactions. That distinction alone illustrates the need for a new regulatory paradigm that will protect investors while promoting innovation.

Second, regulators should understand that the transparency and peer-to-peer nature of public blockchain infrastructure is a tool, not a threat, and that compliance standards implemented on it can be superior to those in today’s financial system.

Illustrating these models, FTX highlighted its Commodities Futures Trading Commission (CFTC) filings to launch crypto derivatives trading in the US, emphasizing that real-time settlement of crypto transactions helps them monitor margin risk in real-time––a significant improvement over traditional financial infrastructure.

As blockchain technology and DeFi evolve, we trust that regulators will focus not only on financial safety and stability but also on collaboration, experimentation, and education. In so doing, they will introduce thoughtful measures to protect investors while catalyzing innovation.