Why does Elon care about the number of bots on Twitter?

Unless you have been living under a rock, you know that Elon Musk has been attempting to purchase Twitter. One large point of contention for this proposed $44 billion acquisition is the number of bots on the platform. As an aside, Elon (1% chance he is reading this), I hate to break it to you, but Tesla also gets botted.

For those who do not know, bots are just fake or spam accounts. Twitter has been steadfast in its belief that bots contribute less than 5% of accounts on the platform, while Elon strongly disagrees and has demanded more proof for that justification. We’ve also done our own calculations where we estimate ~24–37% of daily active users are bots (happy to help you in court, Elon!).

This disagreement can potentially jeopardize a $44 billion acquisition and created a media storm that dominates all headlines. Beyond the media loving everything related to Elon Musk, if Elon chooses not to continue with the acquisition of Twitter, he would be required to pay a $1 billion break fee.

A lot of the media has accused Elon of using the number of bots to weasel his way out of the deal without needing to violate and pay the break fee. However, we disagree and applaud his due diligence because having a large percentage of bots can be devastating to the entire business.

Revenue & Ad Dollars: Twitter generated about 85% of its revenue from selling advertisements. The number of accounts and interactions on the platform are braggable metrics they can market to potential customers.

The more users, the more potential reach and audience for their customers; thus, if numbers are inflated, it is not the worse thing. We tried advertising and promoting tweets and learned that Twitter has too many bots and was essentially a waste of time. If this trend continues with a significant portion of advertisement impressions coming from bots, then companies and advertisers will leave the platform as who wants to promote for fake likes, retweets, and spammy comments. End of the day, we’re all getting click baited — the interactions should come from true consumers, not click farms.

Customer Experience: the value of social media is the connection and interaction with others. Creating this network effect is essential for the success of the social media site; thus, theoretically, the more interactions, the better.

Twitter is a phenomenal and impactful community where one can learn, make friends, and post fire memes. However, it is filled with garbage and dilutes the value it provides — for example, last week, we were looking for a logo designer and were spammed by automated responses and bots.

It negatively impacts the experience, as once you experience a sleuth of bots or fake accounts. It causes you to question the legitimacy of many of your interactions on the site. It becomes dilutive and causes attrition to other competitive sites (i.e., Reddit, Tik Tok, etc.).

Trust & Fidelity of Data: there are massive long-tail impacts of not knowing your customers, such as the health of the business, over-allocating resources and expenses, and your product vision shaped by data. You can jeopardize the company if you use skewed and bad data from a misunderstanding of your customers. When you think about earnings calls and growth numbers that are being reported, it can mislead investors about the health of the company.

The impact for any potential acquirer of Twitter is enormous, as not understanding and knowing their actual users can jeopardize the entire business. It can destroy the customer experience, leading to customer attrition and losing critical advertisement dollars.

Elon cares because he knows the impact could be enormous and is doing the necessary due diligence to see the value of Twitter.

Why other companies should care too:

1. Skewed metrics, reporting, and KPIs. All metrics will be more scrutinized than ever, as calculating the bots/bad actors from your total accounts will become a norm. There’s going to be a difference between active daily users vs. active daily good users. Here’s a prime example of PayPal (another Elon company).
2. Businesses succeed by knowing their consumers. Once their data and perception of consumers become miscontrued, they make bad decisions based on faulty data. This data stems from click farms, bad actors, and scripts emulating humans. Another prime (not Elon example), Spotify.
3. Inflated Customer Acquisition Cost. It’s already expensive to convert new consumers, especially where retargeting has become more restrictive. You are blindly throwing resources — advertising, promotion, discounts, and more.

These are just a few examples, but as we all know, data and proper data usage are critical for a successful business. Data fuels all actions made within your business, and with skewed metrics, negatively impacted customer experience, and misleading growth numbers — it can be challenging to make the correct decision.

We know this because we experience bots at some of the largest brands (e.g., Nike, IBM, Coinbase). This topic around bots is here to stay and will become more prevalent in the future. It’s not just about how many spammy NFT accounts or bots are on Twitter but also about understanding your customer’s digital identity. We’ve seen the growth of bots, from tickets and sneakers to everyday necessities (e.g. tampons, toaster ovens, etc.). One of the biggest challenges for businesses is understanding their customer’s digital identities; we all have multiple identities, intentional or unintentional, on web2/web3. It’s a challenge that all businesses will have to face.

Elon, I applaud you for pushing back and ripping off the bandaid on a very taboo topic.

With Love,

Yofi

‍