Trump Media’s Achilles’ Heel

Donald Trump
Photo by STR/NurPhoto via Getty
Tina Nguyen
February 24, 2022

Over President’s Day weekend, the Trump Media Technology Group soft-launched their first product: Truth Social, the long-anticipated, Donald Trump-backed social media platform that investors hope will rival Twitter and Facebook. Well, they tried to launch it, anyway. Although the mobile app was approved for Apple’s App Store, the company itself was forced to bump its official launch date by a month, and the app initially crashed whenever people tried to sign up for the waitlist. (It’s been four days, and I still can’t get past a 405 Error page.) These inconveniences, however, didn’t stop the SPAC that intends to merge with TMTG from exploding in value: in a single day, Digital World Acquisition Corp.’s stock price, already up around 700 percent since the merger announcement, spiked another 17 percent.

Of course, there remains the possibility that TMTG dies before the merger with DWAC closes, thanks to a pending S.E.C. investigation. Or, more likely, that TMTG—which is promising to build a streaming video business to rival Netflix and CNN and Disney—plummets in value when those plans fall apart. But Truth Social, whether it survives or not, is already a thicket of issues involving off-the-shelf technology, meme-stock gamesmanship, disinformation, political echo chambers and larger geopolitical forces; all complicated by the omnipresence of Donald Trump—his ego, his lackeys, and his all-consuming need to bolster his political brand while stewing in political absentia in Mar-a-Lago.

My partner William D. Cohan has written eloquently about the financial machinations surrounding the SPAC structure, and the early investors who have already pulled their money from the venture. But there’s only one person, in my opinion, who could accurately assess the technological and product-market fit questions that Truth Social will have to overcome: John Matze, the founder and former C.E.O. of the rival free-speech social media platform, Parler.

Matze, after all, knows exactly what it’s like to try to build a new social network from scratch—and, in particular, the specific challenges of attracting and retaining a largely conservative user base. We first connected shortly after the January 6th riot at the Capitol, when he was ousted from Parler by board member and G.O.P. megadonor Rebekah Mercer. I’ve always found his insight into the deepening partisanship of social media both well-informed and unique, in both the media and the tech space. He has also been prescient in his assessment of the difficulties that Truth Social faces today. Back in June 2020, Matze made the pilgrimage to Mar-a-Lago to discuss an exclusive deal that would give the Trump Organization a 40 percent stake in Parler. But Matze agonized over the idea of working with Trump, who he worried would seek control of the company, or might become vengeful if the deal fell apart. (The discussion didn’t go far, and the deal fell apart. Matze was fired several months later.) 

Since then, Matze has been working as a private consultant—and has been more than willing to speak his mind. So last weekend, as Truth Social kept glitching through its launch, I asked Matze if he would hop on the phone to share his views on the Truth Social app, TMTG, and the future of conservative-friendly social media. This interview has been edited for length and clarity.

A couple days ago, Don Jr. shared a screenshot allegedly depicting his father’s first post on the beta version of Truth. But the company had a highly glitchy launch and appears to be a Twitter rip-off. What are your thoughts?

[February 21st] was supposed to be their official launch date, and they have a big waitlist, and they can’t let people in. And so the big marketing pitch they’re going for is there’s so many people who want to join that, you know, we’ve got a waitlist to get people on board. But it seems they’re not spending any time or energy developing the technology to scale rapidly, or at least not enough.

If you launch a social media platform, and you want to get everybody to sign up as quickly as possible, then you want to acquire people while you have the press and the publicity. And if you’re not doing it in bulk, and you’re not capturing as close as possible to 100 percent of the people who want to sign up on that day, they may not all come back. 

I just tried to put my information in, and it went to a 405 page.

From a business perspective, all signs suggest that they want to make a run at making a ton of cash on the speculative value of a social media platform that’s run properly by Trump. That’s why they want to launch with that SPAC. The speculative value of what this could be is going to be a bank run for the Trump family to at least cash some of it out, and then raise funds to just hire people to go out and just build the thing that they want built. And hopefully it’s not a complete embarrassment or a train wreck, and they can justify why they had that valuation.

Speaking of the valuation, right now it’s trading at about eight times its I.P.O. price and spiked by 17 percent when it appeared on Apple’s App Store. Does that level of volatility and excitement surprise or concern you?

It doesn’t surprise me at all. I think that his brand has some tremendous power behind it. Even despite everything that he’s done, it does have tremendous weight and power, and it could bring immense value to a technology company. It does concern me because I don’t think that he has any interest in building an actual technology company.

Besides the Trumps, are you familiar with any of the other stakeholders involved?

No. The only other individual that I’m aware of that’s involved is their C.E.O., Devin Nunes, a former member of Congress. I think he is an interesting choice. He was one of a number of prominent individuals that I worked with in the past. And we had a working relationship to make sure that if something went wrong at Parler, I’d get a text message from him. We didn’t have a business relationship, per se. We had a “your shit’s not working” or “Hey, it’d be nice if this feature existed” relationship. I think he’s a decent enough individual. He’s probably gonna do a good job as C.E.O., but my point is that he’s not a technologist. If he was a young kid coming from Silicon Valley, I would say that their company would have a better shot at success as a technology company. 

According to the investor deck, TMTG is aiming to build a Trump-centric media universe: television streaming, documentaries, podcasts. One of the slides says that Truth Social could reach 81 million users by 2026, and generate $13.50 in average revenue per user. And it also says that TMTG+, TMTG’s streaming app, is projected to reach 40 million total subscribers by 2025, and generate $9 in average monthly fees per user. Do these numbers make any sense to you?

They make sense if you were talking about companies like Twitter, or Netflix or YouTube. They make sense if you’re talking about a company with mass appeal, and with quality software, and with really well thought through and developed, innovative solutions. It doesn’t make sense, though, given the trajectory of his marketing, and his brand appeal and what he’s trying to do. 

I would imagine that the people he’s going to get converted to being paid membership accounts are going to be more of his core Trump base, and they’re going to do it because they support him. They’re not going to do it because of a value proposition that’s awful.

You’re talking about the quality of the content, the quality of the interactions they have on the platform?

Yeah. I mean, one of his big selling points is it’s your truth, right? If you look at his slogan, on the website, it’s a big tent for all political viewpoints, something along those lines. If that’s his big selling point, there’s a lot of competition in that space. Although 80 million potential users kind of makes sense as a number, it doesn’t make sense that they are coming back daily, and it doesn’t make sense that they are monetizable users. I’m foreseeing the conversions to paid members as being much lower than what he predicts.

If you also take a look at how Twitter’s done with Twitter Blue [Twitter’s paid premium tier], of the 80 million monetizable users, give or take whatever it is, a very small portion of those monetizable user accounts are paying for Twitter Blue. Twitter is still relying on ad revenue. And I feel that advertisable brands are not going to want to sell Coca Cola products or to sell Apple products or to sell Microsoft products next to Trump’s political statements. You’re not gonna want to put an ad for a reputable brand next to Trump’s political rant.

So what do you think is the total addressable market?

I think you’re looking at somewhere between 10 and 20 million people, not 80 million.

In 2020 Twitter had gross revenue of about $3.6 billion with 186 million users. Given that no major advertisers will likely be working with Truth, what are Truth’s realistic prospects?

I doubt board members at Netflix are talking about losing monthly paying clients to Truth. YouTube likely isn’t worried about losing high quality video producers to Truth. The top advertisers in the United States in 2020 by money spent were Amazon, Comcast, ATT, Proctor Gamble, Walt Disney, Verizon, et cetera. All of which either denounced the events of January 6th, pulled some donations from Republicans, or terminated services with companies believed to be associated. Does anyone expect these brands to advertise or support Trump’s social platform in any way?

Does Truth Social survive to Year Five, or even Year One?

We’re gonna see a really big test within the next couple months, because he’s pushed back the release date for the general public. Now, whether or not something happens by the end of March is going to be really telling. And how the app copes with the scale, right out of the gate, is going to be very telling. But, also, a thing to keep in mind is if you sign up on the app, and you use it, is it the quality product that you’d expect from Twitter, from Facebook, from Apple, from Google? Is it at that level of quality, or is it going to be glitchy? Chances are, it’s not going to be that good. But we won’t know, right? Maybe he’ll surprise us.

The conservative, alternative media universe seems kind of ripe for consolidation. Do you think there’s a possibility that TMTG starts rolling up other competitors like Rumble, Parler, GETTR, and so on? Or do you think it might eventually get acquired, itself?

Trump’s best bet is to roll up the people who’ve proven themselves the most in that space. That is his best business bet. Though if I were his C.E.O., or lead investor, or on his board, I would be advising him to try to convert a decent chunk of that SPAC into cash that can be used to acquire all of the talent to build his dream product that he’s trying to put together, and acquire all the technology companies required to do that, and the best ones that are out there today. And so, you make that judgment call, whether it’s Rumble or one of the other YouTube alternatives; out of all the social media alternatives, which one is the best? Acquire those and bundle them up. But once again, it’s not clear that that’s what he’s doing.

You’ve spoken before about how the events of January 6th, some of which were coordinated on Parler, caused you to change your views about the importance of content moderation. What was that evolution like, from advocating a purely free-speech platform to identifying the need for reform?

I think social media is far more complex than I would have ever imagined going into anything, three, four years ago [when I founded Parler]. But it’s also now extremely interwoven into international politics. And I think being away from all of this has made me realize, even more than before, that these are not just tools for people to communicate with one another. These are tools which are also used in the hybrid modern warfare of disinformation—which can be used to manipulate society as a whole. 

How do you counter global informational warfare while also preserving people’s good faith conversations at scale, and determining the difference between good and bad faith arguments—not just for a small group of people, but for millions and millions of people, with the topics evolving in real time? I mean, that’s a huge challenge. I just don’t think that Trump’s the man to solve that.