June 27 (Reuters) - Social-media startup Truth Social has
branded itself as the anti-Twitter and the exclusive home of
former President Donald Trump. Its prospects, the firms
financial backers have disclosed in public filings, depend on
monetizing Trump supporters rage over alleged Big Tech
censorship of the political right.
As it turns out, its hard to build a social network to take
on Big Tech without the help of Big Tech. The Trump ventures
pugnacious political approach has hobbled the companys
development from its inception, a Reuters examination of the
origins of the secretive enterprise has found.
Trump Media & Technology Group (TMTG) has struggled to
develop its social media platform since its February 2021
founding because its managers have sought to avoid potential
corporate partners and employees perceived as politically
liberal in a Silicon Valley-based industry that skews left, said
three people with knowledge of its operations.
The feeling is mutual: Many engineers and tech firms wont
consider working with a Trump company, according to two of those
people, two additional sources with knowledge of the venture and
a May 16 filing with the Securities and Exchange Commission by
the investment company that plans to merge with TMTG, Digital
World Acquisition Corp, or DWAC. The mutual aversion
has severely restricted the pool of talent and corporate
partners available to help TMTG build a competitive social
network on an ambitious timeline.
The reluctance of potential staffers and partners to work
with TMTG is as practical as it is political: The firms fear an
association with Trump will cost them customers, and tech
workers worry it could hurt their careers, the people
interviewed by Reuters said. The company risks facing the same
challenge in seeking advertising from major companies, who want
to avoid alienating the half or more of their customers in a
politically polarized America who dislike Trump, according to
two advertising experts.
This account of the companys early challenges is based on
interviews with 16 people with knowledge of its operations, all
of whom spoke on condition of anonymity, and public filings by
DWAC.
The company also faces serious challenges on the legal and
financial fronts. DWAC disclosed on Monday https://www.reuters.com/technology/digital-world-board-members-get-subpoena-over-trumps-social-media-deal-2022-06-27
that a federal grand jury convened by the Department of Justice
(DOJ) in New York has issued subpoenas to all of its directors.
The DOJ investigation dovetails with a probe by the Securities
and Exchange Commission (SEC) that the investment company first
disclosed in December. Word of the SEC inquiry came weeks after
Democratic Senator Elizabeth Warren, of Massachusetts, asked the
SEC to examine possible securities violations related to
allegedly undisclosed private merger talks between TMTG and DWAC
last year, before DWAC went public.
The SEC declined to comment on its investigation Monday; the
DOJ did not immediately respond to a request.
DWAC said in an SEC filing Monday that the investigations
could delay the proposed merger, which would also stymie a major
cash infusion planned for Trumps social media company.
TMTG said in a statement Monday that it would cooperate with
SEC oversight, without mentioning the Justice Department
probe, and said that it remained focused on reclaiming the
American peoples right to free expression and improving the
Truth Social app.
The companys avoidance of Big Tech firms contributed to
major problems with the February launch of its app on the Apple
Store, relegating hundreds of thousands of users to a waiting
list that wasnt cleared until April. A person familiar with
TMTGs technical operations said the botched launch was caused
by problems with servers, the remote computers that provide the
storage and data-processing power to run websites.
The servers, the person said, had been provided by two
smaller cloud providers with political credentials that suited
TMTG: Rumble, a Canadian video-sharing platform that caters to
conservatives but is brand new to the server business; and
RightForge, an infrastructure firm that markets itself as a
free-speech champion. The firms were chosen to replace
cloud-computing industry leader Amazon Web Services (AWS), which
was used early in the project but quickly ditched for political
considerations, the person said.
AWS was particularly problematic because the cloud-computing
unit of tech titan Amazon.com Inc. angered many on the political
right last year by terminating services to Parler, the social
network popular among conservatives, citing its failure to
police posts inciting violence. In the May 16 filing, DWAC named
Amazon among the Big Tech firms TMTG was founded to fight,
because they collude to limit debate in America and silence
voices that contradict their woke ideology. The list also
included Twitter, Facebook, Netflix and Google, among others
DWAC left unnamed.
An AWS spokesperson declined to comment. Parler did not
respond to an inquiry.
An investor relations company representing TMTG issued a
short statement in response to detailed questions from Reuters
sent to representatives of Trump, TMTG and DWAC. The statement,
from Shannon Devine, a managing partner at MZ Group, said the
Reuters inquiry contained false and defamatory statements.
It also includes misleading assertions and omits material
facts, wrote Devine, who said the statement was on behalf of
TMTGs legal department.
Devine did not specify what information was false or
misleading and did not respond to a follow-up request for
comment.
TMTG has also been hampered by a leadership team with little
tech-industry experience and little interest in learning the
operational details of software development, according to two
people familiar with company operations.
Two people central to the companys founding, Wes Moss and
Andy Litinsky, are both former castmates on The Apprentice,
the reality TV show that featured Trump before his presidency.
Moss is also a managing partner at a wealth management firm in
Atlanta. Litinsky previously worked at Trumps TV production
company and hosted a conservative radio show. He also ran a
short-lived start-up, ConnectPal, a social-media site that
charged subscribers to access users profiles before Litinsky
dissolved the business in 2018, according to a regulatory
filing.
Two people familiar with company operations said Moss and
Litinsky essentially ran TMTG in its early days, before it hired
CEO Devin Nunes, a former Republican U.S. congressman and dairy
farmer. Nunes started in January, the month before the rocky app
launch. He did not respond to a request for comment.
TMTG has not disclosed executive job titles for Moss and
Litinsky. The May 16 filing identifies Moss as a director, but
Reuters could not determine his current management role or level
of involvement with the company. Moss did not respond to a
request for comment.
Litinsky left the company months ago, according to a
person familiar with the venture, without specifying his exact
date or reason for departing. The exit of Litinsky, who now
works as a media and technology consultant, has not been
previously reported.
TMTG technology team members tried soon after the companys
launch to get Moss and Litinsky to commit to
software-development best practices, such as identifying and
prioritizing key user features, according to a person familiar
with company operations. The two men called such suggestions a
waste of time, the person said. When tech employees pressed Moss
and Litinsky for the company vision, they said TMTG should
replicate Twitter, the person said, except without
content-moderation policies that irk some conservatives.
Such an imitative approach would reflect a fundamental
misunderstanding of whats required for tech-industry survival,
said Aaron Ginn, co-founder of the Lincoln Network, an
influential group of tech-industry conservatives. Like all
startups, he said, TMTG must innovate to compete in the fierce
battle for users attention.
The question is whether or not the product has a unique
invention, Ginn said. TMTG, he said, needs to generate
differentiated content that users cant get on Twitter.
TMTGs business model has looked shaky in light of recent
news. Billionaire Elon Musk, who has a deal to buy Twitter, in
May vowed to rescind that platforms ban on Trump. Later, the
May 16 DWAC filing disclosed that the platforms exclusive
deal with Trump isnt so exclusive: It allows him to post
political commentary on any social media site at any time,
deepening doubts about his commitment to the enterprise.
A Twitter spokesperson declined to comment for this report.
TMTGs fortunes are inextricably tied to Trump. He is billed
by the company as the chief traffic driver. As chairman, he will
control either 47% or 58% of the companys voting power,
depending on how preferred stock is handled once it merges with
DWAC, the special purpose acquisition company. The merger
requires approval from the Securities and Exchange Commission
and is likely months away from closing.
'COMICALLY LOW' APP DOWNLOADS
Some early dysfunction is expected in startups, but unlike
most new firms, TMTG did not have the luxury of learning on a
small stage. Under the unceasing spotlight on Trump, the company
had to build a platform to accommodate a large audience and
uneven spikes in traffic from its first day, without the
reliable tools most Silicon Valley developers depend on.
Platforms such as AWS server systems, for instance, have
become so ubiquitous that many developers arent trained to work
on anything else. That dynamic exacerbated already difficult
recruiting and development processes, according to a person
familiar with TMTGs technical operations.
The tech team has started to get more traction recently. In
late April, Truth Social finally cleared its waiting list for
Apple device users and topped the charts for App Store downloads
for about a week. In mid-May, the company released a version of
Truth Social for web browsers.
The company, however, has yet to launch an app in Googles
Play Store for Android phones, which comprise about 40% of the
U.S. smartphone market. And its user base remains a tiny
fraction of its ambitious growth targets. TMTG told investors in
November that the site would reach 56 million users by 2024 and
81 million by 2026. For comparison, the 2026 target would be
about 35% of the number of daily users on Twitter today.
As of June 1, the Truth Social app had been downloaded 2.8
million times, according to data analytics firm Sensor Tower.
One venture capitalist called that figure comically low for a
high-profile venture backed by a former U.S. president. Gene
Munster, a managing partner at Minneapolis-based technology
investment firm Loup, said he would have expected more like 25
million downloads given the heavy attention the project has
drawn.
Is it that the platform wasnt working right? Is it that
they arent getting their message out? he asked. Im shocked
thats low.
CAST OF CHARACTERS
The team seeking to monetize Trumps social-media magnetism
has been a revolving cast from politics, tech, reality TV and
other industries. The firm has had three different technology
chiefs in its first year.
The idea for Truth Social started with the duo from the
Apprentice, the show that forced contestants to compete in
business challenges for a job in Trumps real-estate empire. In
January 2021, Moss and Litinsky pitched Trump on a social
network that could restore his unfiltered access to the American
people, according to a person familiar with the companys
founding. Twitter and Facebook had just banned Trump after
concluding he had incited or glorified violence during the U.S.
Capitol riot earlier that month.
Trump greenlit the idea, and by June a small team set to
work on it, according to a person familiar with company
operations. Fellow Apprentice alum Nicholas Warnock, a
California insurance salesman, was one early team member.
Warnock previously spent more than a decade at a digital book
company. He was sued in 2019 by his former business partner, who
alleged Warnock had absconded with money, court filings show.
A California judge last year ordered Warnock to pay more than
$310,000, a decision Warnock has appealed.
Warnock did not respond to requests for comment. Reuters
could not determine his specific role or current employment
status at TMTG.
Another early team member was Will Russell, a former deputy
travel director in Trumps White House. The chief financial
officer was Phillip Juhan, who previously held the CFO role at
bankrupt fitness chain operator Town Sports International,
according to the May DWAC filing. Chief Technology Officer Jay
Dalke, an Atlanta tech-industry veteran, was among the few early
hires with significant tech-industry experience.
Truth Social last summer started recruiting tech talent.
Executives sought to find ideologically aligned staffers, in at
least one case scanning candidates social media and listening
to their appearances on podcasts, according to a person familiar
with company operations. But the company struggled to woo
skilled tech workers, regardless of their politics, according to
three people with knowledge of the recruiting efforts.
Those with the companys preferred conservative politics, or
at least a commitment to its stated free-speech mission, were in
short supply, they said. And tech workers with liberal or
moderate politics usually wanted nothing to do with the Trump
company. One person approached by TMTG told Reuters it was an
easy offer to refuse. Beyond a distaste for Trumps politics,
this person cited concerns about the former presidents history
of business failures the DWAC filing lists six Trump entities
that have filed for bankruptcy and about TMTGs financing
arrangements.
At least two people who never worked for TMTG were listed in
a November 2021 investor presentation as members of its tech
team, according to two people with knowledge of the matter. An
earlier presentation, in March 2021, named John Horton, a
startup founder who served in the administration of Republican
President George W. Bush, as one of Trump Media Groups key
personnel, responsible for technology, security and payment
processing. Horton told Reuters he has had no involvement with
Truth Social.
Some staffers who did sign up have hidden their work at
TMTG, avoiding any mention of their new jobs on their social
media bios, according to a Reuters review of workers bios. Some
feared career repercussions, according to a person familiar with
company operations. The identities of two key TMTG executives
Chief Product Officer Billy Boozer, and the companys second of
three chief technology officers, Josh Adams were not publicly
known until Reuters exclusively reported in April that they had
resigned after a brief and tumultuous tenure.
Boozer and Adams did not respond to requests for comment.
SLEEPLESS NIGHTS
The development team worked at a WeWork co-working space in
Atlanta. The TMTG staff was small and heavily reliant on outside
contractors, according to two sources familiar with company
operations. Reuters could not determine the size of the whole
operation, but TMTG had about 40 full-time employees as of March
31, according to the May 16 regulatory filing from DWAC.
The startup had as much difficulty finding vendors as it did
recruiting staffers, according to the filing and three people
with knowledge of company operations. Several potential
partners, the filing said, were unwilling to partner with TMTG
because of the companys connection with President Trump.
Two sources with knowledge of TMTGs operations said several
companies backed out of agreements after reconsidering the
potential for backlash from clients or customers. Some
prospective partners feared becoming targets for hackers,
according to another person with knowledge of company
operations. Fueling those fears, an early, unpublished version
of the app was breached in October by hackers who created parody
accounts, including a false donaldjtrump account with a
photograph of a defecating pig.
Fastly, a content-delivery network provider, told Reuters it
rejected a request to provide services for Truth Social. The
company, which provides a system allowing for fast and reliable
web access, said someone signed up online with a personal email
address in September and ultimately tried to configure service
with a truthsocial domain on our system. The company said it
shut the account down for violating its terms of service but
declined to comment on the specific violation.
As TMTG publicly blasted Big Tech, it sought out
ideologically aligned firms such as Rumble. TMTG announced on
Dec. 14 that it had entered into a wide-ranging technology and
cloud services agreement with the Canadian firm, which would
include video and streaming for Truth Social. Rumble had already
been working with TMTG for months in a role that was described
internally as a key strategic partnership but not clearly
defined to staffers, according to two people with knowledge of
TMTG operations.
TMTGs connections to Rumble were both political and
personal. Rumble CEO Chris Pavlovski was a friend of Moss,
according to a person familiar with the venture. Rumble was
backed by major investors on the political right, including
PayPal co-founder Peter Thiel. Trump Media CEO Nunes had a
presence on the platform, and a lawyer who had previously worked
under Nunes on a Congressional intelligence committee became
Rumbles top attorney in November. Thiel did not respond to a
request for comment.
TMTG wanted to use Rumble as a cloud provider, but Rumble
couldnt immediately take on the job because it was still
developing its cloud-services offering, according to a person
familiar with TMTGs technical operations. That forced TMTG to
temporarily use AWS, despite the concerns about hiring a major
Big Tech player. By October, TMTG had dropped AWS and added
RightForge, the company that bills itself as a free-speech
proponent, to be the main server provider while Rumble ramped up
its cloud offering.
By then, the work on Truth Social was so far behind schedule
that its tech team had to work brutally long hours to get it
done, according to a person familiar with TMTGs technical
operations. The firms original chief technology officer, Jay
Dalke, quit that same month, to be replaced by Adams.
Adams and chief product officer Boozer would lead the scramble
to meet the company launch deadline of Presidents Day, Feb. 21.
Both were Southern tech entrepreneurs and conservatives with a
passion for Truth Socials free-speech mission, according to two
people familiar with TMTG operations.
None of these guys slept for weeks and weeks and weeks,
one of those people said of Adams technology team.
Adams and Boozer beat the deadline by one day, but the app
lacked key features, such as direct messaging, and most users
trying to download it were shunted to the waiting list.
Server problems caused the chaos, according to a source
familiar with the apps technical operations. Rumble had only
gotten its cloud service operational shortly before the app
launch, and some of its technology failed when the site went
live, the person said. Deploying Rumbles servers alongside the
RightForge cloud infrastructure also created problems in getting
the two systems to work together running the same app, the
source said.
Rumble CEO Pavlovski did not answer detailed questions from
Reuters on its work with TMTG. A Rumble spokesperson denied in a
statement that the companys servers experienced technical
issues when the TMTG app launched. The statement said Rumble
cloud services were ready in 2021, without specifying the
date.
In a June 17 filing from CF Acquisition Corp. VI, the
blank-check firm taking Rumble public, Rumble said that its
initial cloud service offerings revolve around a small number
of customer relationships, including its work with TMTG, and
that its infrastructure services offerings are still currently
in early development.
A company spokesperson for RightForge did not respond to a
request for comment.
Adams and Boozer resigned shortly after the apps troubled
debut. Replacing Adams was another Southern tech entrepreneur,
William B.J. Lawson, a medical doctor who previously launched
a health tech startup and twice ran unsuccessfully for Congress
in North Carolina.
WEAK GRIP ON TRUMP
Big money is riding on Truth Social. TMTG stands to receive
$293 million in cash from DWAC and has raised about $1 billion
in additional committed financing from investors in a private
investment in public equity (PIPE) arrangement. The money from
both deals wont be available until the DWAC merger closes. The
site, meanwhile, isnt expected to generate revenue until 2023,
according to the May 16 DWAC filing, which noted the company had
a net loss of $60 million in 2021.
Despite Trumps financial interest in Truth Social, the
former president did not post on the platform for more than two
months after its troubled Apple app launch, raising questions
about his commitment to the company. Earlier, in October, as
TMTG raced to produce a product, Trump was holding discussions
about a financial arrangement to join Gettr, a rival
conservative social media network run by Trumps former
spokesman, Jason Miller. DWAC said in a May regulatory filing
that it learned of the Gettr flirtation from a podcast featuring
Miller.
The former president has posted regularly on Truth Social
since the beginning of May, sometimes multiple times a day. But
the May 16 DWAC filing made clear how little control TMTG has
over Trumps social media activities. Trump is obligated to give
Truth Social a six-hour exclusive on any post except the posts
that matter most to TMTGs business. Trump is free to post
political messaging, political fundraising or get-out-the vote
efforts on any site, at any time, the filing said.
The agreement presents a huge problem for the company,
said Munster, the venture capitalist. Its a problem because
Trump is going to go where the audience is, he said.
The companys only defense against promiscuous posting by
the former president, he said, is that Trump may benefit
financially if Truth Social succeeds. But the political
messaging clause is a signal of Trumps lack of commitment to
TMTG, Munster said.
Truth Social has quickly grown its user base by tapping
hardcore Trump fans angry over his de-platforming, but it will
struggle to take over the conservative conversation from
established platforms, said Ethan Zuckerman, an associate
professor of public policy and communications at the University
of Massachusetts at Amherst.
Truth Social really would love to be in a place where, if
you cared what the right in America was thinking, you had to be
on Truth Social, he said. That hasnt happened yet.
The firms revenue challenge mirrors those it faces
throughout its operations: The pool of advertisers for a Trump
company will be as limited as the pool of workers and corporate
partners. The site is likely to get ads from the likes of
MyPillow, a regular Fox News advertiser run by prominent Trump
supporter Mike Lindell, who told Reuters he would absolutely
advertise on Truth Social. It could also attract companies
catering specifically to conservatives, such as gun
manufacturers, said Allen Adamson, an ad industry veteran who is
co-founder of Metaforce, a marketing consulting firm.
But those are not the big advertisers. The big advertisers
are the beer and the chips and the diaper companies, who risk
driving away customers by affiliating with a Trump company, he
said. They have to be relevant in red and blue.
TMTG chief Nunes has privately expressed concern about that
dynamic, worrying the companys revenue will quickly hit a
ceiling without such blue-chip advertisers, according to a
person with knowledge of the matter.
The May 16 filing noted that surveys have shown only 30% of
respondents and only 60% of Republicans would consider using
a Trump-affiliated social media platform. In order to be
successful, the filing noted, TMTG will need millions of those
people to register and regularly use TMTGs platform.
(Reporting by Helen Coster and Julia Love; editing by Ken Li,
Jason Szep and Brian Thevenot)