After ad revenue drop, Twitter tells investors it’s eyeing subscription options

After reporting Q2 earnings that showed a marked dip in ad revenue, Twitter has said its exploring alternatives — dangling the possibility of a subscription option.

Earlier today the social media giant reported ad revenues of $562M, down almost a quarter (23%) on a year ago — saying that the pandemic and “civil unrest” leading many advertisers to pause campaigns had both contributed to the decline. While the US, its biggest market, saw a drop of 25% in ad spend.

Twitter CEO Jack Dorsey told investors it’ll likely run subscription “tests” this year (via CNN), though he also said the bar for charging users for aspects of the service would be set “really high”.

So presumably it’s not considering a ‘your first ten tweets are free’ style pay-to-tweet model.

“We want to make sure any new line of revenue is complementary to our advertising business,” CNN reports Dorsey remarking during the investor call. “We do think there is a world where subscription is complementary, where commerce is complementary, where helping people manage paywalls… we think is complementary.”

The prospect of a paid version of Twitter — free from trackers, annoying ads and irritating algorithms which meddle with the clean chronology of the timeline — has been a holy grail for certain Twitter addicts since (basically) forever. So plenty of its most fervent users will be watching keenly to see exactly what Dorsey cooks up.

We’re spitballing here — but perhaps Twitter could charge, er, certain high profile, high risk users billions of dollars per month for the privilege of tweet-threatening the rest of humanity… Just a thought.

Twitter casting around for ad revenue diversification looks interesting in light of broader digital privacy trends that have put the ad tracking industry under increasing (and increasingly awkward) scrutiny.

Certain adtech players and mechanisms are facing challenges under European data protection rules, for instance, while there are also moves afoot in California to further tighten the consumer protections introduced this year, under the Consumer Privacy Act, which could see more US users blocking the tracking industry’s access to their data.

Last week’s massive Twitter security breach also hardly throws a positive light on the company from a privacy perspective. Dorsey addressed the breach in remarks on today’s call, with CNN reporting he apologized to investors — admitting the company “fell behind” on its security obligations.

“We feel terrible about the security incident,” he said. “Security doesn’t have an end point. It’s a constant iteration… We will continue to go above and beyond here as we continue to secure our systems and as we continue to work with external firms and law enforcement.”

Twitter won’t say if hackers accessed user DMs after breach

Twitter has said that there is “no evidence” that attackers obtained user account passwords after its security breach on Wednesday, which forced the company to lock down user accounts to prevent verified users from tweeting.

In a series of tweets on Thursday — almost exactly a day after the mass account hijacking started — the social media giant said: “We have no evidence that attackers accessed passwords. Currently, we don’t believe resetting your password is necessary.”

“Out of an abundance of caution, and as part of our incident response yesterday to protect people’s security, we took the step to lock any accounts that had attempted to change the account’s password during the past 30 days,” it said. “As part of the additional security measures we’ve taken, you may not have been able to reset your password. Other than the accounts that are still locked, people should be able to reset their password now.”

Twitter said that it’s “working to help people regain access to their accounts” following the security incident. Many high-profile accounts, including news organizations, were still locked out from their accounts by Thursday morning. Some are still locked and unable to tweet.

News of the incident broke in real time — on the social network, no less — after cryptocurrency sites were hijacked to send tweets promoting a common cryptocurrency scam. Several high-profile accounts, including @apple and @binance, as well as celebrities @billgates, @jeffbezos and @elonmusk — which collectively have 90 million followers — were hacked as part of the mass account hijackings.

A public record of the cryptocurrency wallet showed hundreds of transactions, amounting to more than $100,000, in just a few hours.

Twitter later confirmed that hackers launched a “coordinated social engineering attack by people who successfully targeted some of our employees with access to internal systems and tools.”

A hacker with direct knowledge of the Twitter incident told TechCrunch that another hacker, who goes by the handle “Kirk,” gained access to an internal Twitter “admin” tool, which they then used to hijack high-profile Twitter accounts and spread the cryptocurrency scam.

It’s not known if other hackers also had access to the admin tool. The FBI is now investigating the incident, a spokesperson said Thursday.

But questions remain over exactly how much access the hackers gained, or if the hackers were able to read users’ private direct messages.

Ron Wyden, a Democratic senator, said in a statement that in a private meeting in 2018, Twitter’s chief executive Jack Dorsey said the company “was working on end-to-end encrypted direct messages,” a kind of encryption that would prevent even Twitter from reading users’ messages.

“It has been nearly two years since our meeting, and Twitter DMs are still not encrypted, leaving them vulnerable to employees who abuse their internal access to the company’s systems, and hackers who gain unauthorized access,” said Wyden. “While it still isn’t clear if the hackers behind yesterday’s incident gained access to Twitter direct messages, this is a vulnerability that has lasted for far too long, and one that is not present in other, competing platforms.”

“If hackers gained access to users’ DMs, this breach could have a breathtaking impact, for years to come,” the lawmaker said.

We asked Twitter several questions about direct messages, including whether the company has any evidence that the hackers gained access to users’ DMs; what protections it puts in place to prevent unauthorized access — including from Twitter employees; and if there are any plans to implement DM end-to-end encryption.

When reached, a Twitter spokesperson declined to comment.

Twitter screens Trump’s Minneapolis threat-tweet for glorifying violence

After applying a fact-checking label Tuesday to a misleading vote-by-mail tweet made by US president Donald Trump, Twitter is on a roll and has labeled another of the president’s tweets — this time screening his words from casual view with what it calls a “public interest notice” that states the tweet violated its rules about glorifying violence. 

Here’s how the tweet appears without further interaction (second tweet in the below screengrab):

The public interest notice replaces the substance of what Trump wrote, meaning a user has to actively click through to view the offending tweet.

Engagement options are also limited as a result by this label, meaning users can only retweet the offending tweet with a comment; they cannot like it, reply to it or vanilla retweet it.

Twitter’s notice goes on to explain why it has not removed the offending tweet entirely — and this is where the public interest element of the policy kicks in — with the company writing: “Twitter has determined that it may be in the public’s interest for the Tweet to remain accessible.” 

Twitter appears to be shrugging off the president’s decision yesterday to sign an executive order targeting the legal shield which internet companies rely on to protect them from liability for user-created content — doubling down on displeasing Trump who has accused social media platforms generally of deliberately suppressing conservative views, despite plenty of evidence that ad-targeting platform algorithms actually boost outrage-fuelled content and views — which tends, conversely, to amplify conservative viewpoints.

In the latest clash, Trump had tweeted in reference to violent demonstrations taking place in Minneapolis sparked by the killing of a black man, George Floyd, by a white police officer — with the president claiming that “THUGS are dishonoring the memory of George Floyd” before threatening to send in the “Military”.

“Any difficulty and we will assume control but, when the looting starts, the shooting starts. Thank you!” Trump added — making a bald threat to use military force against civilians.

Twitter has wrestled with the issue of how to handle world leaders who break its content rules for years. Most often as a result of Trump who routinely uses its platform to bully all manner of targets — from rival politicians to hated journalists, disobedient business leaders, and even actors who displease him — as well as to dispense direct and sometimes violent threats.

Since being elected, Trump has also used Twitter’s global platform as a foreign policy weapon, firing military threats at the likes of North Korea and Iran in tweet form.

Back in 2018, for example, he teased North Korean leader Kim Jong-Un with button-pushing nuclear destruction (see below tweet) — before going on to “fall in love” with the dictator when he met him in person.

Twitter’s go-to defence for not taking offending Trump tweets down in the past has been that, as US president, the substance of what the man tweets — however mad, bad and dangerous — is inherently newsworthy.

However, more recently, the company has created a policy tool that allows it to intervene — defining terms last summer around “public interest” content on Twitter.

It warned then (almost a full year ago, in June 2019) that it might place a public interest notice on tweets that would otherwise violate its rules (and therefore merit a takedown) — in order to “to provide additional context and clarity”, rather than removing the offensive tweet.

Fast forward a year and the tech giant has started applying labels to Trump’s tweets — beginning with a fact-check label earlier this week, related to the forthcoming US election, and following up now with a public interest notice related to Trump glorifying violence.

So, finally, the tech giant seems to be inching towards drawing a limit-line around Trump in near real-time.

Explaining its decision to badge the US president’s threat to order the military to shoot looters in Minneapolis, the company writes: “This Tweet violates our policies regarding the glorification of violence based on the historical context of the last line, its connection to violence, and the risk it could inspire similar actions today.”

“We’ve taken action in the interest of preventing others from being inspired to commit violent acts, but have kept the Tweet on Twitter because it is important that the public still be able to see the Tweet given its relevance to ongoing matters of public importance,” Twitter goes on.

It also links to its policy against tweets that glorify violence — which states unequivocally [in bold]: “You may not threaten violence against an individual or a group of people.”

Back in June, when Twitter announced the ‘abusive behavior’ label, it also warned that tweets which get screened with a public interest notice will not benefit from any algorithmic acceleration, writing: “We’ll also take steps to make sure the Tweet is not algorithmically elevated on our service, to strike the right balance between enabling free expression, fostering accountability, and reducing the potential harm caused by these Tweets.”

However the newsworthiness of Twitter’s decision to finally apply its own rules vis-a-vis Trump will ensure there’s plenty of non-algorithmic amplification (and no little irony).

We reached out to the company with questions about its decision to apply a public interest screen on Trump’s latest tweet but at the time of writing it had not responded.

On Wednesday night, Twitter CEO and co-founder, Jack Dorsey, put out a series of tweets defending its decision to apply a fact-check label to Trump’s earlier misleading tweets about vote-by-mail.

“This does not make us an “arbiter of truth”,” wrote Dorsey. “Our intention is to connect the dots of conflicting statements and show the information in dispute so people can judge for themselves. More transparency from us is critical so folks can clearly see the why behind our actions.”

Dorsey’s remarks followed pointed comments made by Facebook CEO Mark Zuckerberg to Fox News, seeking to contrast Facebook’s claimed ‘neutrality’ when policing its platform with Twitter’s policy of taking a stance on issues such as political advertising (which Twitter does not allow).

“I just believe strongly that Facebook shouldn’t be the arbiter of truth of everything that people say online,” Zuckerberg told the conservative news station. “Private companies… especially these platform companies, shouldn’t be in the position of doing that.”

It’s notable that Dorsey used Zuckerberg’s exact turn of phrase — “arbiter of truth” — to reject Facebook’s attack on Twitter’s policy as a straw man argument.

Let’s give tech philanthropists the benefit of the doubt on COVID-19

Tuesday afternoon saw two big announcements from the tech world in the fight against COVID-19.

First, Jack Dorsey, CEO of Twitter and Square, announced he would give $1 billion to COVID-19-related causes. A few hours later, a group of tech billionaires, including LinkedIn founder Reid Hoffman, Stripe’s Collison brothers, Y Combinator’s Paul Graham and venture capitalist Chris Sacca, announced a rapid-response grant program for researchers working on COVID-19. These two announcements come on the heels of an initiative led by Bill Gates to build factories for the most promising COVID-19 vaccines and a host of smaller efforts by tech industry leaders, including importing and donating personal protective equipment (PPE), building ventilators and supporting local businesses.

Even as tech philanthropists ramp up their responses to the COVID-19 pandemic though, critics of philanthropy lament the need for philanthropy to fulfill a role that should be played by government. Meanwhile, other commentators criticize it as a power grab. As Theodore Schleifer wrote in Recode this week:

And yet the critique of billionaire philanthropy revolves around the idea that these donations are an expression of private power. Indeed, philanthropists like Moskovitz are some of the most important people in determining the shape of America’s response to an unprecedented crisis. They are imbued with unaccountable, untransparent, and undemocratic influence. Power grabs can happen. And their donations can legitimize the philanthropists as heroes, which can discourage scrutiny of their business practices.

But this is the wrong premise. Even if the government had fully funded a pandemic response, and even if tech leaders’ COVID efforts were a power grab (of which there is no evidence), there would still be a role for the tech sector — and tech philanthropists — to play.

The question we should be asking is whether or not their efforts are properly leveraging tech’s unique capabilities and resources. If Tesla (or GM) can make ventilators, software companies can help public health officials, programmers can help state labor departments update their outdated unemployment systems and philanthropists can rush money to researchers more quickly than the government can, then they should. It’s no different than hotels supplying empty rooms for first responders or the homeless to stay in during this tragedy.

Invoking the Defense Production Act to compel manufacturers to produce masks and ventilators was uncontroversial precisely because everyone knew that capacity rested exclusively with private industry; why wouldn’t we expect the tech sector to similarly contribute in this moment of national emergency? And in the absence of a fully-funded national medical research establishment, the more resources going toward rapidly developing a vaccine, the better.

Which brings me to the oft-cited, variably defined concept of “impact” that I’ve tried to focus on throughout my interviews at TechCrunch. How do you know when charitable giving is making a difference? How do you discern the difference between a PR stunt and a well-designed program? How do you know that the right problem is even being solved?

I’ve found that even the most earnest, data-driven philanthropists don’t always ask the right questions. Just because there is a measurable outcome doesn’t mean that it should define success. And just because a company or foundation is doing some good doesn’t mean it is maximizing the social impact it can have.

After all, sometimes maximizing social impact simply means a company is performing its core competency. If tech companies — and the billionaire philanthropists they create — happen to have a skill set that is useful in a public emergency, then the responsible thing to do is to do it and do it well.

We’ve spent so long asking tech to turn its attention to real-world problems. Let’s not complain when they do so now. 

That doesn’t mean we shouldn’t criticize tech firms when they fall short, of course. People have rightly criticized firms like Amazon (and Whole Foods), Instacart, Seamless and DoorDash for their deficiencies in protecting their front-line staff. Tech companies still must be held accountable even when they are fulfilling essential functions.

It’s clear though that beyond keeping the supply chain going, technology will play a central role in implementing any strategy to overcome the novel coronavirus pandemic. Moving PPE around the world requires the logistical expertise companies like Flexport and Apple have mastered. Mass testing will require the rapid rollout of new devices from biotech firms like Gilead Sciences. A tracing regime will require massive data collection and analysis like that done by Verily or Palantir. And of course we’ll have to manufacture and distribute vaccines and other treatments at scale. Like Amazon or not, I suspect it might have a role to play.

Which brings me to Bill Gates, whose announcement that he will start building factories for promising vaccines now has made him the most central tech figure in responding to COVID-19. Bill Gates isn’t just a tech philanthropist. He is — after years of study — one of the world’s leading experts on pandemic preparedness. When we look to him for guidance, we’re not asking for a tech billionaire to assert his power. We’re embracing the leadership of someone who has a proven track record bringing his engineering and project management skills to bear on some of the most intractable public health problems of the last few decades.

Of course in an ideal world, the void Gates is filling would already be filled by the government. It’s inexcusable that it isn’t. But good democracy also means asking for all of society to contribute. And good public policy means looking for the best solutions wherever they are found.

Sometimes that means an anonymous bureaucrat in the suburbs of DC. And sometimes it means a billionaire public health nerd tech mogul.

Jack Dorsey creates $1B COVID-19 relief fund using Square equity

Jack Dorsey announced in a series of tweets today that he is shifting $1 billion in his Square equity to create a fund dedicated to COVID-19 relief. The Twitter and Square CEO is calling the fund Start Small and posting a tally of disbursements and recipients in a public spreadsheet.

Dorsey said in his announcement that the new initiative will shift the focus to other causes at some point, naming health and education for girls and universal basic income

The first Start Small contribution listed is $100,000 to America’s Food Fund — an effort led by Leonardo DiCaprio and Laurene Powell Jobs dedicated to providing meals to vulnerable populations disrupted by the COVID-19 pandemic.

Other top backers of America’s Food Fund include Oprah Winfrey ($1 million) and Apple ($5 million), according to the organization’s GoFundMe page.

That’s what we know so far from a tweet posted Tuesday afternoon by the American tech entrepreneur who co-founded and leads not one, but two publicly listed companies.

On why he sourced the equity for Start Small from his payments company Square, vs. Twitter, “I own a lot more Square. And I’ll need to pace the sales over some time,” Jack said in a subsequent tweet.

There’s still a lot to learn about Dorsey’s new initiative, including how it will be managed, whether it will make investments (along with donations) and exactly how those interested can seek funding. TechCrunch has asked Square for additional details and will update this post when we hear back.

Anomalous data can lead to growth opportunities

We’ve aggregated many of the world’s best growth marketers into one community. Twice a month, we ask them to share their most effective growth tactics, and we compile them into this growth report.

This is how you stay up-to-date on growth marketing tactics — with advice that’s hard to find elsewhere.

Our community consists of 1,000 startup founders and VPs of growth from later-stage companies. We have 400 YC founders, plus senior marketers from companies including Medium, Docker, Invision, Intuit, Pinterest, Discord, Webflow, Lambda School, Perfect Keto, Typeform, Modern Fertility, Segment, Udemy, Puma, Cameo and Ritual .

You can participate in our community by joining Demand Curve’s marketing webinars, Slack group or marketing training program.

Without further ado, on to our community’s advice.

No one wants your $25 referral bonus

Insights from Julian Shapiro of Demand Curve.

Even people who earn minimum wage can’t be bothered to refer a friend for a $25 referral fee. The most successful referral programs typically focus on app features that naturally incentivize users to invite friends and colleagues.

Silicon Valley Community Foundation challenges donors to address local problems

Over the last decade, Silicon Valley Community Foundation has become one of the favorite destinations for tech philanthropy.

Counting Mark Zuckerberg, Jack Dorsey and Reed Hastings among its donors, SVCF has quietly become a philanthropic powerhouse. As a community foundation, it made $126 million in grants in 2018 in San Mateo and Santa Clara counties (the latest year for which numbers were available), but its true power comes from the nearly $9 billion in donor-advised funds (also known as DAFs) it oversees.

DAFs have become popular among wealthy donors in recent years because they carry the tax benefits of a donation without requiring that an immediate donation be made. They also courted controversy, with critics accusing them of being a vehicle for tax sheltering.

Not so, says Nicole Taylor, SVCF’s CEO and president. Appointed a year ago after her predecessor was ousted in scandal, Taylor is working to change the image of DAFs while challenging her donors to take on the Bay Area’s unique challenges, like housing, inequality and transportation. I spoke to Taylor about how the tech sector can do better with its giving.

TechCrunch: Let’s start by explaining how a community foundation works?

Nicole Taylor: Community foundations are a vehicle for people who want to give that come with a far better tax advantage and advising advantage than setting up private foundations [whose] overhead is costly. Most people don’t want to go there; they want a place that helps them with their giving and they want to have that connection back to their local community.

Community foundations were started in the Midwest and are over 100 years old. There are over 800 of us. We serve particular geographic areas. Our core focus [at SVCF] is the Silicon Valley region, the two counties here – Santa Clara and San Mateo.

Nigeria is becoming Africa’s unofficial tech capital

Africa has one of the world’s fastest growing tech markets and Nigeria is becoming its unofficial capital.

While the West African nation is commonly associated with negative cliches around corruption and terrorism — which persist as serious problems, and influenced the Trump administration’s recent restrictions on Nigerian immigration to the U.S.

Even so, there’s more to the country than Boko Haram or fictitious princes with inheritances.

Nigeria has become a magnet for VC, a hotbed for startup formation and a strategic entry point for Silicon Valley. As a frontier market, there is certainly a volatility to the country’s political and economic trajectory. The nation teeters back and forth between its stereotypical basket-case status and getting its act together to become Africa’s unrivaled superpower.

The upside of that pendulum is why — despite its problems — so much American, Chinese and African tech capital is gravitating to Nigeria.

Demographics

“Whatever you think of Africa, you can’t ignore the numbers,” Africa’s richest man Aliko Dangote told me in 2015, noting that demographics are creating an imperative for global businesses to enter the continent.

Trump to halt immigration from Africa’s top tech hub, Nigeria

The Trump administration announced Friday it would halt immigration from Nigeria, Africa’s most populous nation with the continent’s largest economy and leading tech hub.

The restrictions would stop short of placing a full travel ban on the country of 200 million, but will suspend U.S. immigrant visas for Nigeria — along with Eritrea, Kyrgyzstan and Myanmar — starting February 21.

That applies to citizens from those countries looking to live permanently in the U.S. The latest restrictions are said not to apply to non-immigrant, temporary visas for tourists, business, and medical visits.

The news was first reported by the Associated Press, after a press briefing by Acting U.S. Homeland Security Secretary Chad Wolf. AP reporting said the stated reason for thew new restrictions was that the countries, such as Nigeria, did not meet security standards.

TechCrunch has asked the U.S. Department of Homeland Security for a clarification on that and full details of the latest restrictions.

The move follows reporting over the last week that the Trump administration was considering adding Nigeria, and several additional African states, to the list of predominantly Muslim countries on its 2017 travel ban. That ban was delayed in the courts until being upheld by the U.S. Supreme Court in 2018.

Restricting immigration to the U.S. from Nigeria, in particular, could impact commercial tech relations between the two countries.

Nigeria is the U.S.’s second largest African trading partner and the U.S. is the largest foreign investor in Nigeria, according to USTR and State Department briefs.

Increasingly, the nature of the business relationship between the two countries is shifting to tech. Nigeria is steadily becoming Africa’s capital for VC, startups, rising founders and the entry of Silicon Valley companies.

Recent reporting by VC firm Partech shows Nigeria has become the number one country in Africa for VC investment.

Much of that funding is coming from American sources and the U.S. is arguably Nigeria’s strongest partner for tech and Nigeria, Silicon Valley’s chosen gateway for Africa expansion.

There are numerous examples of this new relationship.

In June 2019, Mastercard invested $50 million in Jumia — an e-commerce company headquartered in Nigeria with broader Africa presence — before it became the first tech startup on the continent to IPO on a major exchange, the New York Stock Exchange.

One of Jumia’s backers, Goldman Sachs, led a $20 million round into Nigerian trucking-logistics startup, Kobo360 in 2019.

Software engineer company Andela, with offices in the U.S. and Lagos, raised $100 million, including from American sources, and employs 1000 engineers.

Facebook opened an innovation lab in Nigeria in 2018 called NG_Hub and Google launched its own developer space in Lagos last week.

Nigerian tech is also home to a growing number of startups with operations in U.S. Nigerian fintech company Flutterwave, whose clients range from Uber to Cardi B, is headquartered in San Francisco, with operations in Lagos. The company maintains a developer team across both countries for its B2B payments platform that helps American companies operating in Africa get paid.

MallforAfrica — a Nigerian e-commerce company that enables partners such as Macy’s, Best Buy and Auto Parts Warehouse to sell in Africa — is led by Chris Folayan, a Nigerian who studied and worked in the U.S. The company now employs Nigerians in Lagos and Americans at its Portland, Oregon processing plant.

Africa’s leading VOD startup, iROKOtv maintains a New York office that lends to production of the Nigerian (aka Nollywood) content it creates and streams globally.

Similar to Trump’s first travel ban, the latest restrictions on Nigeria may end up in courts, which could delay implementation.

More immediately, the Trump administration’s latest moves could put a damper on its own executive branch initiatives with Nigeria. Just today the U.S. Assistant Secretary of State for African Affairs Tibor Nagy — who was appointed by President Trump — posted a tweet welcoming Nigeria’s Foreign Affairs Minister Geoffrey Onyeama to the State Department Hosted Nigeria Bicentennial, planned to start Monday.

The theme listed for the event: “Innovation and Ingenuity, which reflects the entrepreneurial, inventive, and industrious spirit shared by the Nigerian and American people.”

Trump’s travel ban could extend to Africa’s top tech country, Nigeria

The Trump administration is poised to add several African countries to a U.S. travel ban list, including Africa’s top tech hub, Nigeria.

Politico first reported the White House is considering Tanzania, Eritrea, Sudan and Nigeria for new travel restrictions, to coincide with the three-year anniversary of Trump’s original executive order, that targeted majority Muslim nations.

Of the possible additions, including Nigeria could prove the most problematic to U.S. commercial relations. In addition to boasting Africa’s largest population and economy, the country of 200 million has become a magnet for VC and a strategic entry point for Silicon Valley.

Why Africa, why Nigeria?

The Department of State would not comment on a TechCrunch request to confirm an extension of the travel ban to Nigeria or other African countries.

TechCrunch has an open inquiry on the matter to the National Security Council’s Senior Director for African affairs, Elizabeth Erin Walsh.

The Trump administration issued its first travel ban in 2017, which was challenged, amended, and upheld by the U.S. Supreme Court.

In its current form, as Executive Order 13780, the ban places restrictions on entry for citizens of Libya, North Korea, Syria and Yemen — predominantly Muslim countries — naming “significant terrorist presence within their territory” and “deficient” immigration screening processes.

With no comment from the Trump administration, we don’t know the motivations — stated or veiled — for the possible addition of Nigeria and other African countries to the ban.

To previously named reasons countries were listed, there are issues with Nigerian visa overstays in the U.S. and Nigeria does have a terrorist problem in its northeast with Boko Haram, though no incident related to extremist group has ever hit U.S. soil.

Reading the tea leaves may reveal other motives for placing travel restrictions on Nigeria and additional African countries. In an article in The Atlantic Monday, writer Peter Beinart suggested African immigrants may be next in the Trump administration’s pattern of restricting U.S. entry from predominantly brown-skin countries.

“For several years now, Trump has trained his nativist ire on Muslims and Latinos. The travel ban suggests he’s adding a new target, just in time for the 2020 elections: Africans,” said Beinart.

He cited recent negative reference to Nigerians and Africans in conservative circles by pundits Ann Coulter and Tucker Carlson and Trump’s now infamous reference to Nigeria as a “shithole” country, as reported in January 2018.

Trump Buhari Nigeria

Saul Loeb / AFP – Getty Images

That set the ominous tone for Nigerian President Muhammadu Buhari’s April 2018 White House visit, where Trump pressed Buhari publicly on persecution of Christians in Nigeria — a hot button issue with Trump’s evangelical base.

This could underlie motivations behind a possible U.S. Nigeria travel ban, according to Aubrey Hruby, a Senior Fellow at the Atlantic Council’s Africa Center.

“I’ve spoken to several people in government close to the matter who’ve indicated visa restrictions being discussed are also coming from concerns that Christians are being persecuted in Nigeria and within the broader context of the administration using visa rules as tools of foreign policy,” said Hruby.

“If this is the case, and they go forward with a ban, the administration could be overlooking the deep cultural and commercial ties that exist between the U.S. and Nigeria, and how much restricting travel could disrupt them,” she added.

Africa’s tech hub

Nigeria is the U.S.’s second largest African trading partner and the U.S. is the largest foreign investor in Nigeria, according to USTR and State Department briefs.

Increasingly, the nature of the business relationship between the two countries is shifting to tech.

That’s in tandem with Nigeria steadily becoming Africa’s unofficial capital for VC, startups, rising founders and the entry of Silicon Valley companies.

By 2018 numbers, depending on the study, the country ranked first or second for tech investment on the continent. And into 2019, more of that is coming from American sources.

Goldman Sachs is a major backer of Jumia, the Nigeria headquartered e-commerce venture that became the first VC funded tech company in Africa to IPO on a major exchange, the NYSE in 2019.

Goldman also led a $20 million round last year for Nigerian trucking logistics company Kobo360.

The U.S. bank’s investment in tech companies operating in Nigeria runs parallel to those by Visa, Mastercard, and SalesForce Ventures.

Nigerian tech is also home to a growing number of founders with ties to the U.S. and startups with operations in both countries. Nigerian fintech company Flutterwave, whose clients range from Uber to Cardi B, is headquartered in San Francisco with operations in Lagos. The company maintains a developer team of Africans across both countries for its B2B payments platform that helps American companies operating in Africa get paid.

MallforAfrica — a Nigerian e-commerce company that enables partners such as Macy’s, Best Buy and Auto Parts Warehouse to sell in Africa — is led by Chris Folayan, a Nigerian who studied and worked in the U.S. The company now employs Nigerians in Lagos and Americans at its Portland processing plant.

Africa’s leading VOD startup, iROKOtv maintains a New York office that lends to production of the Nigerian (aka Nollywood) content it creates and streams globally.

Andela, a tech-talent accelerator with over a $180 million in VC, was co-founded by American Jeremy Johnson and Nigerian entrepreneur Iyinoluwa Aboyeji. The company has offices in New York and Lagos and employs over 1000 engineers.

Over the last five years, Silicon Valley’s ties to Africa and Nigeria have grown. There are a number of Nigerians working in senior positions in the Bay Area, such as Ime Archibong at Facebook — the U.S. company that opened an innovation lab in Nigeria in 2018, called NG_Hub.

Possible implications

Adding Nigeria to the U.S. travel ban would be a mistake for tech development of both countries, believes Bosun Tijani, CEO of Lagos based CcHub, now Africa’s largest innovation incubator.

“Nigeria’s a strategic country for well established companies, such as Google and Facebook. Twitter’s founder visited just a few months ago,” Tijani said, referring to Twitter/Square CEO Jack Dorsey.

CcHub CEO Bosun Tijani1

CcHub CEO Bosun Tijani

On the impact of a full travel ban, “The implications would be serious for both sides. U.S. companies will suffer and Nigerian companies will suffer,” said Tijani.

He also referenced the increasing level of tech capacity fostering between the the two countries.

“With the importance of Nigeria to U.S. tech companies and the pool of talent that exists in Nigeria, there’s too much at stake to mess around with some visa ban. The embassies already do their work to vet people properly,” he said.

Adding Nigeria to the travel ban would adversely impact the work CcHub does with its American partners, which include Facebook and Google. “That’s the reason I come to the U.S. I’ve never been to the country on holiday, it’s always for business with them,” said Tijani.

Another effect of restricting entry of Nigerians into the U.S. could be to turn more of Nigeria’s techies away from U.S. partnerships and toward China. The country has been pivoting its strategic relationship with Africa to the continent’s tech scene.

In the last two quarters of 2019, more than 15 Chinese actors invested over $240 million in VC in Africa. More than $210 million of that was for startups in Nigeria.