An Alternate Theory on Trump 2024 Strategery

Since you can now pay Elon to have nearly unlimited characters on your Tweets – and no, we aren’t going to acknowledge the stupid, brand-killing ‘X’ nonsense – this comes from a long tweet but going to condense it here because the theory is worth a discussion. Brian Jacobson from his Twitter feed:

How Truth Social is killing Donald Trump’s finances and may sink his Presidential bid.

The revelation that Trump is launching a legal defense fund is causing me to want to really delve into this in a long form post.

I want to get a few disclaimers out of the way before we get going. I have no insider information and no sources. This is speculation based on my 25 years of experience in the tech sector working at times for start ups and also big tech companies.

My theory is that Trump is asset rich and cash poor. His businesses are worth a lot of money but they don’t make a lot of money. Some don’t make any money at all. In fact some I suspect one loses quite a lot of money.

This is where Truth Social comes in. In Trump’s FEC filings he indicated he owns 90% of Truth Social and has profited less than $200 on it. Truth Social is headquartered in Sarasota, FL and has an estimated 40 employees. It is hosted on Rumble’s cloud services and Cloudflare handles CDN duties.

We know that Devin Nunez, the CEO of Truth Social makes $750,000 a year but I suspect most of the 40 employees have salaries solidly in the six figure range. We can safely estimate that just payroll and benefits for Truth Social run about $10m a year.

We have no way of knowing what the contracts with Rumble or Cloudflare cost but I’m betting it’s in the ball park of $10-20m a year. If they know what they are doing. If not it could be much higher. Then they have the contract with the AI firm that scans and moderates Truth Social content. I have no idea what that costs but I am betting it is quite a lot. I am going to take a generous guess and say $5m a year.

All told we are looking at somewhere around $30-50m a year in operating expenses. Which wouldn’t normally be a problem but in 2016 when Trump “self funded” his campaign he put in right around $66m dollars. So I’m guessing Trump’s free cash flow per year is somewhere around $50-70m.

This sounds slim but manageable right? How did things go wrong? Well things went wrong when Elon decided to buy Twitter. That decision inadvertently destroyed the plans for Truth Social.

You see Trump was not supposed to be spending that $30-50m on Truth Social this year. You were. By that I mean Trump had plans to take Truth Social public and let stockholders fund his social media company.

That plan got nuked when Elon bought Twitter and half of the reason for switching to Truth Social evaporated overnight. The plan was to take Truth Social public through an acquisition by the publicly traded company DWAC (Digital World Acquisition Company). That merger was put on hold as soon as it became clear Twitter’s users were leaving Truth Social and returning to Twitter. Truth Social was initially valued at $700m dollars.

Not a bad plan all in all. Trump gets a fat paycheck to the tune of about $500m and now a nice base of liquid cash to use to pay for his looming legal defenses and stop gap anything necessary for his Presidential campaign.

The dissolution of that plan is causing Trump even more headaches than just the lost payday. He now has numerous regulatory bodies investigating the failed merger from different angles. This is costing a lot money for legal representation. How much? Not sure but I would be willing to bet it is around $10m a year.

Now Trump is really tight on his cash flow and he is stuck in a trap of his own making. He can’t do what he should do and let Truth Social die. That would be too much of a PR embarrassment right in the middle of his campaign. He won’t drop out of the Presidential race because he sees that as his major lifeline out of legal trouble. He however cannot pay his legal fees and keep Truth Social afloat without selling assets or getting help.

That is why his campaign has funded his legal defense. It’s the only way to keep him in the race and Truth Social alive. With these new indictments that probably won’t be enough so now we see the legal defense fund getting launched. If the fund doesn’t rake in enough money we may see Trump either fold Truth Social or bow out of the race.