> Bytedance now faces questions over when or even how it will start making a profit.
$75B value and it still faces the most basic question. Makes me feel I don't understand business at all.
Also its main app seems to be musically. I have only heard of it but it seems a little to an app like Dubsmash. Did dubsmash ever make any money? What is the business model for such apps?
> $75B value and it still faces the most basic question. Makes me feel I don't understand business at all.
Business journalism really does a disservice when it pushes the "they have no revenue model" angle for these massively scaling traffic aggregators. It was a bit interesting when this was written of Yahoo, I guess, since we didn't have proof yet that online advertising was a viable business model.
In any case, the playbook is very well understood. Build a loyal audience numbering minimally in the hundreds of millions (Small audience pubs only achieve success with subscription-based models. Mid-sized audience aggregators may not have a viable business model at all). Demonstrate that the cost of building said audience is either free or pennies per user (e.g. unpaid viral audience growth). Make several dollars to tens of dollars per user per year by running advertisements to said audience. The more relevant or (lately) emotionally compelling the advertisements the more you'll earn per year per user.
Of those components, building an enormous audience is the hardest part, which is why every company that has followed this model, from google to snapchat, has focused on that long before building a corresponding revenue stream.
We've seen this model a dozen times and it's understood well enough that financiers are able to approximate the value of Bytedance future revenue streams rather confidently.
The number is still a bit confusing for an outsider though, no?
Twitter is worth 20B. Facebook is worth just five times this and also has Instagram and Whatsapp. Is this worth as much as Instagram which has a huge and wealthy audience?
FB has 1.5B DAU, Twitter - ~150M DAU. Bytedance has ~200M DAU, and about the same revenue as Twitter. So, Bytedance DAU is valued as an FB DAU - probably reflects expectations that it can get to the FB level (ie. 3x) of per-user revenue extraction and not ends up like Twitter/Snap.
Where are the bulk of their users based? I assume China right? Surely the ARPU in China is way less than the USA where FB/Snap/goog/twtr own most of the market.
Tik Tok is mainly videos though, that is huge difference in the price of ads.
And due to various reasons, some from censorship, some from the medium itself and how the company chooses to operates on it, Tik Tok is mainly free of political contents, which makes it less toxic.
Also Tik Tok breaks out in other major Asian market as well, like Japan/S Korea/Taiwan, etc. Those markets are very lucrative.
You're implying that Instagram users are wealthier than twitter users? That's 1) only tangentially relevant to ad income. 2) unsupported. 3) probably wrong
Not a fan of the company, but they are much more than musical.ly.
- Toutiao, the content farm (think Buzzfeed++), a pivot from the original news aggregator model. It has 120M DAU as of last October, per YC's report [1].
- Douyin, or Tik Tok, the short video platform, a pivot from originally a copycat of Musical.ly (ironically). It has 150M DAU [2].
- Dailyhunt, Toutiao for the India market.
- Musical.ly, an acquisition.
I have a strong disdain for the company, because the content is almost completely garbage, rumors, and click-baits, and it is dangerously addictive.
I've never used Musica.ly myself, and I don't have any kids of my own, but I came across this video [0] where a Youtuber looked at clips from it. It seems like a lawsuit waiting to happen, I can't see how it could be worth that much money. I wouldn't want any of my future kids anywhere near there.
GP was wrong. They acquired musica.ly in 2017 for $800 million. Musica.ly accounts for a minuscule portion of their valuation. The article itself clearly spells out what Bytedance's main businesses are, but commenters don't appear to want to read!
I can't see how it's worth close to $800 million either. Besides the icky sexualized content, isn't ads to kids illegal in most countries? How are you going to monetize that market? And even if it's legal, how moral is it?
> I can't see how it's worth close to $800 million either.
It's worth $800 million because someone was willing to buy it for $800 million. Why is anything worth anything? Because someone is willing to pay for it.
> isn't ads to kids illegal in most countries?
What? Then how does nickelodean, toys stores, kids clothes store, etc exist? I can assure you that ads to kids are most definitely legal in most countries. We have back-to-school sales and of course we have christmas.
> And even if it's legal, how moral is it?
What's immoral about it? Targetting adult specific ( cigarettes, alcohol ) to kids shouldn't be allowed, but what's immoral about targeting age specific products to kids?
You sound like people saying kids shouldn't be taught about sex education, learn about violent news, etc. Kids and everyone should be taught about ads and adults should help kids deal with ads because ads are a part of life and they are going to have to deal with it eventually. Rather than ads themselves, I think the lack of educating kids about ads is the problem. But lots of backwards controlling parents want to keep children uninformed and naive and ill prepared for real life.
> It's worth $800 million because someone was willing to buy it for $800 million.
Obviously I meant that I can't see how they'd get $800 million of value from their purchase. Thank you for your lesson in market value though.
> What's immoral about it?
Children aren't equipped to separate fiction from reality, so they aren't as critical about what they're told as adults are. Plus they rarely have much money of their own, so advertisers use the children's "pester power" [0] to get the parents to buy stuff.
> You sound like people saying kids shouldn't be taught about sex education, learn about violent news, etc.
No I don't. That's learning about real life issues to equip you for the future. Ads are people trying to take advantage of you for their own profit. Don't compare commercials with information.
All I could say is that if there were a clear way for monetizing their user base musical.ly would not have been sold for that price. But it is not very relevant to Bytedance's valuation or main businesses either way.
musical.ly never had the same level of success TikTok now has, and it probably hasn’t focused on monetization at the time it was sold. Plus Bytedance owns quite a few apps many of which are extremely popular
How is that site not shut down? The guy in the video was correct. If you had any one of those clips on your computer alone, you'd be going to jail. Now that a company has figured out a way to monetize it, they can do it at scale?
Its main app isnt musically, its Jinri Toutiao, a news app that has reputedly $2B revenue. TikTok, Musically is just its new acquisitions and ventures. It owns a vast array of video content based sites and apps.
抖音(Dou Yin), or Tik Tok, is a huge traffic sucker in China. They went from millions MAU to now 100 millions of DAU in just one year. People are spending like hours on this app alone every day, and it is the perfect platform for commercials as well, could almost go unnoticed if it is well made.
Tik Tok is seriously addictive and the ultimate time killer. Too much so I think the Chinese government is pushing some anti-addiction measure to this platform, as what they did for the online gaming market.
I was digging to find it but gave up. if musical.ly is their main app then this is surely an overestimation of their valuation. I haven't heard a single good thing about musical.ly, but maybe that's just because it's not my crowd.
Its not necessarily musical.ly but its Chinese counterpart, Douyin. Douyin is absolutely massive in China, think Snapchat/Instagram/Vine but much more popular.
They run ads between the short videos, I would imagine that ad space is very valuable to some Chinese companies. I've never used Musical.ly however I imagine its similar just rebranded for an American market.
I truly hope the advertising driven tech industry dies and a general paid service model takes it place. The long term affect adverts have on humans cannot be positive.
They go away eventually on open platforms, because blocking. That's why lots of firms push closed platforms. That's why humans should use open platforms.
Advertisers not using ads to inform their target potential market, but instead choosing to use them to mislead and trick the consumer, are the reason for this.
"ByteDance’s top earners make more than $1 million a year plus stock options, with total compensation sometimes exceeding $3 million. " I bet top earners at Google, Facebook etc make much more than this.
So 100 Engineers will cost $100M per year? I sometimes wonder why the gap between developers are so wide. There are many ( or more like majority ) in HK the make less than a $100K a year.
When you are getting money on a 75B valuation good luck cashing out on that sort of startup. The investors will eat most of that profit leaving you with a few million if you are lucky on a big exit.
I can't be the only feeling a bit depressed that these highly valued companies are still in the "maximize eyeballs for advertising $" business. $75 billion for finding a way to keep people browsing low-content crap for longer. I'm certainly not singling out Chinese companies for this exact thing is the cornerstone of FB's business model and they're one of the biggest companies in the world.
If you want to make sense of this. It's better to think like physicist and start from "spherical cow" model.
The asymptotic limit to the whole market is set by people's income.
* Ad revenue will always be small fraction of total income
* All fun, social and leisure activity is fraction of discretionary income.
"Eyballs"/hour is the future source of growth because all societies move towards becoming post-industrial consumer based societies and people spend more time staring at the screen. Tech companies, no matter how tech, produce products and services where the value is increasingly coming from discretionary income and services. There may be several links between the product and the consumer.
I’ve been telling people about TikTok for a year now, since I live between Asia and the US lately. Most people don’t get it, or understand why it’s so big. The western variant Musical.ly doesn’t help, as the content (which reflects the culture) is different, and not in a good way. The recent efforts to merge the two apps are a huge mistake in my opinion. The beauty of Douyin was the innocent, childish creativity that developed organically there. Merging that Asian thread with a bunch of western brats “flexing” and trying to recreate Vine/Instagram celebrity culture is a bad move.
It’s an app for sharing short audiovisual clips and it’s huge because it developed in a culture of good-natured, one-upsmanship that is suited to a broad audience of Asian youth (including China, Japan, Korea, Indonesia, Philippines, South Asia, etc.), and in turn was fueled by adaptive feeds based on user behavior and feedback. I liked it because the content was friendly, accessible, and creative. I assume others felt the same way.
You have been living under a rock, although it’s not your fault. There is depressingly little information exchanged between east and west, other than reports on fringe stuff that emphasizes our otherness. If you knew anyone under age 20 living in nearly any Asian country (maybe India, Pakistan, Bangladesh excluded), they could tell you about Douyin/TikTok.
It is surprising in the age of Internet where one expect information flows in seconds and things spread fast. The East and West is still very separated as it is.
I'm not in the western world, but News Republic is on plenty of phones around here, as part of the initial bloatware. I have not used the product myself, so this is not a comment on the quality of the product.
My opinion on the long term potential of China's short video platforms has changed completely in the last three months. Used to be high on it, but now I think it's useful but not to this hyped up level, not even close.
The majority of videos on Douyin belong to one of these three categories,
1, girls putting on crazy amount of makeup staring at the camera or lip syncing. The platforms's software are often used to make the eyes larger and legs longer, to ridiculous degree.
2, cats, dogs and other pets,
3, tens of thousands of people imparting universal wisdom to you on how to get rich quickly, become a skillful pickup artist or life guru, etc.
Other than these three types, there are very little left. Of course you may find it differently. But IMO shortage of quality content will be a big problem going forwad for these platforms. In general most people in every country don't have the skill to produce videos of good quality, coupled with China's tight control on what can be shown, it's becoming suffocating for creativity. For example comedies or poignant news commentaries are very rare. A lack of respect for intellectual rights is still a problem in China, endless copying and pasting and boring and fake stuff. Anyway, content shortage is a problem everywhere, but it's just terribly bad in China.
Also, unlike say Facebook or Wechat, these video platforms lack the relationships between users that keep people around. Sure you can leave messages on Douyin but there are basically zero long term interactions going on. People on Douyin always tell others to meet at Wechat or Weibo or other places. Douyin is simply not made for social networking, and I don't see it can change that.
Actually there is Wechat's subscription accounts, which is for the more in-depth analysis and long posts. So it's more of a market segmentation strategy I would say.
Sort of similar to how Instagram and New Yorker work in US. You can use/read either of them, or both.
I would like to write something on Wechat subscription accounts soon, which like douyin so few people outside the Chinese circle knows.
Edit: Instagram is a better example than Snapchat.
I agree, though Instagram is images based with plenty of sources for good contents (photos created by shopping web site, the makers of those products, etc.), but videos are not as plentyful.
> But as with Facebook at the same stage of its life, Bytedance now faces questions over when or even how it will start making a profit.
Amazing. $75b valuation, loads of cash to run ops and not have your burn rate run you into the ground. Clearly the worth here lies in the apparently very strong AI they use to detect trends. Again, as with Shazam, detecting trends early is obviously quite valuable.
This has got to set some sort of record for dubious valuations; effectively means that the worth of this particular vaguely AI related video/news business is worth a 12th of the entire bailout package that saved the UK banking-industry in 2008*
The company is a click bait companies. The innovation they made is to use ml or automation to generate and push content that users are likely to click.
Mostly off topic. Why has China produced most of the serious competition to US software titans? In particular, given that South Korea was way ahead of the rest of the world in cell phone and broadband universality for it's population, why haven't they been the birthplace of any social media or other internet companies that expanded abroad (instead they adopted YouTube and Facebook)?
1. Korea is much more homogeneous than China. China has a wide diversity of ethnicities. (Before you downvote, check Wikipedia first)
2. China doesn't "ban foreign internet/social media". LinkedIn is in China, so is Bing. It bans companies that do not follow Chinese law. If you want to argue that the Chinese law is bad, you should know that Korea bans Google map because of law.
I'm reading AI Superpowers by Kai-Fu Lee (MS Research China, Google China, Sinovation) now - https://aisuperpowers.com/
His version of the story:
1) China's wild-west, copyright ignoring culture forced Chinese entrepreneurs to out work, out hustle, out spend their competitors because there was no IP moat. 3 decades of that environment allowed China to develop many levels of development, management, etc talent. Now they have a large, well educated, experienced, seasoned technical workforce.
2) China's culture, just 2 generations removed from mass starvation and poverty, is very hungry and chases business and money as opposed to Silicon Valley vision startups.
3) American tech companies want to make a product that can be used in all countries, but Chinese tech companies tailored to the distinct behavior of Chinese internet users, most of whom are a) smartphone only, and b) on the internet for the first time, and therefore have very different behaviors. Also, because of no IP protection, they built moats through deep, expensive, messy integration into cities, shops, physical assets, etc, whatever gives them some defensibility. American companies, less willing to adapt their products, were poorly received and outcompeted.
4) China's government (national, state, city) has a system of incentives that can align lots of money, compliance, resources, and attention very quickly. In 2013, the Chinese government announced "mass entrepreneurship" plans, and after AlphaGo's victory in 2016, they made a similar plan to make China an AI superpower. This led to a nationwide flood of venture capital, office space, social perks, etc. They're willing to tolerate inefficiency in order to capture a huge new industry. Contrast with the US, where Republican beat up on Obama and Dems for years because of Solyndra, even though the overall renewal energy stimulus made money.
5) China is huge - its urban population is larger than the entire USA, while South Korea's population is about the same as the US West Coast. So a portion of their labor force can tip the global scales of man-hours in a field.
Also, I believe WeChat is popular outside of China, but not so much in USA/Europe. Alibaba is globally influential in manufacturing and ecommerce.
I'm going deep into Chinese tech, particularly AI, and I'd love to talk more about it.
Anyone who wants an example of Chinese engineering at its best should try downloading the desktop Wechat client. Super smooth, fast and lightweight, currently just using 40mb in my task manager. Using it highlights how much software like Skype has lost its way. Or the Slack desktop client, which won't even start on my Linux laptop without 3gb of free ram, due to being packed so full with memory bloat and disregard for its users in the name of faster development time (or maybe management being too cheap to hire people capable of developing efficient GUIs in a lower-level language).
- South Korea has the fortune of understanding the importance of internet "infrastructure", and being a dense country, manages to roll out first-class internet before most other nations.
- Burgeoning domestic services start to take root.
- Government sets up various crazy laws that make doing internet business extremely painful, killing innovation. Large carriers (KT, SKT, LG) exert tight control of the market, killing innovation in the mobile space.
- Only a few giant corporations survive (e.g., Naver and Kakaotalk). When foreign products (Youtube, iPhone, etc.) eventually break into the market, there's no meaningful domestic competitor.
There was a time when everybody had a Cyworld account: you never heard about it, because it was acquired by SKT, and they didn't want it to cannibalize their mobile services. Nobody uses it any more. We all moved to Facebook.
Because Korea never protected its internet/software industries or never adopted an infant industry argument for their software, they chose instead to consolidate and protect the powers of chaebols who focused on hardware applications and those industries that it was already good at because they were already making money and likely to do so in the future.
Moreover, the chaebols probably out-competed and bought out any software competitors in their protected status.
> Why has China produced most of the serious competition to US software titans?
In a word, Chinese protectionism. However, given how our software titans are dominating our society, I'm not sure it's a bad thing that competitors have emerged, even if it was from the cradle of market manipulation.
Chinese protectionism wasn't bad in the first place, Americans adopted the infant industry argument articulated by Alexander Hamilton and American tariffs were highest in the world from 1816 through 1945, other countries are just now adopting whats working from the past.
A lot of commenters are arbitrarily commmenting without reading the article, Musically and Tiktok is really a new venture + acquisition for ByteDance, its not their main business but something they're trying out and trying to grow for the future. They're more a corporate group or a consolidating conglomerate of new media startups.
Their main business is Jinri Toutiao, a news aggregation + content site powered by ML recommendations that is very popular in China at ~120MM DAU and revenue targets of ~7.5B overall for the whole corporate group. Otherwise they have quite a bit of other popular video content and streaming sites based in China and Asia.
Throwaway account since I'm an old-school news editor but why is it that curated news companies like hvper.com or Techmeme haven't received the same amount of backing? I see more value in targeted + quality than random mishmash of AI-collected headlines.
This article seems a little misleading... It says in the very beginning
"Back then, the question was how a 29-year-old locally trained software engineer could outsmart the numerous news portals operated by the likes of social media behemoth Tencent Holdings Ltd. and extract profit where even Google had failed."
This seems to suggest that he figured out how to make a profit. But then further down it says "But as with Facebook at the same stage of its life, Bytedance now faces questions over when or even how it will start making a profit."
So now I'm not sure if it's making a profit or not.
I read once that they pay over 2M+ USD as an annual salary to entry level employees. I'm sure they're exceptional and talented, but still crazy to think about.
I'm sure that was for one person or a small handful. And that is rational, one engineer can add a million dollars of value in a day if they are really capable and focus on the most important problem.
I downloaded the app and used it for about an hour. Hated it. Uninstalled it. Must be only popular with the younger generation. I thought most of the videos on there were a complete waste of time to watch.
Second, if they have a $75b valuation and no profit plan, that's not likely a good sign. I doubt China's P2P and venture capital markets are related, but I'd bet they gave a high valuation just to grab headlines. Also, it'll eventually get censored like everything else in China, so 'doing better than Baidu' is probably temporary.
Real question: Is there some social etiquette rule that says describing a person to a news audience as "unknown" is being rude? Honestly, I've never heard of that.
If I created a billion dollar company and Bloomberg called me "an unknown", I'd consider it a massive compliment. It means that I was able to grow the company totally under the radar without any distracting interview requests from TechCrunch, TheVerge, Gizmodo, etc.
I guess the problem is the combination of "35-year-old" with "unknown".
Seems the 35yo bit is irrelevant to the story, that's neither old nor young: you can have a significant career by that point and you are a long way from retiring. So I can understand some people from the Valley would think this is just another case of ageism.
A bit like saying "A Black Woman left me her seat in the bus" can be suspicious even though it is factual.
Apparently he was 29 anyway, so I'm not sure what the point of the 35 is.
And to be honest Chinese billionaires not being well known in the west isn't that surprising to me, particularly when their business ventures are heavily China-facing.
FWIW I have always been under the impression that "first of all that's rude" is mostly used as a funny meme, a recurring harmless little joke (to put emphasis on what comes next in the speech).
Every other founder is virtually unknown before they become known. Is he unknown because he lives in China and didn't attend Stanford? What does it mean that he is Unknown?
In this context, unknown could be pretty easily with calling someone a nobody.
A nobody, compared to who? A status quo? Innovation is about outliers getting things done.
Whereas a success like this would normally be celebrated to the moon and back. Why not here? Is this individual's success outside a self-congratulatory echo-chamber?
With media it's worth asking questions about the use of words, because they wordsmith for a living.
My real question is: do they really mean unknown or just “unknown to us”. Guy could be quite well recognised in China for all I know. There’s a lot of implicit parochialism that works its way into news stories.
"Unknown" is not an insult. It's not rude. It just means that he was not prominent before this company. It's actually somewhat of a compliment, because you generally expect gradual rises in fame and performance, not meteoric ones. So to say "unknown X does great thing Y" is more complimentary to X than saying "X does great thing Y".
You could say that for any word. The common people's definition of prominent. In the sense that he wasn't that known in the tech world and not a household item in the business industry either.
I am simply observing the general meaning of unknown in the context of statements like this in the English language. I suspected that the person I was replying to might be unaware of this meaning based on their reaction, and was trying to clarify. I really don't think there are many assumptions here. This is by far the most common interpretation of unknown in sentences like this.
Honestly, we the lesser mortals do not know what goes behind the closed doors when cheques like $1.5 billion are written.
People said the same thing when Microsoft valued Facebook at $15 billion. Now, in the hindsight, it seems so funny that people frowned upon those valuations.
Power of having many consumers engaged on your platform is too much in digital age.
Absolutely agree. When Kevin Rose came out of the blue with Digg, they didn't call him 'Unknown'. It is just how media in the US (and rest of the world is trying to copy them mostly) tries to grab attention.
Also, it is unknown to them, but Bytedance has been around for quite some time and covered in the US. Also, it is not like they are not making money. So many things are wrong with how they cover this.
A bit off topic, but isn't you nickname FLUX-YOU a bit rude? Apart from that you are screaming does it sound quite similar to f%&$ you. And to flux means something like "flowing of fluid from the body, such as diarrhea".
News aggregation is meaningless in China. However AI-based might make an English language version useful. But how does AI get rid of garbage? Is there any working product at all? I went to bytedance and it appeared pre-.
Here's me, wandering around the internet for multiple decades now. Tuning into Slashdot for maybe 10 years, HN for about 5 years, I'm tuned into pretty much all of the new school recent developments and current events, across a wide range of technologies, and I've never heard of this particular company, neither heard nor used of any of its products, nor heard mention of any of them, until right now, today, and it's the most valuable startup ever, worth 75B for no reason, with a website that does nothing.
Okay, Bloomberg. Thanks for cluing me in. Maybe you could have dropped this news on me when it was worth a billion. Or maybe when even one of its products gained a bit of inertia? No? Not really? Okay. No problem.
Sorry to sound harsh. Maybe it's time to burst out of the English/US bubble and look at what's happening around other parts of the world.
Come to think of it, maybe I should start a blog focused on covering tech in China.
Edit: To give some context, out of 10 videos that I see on facebook, about 3 of them are "directly taken" from douyin. You can spot them because they have the watermark in Chinese. Granted my social circle is more "Chinese", but lots of content are not Chinese specific, like cats or random funny videos.
I only know of the company because of PaymoneyWubby, a popular YouTuber who made videos about their Musical.ly/TikTok app that sparked bad press against them and Bytedance tried to censor: https://youtube.com/watch?v=Pu3bpqsa7dM
this whole fame+valuation approach serves the purposes of .. who ? other posts mention the shallow (and worse) nature of this kind of adspace.. long toiling projects starve while this is the monetary king-of-the-hill ? ugly
>Just use his name in the headline, how hard is that?!
Because "unknown" in the title is more descriptive of the general public's (lack of) awareness of the person's identity. (I assume Bloomberg's audience is mostly North America.)
It's very common to use "unknown" in the title and the full name in the body of the the article which Bloomberg has done here. The article's first sentence has his full name: Zhang Yiming. To me, this appears respectful and not insulting.
>You and the other guy calling it a compliment are either the same person, or you're both social robots
First, you're being rude (both for implying the "same person" and for calling them "social robots" because they disagree with you).
No, calling someone an unknown is not by itself treating someone bad. It depends on the context.
If you say it dismissively ("you are an unknown") to imply your superiority then it's bad manners. If you merely inform readers for a fact (that he came from nowhere to create a huge company) then it's not.
>Just use his name in the headline, how hard is that?!
That wouldn't convey the information they need to convey.
You compared the company to dog shit, even the best of which won't make its owner any money. Yet, this company, with a $75B valuation, clearly has made its owner some money.
> with a $75B valuation, clearly has made its owner some money
Why do you assume that? It's not profitable, it only survives because of outside funding, and thus the owners of the company, are the ones providing the funding, not the guy who decided what the world needs is a better way to generate scummy click-bait content.
Thanks to this article I'm now aware that Musically is Chinese. That's all the info I need to explain to my kid why it needs to be deleted from her phone. Thank you, Bloomberg!
My objection is that Musically is a social network. Inherently, its Chinese ownership renders it government spyware, the only kind of chat app permitted under the regime.
$75B value and it still faces the most basic question. Makes me feel I don't understand business at all.
Also its main app seems to be musically. I have only heard of it but it seems a little to an app like Dubsmash. Did dubsmash ever make any money? What is the business model for such apps?