Bytedance said to be valued at over $75B in new round

You understand business, just not the shell-game that's grown up around it.

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.

https://www.youtube.com/watch?v=BzAdXyPYKQo

[0] https://www.youtube.com/watch?v=5PmphkNDosg (NSFW language)

- 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.

[1] https://blog.ycombinator.com/the-hidden-forces-behind-toutia...

[2] https://walkthechat.com/douyin-became-chinas-top-short-video...

http://bytedance.com/products/

From what it seems, its trying to dominate the new media space in China and Asia through consolidation and acquisitions.

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.

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'll bite. What is it and why it's got so big?

Seems we never heard of it because we‘re not in their target market.

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.

The core competency here is content. Douyin has a creator base, and the platform to deliver the contents to massive audience.

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.

- 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.

I heard it's somewhat getting better these days.

Moreover, the chaebols probably out-competed and bought out any software competitors in their protected status.

Chinese engineers are cheaper

Their internal competition is fierce.

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.

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.

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.

For whom? Because the founder will walk out a billionaire, or at least multi-millionaire, whatever happens...

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.

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.

> doesn't make it's[sic] owner any money