ByteDance: From a Real Estate Search Engine to the World's Most Valuable Startup
ByteDance: From a Real Estate Search Engine to the World's Most Valuable Startup
The Vision Fund Tales #2: ByteDance
This post is part of the Vision Fund Tales where we explore the fates of the companies backed by Soft Bank's $100 Billion fund.
To get future posts:
In 2017, Bytedance acquired a growing lip-syncing App. Little did anyone know at the time that this App would become one of the top Social Media platforms globally!!!
While today, ByteDance has a valuation of over $ 360 Billion, It had to go through several phases to reach this point.
Phase 1: A Change in Plans
After studying Software Engineering, Zhang Yiming worked at different startups before starting a real estate search engine in 2009.
Zhang, who is obsessed with the circulation of information, noticed that there was a major shift happening in news consumption. People were relying on their smartphones to get the news instead of reading newspapers.
He decided that it was time for a pivot. His company from that point would focus on building a content platform.
Phase 2: AI + News= A Unicorn 🦄
The key to ByteDance’s success as a content company is its AI recommendation engine.
The first app that it launched was Neihan Duanzi, a memes platform.
The app went viral and at its peak, it had over 200 million users.
Unfortunately, ByteDance had to shut it down in 2018 after pressure from the Chinese government due to the app’s “vulgar content”.
The company launched its second app, a news aggregator called Toutiao, in 2012.
Toutiao became a big hit due to its smooth experience. Users get a news feed based on the topics they follow. They can either skim through the headlines, click on a headline to read the full article or have the article read to them by the built-in reader.
Luring Top Talent 💰
Chinese companies usually pay lower salaries than their western counterparts. Not ByteDance. The company was willing to pay top dollar to lure in top performers from other tech giants, at instances offering 50% pay increases.
This strategy helped ByteDance build a top-tier AI team to develop Toutiao’s recommendation engine.
The strategy worked perfectly and the users loved the app.
In 2014, Toutiao reached 90 million users and raised a $100 million round led by Sequoia Capital at a $500 million valuation.In late2016, it reached 600 million users!
Even though Toutiao was doing great, ByteDance had bigger aspirations…Global ones.
Phase 3- TikTok ♪
So, how did ByteDance get into Video?
In September 2016, the company launched A.me a short video app that uses its recommendation engine. The app’s name was later changed to Douyin.
In order to fuel its growth, Douyin allowed video sharing on several other platforms.
Within less than a year, the app crossed 1 billion daily video views.
One main criticism the app was receiving: it was just a copycat of musical.ly, a popular short- video platform at the time.
2017:
In September, ByteDance launched TikTok, the international version of Douyin.
In November, ByteDance acquired Musical.ly for over $800 million and merged it with TikTok.
In a stunning turn of events, Douyin went from being Musical.ly’s copycat to becoming its competitor, into finally acquiring it in a matter of months!!
2018:
In Q1, TikTok became the most downloaded app globally with 45.8 million downloads.
By May, the app reached 120 million daily active users.
The average time spent per day was 20.5 minutes. That’s 82 15 sec videos per day!!
In October 2018, ByteDance closed a $3 billion funding round at a $75 Billion lead by SoftBank’s Vision Fund making it the highest valued startup globally.
Today
TikTok’s rise globally lead to scrutiny from politicians worldwide.
In 2020, the app was banned in India.
Other countries including the US and Japan considered banning the app.
In April of this year, ByteDance put its IPO plan on hold after failing to find a business structure that pleases Washington and Beijing.
Zhang Yiming stepped down as CEO in May. A step that came in line with other CEO resignations at Chinese Tech companies.
But all the setbacks haven’t hindered TikTok’s astronomical rise.
2021
TikTok became the 5th app to reach 3 billion downloads.
In September, the company celebrated reaching 1 billion monthly active users.
The average user spends, wait for it, 89 minutes a day on the app.
In Ocotber of this year, a US investor tried selling ByteDance stock at a $400 billion but wasn’t successful and had to lower the price. Another investor sold shares in the company at a valuation north of $360 billion.
This post is part of the Vision Fund Tales where we explore the fates of the companies backed by Soft Bank's $100 Billion fund.
To get future posts:
If you liked the post, sharing the thread on Twitter would mean the world to me:
