I really can't fathom how this is possible. The largely young demographic (which I'm guessing warrants this valuation) has a track record of jumping from platform to platform, whichever is trendy for a given year.
With that in mind, how are investors seriously willing to get behind this company in such a big way?
ByteDance isn't just TikTok, which is what the headline doesn't include. They also own Toutiao (Chinese news/content platform, top 100 website in China), Helo (Indian social media, the Google Play app alone has 2.2M reviews), Lark (https://www.larksuite.com/, an enterprise collaboration platform aimed at the Japanese market).
ByteDance did $20bn of revenue in 2019. The comments in this thread are… wow. Lots of opinions from my favourite HN cameo character, "Person With Vitally Important Opinions About Complex Topic But No Time To Read Beyond The Headline."
In my opinion Tiktok is a viable replacement for Instagram, a platform that generates on the order of 10B USD revenue a year. They both have pub/sub models where you can follow topics or celebrities or content creators you care about. Instagram is more photo focused and Tiktok is more video focused. The video first format is arguably higher fidelity/more compelling for content consumers.
Yes, people jump from platform to platform. Instagram will not be king forever, but it will be generating massive amounts of money both on the upswing and the downswing.
Facebook was able to leverage their popularity with college students into a larger platform that had mass appeal with all age groups. I don't see why TikTok can't add features and get the same results.
Facebook solved the core problem of real identity on the web. Extending outside colleges was a natural progression (first to workplaces, then to high schools, then publicly).
TikTok solves the problem of short form video creation / entertainment. Will their userbase be interested in creating the same type of content in 4-5 years? I think they'll struggle the same way Snapchat struggles to convince people over 35 to use their app.
> I think they'll struggle the same way Snapchat struggles to convince people over 35 to use their app.
Have you used TikTok lately? It's overwhelmed with millennial/elder millennial and beyond. I don't see this as a problem for them and in fact I think people are jumping over to it in droves.
Is this redundant or is the latter the new term for Gen X from the people who believe that the world is divided between Boomers and Millennials, so everyone else must be a “young millenial”, “elder millenial”, or “advanced boomer”?
People complained about YikYak being anonymous. The problem is that YikYak listened to the complaints rather than their users.
Every social media company upsets its users at some point. Facebook, Twitter, Snapchat, Digg. The moat, platform stickiness, and competition shape outcomes.
TikTok is a bit headache inducing for anyone not under 20. Anyway I don't think humans should be receiving that much stimulation, and information overload in such short bursts.
Facebook has network effect, TikTock doesn't really.
Facebook is really centered around 'everyone you might know' including friends and family, whereas I doubt parents and grandparents will ever go onto TikTok.
Most importantly, TikTok is not basic communications tool, it's a specialized communications tool honed on a timely and probably faddish trend.
Facebook may or may may not survive, but TikTok will have to transform to make it for the long haul.
Will most likely branch out into all the other usual markets, TikTok chat, TikTok meetings, TikTok Ads, TikTok shops, TikTok news, TikTok Pay, etc. Basically another slightly different version of the same stuff we're all used to with these kinds of social platforms. Still.. >100Bn is simultaneously ridiculous, funny and sad imho.
EDIT: valuation makes a bit more sense for the parent company seeing as it has a lot of other brands that are huge in China and India
Instagram doesn't have the same network effect as Facebook. Snapchat does have Quick Add, which shows people you might know; it's also a much more communication-driven platform.
TikTok is probably the modern Instagram replacement, not the modern Facebook replacement.
The barrier to making TikToks is much higher than for Instagram posts. It takes hours to make a decent TikTok; it takes second to make a decent Instagram Story post. For that reason, I see TikTok as more adjacent to YouTube than Instagram.
> has a track record of jumping from platform to platform
do they really though? It honestly seems like particular brands are very sticky with internet demographics, not just young people.
IIRC there even is more brand loyalty among ecommerce than there is among physical brick and mortar stores.
You can look at something like Whatsapp as well. There have been lots of privacy concerns after the acquisition by Facebook but the number of people who actually switch to say, Signal is very low. There are huge network effects to these social media / communications platforms, and TikTok already has 1.5 billion users worldwide.
In my experience, the claim that the younger generation hops around is fair. I'm 26. Between the ages of 15 and now, my primary social media platform has hopped between Myspace, Facebook, Reddit, 4chan, YouTube, some diary site, PSN(PlayStation Network), Hacker News, and probably others. I've dipped my toes into countless other ones. I've kind of stopped hopping around as much, but other people my age still hop between newer ones like Instagram, tiktok, and others.
That isn't true. Outside of teens in tech or nerdy places, most won't switch to the next hyped thing. I have been trying to get people on session and pleroma but most of them don't care.
The tendency of young people to jump from platform to platform is partially an illusion caused by the fact they don’t remain young. You see this especially in dating sites — people used to think OkCupid could never make money because it was dominated by 18-to-25-year-olds. Now it’s mostly people in their 30’s, and the prior king of 30-somethings, Match.com, is for people over 40. The same thing happened with Tinder, PlentyOfFish, etc.
TikTok isn’t a dating site, but it’s certainly “flirty”. It has specific appeal to socially active teenagers and nearly all of the content shows off suitability for dating: looks, dancing, fashion, wit, etc. I could imagine adding paywalls to men contacting desirable women, or of course just padding the feeds of less valuable users with ads.
It’s less horrifying if you think of it as a treadmill — MySpace is sort of the logical extreme, where the owners realized its days were numbered and made the experience so ad-heavy that everyone left for other platforms. You sow growth for some number of years, then you reap. Sometimes it’s subscriptions, sometimes it’s sponsored full-page branding.
People that are more socially valuable are given a better experience and are treated better; kind of the social media "red carpet" treatment. Those that are less valuable are mined and exploited.
I can imagine an insidious future where social networks assign an "intelligence score" to users and advertise snake oil to those with less capacity to evaluate risks. There might even be a market for those users. A number of companies in the mobile gaming space profit from exploiting "whales". Imagine buying and selling them as targets.
Similarly, networks might evolve to give positive experiences to users that create content. We already have that in the form of monetization and karma. The economy rewards value creators.
What makes you think this hasn't already happened? Advertising can both create and meet demand. A large portion of social media advertising came from mobile gaming companies, relying on the targeted profiles available on social platform, to find people who could be converted into whales.
The valuation is for TikTok's parent company ByteDance which has a large number of products and investments including a really popular news aggregation app in China.
Also, TikTok in China, which is its largest market, is popular with everyone, young and old. It got to the point of threatening WeChat. CEOs of Tencent and ByteDance had a huge spat a while back.
I tried it multiple times, but I've always got low-quality-video fatigue when after have seen the same dance moves 20 times by different people for the same music.
With Youtube I can watch conference videos that contain genuinely new content forever, but I don't see that happening with TikTok. Also it spams my mobile notifications, so I had to delete it, even though I don't delete too many apps.
For young people who have their friends on it, it's probably fun to see them, but for me I just hope that forced TikTok integration won't be the next one on Tinder.
Scroll past the ones that bore you, or long press and hit "not interested", and the for you page will improve.
> conference videos
TikTok is for killing time and having fun. If you're learning on TikTok it's by accident. The videos are limited to a minute, ffs. That's why it's fun and it's good that people who take it too seriously are put off by the format and leave.
> I had to delete it
You can curate the apps allowed to notify you on your phone. For me, my phone makes a noise when someone is calling me (a good old-fashioned phone call) and that is the only notification I allow. If you're deleting apps for that, you're missing out.
> young people who have their friends on it
You're thinking of snap. Young people don't have their friends on tiktok, they are mostly hoping not to meet people they know on there so they don't get in trouble for how they use it.
When a platform captures the leisure of young people, it develops a culture with its own conventions and art. TikTok is the first platform I've been excited by since early Twitter. The fact that old people don't get it is a huge benefit. TikTok doesn't want your boring conference videos.
You need to be really careful how you tailor it (what you like, hashtags you look up, who you follow, what videos you watch all the way through or multiple times).
Tumblr, Discord, Slack, Ello, Telegram, Badoo, FormSpring, iTunes Ping, FriendFeed, Diaspora, Bebo, Path, Meerkat, VK, Google Buzz, CryptoKitties... The list goes on and on.
This time last year (or was it the year before that?) it was Snapchat (remember Snapchat? Kids don't) that was going to take over the world and be bigger than Apple + Facebook + Google combined etc etc. I don't think that worked out really.
I am guessing that investors just pile in wherever the "youth" are without paying too much attention to what it really is they are investing in... just hoping to get in early on the next big thing I suppose
Snapchat is still massive and influential. My snapchat username is still probably the first thing people my age will ask me for. Yes of course it’s not as influential as facebook or google, since it only has one product, but don’t act like youth no longer use snapchat.
I think Twitch could be a valid comparison to TikTok. Both are content-focused platforms that draw in audiences from a variety of somewhat non-overlapping demographics, but exist in the same space. They've already branched out into livestreaming, and I think a logical next step would be leaning even heavier into Twitch-style community building features while simultaneously promoting the app's base of viral social media video content.
1. insanity
2. lies about numbers
3. massive invasive data siphoning and thats actually the basis for the valuation
4. tiktok now has a license to vast raw video and personal data that users granted them the right to use and resell in perpetuity. They obviously don't just keep edited but also raw data, videos never published, maybe even entire camera rolls. So much data held by a company sheltered behind the Chinese state's protection from legal repercussions.
Scenario 5: you didn't read beyond the misleading headline to see that it's ByteDance, who own TikTok, and who did $20bn of revenue in 2019 (implying a 5x multiple on valuation).
This was my first reaction also but making a quick google search it seems that TikTok has 500 million users. That's a lot. Doing a pretty simple calculation of a dollar per user per day, you arrive quickly at 180 billion dollars of advertising monetization a year. It is really just another scale. But yeah, maybe i am way off and the valuation is still absurd.
Where did you get that “simple calculation” from? If Average user is worth to TikTok a dollar per day that means that ad buyers are willing to give it to TikTok from their advertising and marketing budget. Which means that the average user should spend at least few grands each year on advertised products and services, which does not seem likely.
Also, this is not how valuations are estimated. 180 billion _per year_ is a huge amount (for comparison Apple revenue for 2019 is 260B). One applies a revenue multiple that depends on the stage of the company and industry but for early booming social media site is in the range of 20-40. So the estimate of 105-110 probably comes from the range of 3-5 B yearly revenue estimate
Yes, that's correct. A dollar per day is huge, and that would bring the valuation close to a revenue multiple of one, which is madness by market standards. If you would make it 10 cents per day, which seems more reasonable according to people more informed than me, that would become simply a multiple of 10, which is still low, as you pointed it out. We can keep changing the variables, divide it by 2 even, but the point i tried to make is that it seems not that crazy of a valuation after all if you consider 500mi users as an average
One dollar per day!? That's an obscenely high level. Facebook is one of the highest revenue per user social media companies by orders if magnitude and they made worldwide an average of 7.26 per user in an entire financial quarter, which is like 8 or 9 cents per day. If tiktok is outdoing facebook by a full order of magnitude, and has 1/5th the users, even with identical growth expectations they'd be twice the valuation at like 1.2 trillion dollars. A couple billion in revenues plus investor belief in growth potential is more than enough to justify a 105 billion dollar valuation (nobody said investors can't overvalue companies either, look at wework). I dont think they're anywhere near as obscenely profitable as making a dollar per day across all international users, they're going to be orders of magnitude removed from that.
I wonder what the amount spent by users on advertised products per quarter is... presumably more but that seems like a lot especially if that is worldwide.
What happens if Chinese big tech starts dominating the world? Since the US no longer dominates manufacturing, if the US starts losing in services too, what advantage will the US ever have on China?
I've been saying this myself for a while now. Take the EU for example. Why doesn't the EU have a silicon valley rivaling our silicon valley? They have a larger population and a larger economy. Not only can they afford to invest in their silicon valley, they have a market to sustain it. Where is their facebook, google, apple, youtube, etc? Even more baffling is india. The US has a lot of indian tech workers. Why doesn't india bring some home and build their own tech giants. Instead their major "tech" companies are outsourcing companies which essentially "sells" indian workers all over the world. Why not use those workers to build indian tech companies? Why isn't there an indian whatsapp? Why did india hand that market over to facebook? None of this makes any sense.
If they don't want to follow the "chinese model" because of any perceived stigma attached to it, then follow our model. The US became an economic powerhouse due to protectionism. Every major economy in the world developed under protectionism.
I used to think it was because politicians are old and think tech is magic, but I'm just starting to believe most of them are outright lazy and incompetent.
Europe is fragmented not only by language but by law, culture and other things as well... It's not trivial to be available to all europe at once (Spotify/Netflix for example are not available in several eastern european countries)
Yeah, I don't really blame them for taking control of their citizens' data and keeping the revenue within borders versus shipping it out to American corporations.
That's where we are at. Thankfully modern economic theory has the best interest of the US at heart. I'm sure the more we offshore the better it will get for all of us here, I mean it just makes sense.
World's largest navy and control of global oil shipping. That and some pretty advanced and battle tested military technology and the world's largest arms industry.
This is an excellent question, but more pertinent is the fact that these companies are state-sponsored, state-backed.
The CCP/China views these apps as a serious tool of foreign policy and economic expansion, influence and control.
Imagine if Trump had meetings with Apple CEO and was subsidizing their product, creating worker legislation for them, directing/requiring banks to fund them, using the foreign service to help cut deals and suppress competitors etc., controlling/censoring everything in the AppStore.
This happens everywhere to some extent but it's very real for China.
It would be fine if some 'large, great Chinese companies' started doing some great things but that isn't really the case, this will be a form of economic dumping, state collusion and strategy.
It's a serious issue that 'old economy' Trump is nowhere close to understanding.
We don't want to get hyper-nationalist on the other hand, we can't afford to ignore the real systematic issues either, and only a very firm hand will be able to make a difference. This is in a way the paradox of Trump - he's the only US leader, arguably through bluster and arrogance - to be able to actually stand up to some systematic Chinese intransigence.
US Corporations do not have the power to 'stand up to China'.
People need to start to understand that when it comes to major international players, over $50B, that are related to state actors - then it's a geopolitical question as much as an economic one.
TikTok is not just a company, it's a strategic arm of the Chinese government.
China 'divides and conquers' and pushes ruthlessly on any and all entities in pursuit of its goals. They coordinate student groups on Western Uni campuses to oversee Chinese students, suppress any ideas or policies in their way. They threaten any politician, and the press from publishing or making statements they're not happy with.
They use the 'carrot' of access to their huge market, but often this is a ruse - as they require foreign companies to hand over IP to local companies, this IP filters into the hands of state-backed competitors and the entrant never has an opportunity. All of this is in blatant contradiction to WTO terms.
The Western companies that have made inroads are ones that have a lot of brand value, think McDonald's or Disney, but even then, China can have leverage: Big Hollywood films are made for global audiences, and China is a big market over which the government censors and controls content. China dictate terms to major Hollywood studios - and said studios comply - or are banned. It's that simple.
"If you do not promote our policies, and portray China a certain way, you do not get access to our market. So here is how you are going to portray us: ..."
Only the US President or the leader of the EU with the backing of the German Chancellor has the hope of applying pressure on China in any serious way. The Europeans won't so it's down to the US president.
Trump is blustering, nationalist, and not quite focused on the right things in 'standing up to China' and I think he might be doing it for some of the wrong reasons, nevertheless, he is doing it, and actually it is working. He has mostly a competent team doing it.
China's tactics have made a lot of talk behind closed doors around the world and even Dems, Europeans - everyone - is actually happy about this.
Sadly, it may be that the next administration may not have the wherewithal to continue to push for better terms because it does require a fairly steadfast and aggressive approach inconsistent with the personal manner of say, a guy like Obama, whom I admire quite a lot, but who I don't think will do what is needed.
Assume that anything you say on Zoom or TikTok could be made available fairly readily to the Chinese government and that they will leverage control of TikTok for whatever reason they want, consistent with their overall geopolitical strategy.
> Assume that anything you say on Zoom or TikTok could be made available fairly readily to the Chinese government and that they will leverage control of TikTok for whatever reason they want, consistent with their overall geopolitical strategy.
As others have mentioned, this hacker news headline is deceptive. The valuation is with respect to ByteDance, which has a business suite beyond TikTok. Even the article headline mentions this: "TikTok Owner’s Value Exceeds $100 Billion in Private Markets"
There are other facts about ByteDance such as having nearly 100k employees and a moderately size AI research lab that makes this news less surprising.
TikTok proved to be a perfect secret clubhouse for Gen Z sensibilities of humor, nihilism, and celebration of differences. But as older generations pile on that do not pass the "vibe check", it is already slowly starting to ruin the party. It's still the best party in town, but hopefully ByteDance is humble enough to realize TikTok's success is about a lucky coupling of a format and cultural moment.
I don't necessarily agree with this. I know several people that get their daily news through Snapchat. Tiktok rewards viral content, unlike Facebook which just blasts everything your friends do on the platform into your timeline. I think the signal is much higher on tiktok.
If what you’re saying is true, then in a sense a lot of these apps are like the Seinfeld of the time. Eventually the season finale happens, and very few end up being a Simpsons (Facebook).
> It’s the first salvo of ByteDance’s goal to reach 100,000 staff globally by the end of the year, outlined by Chief Executive Officer Zhang Yiming in an internal memo last month.
Can someone explain to me the rationale behind such an aggressive employee headcount? Do they have larger ambitions or are they trying to justify the valuation? It just strikes me at an incredibly large number of employees for the service.
ByteDance has a huge suite of apps already (in China). Several of them could independently be unicorns without international expansion. I don't see why they wouldn't want to both grow that number and expand what they already have to other markets
Maybe something worth mentioning: The ratings on google play [1] dropped from 4.5/5 to 1.2/5 because they deleted a video criticizing a TikTok user and did not delete a video endorsing acid attacks, but it seems like it's mainly ongoing in India. [2]
Anyone care to comment on the sustainability of these platforms?
Facebook has a strong network grounding effect (a few of them) and it may be around for a while.
But these 'hyper short form' things like Snapchat and TikTok I feel to be faddish. The 'form' is here to stay, but unless the platforms have lock-in they are fickle.
I think Apple, FB, MS, Google have strong incumbency, even though Snapchat is growing ... I'm not so sure.
That said - the world is still coming online in droves, and Snapchat only has 200M users meaning a lot of upside, and possibly an opportunity to entrench themselves.
I'm not sure that I would put Snapchat and TikTok in the same bucket. Snapchat has very strong network effects among a certain significant demographic. It has a feature that suggests people you may know and a variety of techniques (Streaks, BFFs, Snap Score) intended to keep people using it daily. Think of Snapchat more like a messaging app than like a social network.
If you believe in the power of targeted marketing, believe in TikTok. I didn't log in, I gave this app no information about me at all and it managed to turn 1 or 2 likes into a stream of endless content that hit a certain spot for me. I had to delete it.
Social media in the US was always something I thought that Chinese companies couldn't penetrate due to cultural differences. The fact that they have means so many more US tech businesses are potentially at risk, because China's tech sector is extremely strong on the software side, even on the open source side (Ant design for react, Vue js). This is despite relatively high anti-China sentiments: see Koa-router being transferred to a Chinese maintainer: https://news.ycombinator.com/item?id=19158218, granted there are concerns with transferring a popular package to an unknown person for money, or Huawei's problems penetrating US market. Companies often have to hide their Chinese origins, such as OnePlus (a subsidiary of Oppo).
Thanks to Hollywood, American TV shows, and the Internet being predominantly US/English dominated, every country understands America more than the other way round.
That is probably true with America when compared with any other country. When I was in elementary school some kids thought Canada was just another state!
In theory that sounds nice but as far as trusting a company with my privacy/data, a Chinese backed social network is probably one of the only entities I would trust less than Facebook.
Being successful in the TikTok, Snapchat, Instagram market segment seems completely random. These apps have so many features in common with each other and none of them really do anything innovative. TikTok is definitely not the only vine clone in the world, but for some reason this is the one that is worth $110b
So far in this discussion I've figures of 500 million, 800 million and 1.5 billion users for Tiktok. All staggering but rather large degree of variance
I wonder how many of these traders are Chinese nationals- makes me wonder if we're towards a future where it's not just American dollars, but also RMB, Gulf Arab petrodollars (as we're seeing from the Saudi investment in the Softbank Vision Fund), and just dumb cash coming in from every part of the world economy. Or maybe we're already there.
Pretty insane. It will be replaced by another app-du-juor in 4 years. Social apps follow a pretty predictable schedule where cohorts are strongly associated with high school and college demographics moving through phases of their lives.
With that in mind, how are investors seriously willing to get behind this company in such a big way?