The $75 Billion Startup You've Never Heard Of
Have you heard of ByteDance? Most likely not, but we bet you've heard of TikTok. ByteDance, a Chinese internet technology company, is the company behind America's new favorite video sharing app TikTok.
ByteDance has a version of TikTok, called Douyin, that's used in mainland China. The two are the same but are run on separate servers to meet Chinese regulations. Across ByteDance’s portfolio of apps, the company has 1.5 billion monthly active users, with almost half of them using one of their apps daily.
ByteDance, which was founded in 2016, is now the world’s most valuable startup. The company is reportedly valued at $75 billion with backers such as Softbank, KKR and General Atlantic. Un-like some recent unicorns, the ByteDance is financially sound. ByteDance, which is reported to have booked revenues of $7.2 billion in 2018, revised its 2019 revenue target upwards from $14 billion to just under $17 billion. For reference Facebook, Twitter and Snap Inc. reported revenues of $55 billion $3 billion, and $1.2 billion in 2018.
|Revenue in Billions|
The company books the majority of its revenues in China but is aggressively entering the U.S. market. TikTok is their biggest opportunity in the U.S. so it makes sense they’re getting aggressive across the Pacific. TikTok even recently moved into WhatsApp’s former office in Mountain View. If that’s not enough, they’ve hired more than two dozen former Facebook employees since 2018 by offering salaries up to 20% higher. It’s not just Facebook employees they want, though, as they’ve also poached employees from Snap, Hulu, YouTube, Apple and Amazon.
However, it’s not all smooth-sailing for ByteDance’s TikTok in the U.S. The company has repeatedly seen critics warn the company could be passing along the data it collects to the Chinese Government, something it would have to comply with by Chinese law. Just this week, Senators Chuck Schumer and Tom Cotton sent a letter to the Director of National Intelligence to assess if the app could pose “national security risks” to the U.S. The letter said “Security experts have voiced concerns that China’s vague patchwork of intelligence, national security, and cybersecurity laws compel Chinese companies to support and cooperate with intelligence work controlled by the Chinese Communist Party.” Sure enough, on Friday, The U.S. Government formally launched a review of ByteDance.
|The US is looking into Bytedance and its ties to the PRC. Source: Alex Wong/Getty Images.|
If they needed any proof as to how ByteDance bows to the Chinese government, they wouldn’t have to search too deep. The company is receiving criticism for censoring videos of the Hong Kong protests, as well as other topics the Chinese government deems sensitive, such as Tiananmen Square and Tibetan Independence. Facebook CEO Mark Zuckerberg, used the news to take a swipe at the company saying “While our services like WhatsApp are used by pro-testers and activists everywhere due to strong encryption and privacy protections, on TikTok, the Chinese app growing quickly around the world, mentions of these protests are censored, even in the U.S. Is that the internet we want?”
With an astronomical valuation and an app that is taking the world by storm, ByteDance is a company to keep an eye on as it inevitably approaches an IPO. Some of the biggest questions will be if it can maintain its valuation and if the Chinese government will loosen its grip on the company to be successful in the U.S.
- According to a new Morning Consult survey, TikTok is more popular today among U.S. teens than Facebook
- The app hit 1 billion downloads in February. It reportedly has more than 100 million U.S. downloads.
- It provides endless mind-numbing entertainment. See here and here.