Let’s talk about TikTok

The 1 Billion milestone

In September, TikTok quietly announced the milestone of reaching billions of monthly active users (aka MAU). At present, Douyin’s parent company ByteDance’s products, including products represented by Douyin, Toutiao, Watermelon Video, etc., have a total MAU of more than 1.9 billion people. I think it is not easy for TikTok:

  • According to Sensor Tower’s report om January 2021, TikTok is worldwide number one non-game appplication with revenue US$ of 128 million with 3.8 times of annual growth rate. It’s report in July, shown total number of downloads top 3 billion since inception in 2016. Also according to Nikkei in 2020, TikTok worldwide download is number one, surpassed Facebook since 2018.
  • It is truly “the only social network product from the Chinese world” in the world, and “all young people around the world” are crazy for it. You would argue that WeChat is already one billion, but are there any white Americans or Europeans using WeChat?
  • In just 4 years, it reached the monthly active number (MAU) of one billion people per month, and it took 8 years for other competitors to reach this milestone. These billion-level competitors include Facebook, WhatsApp, Messenger, Instagram, YouTube, WeChat, but I think these softwares are invincible, because none of them are built from scratch, and they all have assistance or help of platform traffic from their conglomerate’s existing moster software or assets, even WeChat depends on QQ to have its status today.
  • It was the first software company that made the Chinese government explicitly prohibit the export of its technology (mainly its unique and outstanding algorithms). One can imagine its importance.
  • Under the control of various means by the United States, it still broke through. Americans can’t compete with TikTok. They say that it has national security issues, prohibiting its use by civil servants and military personnel, and forcing TikTok to be sold to American companies. Microsoft (ticker: MSFT) and Oracle (ticker: ORCL) are making trouble because of this. After all, the existing money-making cash cow delivered it to the door by herself. Who would refuse? Looking at this now a year later, I am afraid that only Americans can do such ridiculous things! I personally think that TSMC (ticker: TSM) is currently on this path, but the methods used by American are different.
  • At present, the business continues to grow rapidly, and it seems that there is no end in sight (currently only 1 billion, and the Facebook family is 3.6 billion).

What about Line?

Taiwanese will subconsciously say Line! Wake up, Line’s listing on the US stock market basically failed. If it weren’t for SoftBank (ticker: SFTBY) to later acquire it and let it go privatized, Line’s future in US stocks is not good. Because in terms of function, business, and number of users; Line is not a well-known role in the global social network community, and no one is discussing it.

However, Taiwanese people do not ask right and wrong, and have long hated China and denied any achievements made by others. All achievements in mainland China are ignored. They even refer to the black land as white. It’s not that you can’t criticize, but “the criteria must be consistent, and progress can only be meaningful based on the facts” (as an investor, if you can’t even do this, then your investment prospects are in jeopardy). Don’t be reduced to justice and guilty. Should we close the door to criticize mainland China, and mainland China will stop progressing because of this, and Taiwan will automatically progress itself? After the criticism is vented, what then? Have we reviewed ourselves?

What proud achievements has Taiwan cultivated in the past two decades that are worthy of being shown to the world? The problem lies in our own self-reflection ability. Have we made progress on our own? As long as things in China are substandard, Taiwanese have been instilled with a sense of self-superiority over mainland China since childhood. Except for TSMC (Don’t forget that many key technologies of TSMC were pinched by the Americans), which was established during the martial law more than 30 years ago, what other competitive companies and national strength can we now come up with? (Please think about it. Taiwan is not a small country in terms of population and GDP. We are ranked about 20; we have to compare with other countries of the same level. Just think about Israel. Please refer to my other blog post “Israel Stock Market and Technology Listing Giant” and “South Korea’s emerging technology giants“) Taiwan’s original advantage is in this atmosphere, and it has been lost bit by bit over the years. Look at others, think about ourselves. The terrible thing is the environment that does not allow the truth to be told, but one day there will be a child who will expose the king’s new clothes.

Just for the topic discussed in this article, is the TikTok that scares Facebook a substandard product? China has all gone back to the moon to mine soil, and now it is going to Mars. Taiwan does not even have the ability to launch our own satellites. Moreover, most people sit in the well and watch the sky. We have a narrow vision. We always think that we are the best in the world from every aspect. We feel good about themselves, prejudice and hypocrisy are rampant in our society. The self-cherishing mentality has been deeply rooted in the hearts of every Taiwanese, not to mention that Line is not a work developed by Taiwanese. And Taiwan can’t even write such kind of social network software that is not very difficult, which shows that Taiwan is more closed. Every day, the whole people hold the PTT from “the era of ancient dinosaurs” and tout Dcard – these things are 20 years away from the world, even 30 years ago. (PTT is the product of BBS in the dial-up era before the internet appeared. Tencent’s Pony Ma has also gotten similar things, but they have evolved with the times, all the way to QQ, to the WeChat that has caused American peers to imitate, not to mention PTT is supported by you and me the taxpayers, and it has functions for more than 30 years without nothing changed; but Tencent is a private company, and it has to face the pressure of survival every day. Which one is more successful, please judge by yourself) and enjoy it. The software capabilities are so backward that almost all major countries in the world have their own social network software developed. Some people will argue that the success of social networks does not depend on technology. I agree, but the problem is that we can’t even talk about the first step. Where is the market, design, function, strategy, and even higher algorithms? , Optimization and other topics. Interested readers can refer to another blog article I wrote “The Failed Taiwan Software Industry Policy“.

Except for Taiwan, Thailand, and Japan, Line is not well-known in the world of social networks. Even South Korea, where Line was originally developed, is used by almost no one. South Korea uses Kakao throughout the country. Even Telegram is much more famous than Line around the world. Facebook crashed a few weeks ago, and Telegram added 70 million users overnight. Have you heard that Line has benefited from this and increased many users?

What about TikTok business performance?

In the year of 2020, ByteDnace delivered:

  • Revenue RMB 236.6 billion +111% Y/Y
    • ads 175B
    • Live Streaming RMB 45-50 billion
    • Game RMB 4-5 billion
    • Education RMB 2-3 billion
    • eCommerce RMB 6 billion (GMV RMB 200 billion)
  • TikTok contributed 2/3 of company ads revenue
  • Operating Income 7 billion
  • Net loss RMB 14.7 billion

How valuable is TikTok?

TikTok is almost synonymous with the parent company ByteDance. Mothers are expensive for their children. It is not an exaggeration to say that the corporate value of ByteDance comes from TikTok. ByteDance’s current business is complex, coupled with mainland China’s ongoing antitrust investigations and fines against Alibaba (ticker: BABA), Tencent (ticker: TCEHY), and Meituan (ticker: MPNGF). ByteDance is already China’s top few technology giants in various businesses such as live video broadcasting, advertising, e-commerce, education, and games.

According to the latest round of fundraising in July 2021, its current valuation can rank top 3 among all unlisted unicorns in the world. Founder Zhang Yiming has become the richest man on the Internet in China, with a net worth of US$59.4 billion, surpassing Tencent’s Ma Huateng.

Who are its main investors? The list includes well-known investment institutions (who would refuse a money-making machine?):

  • Vision Fund (Softbank)
  • Sequoia Capital
  • Benchmark Capital
  • KKR
  • Tiger Global Management
  • SIG
  • DST
  • General Atlantic
  • Primavera Capital
  • YFF Venture (Alibaba)
  • Sina Weibo
  • SIG Asia Investments (an investing arm of China’s government)
  • Susquehanna

When will it go public?

TikTok’s parent company ByteDance and early investors certainly hope to be listed as soon as possible to meet the expectations of market. However, the listing plan was previously affected by various unfavorable factors from the U.S. government, and now because of the continuous monopoly investigation and supervision of the internet, technology, and fintech in China, it is unlikely that it will be listed in the short term (since this year, about 250 Chinese companies automatically cancel or withdraw their listing applications).

But once it went public, it was an absolute sensation. You can understand what I mean by looking at the list of early investors listed above.

TikTok makes me admire

Before, American liked to say that Chinese technology companies copied their idea, which was true at the beginning; but then it was not the case. Amazon (ticker: AMZN), Facebook (ticker: META), Alphabet (ticker: GOOGL and GOOG), Apple (ticker: AAPL), will all follow the Chinese counterparts. This is already an open industry secret, not news. These companies do not deny it, especially Facebook as its representative. You can refer to my other blog post “Why Facebook become a copycat empire?”.

But TikTok is the first product people truly agrees, developed from scratch, a product that is entirely derived from Chinese elements, and can sweep the world (Due to anti-China , it’s hard for Taiwanese to know how poluar TikTok is around the world ) and break through the American monopoly on software.

Finally, why all social networks can’t beat Douyin? Why has it become the common enemy of all people? Because it has created a new social model, social networks are no longer text — based or just for communication in your and my impressions-this is where it succeeds.

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