21 Jun 2020

How TikTok’s Owner Engineered A Virality & Personalization Engine To Become The Most Valuable Unicorn In The World

How TikTok’s Owner Engineered A Virality & Personalization Engine To Become The Most Valuable Unicorn In The World
ByteDance, the China-based unicorn behind the video-sharing app TikTok, was recently valued at up to $140B. Now, the company is leveraging its recommendation algorithms to expand its portfolio in a bid to join the ranks of Big Tech.

At the end of 2018, Chinese tech startup ByteDance completed a $3B investment round led by SoftBank at a valuation of about $75B — catapulting it to be the most valuable startup in the world. In 2020, investments made in the company reportedly valued it at up to $140B, cementing its high-flying status.

Those who are unfamiliar with the name ByteDance have most likely heard of its flagship product, TikTok. As of May 2020, the viral video app has been downloaded approximately 2B times.

The onset of the global coronavirus pandemic and the associated lockdowns have further accelerated TikTok’s trajectory. In Q1’20 alone, TikTok accumulated 315M new downloads worldwide — a record-breaking quarter for an individual app, according to Sensor Tower.

As of spring 2020, ByteDance operates more than 20 apps in spaces ranging from news and video to music and mobile gaming. Some, like TikTok, are international in scope. Others, like the news aggregator product Toutiao, have so far only been made available in China.

With each new product it launches, ByteDance leverages the same 3 key advantages it has cultivated in its core business areas like news curation and short-form video:

  • A young and highly engaged user base. Like Facebook before it, ByteDance is leveraging an audience of actively engaged young people to facilitate its growth. In the US, 60% of TikTok users reportedly fall between the ages of 16 and 24. Worldwide, two-thirds are under the age of 30.
  • Products engineered for virality. With TikTok, ByteDance appears to have tapped into something powerful in the way that users currently want to engage with content. The top 50 content creators on TikTok have more followers than the populations of Mexico, Canada, the UK, and Australia combined.
  • Personalization and recommendation algorithms. One way to think of ByteDance is not so much as a creator of content platforms, but as an artificial intelligence laboratory that specializes in developing algorithms that can match users with content, from video and music to news and e-commerce.

ByteDance is jockeying for a spot alongside global tech leaders like Google, Facebook, Amazon, as well as their China-based counterparts Baidu, Tencent, and Alibaba. But a permanent place in Big Tech is far from guaranteed.

Concerns about ByteDance’s approach to user privacy are mounting and established tech companies and startups alike are singling ByteDance out as a threat, launching products to compete with it directly.

ByteDance will have to prove its viral products are more than a craze.

In this report, we look at ByteDance’s expanding product portfolio, highlighting how its core advantages play out in each product. We’ll also examine how the company is expanding its geographic reach, focusing on its expansion in 3 critical markets: China, India, and the US.

Source: CBinsights

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