When you think the most valuable startups in the world many would go
straight to Elon Musk's space exploration program, the electronic cigarettes market,
Adam Neumann's co-working transformation, or perhaps the
companies changing the holiday game. Most people think of Silicon Valley when they
think of the most valuable startups, but few people actually know that China now
sits on top of the list. ByteDance, an app development company with a valuation
thought to be around 78 billion dollars puts it as one of, if not
the most valuable startup in the world. And yet because it's headquartered in
Beijing and not Silicon Valley, few people pay attention to the firm.
But how did this Chinese tech giant become one of the most valuable startups in the world
beating the Silicon Valley juggernauts to the title?
Here's How It Happened.
ByteDance, founded in 2012 by Zhang Yiming, is a Chinese tech company
specializing in app development. To the Western world, it has gained success with
its app TikTok which was created from the original Chinese version of the app
Douyin, merged with musical.ly. But ByteDance has had a number of
successful apps with Xigua, their knockoff version of HQ trivia,
Vigo Video, a short video communication app, and Helo. an Indian social media app but
perhaps its most well-known app is called Toutiao or 'Headlines' in English
which is a news recommendation engine that shares content with its users that
most closely matches their preferences. ByteDance has been well backed by
investment firms such as SoftBank and Sequoia Capital and for good reason.
But how did the unicorn startup become so successful?
ByteDance were successful as they targeted mobile users, specifically young people,
who were more likely to watch content on their smartphones.
They also succeeded where other companies have failed
by reaching the US audience thanks to TikTok,
which now has around 800 million users worldwide and by
offering the short video platform that had already been proven to be popular
thanks to Vine, ByteDance created a recipe for success. That being said,
there are a number of controversies and rivalries that meant it wasn't all plain sailing for the firm.
Whilst ByteDance is proud of the fact that it has not
been supported by other Chinese giants, such as Tencent and Alibaba, it has been challenged.
Tencent, the most valuable Asian company with a large focus on technology and gaming,
has decided to compete heavily with ByteDance and the founders
especially have been verbally fighting each other, filing lawsuits.
This led to ByteDance accusing Tencent of blocking TikTok videos
on its popular Chinese chat platform, WeChat with Tencent then suing
ByteDance for defamation. And the duel goes on.
The firm have also suffered thanks to the power of the Chinese state.
After their app, Neihan Duanzi was shut
down as it hosted vulgar and improper content, encouraging resentment.
Zhang then publicly apologized for publishing a product that collided with core
socialist values which shows how difficult it is to operate an Internet
media firm in China. The firm was also advised to start cleaning up its other programs.
But what does the future of the company hold? With its current valuation
ByteDance has little other choice but to IPO in the future, to either raise
capital or return it to early investors. SoftBank's involvement may also mean
that it is overvalued thanks to their reputation in the market.
There is also likely to be increased scrutiny from the USA over data tracking,
what is sent back to China, and whether or not the videos are being censored in America.
But with ByteDance continuing to seek growth
and a steep upward trajectory, including potential smartphones and
music streaming services in the works, it shouldn't be long before they can turn a
profit on their numerous apps, especially as they're the first Chinese firm to
really compete with similar US media applications, as Westerners jump
at the chance to download and consume short videos.
And that's How It Happened.
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