TikTok: meet the latest $100 billion unicorn bent on world domination

TikTok was already the world’s “stickiest” social platform for teenagers before the pandemic but the lockdown has taken the video-sharing craze to another level of contagion.

The app has now been installed by more than two billion youngsters around the world, with a record-breaking 500 million of them signing up in the first four months of this year to April alone.

With time on their hands and locked at home, it’s hardly a wonder that teenagers and twenty somethings turned to the app to have a laugh. And even find fame. The app has everything a cooped up teenager could want from popular culture: to sing, dance and generally lark around. Among the twentysomethings, using TikTok has become an unlikely instrument for political parody and even campaigning.

It has become the place for budding singers, dancers and lip-synchers  to become overnight sensations outside the traditional music and film industry. One young British singer did a cover song a few months ago, and was signed by a record company within days. No surprise then, that TikTok has become the No. 1 free non-gaming iOS app in the US for the first time.

TikTok’s power is extraordinary. In the US, the most popular star is Loren Gray, who has a cool 38.1 million followers since using the app. Here in the UK, an unknown young Meggie Foster has become an instant lockdown star with her lip-synching video-vignette parodying politicians from Boris Johnson to Nigel Farage. Foster’s 57-second lip-synching clip of Priti Patel fumbling over the number of coronavirus tests at the April press conference is a must watch, as 1.5 million people have discovered.

Across the Atlantic, a comedian, Sarah Cooper, has entertained millions with her video “How To Medical” taking the mickey out of President Trump. Users of the app have even been blamed for block-booking seats at the President’s recent Tulsa rally so that Trump’s regulars could not find seats. It’s apparently not true but too good a story not to tell.

Yet there is a dark side to the TikTok story. One Indian social media star, a 17-year-old dancer Siya Kakkar, is believed to have committed suicide in New Delhi earlier this week after receiving threats. Kakkar’s apparent suicide came only hours after sharing a TikTok video of herself dancing and singing on the rooftop of her home, one of more than 700 videos she has shared over the last few years with her one million followers.  TikTok’s bosses in the US have yet to make any comment about Kakkar’s death, and whether the sudden fame brings so many youngsters too close to the flame without the necessary support.

Even before the recent lockdown surge in users, TikTok was on the move. In January, the company switched its Los Angeles headquarters to a shiny new space at the heart of the original movie-making land in Culver City, California. Its new 120,000 square foot office takes up five floors – connected by a fluorescent pink staircase – and is covered with huge and colourful murals. Vanessa Pappas, the US general manager, told Varsity the space was designed to “to embody TikTok’s fun and joyful personality”.

But the move was designed for more than fun. Being based in Culver City, on the westside of LA, gives TikTo easy reach to the techies at Silicon Beach and the streaming content whizz kids at Hayden whose expertise are central to TikTok’s ambitions in the entertainment industry

As well as new offices, TikTok has just found itself a new boss in Kevin Mayer, the former head of streaming at Disney, who started this month. He’s quite a catch. The 58-year-old Mayer is credited with closing the deals to buy Marvel, Pixar, Lucasfilm and 21st Century Fox as well as launching the new streaming service, Disney Plus, which already has 54 million subscribers since launching last November. One of his friends says: “He’s a closer, he’s a benevolent killer.” Yet Mayer’s killer instincts didn’t get him the top Disney job when Bob Iger recently stepped down.

Now he may have found himself an even bigger role, perhaps even more challenging, than Disney.  Mayer, whose nickname is Buzz Lightyear because according to a colleague he has “the self-confidence, swagger and jawline of the Toy Story character”, is also becoming chief operating officer of ByteDance, the Chinese internet giant that owns TikTok. He will need all his swagger.

On top of the latest tragedy, TikTok has been under fire in the US over charges that it worked with the Chinese government to censor and surveil content about the treatment of the Uighurs and other issues considered controversial by the Chinese authorities. So hiring Mayer is a smart move by Bytedance, the Bejing-based parent of TikTok, which was started eight years ago by the young software engineer, Zhang Yiming, and still chief executive of the group.

Today, Yiming’s ByteDance is one of the world’s biggest private companies valued by Wall Street analysts recently at between $90 billion and $100 billion: making it the world’s priciest unicorn. Disney is currently worth $200 billion, and the entertainer has  been 103 years in the making.

Some of the world’s blue-chip VCs and investors have already snapped up stakes: KKR, Softbank, Sequoia Capital, General Atlantic, Hillhouse Capital  and Tiger Global Management are investors, according to ByteDance’s company listing. In 2018, ByteDance was valued at $75 billion, following a $3 billion investment from SoftBank’s legendary Masayoshi Son.

The latest $90 billion price tag is based on what Tiger paid for its secondary market investment but some estimates say ByteDance could be worth up to $180bn.

Rumours about floating ByteDance either in New York or Hong Kong or both have been strenuously denied by Yiming despite repeated speculation. The volatile state of the financial markets post-pandemic are hardly conducive for an IPO.

Some say it may be that Yiming does not want to risk a public offer because of the tense relations between US and China over trade and Trump’s attitude to China’s new security laws and crackdown in Hong Kong.  It could also be that ByteDance, which has certain strategic partnerships with some of China’s state-companies, does not want those brought into the open or risk more conflict over censorship.

But does it make money? Who knows, in terms of TikTok. But what we do know is that ByteDance, which has several companies registered around the world from the Cayman Islands to the UK and Singapore, makes money. It does not publish its financial accounts but recent estimates by Forbes suggest that revenues in 2019 were more than double the previous year at $17 billion. Profit for the first half of 2019 is forecast at $3bn, and it is understood to have $6 billion tucked away in cash.

ByteDance’s growth is astonishing. As well as global brands such as TikTok, it has many regional brands such as Lark in Japan and Singapore and Helo in India. Its products are available in over 150 markets and there are offices in 126 cities as well as the new one in LA. They include Palo Alto, New York, Beijing, Shanghai, London, Paris, Berlin, Dubai, Mumbai, Singapore, Jakarta, Seoul, and Tokyo. ByteDance has more than 60,000 employees and has 15 research and development centres around the globe. Not bad for eight years work.

So how did a young Chinese engineer seemingly emerge out of nowhere come to own one of the world’s most valuable social media companies and be named last year by Time Magazine as one of the planet’s 100 most influential people?

Yiming studied software engineering and AI at Nankai University and started several ventures prior to ByteDance. He first launched Kuxun, which became the biggest travel search engine in China which was bought by TripAdvisor and real estate search portal 99fang.

Then in 2012 Yiming set up ByteDance, launching a news aggregator platform called, Toutiao, which translates as “headlines.” It was a news recommendation engine which evolved into a platform with all sorts of content from texts to images and question and answer posts and microblogs. Behind the headlines, Zhang wanted to create a news platform whose results would be powered by artificial intelligence and quite distinct from China’s search engine, Baidu. He’s been expanding ever since, using ByteDance as the umbrella for many social apps from FlipChat to video-messaging app, Duoshan.

TikTok’s origins are slightly more complicated. It began life in 2016 when ByteDance launched a short-video app in China called Douyin which was a roaring success. Before long, Douyin had a million users and one billion video views a day.

In 2017, Yiming took Douyin into international markets but brilliantly changed the name to TikTok. It was soon the top-selling app in Thailand, Japan and across Asia.

At the same time that TikTok was ticktocking across the globe, another short-video app was taking off in the US. The focus of this start-up called musical.ly was 15-second lip-synching music videos. Started by Alex Zhu and Louis Yang in 2014, the original idea had been to create short-form educational videos. The app made the No 1 spot in the Apple Store in 2015 and has stayed in the charts ever since.

ByteDance saw it’s way into the US market big time. Within months, TikTok had gobbled up musical.ly up for $1 billion, and merged the two together on the same platform. It has never looked back.

And it is growing like topsy. There are now four billion native mobile phone owners in the world, with the fastest growing market among the early teens – the 12 to 14 year olds who are TikTok’s prime market and ripe for the pop culture which the app creates. For now, most of the app installations are still coming from the growth markets of India and China. SensorTower reports there are 611 million total downloads in India with China second with 196.6 million downloads. The US is third, with 165 million total downloads but growing fast.

TikTok makes revenue from advertising. The latest figures from Sensor suggest lifetime user spending in TikTok has risen to $456.7 million, more than double the amount it had reached with 1.5 billion downloads.  Chinese user spending was the largest slice of the revenue, $331 million, the US was second at $86.5 million and the UK at $9 million. The bigger the reach, the bigger the bucks.

Where ByteDance pirouettes next is unclear, but expect it to be more of the same and horizontal. Tech expert, Benedict Evans, points out how Chinese social media companies take a bolder, quite different approach to their Western rivals, building their companies out wide with many strands and businesses within a group. Think of the big Chinese internet giants such as Tencent, JD.com, Alibaba and others. By contrast, Facebook and Google are of the narrower, vertical variety, for now anyway.

ByteDance’s Yiming has so far kept a low-profile, both personally and professionally. Hiring Buzz Lightyear from Disney suggests his ambitions are to be on a bigger stage. How far can Tik Tok go? As the Toy Story character Buzz Lightyear, Kevin Mayer’s model, famously put it: “To Infinity and Beyond.”