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> $75B value and it still faces the most basic question. Makes me feel I don't understand business at all. Business journalism really does a disservice when it
by spanktheuser 8y ago
> $75B value and it still faces the most basic question. Makes me feel I don't understand business at all.
Business journalism really does a disservice when it pushes the "they have no revenue model" angle for these massively scaling traffic aggregators. It was a bit interesting when this was written of Yahoo, I guess, since we didn't have proof yet that online advertising was a viable business model.
In any case, the playbook is very well understood. Build a loyal audience numbering minimally in the hundreds of millions (Small audience pubs only achieve success with subscription-based models. Mid-sized audience aggregators may not have a viable business model at all). Demonstrate that the cost of building said audience is either free or pennies per user (e.g. unpaid viral audience growth). Make several dollars to tens of dollars per user per year by running advertisements to said audience. The more relevant or (lately) emotionally compelling the advertisements the more you'll earn per year per user.
Of those components, building an enormous audience is the hardest part, which is why every company that has followed this model, from google to snapchat, has focused on that long before building a corresponding revenue stream.
We've seen this model a dozen times and it's understood well enough that financiers are able to approximate the value of Bytedance future revenue streams rather confidently.
- bb2018 8y agoThe number is still a bit confusing for an outsider though, no? Twitter is worth 20B. Facebook is worth just five times this and also has Instagram and Whatsapp. Is this worth as much as Instagram which has a huge and wealthy audience?
- JauntTrooper 8y agoFacebook is worth $475 billion, 22x as much as Twitter.
- trhway 8y agoFB has 1.5B DAU, Twitter - ~150M DAU. Bytedance has ~200M DAU, and about the same revenue as Twitter. So, Bytedance DAU is valued as an FB DAU - probably reflects expectations that it can get to the FB level (ie. 3x) of per-user revenue extraction and not ends up like Twitter/Snap.
- htormey 8y agoWhere are the bulk of their users based? I assume China right? Surely the ARPU in China is way less than the USA where FB/Snap/goog/twtr own most of the market.
- oh-kumudo 8y agoTik Tok is mainly videos though, that is huge difference in the price of ads. And due to various reasons, some from censorship, some from the medium itself and how the company chooses to operates on it, Tik Tok is mainly free of political contents, which makes it less toxic. Also Tik Tok breaks out in other major Asian market as well, like Japan/S Korea/Taiwan, etc. Those markets are very lucrative. South Korea[No.4]: https://www.similarweb.com/apps/top/google/store-rank/kr/all/top-free https://www.similarweb.com/apps/top/google/store-rank/kr/all... Japan[No.8]: https://www.similarweb.com/apps/top/apple/store-rank/jp/all/top-free/iphone https://www.similarweb.com/apps/top/apple/store-rank/jp/all/... Taiwan[No.2]: https://www.similarweb.com/apps/top/google/store-rank/tw/all/top-free https://www.similarweb.com/apps/top/google/store-rank/tw/all... In fact, if you count China, it is most downloaded iOS apps in the WORLD, for the first quarter of 2018: https://qz.com/1272285/bytedances-music-video-app-douyin-tik-tok-is-the-most-downloaded-iphone-app-in-2018s-first-quarter/ https://qz.com/1272285/bytedances-music-video-app-douyin-tik... And Bytedance has other mega apps other than Tik Tok, like Toutiao, which is its own money maker.
- lightyoruichi 8y agoSEA and the rest of APAC has huge amount of users as well. This is the deck I got from their recruitment team https://drive.google.com/file/d/0B0DEYVDObCi_M3dxcU1XRnVpX09Kckw3RTRfZWFzS1kyajFR/view?usp=sharing https://drive.google.com/file/d/0B0DEYVDObCi_M3dxcU1XRnVpX09...
- eloff 8y agoYou're implying that Instagram users are wealthier than twitter users? That's 1) only tangentially relevant to ad income. 2) unsupported. 3) probably wrong