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I really can't fathom how this is possible. The largely young demographic (which I'm guessing warrants this valuation) has a track record of jumping from platfo
by sjroot 6y ago
I really can't fathom how this is possible. The largely young demographic (which I'm guessing warrants this valuation) has a track record of jumping from platform to platform, whichever is trendy for a given year.
With that in mind, how are investors seriously willing to get behind this company in such a big way?
- goodside 6y agoThe tendency of young people to jump from platform to platform is partially an illusion caused by the fact they don’t remain young. You see this especially in dating sites — people used to think OkCupid could never make money because it was dominated by 18-to-25-year-olds. Now it’s mostly people in their 30’s, and the prior king of 30-somethings, Match.com, is for people over 40. The same thing happened with Tinder, PlentyOfFish, etc. TikTok isn’t a dating site, but it’s certainly “flirty”. It has specific appeal to socially active teenagers and nearly all of the content shows off suitability for dating: looks, dancing, fashion, wit, etc. I could imagine adding paywalls to men contacting desirable women, or of course just padding the feeds of less valuable users with ads.
- echelon 6y ago> padding the feeds of less valuable users with ads This is horrifying when you consider this happens in every avenue of life and will only become better targeted as technology progresses.
- goodside 6y agoIt’s less horrifying if you think of it as a treadmill — MySpace is sort of the logical extreme, where the owners realized its days were numbered and made the experience so ad-heavy that everyone left for other platforms. You sow growth for some number of years, then you reap. Sometimes it’s subscriptions, sometimes it’s sponsored full-page branding.
- echelon 6y agoSorry, I wasn't making the claim about a product. People that are more socially valuable are given a better experience and are treated better; kind of the social media "red carpet" treatment. Those that are less valuable are mined and exploited. I can imagine an insidious future where social networks assign an "intelligence score" to users and advertise snake oil to those with less capacity to evaluate risks. There might even be a market for those users. A number of companies in the mobile gaming space profit from exploiting "whales". Imagine buying and selling them as targets. Similarly, networks might evolve to give positive experiences to users that create content. We already have that in the form of monetization and karma. The economy rewards value creators. But imagine being algorithmically put in place. That gives me the creeps.
- walterbell 6y agoWhat makes you think this hasn't already happened? Advertising can both create and meet demand. A large portion of social media advertising came from mobile gaming companies, relying on the targeted profiles available on social platform, to find people who could be converted into whales.
- duxup 6y agoI'm largely with you, although maybe they're thinking of YouTube in the scene that it has stuck around for a while.
- yRetsyM 6y agoWasn't the same said about Facebook?
- Barrin92 6y ago> has a track record of jumping from platform to platform do they really though? It honestly seems like particular brands are very sticky with internet demographics, not just young people. IIRC there even is more brand loyalty among ecommerce than there is among physical brick and mortar stores. You can look at something like Whatsapp as well. There have been lots of privacy concerns after the acquisition by Facebook but the number of people who actually switch to say, Signal is very low. There are huge network effects to these social media / communications platforms, and TikTok already has 1.5 billion users worldwide.
- TheAdamAndChe 6y agoIn my experience, the claim that the younger generation hops around is fair. I'm 26. Between the ages of 15 and now, my primary social media platform has hopped between Myspace, Facebook, Reddit, 4chan, YouTube, some diary site, PSN(PlayStation Network), Hacker News, and probably others. I've dipped my toes into countless other ones. I've kind of stopped hopping around as much, but other people my age still hop between newer ones like Instagram, tiktok, and others.
- Izkata 6y ago> some diary site LiveJournal?
- TheAdamAndChe 6y agoNah, some other one. I know what it is, but I don't want it to leak in case someone associates this account with my real identity.
- redis_mlc 6y ago> I've kind of stopped hopping around as much So at 26, you're getting old? :)
- searchableguy 6y agoThat isn't true. Outside of teens in tech or nerdy places, most won't switch to the next hyped thing. I have been trying to get people on session and pleroma but most of them don't care.
- dclusin 6y agoFacebook was able to leverage their popularity with college students into a larger platform that had mass appeal with all age groups. I don't see why TikTok can't add features and get the same results.
- jariel 6y agoFacebook has network effect, TikTock doesn't really. Facebook is really centered around 'everyone you might know' including friends and family, whereas I doubt parents and grandparents will ever go onto TikTok. Most importantly, TikTok is not basic communications tool, it's a specialized communications tool honed on a timely and probably faddish trend. Facebook may or may may not survive, but TikTok will have to transform to make it for the long haul.
- lgl 6y agoWill most likely branch out into all the other usual markets, TikTok chat, TikTok meetings, TikTok Ads, TikTok shops, TikTok news, TikTok Pay, etc. Basically another slightly different version of the same stuff we're all used to with these kinds of social platforms. Still.. >100Bn is simultaneously ridiculous, funny and sad imho. EDIT: valuation makes a bit more sense for the parent company seeing as it has a lot of other brands that are huge in China and India
- jariel 6y agoNone of those things are a given, moreover, you could say the same about almost any digital company. "$176.9 million in revenue in 2019" - Forbes, Jan 16. This is another SoftBank fake unicorn. This time, they can hide behind the smoke and mirrors of the HK Stock Exchange and non-existent Chinese standard accounting principles.
- snazz 6y agoInstagram doesn't have the same network effect as Facebook. Snapchat does have Quick Add, which shows people you might know; it's also a much more communication-driven platform. TikTok is probably the modern Instagram replacement, not the modern Facebook replacement.
- inimino 6y agoTikTok is fun. If you're not on it, it's hard to understand.
- kenhwang 6y agoSnapchat is fun. If you're not on it, it's hard to understand.
- deleted 6y ago[deleted]
- skookum-skuad 6y agoX is fun for the next 4 days. If you're not on it, you're uncool and don't jump on whatever is popular because it's popular. X = Email# IRC# ICQ AIM Yahoo Messenger Friendster MSN Messenger MySpace Flickr Orkut Google Talk Skype Google Wave Facebook Youtube# Twitter# Vimeo# G+ WhatsApp Periscope Vine Instagram Snapchat TikTok Zoom # Only exceptions, so far
- knolax 6y agoI wouldn't list IRC as an exception. Every IRC channel I've ever tried using has been dead.
- wolco 6y agoPeriscope was never fun
- leonidasv 6y agoTumblr, Discord, Slack, Ello, Telegram, Badoo, FormSpring, iTunes Ping, FriendFeed, Diaspora, Bebo, Path, Meerkat, VK, Google Buzz, CryptoKitties... The list goes on and on.
- inimino 6y agoI am on it. As a platform, it doesn't hold a candle to TikTok.
- 6y ago
- knackfuss 6y agoThis was my first reaction also but making a quick google search it seems that TikTok has 500 million users. That's a lot. Doing a pretty simple calculation of a dollar per user per day, you arrive quickly at 180 billion dollars of advertising monetization a year. It is really just another scale. But yeah, maybe i am way off and the valuation is still absurd.
- mynegation 6y agoWhere did you get that “simple calculation” from? If Average user is worth to TikTok a dollar per day that means that ad buyers are willing to give it to TikTok from their advertising and marketing budget. Which means that the average user should spend at least few grands each year on advertised products and services, which does not seem likely. Also, this is not how valuations are estimated. 180 billion _per year_ is a huge amount (for comparison Apple revenue for 2019 is 260B). One applies a revenue multiple that depends on the stage of the company and industry but for early booming social media site is in the range of 20-40. So the estimate of 105-110 probably comes from the range of 3-5 B yearly revenue estimate
- bllguo 6y agolet's not quibble over semantics of "simple" anyway the valuation clearly must include investor perception of their growth trajectory.
- dsmithn 6y agoI think the more appropriate wording would be "completely pulled out of thin air and not relevant calculation"
- wolco 6y agoAn averge tiktok user doesn't make a dollar a day not sure they have the most valuable userbase.
- knackfuss 6y agoYes, that's correct. A dollar per day is huge, and that would bring the valuation close to a revenue multiple of one, which is madness by market standards. If you would make it 10 cents per day, which seems more reasonable according to people more informed than me, that would become simply a multiple of 10, which is still low, as you pointed it out. We can keep changing the variables, divide it by 2 even, but the point i tried to make is that it seems not that crazy of a valuation after all if you consider 500mi users as an average
- nelaboras 6y agoi see four scenarios: 1. insanity 2. lies about numbers 3. massive invasive data siphoning and thats actually the basis for the valuation 4. tiktok now has a license to vast raw video and personal data that users granted them the right to use and resell in perpetuity. They obviously don't just keep edited but also raw data, videos never published, maybe even entire camera rolls. So much data held by a company sheltered behind the Chinese state's protection from legal repercussions. or of course all of the above.
- georgespencer 6y agoScenario 5: you didn't read beyond the misleading headline to see that it's ByteDance, who own TikTok, and who did $20bn of revenue in 2019 (implying a 5x multiple on valuation).
- FanaHOVA 6y agoByteDance isn't just TikTok, which is what the headline doesn't include. They also own Toutiao (Chinese news/content platform, top 100 website in China), Helo (Indian social media, the Google Play app alone has 2.2M reviews), Lark (https://www.larksuite.com/ https://www.larksuite.com/, an enterprise collaboration platform aimed at the Japanese market).
- georgespencer 6y agoByteDance did $20bn of revenue in 2019. The comments in this thread are… wow. Lots of opinions from my favourite HN cameo character, "Person With Vitally Important Opinions About Complex Topic But No Time To Read Beyond The Headline."
- thedudeabides5 6y agoTrue, but I'm sure that Bloomberg's paywall isn't helping on that front.
- artsyca 6y agoThe paywall issue is listed in the FAQ - as long as there's a workaround it's acceptable
- chvid 6y agoGiven that Facebook has a market cap of 650 B the valuation sounds reasonable ... maybe even cheap.
- deleted 6y ago[deleted]
- tedk-42 6y agoNice! My usual trick for estimating a companies value is to multiply it's revenue by 10. I highly doubt it's operating hosts are eating into the revenue that much so I'd say they're highly undervalued.
- vander 6y agoThe valuation is for TikTok's parent company ByteDance which has a large number of products and investments including a really popular news aggregation app in China. Also, TikTok in China, which is its largest market, is popular with everyone, young and old. It got to the point of threatening WeChat. CEOs of Tencent and ByteDance had a huge spat a while back.
- mattlondon 6y agoYeah I wonder about this too. This time last year (or was it the year before that?) it was Snapchat (remember Snapchat? Kids don't) that was going to take over the world and be bigger than Apple + Facebook + Google combined etc etc. I don't think that worked out really. I am guessing that investors just pile in wherever the "youth" are without paying too much attention to what it really is they are investing in... just hoping to get in early on the next big thing I suppose
- nopriorarrests 6y ago>remember Snapchat? Kids don't And yet, SNAP stock is up YoY.
- identity0 6y agoSnapchat is still massive and influential. My snapchat username is still probably the first thing people my age will ask me for. Yes of course it’s not as influential as facebook or google, since it only has one product, but don’t act like youth no longer use snapchat. Source: I’m youth
- hkyeti 6y agoIt's mostly a US centric thing though
- technion 6y agoIronically I just took a look at Snap and out of five consecutive advertisements, four were for Tiktok.
- mastermojo 6y agoIn my opinion Tiktok is a viable replacement for Instagram, a platform that generates on the order of 10B USD revenue a year. They both have pub/sub models where you can follow topics or celebrities or content creators you care about. Instagram is more photo focused and Tiktok is more video focused. The video first format is arguably higher fidelity/more compelling for content consumers. Yes, people jump from platform to platform. Instagram will not be king forever, but it will be generating massive amounts of money both on the upswing and the downswing.
- sixQuarks 6y agoTiktok is also MORE popular than instagram worldwide
- searchableguy 6y agoI have been watching white people hired by chinese marketing firms on tiktok. It's hilarious. https://youtu.be/xZ3RbDTc_fY https://youtu.be/xZ3RbDTc_fY https://youtu.be/Mrx4ld3hmmw https://youtu.be/Mrx4ld3hmmw https://youtu.be/VC-6zkDewBQ https://youtu.be/VC-6zkDewBQ
- overcast 6y agohttps://youtu.be/xZ3RbDTc_fY?t=200 https://youtu.be/xZ3RbDTc_fY?t=200 "This isn't even my real hair color!" You don't say. Holy hell, this is scary.
- intro-b 6y agoI think Twitch could be a valid comparison to TikTok. Both are content-focused platforms that draw in audiences from a variety of somewhat non-overlapping demographics, but exist in the same space. They've already branched out into livestreaming, and I think a logical next step would be leaning even heavier into Twitch-style community building features while simultaneously promoting the app's base of viral social media video content.
- pwdisswordfish2 6y agoNothing else to get behind.