
TikTok has recently traded at valuations of $105-110B on private markets - LogicRiver
https://www.bloomberg.com/news/articles/2020-05-20/tiktok-owner-s-value-surpasses-100-billion-in-private-markets
======
sjroot
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?

~~~
knackfuss
This 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
Where 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
let's not quibble over semantics of "simple"

anyway the valuation clearly must include investor perception of their growth
trajectory.

~~~
dsmithn
I think the more appropriate wording would be "completely pulled out of thin
air and not relevant calculation"

------
enitihas
What happens if Chinese big tech starts dominating the world? Since the US no
longer dominates manufacturing, if the US starts losing in services too, what
advantage will the US ever have on China?

~~~
michaelyoshika
Soon Tiktok will be banned in the US by an act proposed by FB lobbyists.

Smart for them to hire an American CEO, though. But I still believe FB has
more lobbyists.

Another possible outcome is they will be forced to sell TikTok to some holding
companies in the US.

~~~
majormajor
What's the worst that can happen?

China banning US services seems to have worked out just fine for their tech
industry, so maybe _more_ countries should do that, not fewer.

~~~
dntbnmpls
I've been saying this myself for a while now. Take the EU for example. Why
doesn't the EU have a silicon valley rivaling our silicon valley? They have a
larger population and a larger economy. Not only can they afford to invest in
their silicon valley, they have a market to sustain it. Where is their
facebook, google, apple, youtube, etc? Even more baffling is india. The US has
a lot of indian tech workers. Why doesn't india bring some home and build
their own tech giants. Instead their major "tech" companies are outsourcing
companies which essentially "sells" indian workers all over the world. Why not
use those workers to build indian tech companies? Why isn't there an indian
whatsapp? Why did india hand that market over to facebook? None of this makes
any sense.

If they don't want to follow the "chinese model" because of any perceived
stigma attached to it, then follow our model. The US became an economic
powerhouse due to protectionism. Every major economy in the world developed
under protectionism.

[https://en.wikipedia.org/wiki/Protectionism_in_the_United_St...](https://en.wikipedia.org/wiki/Protectionism_in_the_United_States)

I used to think it was because politicians are old and think tech is magic,
but I'm just starting to believe most of them are outright lazy and
incompetent.

~~~
ponyous
Europe is fragmented not only by language but by law, culture and other things
as well... It's not trivial to be available to all europe at once
(Spotify/Netflix for example are not available in several eastern european
countries)

------
mrdrozdov
As others have mentioned, this hacker news headline is deceptive. The
valuation is with respect to ByteDance, which has a business suite beyond
TikTok. Even the article headline mentions this: "TikTok Owner’s Value Exceeds
$100 Billion in Private Markets"

There are other facts about ByteDance such as having nearly 100k employees and
a moderately size AI research lab that makes this news less surprising.

~~~
toohotatopic
>moderately size AI research lab

Isn't their AI lab actually quite good? If I remember correctly, they create
personalized news stories that are actually read and consumed.

~~~
mrdrozdov
It isn't an ultimate metric, but they have 150+ papers listed on google
scholar, which is not a small amount.
[https://scholar.google.com/scholar?hl=en&as_sdt=0%2C33&q=byt...](https://scholar.google.com/scholar?hl=en&as_sdt=0%2C33&q=bytedance.com&btnG=)

------
kgin
TikTok proved to be a perfect secret clubhouse for Gen Z sensibilities of
humor, nihilism, and celebration of differences. But as older generations pile
on that do not pass the "vibe check", it is already slowly starting to ruin
the party. It's still the best party in town, but hopefully ByteDance is
humble enough to realize TikTok's success is about a lucky coupling of a
format and cultural moment.

~~~
runawaybottle
If what you’re saying is true, then in a sense a lot of these apps are like
the Seinfeld of the time. Eventually the season finale happens, and very few
end up being a Simpsons (Facebook).

Profit while you can I guess.

~~~
skinnymuch
Seinfeld still makes good money though.

------
bko
> It’s the first salvo of ByteDance’s goal to reach 100,000 staff globally by
> the end of the year, outlined by Chief Executive Officer Zhang Yiming in an
> internal memo last month.

Can someone explain to me the rationale behind such an aggressive employee
headcount? Do they have larger ambitions or are they trying to justify the
valuation? It just strikes me at an incredibly large number of employees for
the service.

~~~
gibolt
ByteDance has a huge suite of apps already (in China). Several of them could
independently be unicorns without international expansion. I don't see why
they wouldn't want to both grow that number and expand what they already have
to other markets

------
tantalor
First glance: seems about right; pretty popular/trendy site

Second glance: oh that's in Bs, not Ms; nevermind!

~~~
proverbialbunny
In comparison Disney is valuated at $128B.

~~~
mikeg8
that is a mind blowing comparison. Thanks for highlighting

------
lessname
Maybe something worth mentioning: The ratings on google play [1] dropped from
4.5/5 to 1.2/5 because they deleted a video criticizing a TikTok user and did
not delete a video endorsing acid attacks, but it seems like it's mainly
ongoing in India. [2]

[1]
[https://play.google.com/store/apps/details?id=com.zhiliaoapp...](https://play.google.com/store/apps/details?id=com.zhiliaoapp.musically)

[2] [https://www.indiatvnews.com/technology/news-tiktok-
gets-1-st...](https://www.indiatvnews.com/technology/news-tiktok-gets-1-star-
rating-on-google-play-store-here-s-why-618838)

------
qeternity
[https://outline.com/YZZ9rB](https://outline.com/YZZ9rB)

------
layoutIfNeeded
>The trading of ByteDance is reflective of the global wave of consumers who
agree that ByteDance can displace Facebook as the leading social network

If this came true, what would be the ramifications for US national security?

~~~
DevKoala
Facebook security issues were an influencing factor in the past elections. How
much worse can it get?

I don’t think that rooting for Facebook against a Chinese built competitor is
rooting for national security.

~~~
SonOfKyuss
Neither are ideal, but at least we can compel the CEO of Facebook to testify
before Congress. Good luck trying that with a Chinese national.

------
justicezyx
This is the parent ByteDance, not TikTok...

------
jariel
Anyone care to comment on the sustainability of these platforms?

Facebook has a strong network grounding effect (a few of them) and it may be
around for a while.

But these 'hyper short form' things like Snapchat and TikTok I feel to be
faddish. The 'form' is here to stay, but unless the platforms have lock-in
they are fickle.

I think Apple, FB, MS, Google have strong incumbency, even though Snapchat is
growing ... I'm not so sure.

That said - the world is still coming online in droves, and Snapchat only has
200M users meaning a lot of upside, and possibly an opportunity to entrench
themselves.

~~~
snazz
I'm not sure that I would put Snapchat and TikTok in the same bucket. Snapchat
has very strong network effects among a certain significant demographic. It
has a feature that suggests people you may know and a variety of techniques
(Streaks, BFFs, Snap Score) intended to keep people using it daily. Think of
Snapchat more like a messaging app than like a social network.

------
lsllc
Here today, gone tomorrow. Like AOL, Myspace and Compuserve before them.

TikTok doesn't have anything other than a fleeting fascination with today's
youth. As they age, the next generation will find something else.

Does TikTok even have assets? real estate, manufacturing capabilities,
intellectual property ... oh and paying customers?

------
intopieces
If you believe in the power of targeted marketing, believe in TikTok. I didn't
log in, I gave this app no information about me at all and it managed to turn
1 or 2 likes into a stream of endless content that hit a certain spot for me.
I had to delete it.

------
alasano
Same reason honey was sold for 4 billion, they have an absolute ton of data on
their users.

------
chrischen
Social media in the US was always something I thought that Chinese companies
couldn't penetrate due to cultural differences. The fact that they have means
so many more US tech businesses are potentially at risk, because China's tech
sector is extremely strong on the software side, even on the open source side
(Ant design for react, Vue js). This is despite relatively high anti-China
sentiments: see Koa-router being transferred to a Chinese maintainer:
[https://news.ycombinator.com/item?id=19158218](https://news.ycombinator.com/item?id=19158218),
granted there are concerns with transferring a popular package to an unknown
person for money, or Huawei's problems penetrating US market. Companies often
have to hide their Chinese origins, such as OnePlus (a subsidiary of Oppo).

~~~
ngokevin
Maybe this isn't a substantive comment, but I think China understands America
more than the other way around.

~~~
Jagat
Thanks to Hollywood, American TV shows, and the Internet being predominantly
US/English dominated, every country understands America more than the other
way round.

~~~
chrischen
There's also the massive Chinese diaspora.

------
kayhi
Feels like Twitter buying Vine and not executing made this possible?

~~~
cwkoss
Yeah, killing vine was such a huge mistake.

~~~
throwaway391003
they really should just start it up again. i'm sure there's many who would
love to get off the chinese service

------
DevKoala
I am happy for these news. Facebook has a monopoly on social media, and it’s
good for competitors to grow strong enough to challenge it.

~~~
nck4222
In theory that sounds nice but as far as trusting a company with my
privacy/data, a Chinese backed social network is probably one of the only
entities I would trust less than Facebook.

------
ummonk
Why the clickbait title instead of the original ("TikTok Owner’s Value Exceeds
$100 Billion in Private Markets")?

------
nly
Two words: market depth.

It's just like bitcoin. In an illiquid market you can easily trade small
volumes at ridiculous valuations.

------
neonate
[https://archive.md/0eXcB](https://archive.md/0eXcB)

------
objektif
There is an insane amount of push to make TikTok happen. I am relatively
certain that it will go nowhere.

------
chickenpotpie
Being successful in the TikTok, Snapchat, Instagram market segment seems
completely random. These apps have so many features in common with each other
and none of them really do anything innovative. TikTok is definitely not the
only vine clone in the world, but for some reason this is the one that is
worth $110b

------
mangix
Makes sense. The fed's inflated the money supply quite a lot.

~~~
xoxoy
Twitter and Snapchat are both “only” worth around $25B each

This isn’t just about a money printer.

~~~
typon
Tiktok: 800 million monthly active users worldwide.

Twitter: 330 million monthly active users worldwide.

Snapchat: 360 million monthly active users worldwide.

Maybe TikTok should "only" be worth $50B?

~~~
qppo
Are Twitter and Snapchat allowed behind the Great Firewall?

Honest question, I don't know

~~~
snazz
According to
[http://www.chinafirewalltest.com/](http://www.chinafirewalltest.com/) (not
sure how legit it is), twitter.com is blocked and snapchat.com is allowed.

------
softbankhater
Good news. Finally some social network without FB and Google!

~~~
softbankhater
OK, it is not really a social network right now, but I suggest they will move
in that direction.

------
mftest
Are these guys also funded by Mayoshi Son and Softbank.

------
EGreg
Paywall. Impossible to read it

~~~
digheal
[http://archive.is/0eXcB](http://archive.is/0eXcB)

------
ManoSinkosika
after rating drop on google still expensive

------
blackearl
Do any of these kind of apps ever make money? Or do they just get pumped and
dumped?

~~~
skinnymuch
Yes. Billions in profit

------
TechBro8615
Pretty insane. It will be replaced by another app-du-juor in 4 years. Social
apps follow a pretty predictable schedule where cohorts are strongly
associated with high school and college demographics moving through phases of
their lives.

