For a very long time, American internet start-ups have failed in China, and Chinese internet start-ups have failed to get traction in America, or in fast growing internet markets like India.
Not getting their story right
Most of the efforts on both sides have missed cultural nuances that affect the core user experience of the products. For example, AirBnB is the latest entrant in a long chain of American start-up migrants trying to make an impression in the Chinese market. While their attempt has been fairly solid with a reported revenue of $130 million in 2018, they have had their fair share of problems with their Chinese adopted name Aibiying being ridiculed by Chinese consumers and recent botched attempt to make a BnB out of a watch tower on the Great Wall of China.
On the Chineses side, the much vaunted social media app WeChat failed to make an impression in India despite launching before WhatsApp. The reason being an inability to figure out how cultural nuances affect the core user experience.
Branding is hard and probably not a problem that can be solved by data fetish.
Along came….
Bytedance.
The worlds most valued start-up and owner of social app TikTok has cracked this code by not pretending to merge the brands and creating a clear distinction between Chineses internet and American internet. Their recent acquisition TikTok targets the western market while their original app Douyin is available only in China. To quote the recent NYT report on the app
So far, Bytedance — which recently secured $3 billion in new funding from SoftBank and other heavyweight investors — has found a rare measure of success in both internets by doing things a little differently.
For one, it is making no pretense to be bridging the two digital realms.
Users of Douyin are entirely walled off from users of TikTok and vice versa;
It is also interesting to note that most of the users of TikTok do not know that the app is owned by a Chinese conglomerate. TikTok has been on a heavy advertising spree, spending massively on Snapchat, YouTube and even having a billboard up in Brooklyn. So it’s not surprising that most of Gen Z (the primary users of the app) do not know of its Chinese leadership.
It’s not that this has not been done before. FMCG and luxury brands seem to do this all the time. The Coco-Cola company acquired Topo Chico in 2017 and in its third quarter earnings for 2018, attributed its growth in North American and South American markets to not changing the ‘Topo Chico heritage’.
But its new for the internet. One of the core reasons for the growth of tech start-ups (in funding and on IPOs) has been the ability to scale across the world with minimal marginal cost. Uber is a prime example of a start-up that scaled fast across the world because it did not need to reinvent the proverbial (and in this case metaphorical) wheel in all the new markets it entered.
But with the internet slowly splitting into two. Start-ups would have to account for marginal costs, especially in marketing, if it wants to tap into the 2 billion people living in China
To continue where I left off in the first newsletter, Is TikTok the new new thing of social media, will it last long enough for advertisers to take advantage of or will it slowly disappear into oblivion like Snap Inc’s stock ?
Some interesting reads around ByteDance
Everything is a copy of a copy on Instagram. Which is why we need a new new thing
What is Tik Tok
TikTok is also the king of cringe