TikTok’s Origins & Insights

How TikTok took off in the mobile short video market

This is one of a series of posts on the origins of well known startups including Instagram, YouTube, Spotify, and SoundCloud. The series is an extension of a short essay I wrote called The Seed Model.

Several years ago I had a group text chain with a few tech founders. Most of the time we used it to support each other, but we’d also share memes and make fun of the hard parts of starting companies. One day, someone shared a link to a short video of an elderly man playing an acoustic guitar and singing Bobby McFerrin’s classic feel-good song “Don’t Worry Be Happy.” The video was hosted on TikTok, which I had read about but never tried. I downloaded the app, listened to the song, and spent the next hour scrolling through short videos. One moment I was watching dancers bend their backs in ways that seemed humanly impossible with trap music playing in the background; the next, a mini-lecture on the origins of metallurgy. TikTok was irresistibly chaotic, and I was hooked.

TikTok’s Origins

TikTok was created by a Chinese internet company called Bytedance. They created several popular Chinese apps before TikTok, but their first big hit was a news app called Toutiao (meaning “Headlines”) that launched in 2012. Toutiao was like Facebook’s News Feed; it used sophisticated algorithms to analyze what users were looking at, measure how much they liked it, and find similar content. People didn’t have to set their news preferences, the app would determine their preferences based on their actions. In 2015, Toutiao launched a video feature for creators to share short videos and appear in news feeds. Chinese users loved it. One year later, the feature had turned Toutiao into China’s largest short video network.

Having cornered the Chinese market for short videos, Bytedance moved to win it outright. They created a new app that focused entirely on watching and sharing short videos. The app was called Douyin, but you probably know it by its international brand name: TikTok. It wasn’t easy for TikTok to transition from a Chinese corporate experiment to an international powerhouse, but we can learn a lot from how they navigated the problems that came up.

Problem 1 — Launching in China

Bytedance faced stiff competition getting Douyin off the ground in China. WeChat — generally thought of in the West as the Facebook of China — was a dominant force in social networking with over 800m users. Live-streaming app Inke topped 250m downloads. Short video app Meipai had over 100m users. They were entering a crowded space and needed a unique angle.

They decided to make Douyin a more fun and interactive video app, similar to the lip-syncing app Musical.ly. But they also planned to include their best innovations from Toutiao, like its feed and sorting algorithms.

To solve the cold start problem, they leaned on Toutiao’s distribution and scale. By getting Toutiao’s most popular creators to share their content on Douyin, Bytedance legitimized the new app. Within a year of its 2016 launch, Douyin grew to 100m users and 1b videos viewed per day.

Problem 2 — Launching outside of China

Bytedance thought the idea behind Douyin could work globally, so they took three major steps to expand out of China:

1. Created a new brand under the name TikTok that used the same technology as Douyin, but kept Chinese users / content separate.

2. Localized TikTok in every market they entered so users would primarily see content in their own language.

3. Acquired similar apps with large international user bases and merged their user bases into TikTok.

The two apps Bytedance acquired and merged into TikTok were Musical.ly and Flipagram. Both allowed users to add music to short videos, but Musical.ly was far more successful at the time of its acquisition. Bytedance reportedly paid $1b for Musical.ly’s 200m users, many of whom were young Americans. All user accounts and data ported to TikTok, and existing Musical.ly users had no choice but to switch.

Go-to-Market

Bytedance understood that teenage and twenty-something Americans were critical to TikTok’s growth prospects, especially after they bought Musical.ly. So they focused on their primary competition in that segment: YouTube, Instagram, and Snapchat. If they could get people who used competing apps to join TikTok quickly enough, it would both expand TikTok’s user base and make it more difficult for competitors to launch competing features.

They used a combination of paid marketing and organic marketing to attract new users. On the paid side, they launched one of the most aggressive social media marketing campaigns of all time. By some estimates they spent over $3m per day in 2018 with much of it focused on Instagram. In contrast to Instagram’s polished aesthetic, TikTok videos were more realistic and fun. People danced and played music and sang, which stood out in a feed full of filtered photos.

On the organic side, TikTok made it easy for users to post their videos to other platforms straight from the app. TikTok’s watermark distinguished videos its users posted and served as de facto ads everywhere they appeared.

Insight 1 — Chinese tech companies can win in America

The first insight from TikTok’s success has to do with the quality of Chinese technology. Every one of TikTok’s large competitors copied elements of its core functionality. Instagram created Reels, YouTube created Shorts, Snapchat created Spotlight, and so on. These efforts were defensive, intended to hold onto users spending increasingly more time on TikTok. It’s not often that a Chinese company comes to America and beats trillion-dollar companies at their strengths. TikTok’s success is a sign that Chinese internet companies are capable of leading industries on the global stage.

Insight 2 — Take care of the little guy

The second insight from TikTok’s success is about its commitment to regular users. TikTok recognized that most social media platforms promote influencers at the expense of normal users. It’s discouraging to see people get millions of likes only to have your own posts get 0. So TikTok decided to go the other way and give new users reach to encourage them to post more. The decision established its reputation for being more approachable than other social networks. It also attracted users from other networks who felt they were stuck and couldn’t grow their followings.

Insight 3 — Talk to your users

The third insight from TikTok’s success relates to its method of product development. TikTok’s focus on music videos came from close observation of how teenagers used their smartphones. Its leaders constantly asked users what features they wanted and tested new features with their users before rolling them out more broadly. Product development followed user feedback instead of mandates from senior management. As a result, TikTok cultivated a stronger sense of community than most of its competitors.

Insight 4 — New segments make new opportunities

The fourth insight from TikTok is about its market segmentation. Like cable television before it, TikTok introduced a range of new video segments based on length. But its segments were notably shorter. It started with 15 second and 1 minute segments before later branching into 3 minute segments, live video, and others. Part of the reason their segmentation was so effective is that their segments were underserved in other apps. They pioneered the market for 15 second music videos and that gave them a wedge to introduce more categories over time.

Insight 5 — Don’t be afraid to break conventions

The fifth insight from TikTok is about their willingness to ignore conventional wisdom so they could grow quickly. Many venture capitalists would recoil at the idea of spending billions of dollars to buy your way into international markets, especially when those markets are occupied by Facebook and Google. The conventional approach would be to develop your product until you find product-market fit, then grow through word-of-mouth from your users. But TikTok prioritized speed over all else. They trusted that they’d be able to figure out product issues with a household name brand, so they put everything into growth. It’s hard to argue with their results — they won.

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