Interview with Matt Brennan on TikTok and ByteDance
Matthew is a speaker and writer focusing on Chinese internet and tech innovation. In particular, he's known for analysis of Tencent, China’s tech giant and WeChat, China’s famous super app. His opinions have been featured in global media including The Economist, Wall Street Journal, Bloomberg, BBC, Financial Times, Forbes, Harvard Political Review, Quartz, TechCrunch, CNN, Business Insider, eMarketer and Wired. He delivers presentations for executive teams seeking to gain insight into Chinese tech innovation.
Why and how Matthew moved to China
Born in the UK, Matthew studied economics at University of Southampton. Going to China was almost an accident but resulted in an interesting journey, one which he is still on. He learned Chinese and worked as a lecturer in Shanghai University Facilitating interactive workshops sessions on marketing and building business within the WeChat ecosystem.
It was in the process of starting and running an edtech company in China that introduced Matthew to the popular apps, starting with Wechat. There have been hundreds of apps created in China since then and this presented an opportunity to help business people from outside China learn and navigate the Chinese business landscape, and the dynamics of the app being created there.
Tiktok is an app from China’s ByteDance and running 18-24 months behind the Chinese version Douyin which is popular inside China.
Matt sees China making big trends digitally which will increasingly impact the lives of people outside China. Not just TikTok and short video clips but everything like ecommerce, live streaming...everything that comes from here will start to be spread out throughout the world.
China Channel helps other companies basically get foothold in China. There are a couple of things, most of the companies coming to Shanghai which is largest for marketing international brands, we have workshops, conferences and everything.
We did some management of some brands, consultancies as well.
I spend some time writing, speaking on everything, doing research and being passionate about it.
Even though we consume their products, ‘China’ is a blackbox for most people outside considering the tech, so this is really valuable information.
Matthew’s new book Attention Factory - The Story of TikTok and China's ByteDance covers the most popular Chinese app from China for the Western consumers, Tiktok, and the company behind it ByteDance.
During 2015, it is very exciting to see the transformation WeChat was bringing to the Chinese consumer habits. And that’s when ByteDance was setting the foundation of what is now Tiktok. Matthew sees ByteDance as a very capable company and they are doing interesting things.
The company started in Beijing in 2012. In china, starting a company is a little complex. They started with 30 employees and they were doing news initially.
Then in 2016 they were thinking of showing videos for everything from everyone. Basically in news app, everyone wants to do the videos and that is actually bringing them the idea. This is the founding story.
Tiktok thrived to build a short video themselves, but then they purchased a company called musically. Musically was a pioneer in the video experience.
Core user experience of Tiktok is personalizing the videos for the user, the recommendations and the swipe of action to move to the next content and the music plays a big role.
We can use music to discover videos. This core experience is quite similar that musically had.
Musically took that experience form Mindy which was built in 2013 in Paris. Generally the public doesn’t know about Mindy.
Musically was definitely successful, mainly with teenagers, mostly female users.
That's not the case with TikTok. The big problem is matching videos with the user’s interest. Lipsync matching is the most popular. People who are interested in using videos, generally don’t prefer to use search engines. So they look for recommendations.
To give an example, if you uploaded a TikTok video today and had an option ‘hey check this one’. It is able to identify and match with the objects.
This technology matching content with the user’s interest is actually the main core objective. Google has the same recommendation technology. Same with Amazon, when we want to buy something it recommends relevant products.
Youtube also has a good recommendation technology and shows all the recommended videos which match with our interests.
Another popular one is Tagging, right now if you upload a video it asks you to add tags to it. So that's a manual process, I have to add what I feel.
Tiktok’s image recognition technology makes this an automated process. That is really interesting.
Hundreds of applications have similar features and have been doing the same for many years. But suddenly one of them focused, what's the difference, why this one difference from others?
At ByteDance they create unique strategies for every single product; how to promote it, how to use and grow it. There are teams for every app in ByteDance. Having raised $2 Billion dollars from Softbank in 2018 ByteDance flooded Facebook with Tiktok ads. Initially they had a push back from users and bad media reviews when Musically was replaced with Tiktok. Which gives some reason for why facebook did not take Tiktok that seriously at the initial stage.
On ByteDance’s management structure and the Middle layer
ByteDance works as a service oriented architecture business with high profile data scientists and highly skilled teams. Every app has search and that is used centrally from the database. These are the examples in the book.
If you open up the news feed app, that information is used as the personalized information for your profile across all ByteDance apps building a social and interest graph of you in their systems.
Tiktok is not a social app right now but provides a very strong foundation to build that in the future.
Some challenges with Tiktok are the low levels of safety and the addiction factor because the app is very addictive. Everyone in China in 2019 was talking about this app and It's so addictive that a lot of people delete it, and same is happening in India.
Many companies, including Facebook, have tried to clone Tiktok but have not been successful to gain the same level of popularity, virality and engagement.
The other Interesting thing is there is no founder or original builder of TikTok. The Founder is a company, ByteDance.
On cross-app data interchange:
In China this may not be a problem, but in the US data and info privacy is a top concern for people and the government, and even stronger in the EU.
TikTok initially was an international version of a Chinese App and relied on the same ByteDance infrastructure but due to pressure from other governments they have apparently separated (or are in the princess of) the two.
Why doesn’t WeChat copy Douyin or Tiktok?
Tencent absolutely tried to copy this, but the rise of Chinese version of TikTok was very fast.
It transformed very fast, and they invested a lot of money in promotion.
TikTok is very quick, literally millions of content in a very quick time and with so many users.
They tried to copy but it was much more difficult to copy TikTok. And Facebook has tried the same unsuccessfully.
Finishing up this segment with comments about the legal issues in the US and potential sale of Tiktok to US companies.
On commerce, shopping and livestreaming
Live streaming ecommerce has been a big thing in China in the past few years with enormous potential to get much larger.
We don’t see a lot of ecommerce on Tiktok yet but they are experimenting with it. Live Streaming ecommerce is more like TV shopping and different types of live streaming are being used within the passive and active modalities.
People are going to live streaming because they need help deciding and advice, and of course in China everything has to be included with discounts.
Livestreaming has three main applications currently
1. Social Live streaming like Tik Tok
2. Gaming Live streaming which is different
3. And we have ecommerce live streaming.
Every one of these applications have their own customer engagement and business dynamics.
Livestream shopping got it’s early start a few years ago with the concept called Daigo, which is banned in China because people were avoiding to pay taxes and tariff on the products.
Most consumers in China use the Taobao app for shopping, including livestream shopping.
People use Taobao because it has little more content. News feed, live streaming, a mini version of viber, chinese version of twitter and facebook and shopping and payment all in one app.
Desktop and laptops very flexible for search, but with mobiles the screen is very small and the session time is just 60 sec, so how do we recommend ecommerce search on mobile? That's an area Amazon really needs to focus on.
On human to human commerce
Human experience is much closer than automation and It works well with personalization.
Chinese consumers tend to like stuff like timed discounts and coupons.
Links:
Matt on Twitter Matt on LinkedIn
State of M&A in Creator, Media and Technology - a conversation with Chris Erwin Founder of RockWater
Future of Loyalty is Experiential! Interview with Lin Dai CEO of Superlogic
What is happening to Search and Discovery? Interview with Nate Barad from Algolia
