#seattle startup week

[forgotn1]

Antitrust is so underrated. It's cheesy at times and Ryan Phillipe overacts his ass off, but it's still a lot of fun to watch. It's a hacker/thriller from the early 00s that used the sleek Silicon Valley and Seattle tech vibe rather than a cyberpunk vibe like most other 90s hacker films.

It's got Tim Robbins as a sinister Bill Gates/Steve Jobs type tech entrepreneur who is literally having his competition killed and stealing their code to finish his next big innovation. While Ryan Phillippe plays a genius coder who is recruited to the company and mentored by Robbins' character. He leaves a startup he created with his childhood best friend to take the job and several weeks later, the friend is killed under mysterious circumstances.

There's even an impromptu allergen check before dinner to see if his girlfriend is trying to kill him with sesame seed. It's got a lot of interesting twists and turns along the way and it's an entertaining watch. It also advocates for open source software, which is pretty cool.

[xtruss]

The Complete History And Strategy Of TikTok

We take Acquired to the Old Town Road to cover the amazing story behind the biggest global sensation of 2019 — and the highest valued private startup in the world — TikTok. How did a mid-30 year old UX architect at enterprise software giant SAP wind up creating Gen Z’s favorite social app that’s now rivaling Instagram in global MAU? Why is a 2017 merger of two Chinese companies being branded a US national security threat and retroactively placed under review by CFIUS? And perhaps most importantly, why is TikTok such an important product & technology innovation that all of us should be learning from? Tune in for all the answers!

— Podcast Transcript | 1440 Magazine | December 8, 2019

TikTok Logo

Ben: Welcome to Season 5 Episode 8 of Acquired, the podcast about great technology companies and the stories behind them. I'm Ben Gilbert and I am the co-founder of Pioneer Square Labs, a startup studio and early-stage venture fund in Seattle.

David: And I'm David Rosenthal and I am a general partner at Wave Capital, an early-stage venture firm focused on marketplaces based in San Francisco.

Ben: And we are your hosts. Today, we’ll tell the story of the most valuable tech startup in the world, ByteDance. You may not have heard of it, but you have almost certainly heard of their most popular product, Douyin, or wait, if you're a Western audience, I mean TikTok. Valued close to $80 billion, this privately-held venture-backed Chinese company has completely changed how a generation of teens and 20-somethings globally use their phones.

Another fun way to introduce TikTok, what is this machine learning-based social media app that skyrocketed the then-unknown Lil Nas X to number one on the Billboard Hot 100 for 17 weeks, the longest of any song in history with his breakout track Old Town Road?

David: I’m so pumped. After doing this research, I finally know what the hot challenge was.

Ben: David, how on earth can this app create such a universal sensation for so many people at once to skyrocket it to number one like this? This is something that no other social media app has been able to accomplish.

David: Not in quite a long time. The other fun thing that we're not going to talk as much about on the episode but to say upfront to also just build the Acquired human suspense here, you, of course, know who assigned the $78 billion or $79 billion valuation to ByteDance, right?

Ben: Is it Sequoia China? They were an early investor?

David: No, SoftBank.

Ben: Oh.

David: Sequoia China wasn’t their early investor.

Ben: Oh, boy, I can't wait for this.

David: Yeah, the hits keep on coming, although this one actually is a hit.

Ben: Indeed. Listeners, the way we'll be telling this story is through ByteDance’s 2017 acquisition of another China-based company, Musical.ly, so join us on this journey of ByteDance acquiring Musical.ly to create the TikTok that we know today.

We have a special announcement that we're excited to share with you. we showed it on the last episode. We are doing a live episode in Seattle. It will be on December 17th with the co-founder and CEO of Convoy, Dan Lewis, discussing the origin story of the company, disrupting the trucking industry, and valued last month at $2.7 billion. You can click the link in the show notes or go to acquired.fm/liveshow to reserve your ticket.

Lastly, before we dive in, I want to thank the sponsors of all of Season 5, Silicon Valley Bank. Earlier this week, I caught up with our sponsor so let's dive in for a little Q&A.

Thanks to SVB, and now, on to TikTok.

David: Indeed, on to TikTok. To start history and facts, we're going to go all the way back to the 1920s and Charlie Chaplin. No, I'm kidding, although if we really, really wanted to give it the full Acquired treatment, we would do that. But no. Of course, I was referring to the great performer, the performing arts, and the origins of showbiz, Charlie Chaplin, but no.

We pick up the story relatively recently (this time by Acquired standards) in 2012, not in China but in the San Francisco Bay Area with a man, and not a young man as we so often talked about on this show, but a man named Alex Zhu who is in his mid 30s. He's from China originally.

Ben: I love that’s like not a young man to you.

David: Hey, I mean, I just turned 35 so I definitely don't feel like a young man anymore, but in comparison to what we're about to talk about, you might think that TikTok or Musical.ly, if you knew it initially, incarnation would have been started by a teenager or an Evan Spiegel-like character. But no, not at all as we will see. In many ways, Alex is the anti-Evan Spiegel. He's in his mid-30s and he's working as a UI designer at the European enterprise software giant, SAP, hotbed of consumer mobile social app innovation.

Ben: Oh, yeah, totally. The SAP mafia of social network startups.

David: Indeed. This is actually his second stint with SAP. At this point, Alex has a long career in enterprise software and after his second stint at SAP (he’s working there for about a year), he's just been appointed as an in-house futurist at SAP, focused specifically on the future of education. You can just see Musical.ly jumping right off the page here.

Ben: I think I saw some tweet years ago that said, “If you have the word digital in your title, then you have the right job at the wrong company.” I think that might be the same thing for futurists.

David: Yeah. Why is it a little bit like enterprise companies have futurists?

Ben: I think Google does [...] that Google is the chief futurist or something?

David: Oh, I don't know, maybe. I'll have to look that up. Alex's new role as futurist (and he says this on his LinkedIn profile which we’ll link to in the show notes), it's quite amazing. He says his job was to research the future trends of education and learning, specifically identify opportunities for breakthrough innovation and social impact and convert ideas into prototypes and applications.

What did this mean at the time in 2012? I remember this super clearly, I was about to start business school at Stanford. What was all the rage, both in the tech world and in the education world, were MOOCs. Coursera and Udacity had just launched (both of them out of Stanford), raised tons of money, and they were going to digitize universities, learning, and education, and bring it all online.

Both of them are still around, but neither of them would go on to realize the potential that everyone thought they had at the moment or at least, not in a near-term timeframe. Interestingly though, it was actually an enterprise software company to you that would go public and become quite a large company that would help existing schools manage their online degree programs.

Actually, my old undergrad classmate, Jeremy Johnson, who's now the CEO of Andela was one of the cofounders of that. It was enterprise software. You could paint a story why it made sense for Alex to be working on this within SAP. As he gets deeper and deeper into it, he becomes really convinced that there are a couple of problems with the way MOOCs and online education is being approached at that time and he was totally right.

The biggest one, as he digs in is that nobody finishes the courses. Not only nobody finishes the courses, nobody even finishes a single video of a single lecture, they're just too long for most people unless you're in an actual degree program where you have to. Students at colleges barely stay awake through lectures, who's going to watch a whole course of their own free will and volition?

Ben: Yeah, reflecting back on it, I think if I'm going to watch even the Khan Academy type stuff, it's going to be like one video at a time and maybe not even the whole video.

David: Yeah, you're going to spend five minutes or less on there. As he comes to this realization, he thinks, “Maybe the way to attack this is to make the videos short-form instead of long-form, these educational videos,” and he realizes, “Look, this is not something that an enterprise software company like SAP is going to really be equipped to tackle here,” so he is passionate about the space, though, and he does decide to start a company on the side outside of SAP while he's still working there.

Ben: He’s going to take his futurism talents elsewhere.

David: Exactly. At least, according to his LinkedIn, he does stop being a futurist at SAP. He goes back to working on other normal projects as a UI designer and actually stays at the company (according to his LinkedIn) for quite a few years to come. On the side, he's working on realizing this opportunity and he calls up an old friend back in China, Louis Yang, who he had worked with at another company back in China, and they started a company called Cicada Education, a real auspicious name.

Ben: Like a bug?

David: I believe so, at least, that is how it's spelled.

Ben: I know where you grew up there were cicadas in Ohio, every 15 years or something, these gnarly bugs like for two weeks of summer.

David: Yeah, same where I grew up in Pennsylvania and then especially in New Jersey going to college, it did not make you want to study.

Ben: Or name a company after them.

David: So far, this is an interesting compelling story. There are a few twists here, but it sounds like your typical Bay Area startup story on the surface. But when you peel back the onion a little bit, there's a couple of really unique things going on for the time. One, the dual China and US headquarters of the company.

Alex stays in the Bay Area, he’s still working at SAP there, Louis is back in China. This is not done at the time. I remember starting to invest in companies when I joined Madrona at this time. Remote teams period are like a no-no for venture capitalists and startups, let alone cross-continent, cross-border, cross-cultural remote teams is just crazy, but these guys have a little bit of experience with that, or at least, Alex does.

After undergrad, he first worked at China Pages in China as a designer and then he spent three years at WebEx where I believe—I can't verify for sure—he reported up to Eric Yuan.

Ben: Wow, founder and CEO of Zoom.

David: Of Zoom. Zoom would leverage this model (as we covered on the Zoom episode), to amazing success. Eric also did within WebEx (of having engineering back in China and all over the world, really) while having go-to-market based in the Bay Area.

After WebEx, Alex joined SAP, then left SAP and went to an insurance software company called eBao. That's where he met Louis, who was the best PM there. They worked together briefly there before Alex went, rejoined SAP, and moved to the Bay Area. He calls up Louis, this really talented PM who he's worked with before, they go out, and they raise $250,000. Ben, you actually know the folks that they raised this angel money from, right?

Ben: Yeah. One of the firms there is China ROC Capital Management, a great cross-border China-US firm that’s important to this story has a Palo Alto office.

David: Yeah. They're at the forefront of this crazy idea of building cross-border companies and the idea is that they're going to take Alex's insight and get experts across a wide variety of domains from peer education to professionals, to create these short 3–5 minute videos explaining a subject that they know really well.

They raised money, they started working on this. As you can imagine, it's not super compelling. After the pivot of Musical.ly, Alex says, “The day we released this application to the market, we realized it was never going to take off. It was doomed to failure.” The name Cicada may have had—

Ben: Yeah, something to do with it. To have one thing so right in short-form video and one thing so wrong in delivering education in an entertainment-type format in that short-form video, it's remarkable how they really, really deeply keyed into a trend but didn't exactly nail it the first time.

David: Yeah, Alex says, “It's hard for a new startup to fight against human nature. It's better to follow human nature,” and especially in short-form video, education is not just going to really compel somebody to open up an app on their phone. That's the big thing that they get wrong with Cicada, but the other thing that they get wrong, and this really goes on to inform Musical.ly and TikTok, is the videos took way too long to create and they were way too hard.

Cognitively, if you're an expert trying to convey the essence of a subject in 3–5 minutes, you can't. You could do that if you spend a lot of time organizing and figuring out how to convey information, but also just like the tools—remember, this is back in 2012–2013—within the product to create these compelling videos are way, way, way too immature for this to go mainstream.

Ben: Yeah. If you think back, 2014 was probably the iPhone 6s that [...].

David: No, I think that was the iPhone 6.

Ben: Or let's put an OS number on it. That would have been iOS 7 just came out.

David: Yeah, 2014 was the iPhone 6 and iOS 7 or 8. This means back in the Cicada days, you're working with, at best, an iPhone 5s which is the small screen. As much as I love and miss that thing, creating video content on that was going to be super hard.

Ben: Yeah, and it was only the third generation of Retina phones, so there are still lots of phones out there that are the 320x480 or whatever it was.

David: Yeah, totally. We're now in the spring of 2014. They've burned through most of the $250,000 that they raised, but Alex is at least part-time on this.

Ben: And I think he's hanging out a lot at the China ROC office in Palo Alto, and importantly leads to him taking Caltrain rides.

David: Yeah. I believe he was also probably working for SAP’s campus down in Palo Alto at the time too, spending some portion of his time there. They decided to take another swing at this. As you said, he is famously commuting down from San Francisco to the Peninsula (as so many people do), and often he takes Caltrain to avoid the traffic.

One day, he's thinking about the failure of Cicada, thinking about what they want to pivot into, and take a swing at next based on what they learn, and he sees a group of teenagers on the train. They're playing with their phones and they're doing it together. He starts observing them like, “Oh, what are these kids doing? Maybe I can learn something.”

Interestingly though, the stereotype at the time, remember the adults or the older partners at Madrona talking about this like, “Oh kids, they just sit on their phones, they don't talk to each other, they're not social, and everything is digital,” but that's not what's happening at all. These kids are collaborating together, they're talking, they're chatting, they're being loud, they're not parallel playing, they're using their phones but they're doing things together physically on them.

What are they doing? They're taking selfie videos. They have one person who's making the video, another person is finding music on their phone to play in the background to put a score to the video, then other people are creating graphics and digital overlays that they're going to put on top of the video, narrate all together a story about their time on the train together, and then they're posting it out to other social media, to Instagram, to Twitter, to Facebook.

Alex realizes like, “Oh, wow, this is actually a perfect use case for all this tech that we've built and for short-form video. Look at these lengths that these kids are going through to create this content here on the train together. What if we made one app that made it really easy for all this to happen? That would be cool.”

Ben: Yeah, and important here to know about Alex is there are lots of different founder archetypes, he's really the product person/designer archetype where part of the reason that he was able to raise that initial little seed money is really he's able to not only design beautiful products but observe problems in the world that can be solved with technology. The thing that we're seeing here when you're thinking to yourself how was it a good idea to pivot when deciding, “Should we pivot? Should we not?” Alex was uniquely good at observing problems, and with little resources, figuring out how to solve that problem with technology.

David: Yeah. Louis actually talks about this later, he says, “We changed the product quickly from the education-video app to do an experiment. What if we just provide some music in the product to allow people to quickly shoot a video with music? Will they feel very confident about what they create? If they feel excited about it, will they share it?” This is interesting. He says, “We created the prototype very quickly and we tried to launch in China, in Japan, in Europe, and in the US, we just wanted to see, we were not sure which country was going to pick it up really quickly but we had a gut feeling that it should be the US, the US is a music country, everyone there is so into music and the US is the center of pop culture worldwide. We got that gut feeling but we still decided to try it worldwide. We just really stood in the App Store, created some keywords for people to search for it, and the result is yeah, in the US, people automatically started picking it up.”

Ben: Fascinating. I did not know that was a hunch of why they did it in the US.

David: Yeah. That's the official story of the launch of Musical.ly. As far as we know, we have no contradictory evidence that anything else was different, but there were two other apps that were blowing up at the same time that probably had a pretty big influence on the direction.

Ben: Dubsmash?

David: No, Dubsmash actually launched right around the same time as Musical.ly, they were pretty concurrent but had a big influence on the direction that Musical.ly decided to go.

Ben: Snapchat?

David: No, not Snapchat. One is in the US and one is in China, one is Vine. Remember Vine?

Ben: Oh, yeah, Twitter’s biggest mistake.

David: Oh, man, such a tragedy. Doing this research reminded me of it. Vine was acquired by Twitter pre-launch back when the team was still working on the product and Jack Dorsey saw the potential for this and just loved it and so they acquired the company in January 2013 before they launched the product. Vine (I'm sure lots of our US listeners will remember this) was 6-second looping videos and music and lip-synching was a key use-case on Vine.

Ben: Yeah, it was lip-synching and NBA replays.

David: Yeah, such a good platform for sports replays. Users loved it and it had priority distribution on Twitter, but especially teenagers. This story presages TikTok so exactly. There was this Canadian teenager who goes by Ruth B, who goes viral after posting a short clip of herself singing a few lines that she just made up about Peter Pan on Vine. It ends up turning it into a full song, gets a record deal, makes the Billboard top 100 charts.

This should have been a sign to Twitter that there's something really interesting happening on this platform, but Twitter was going through its IPO at this time, they had crazy management drama, they didn't have enough resources to invest in it.

Ben: Ultimately shut it down.

David: Platform just peters out, yeah, and they ultimately shut it down. Lots of people saw what was going on here. I have to imagine that Alex and Louis did and this had a big influence on the direction of Musical.ly.

Ben: Alright, what's the second one?

David: The second one back in China is an app that's still a super large company today called Kuaishou. That was actually started in 2011 as a gift-maker tool in China. They’ve raised money from Morningside Ventures originally. It didn't go super well (they were just a utility), so they brought in one of their advisors and angel investors to take over as CEO, this guy named Su Hua. Su had worked at both Google and Baidu and he pretty quickly transforms Kuaishou into a short video platform. This is the first big short-video platform in China and it starts taking off like wildfire.

Ben: Wasn’t Morningside also the first money into ByteDance?

David: That's a good question. They might have been. They're really good early-stage venture folks in China. Interestingly, Kuaishou starts taking off not among what you think of is the normal audience for tech products in China, which is wealthy middle- and upper-class tier-one city urban elites, Kuaishou takes off in the rural areas with the 80% of the country that is still living in the provinces and are getting their first smartphones around this time. Kuaishou is just for people to make videos and talk about their daily lives.

There's a great 2017 tech note article that talks about their strategy and this says it's a really authentic place where people can be themselves and show their lives. The way that it all works is the content that people see is not driven by who you are or who you follow, it's driven by an algorithm. It gets to know what you like and it recommends videos that other people make to you that just find their way to you. You don't have to go out and find influencers, find topics, it just starts to get to know you and it surfaces all this interesting stuff much like other companies that we're going to see in a minute here.

Ben: There's one other interesting thing to note on why it blew up in America. In America, this notion of lip-syncing has always been like a thing people knew about, it's not like there was a dedicated video platform for it but it was like a popular thing to sing along with the music and famously, there have been some big debacles where even pop artists were lip-synching their own songs and got called out for that. This is a bit later but just to drive the point home on lip-syncing as a cultural phenomenon in the US but not China at the time, there was actually a TV show called Lip Sync Battle.

David: Oh, yeah. That is going to come up in a second here.

Ben: All right. I won't spoil it too much, but you got to understand at this time that this is really unique for a Chinese technology company to be building a product that is most popular in the US market. This was pretty unheard of and makes total sense when you think about the cultural differences of where it could be appreciated.

David: Yeah. The super cool thing is the team learned their way into this. We're still in 2014 when they make this pivot and they launch the MVP of Musical.ly. Now they're already thinking about music clearly, but the name of the app as being a key feature, but it was more Vine and Kuaishou than it was what we think of Musical.ly and TikTok today. It was a broad short-form video platform.

They launched it and they do a couple of really interesting things. Louis talked in that quote about the name of the app and doing app store optimization. This was a point in time when the app store, particularly the iOS App Store, started really prioritizing search terms, I don't know if you remember, Ben, a bunch of apps and Musical.ly does this more than anyone.

Ben: Keyword stuffing?

David: Yeah, stuff a ton of keywords into their titles. The title of the app is like, “Musical.ly-make videos for Instagram, Twitter, and Facebook with music with your friends, have fun like blah-blah-blah.” That just goes on and on and on, they stuff all these keywords in there and that's what starts getting the initial download traffic that the app is getting in the US. This is where, based on that, they start to learn a couple of things and this eventually leads to the big breakthrough of Lip Sync Battle.

They operate for a few months, the app’s growing, they're getting really good retention and usage, people that are downloading it and trying it are sticking with it, but they're not hitting a rocket ship growth yet. So they started digging into their data and they realized that on Thursday nights in the US, every Thursday night, there's a big spike in downloads.

They started going on the app trying to figure out why. They've always been really good about staying close to their users. They have lots of user research groups that they do to this day. Alex talks about how he creates fake accounts and just goes into first, Musical.ly, and now TikTok, and interacts with users just try to get a sense of what's going on and why they're using it. They realize that it’s because of the Lip Sync Battle TV Show which airs Thursday nights in the US on the Paramount network.

I had totally forgotten about this, but Lip Sync Battle is actually a spin off from the Jimmy Fallon Show. Jimmy started doing this as a skit on the Jimmy Fallon show, and then he went and he pitched it with a couple other producers to NBC as its own show. NBC turned it down but Paramount picked it up and it became a huge hit. People love it.

Ben: That’s awesome. I had no idea of the history of that.

David: Yeah.

Ben: Did they mention Musical.ly at all in that? Or was is just like people getting inspired from the show that they—

David: No. It’s back to the App Store optimization. They had put lip sync in the title of a bunch of versions of the app. After the show ends, people just go on and search the App Store for “lip sync” and Musical.ly is what pops it.

Ben: Makes total sense.

David: Yeah. Super cool. It’s now in spring of 2015 when they realize this is happening. Because growth has been slow, they decide on a couple of things. One, we need to make a decision and go all in on a particular use case, like classic enterprise software crossing the chasm-type problem of you have a broad platform that ultimately will be useful for lots of different things, but in the beginning you have to have one very specific use case to knock down that first bowling pin of why people are going to use the product.

They realized that they need to have one killer feature that they really prioritize in the app. This is where a confluence and of a bunch of things come together. They changed the onboarding flow to make it clear that Musical.ly is really great at helping you create lip sync videos. Two, they then start sending users regular notifications, like daily notifications with challenges of lip sync videos that they can create using the app. This starts driving people to keep coming back. People are coming back and consuming content but this starts driving people to come and create content on a more than a weekly basis.

This is the origin of challenges that ultimately the Yeehaw Challenge would be one of the biggest stuff that would help drive Old Town Road, but that’s still to come. And then the product model is super cool. If you think about Instagram, Facebook, Twitter, even Snapchat, all the successful Western social networks up to this point, the content that you see is based on who you follow. When people log onto the app and create accounts for the first time, who are they follow?

Ben and I were chatting before the show, we’ve been paying with TikTok over the past couple of days and Ben here were like, “I went in, I followed a bunch of my friends and none of them have any videos.” On TikTok and on Musical.ly, before that it didn’t matter. This is what they take from Kuaishou back in China. Because the content that the app surfaces for you is based on an algorithm of what it thinks you’re going to like completely regardless of who you follow. When you’re a new user onboarded for the first time, it prioritizes content that you have no connection to. That makes it super different from other apps but also this incredible opportunity.

Ben: Yeah. It’s about finding the content fit with your interest, not the person fit, like a person that you know, and not your own perceived content fit. It’s not like I would tell you that I like SciFi. What’s actually become quite clear to me from TikTok is what TikTok has learned. I like prank videos and I like extreme sports things. I’ve been using TikTok for a year and didn’t follow anyone and I followed people this week and didn’t improve my experience at all. It’s still the same stuff from people who I’ve never met that is just very well-tailored to me at this point.

David: Totally. Once they make this changes in the Spring of 2015, the apps just takes off like a rocket ship. Two months later, on July 6, it’s number one in the US iOS App Store. Since then, Musical.ly and then its successor, TikTok, has never fallen out of the top 40 apps, which is pretty incredible. This is the beginning of the rise that puts it not just onSnapchat trajectory, but now well beyond to Instagram and even potentially bigger.

There’s a really great talk that he did, Greylock and our friends at GGV, main venture investors in Musical.ly. There’s a great talk that Alex does with Josh Elman at a Greylock product event that’s on YouTube. We’ll link to it in the show notes; you should definitely go watch it. He talks about the philosophy behind this product decision and how it leads to Musical.ly really having a chance to become a social platform instead of just a utility.

Remember we talked about Vine. Dubsmash was out there at this point in time. There are a bunch of other competing apps, but what is it about Musical.ly that makes it special, it’s the Ruth B story from Vine. It’s allowing somebody who’s a nobody, who’s brand new to the platform, doesn’t have any special advantages like a celebrity or an influencer, they’re just somebody who has talent. If they put that quality content on a platform because of this recommendation algorithm, platform’s able to find it, surface it to a bunch of people, and make those creators who actually have talent really successful.

That’s what this becomes over time, and what TikTok has become is this really interesting two-sided network effect of a creator side and a consumer side, of which there’s a lot of overlap, but they’re actually pretty different. It’s a lot more like YouTube than it is like Instagram or Snapchat or Facebook.

On the creator side, even more than YouTube, really what it is, is it’s like a digitization of American Idol or America’s Got Talent, which is you’ve got these people who have aspirations to show their talents, whatever it is, whether it’s extreme sports videos, or comedy, or singing, or music. They believe that the platform, even if they don’t have a following today, if they make something great and they put it on the platform, there’s a chance that they’ll get discovered.

Ben: Yeah. The interesting thing about this is—two points I want to make—one, in apps where the expectation was set originally that I’m going to express interest in who I care about and then I get to follow them. I get really annoyed later when that promise is broken. Twitter starts doing the algorithmic timeline, Facebook starts to limit organic distribution and makes you pay for exposure if you’re a brand. There’s always things where you start to feel like they’re really messing with what the brand promise was here.

TikTok from the very beginning is, “We are going to show you what we think is the most engaging for you, and we make no promises.” Yeah, sure there’s that following tab, but that’s not where you live. You live on the tab where it’s, “Hey this is what we think you most like.”

David: The for you tab, which is like the explore tab on Instagram that nobody goes to.

Ben: Right. So, their algorithm is not public, but there’s been some really, really nice speculation by a great medium post by Matt Schlicht, where he talks about his experience dribbling stuff out and trying to reverse engineer the algorithm a little bit on TikTok. This is flashing forward a little bit, but I think it’s important to really understand what it’s doing.

It’s like it’s always AB testing. The vast majority of what you’re being shown is things that TikTok thinks you will like based on your previous viewing and liking history. Mixed in there is every video gets the waters tested. They can see how engaging is this. It looks for what is the conversion ratio from view to like. What’s the conversion ratio from view to finish viewing. That determines how it spreads wider and wider and wider.

It’s important to have a basic understanding of how the algorithm works. When we say things like, the platform truly rewards and spreads the most objectively liked or objectively good, talented videos, that’s actually what it’s doing.

David: It’s even more than this. As I was doing research and thinking about what made Musical.ly successful more than its peers at the time and what’s made TikTok such an incredible global phenomenon, it really is bringing back to the American Idol analogy. It’s like a personalized American Idol for every single consumer on the app.

In American Idol, it’s just a flat TV show. What can the producers go out and find from talent all across the country that’s going to have the broadest mass market appeal? Because they have to show that one single TV show across the entire audience.

On TikTok though, they can have all of these content and all of these niches and have the personalized algorithmic feed for each consumer. They’re able to take so much more content, talent, and creators, and make them successful because they only need to find their niche audience. They don’t even need to go find it anymore. TikTok is finding it for them.

Ben: Fascinating but important in knowing that you don’t need to find your own audience and you’re relying on TikTok finding it for you, it means you don’t get to form that direct relationship with that audience. It’s not necessarily going to lead to a follow or something where they’re going to see your next piece of content. You may be a flash in the pan if that’s your best and only great video. It truly rewards the venture investing philosophy espoused by Sequoia early on, you’re only as good as your last investment.

David: Yeah, or your last TikTok video. Let’s talk about what success for creators on TikTok means. This is another area where the platform is really different from the existing social networks that’s come before them. Alex gives a great talk on YouTube at a Greylock event. Greylock, our friends at GGV were the main venture investors behind Musical.ly before it was acquired and became TikTok.

In his talk, Alex has this analogy of building the social network of Musical.ly to being like founding and building a country, a nation. He says, “At first, you find the new world, the new land, and you have nothing. You just have a land. You just have real estate. You need to attract people to come to that land and to attract the people, you need to show them a path to success, you need to create this image of your new land of being a land of opportunity. The way that you do that is some version of a path to wealth creation, because ultimately it’s an economy that a country runs on a political economy and it’s the same thing with the social media platform.”

Alex says, “When users first come to a new social media platform, the first thing they’re looking for is fame.” That’s a stand-in for an economy. It’s like a proxy people believe once they have fame they can get money. He says, “But that’s not enough. Once they have the fame, they have to monetize. The platform that can generate the biggest revenue streams for it’s biggest users, that’s the one that will stick around.”

He says the way that they did this at Musical.ly is first, you centralize your economy. You make sure you put your hand on the scale. You make sure that some of those initial people that are on the platform, those initial creators, the ones with the most talent that you are subjectively judging as the arbiters of the platform, you make sure that they get rich.

Alex doesn’t talk a lot about how Musical.ly does this, but ByteDance with TikTok in China, just start paying content creators and people who are creating the best content, they pay them more money. They invite them to exclusive events and they get all sorts of perks. And they broker introductions between them and marketers and advertisers who are going to want to sponsor their content, either directly or through the platform.

That’s the first step. Then Alex talk about—this is a really amazing insight—he says, “Then though, you have to take a second step which is decentralizing.” You start with the centralized economy where you’re making sure that some people succeed, but then though you have to pull back and decentralize because if you want to keep attracting new creators—this is where Facebook and Instagram have really failed to make this step—you have to ensure that there really is an opportunity for everyone, that there’s the equivalent of the American dream.

If you’re someone who is new to the platform, you have to believe that there’s a real chance that you’d get discovered and that you can find success even though you’re starting from a cold start. This actually is back to the American Idol analogy. This is why the algorithm and the algorithmic feed within Musical.ly and then TikTok is so important. It makes it so different from Instagram.

Ben: Wow. There’s a lot there, but it’s a pretty interesting analogy to the criticism of America right now that the American dream has failed and actually, once you’re out one end of the pole or the other, you tend to stay there. You could see people arguing that our country needs an equivalent TikTokification.

David: Also, quite ironic that this vision is coming from a cross-border US and Chinese startup. The thing gets acquired by and becomes part of the largest startup in China. The two subpoints that he makes about this need to decentralize is one, exactly what you said Ben. You need to have true social and economic mobility within the platform. But just as important too (and it’s your point about making money), you need a viable middle class. Of course you’re going to have the elite, the upper class, the Little Nas X, people who become just so much bigger than anyone whom we could have ever imagined, but you also need viability for the middle.

There’s going to be people who just don’t have talent and then they won’t make it. But there are going to be people who have a few successes or have a relatively small niche. How do you help them succeed? This is something that the platform hasn’t fully, fully figured out in the West. We’re going to talk about this a bunch more as we go through the rest of the episode.

Ben: Yeah. It’s really interesting. There’s another point that’s important to hit on that’s part of Musical.ly’s success here. They really do something pretty innovative in overhauling the app to be all in on lip synching because they’re able to allow people to be a little bit creative and get a lot of output, which was kind of the magic of Instagram when it started. You could be a crappy photographer and put a cool filter on it and then no matter what, it was going to look cool. It very much rings true of the way to bootstrap a network, which is come for tool, stay for the network.

People were creating in Musical.ly because it could create a good product with little effort and sharing it everywhere else. Musical.ly watermarked every single one of those videos and made it very easy to share it everywhere else. If there’s one big difference to know between Musical.ly then and TikTok now, Musical.ly really grew organically because people we're sharing their creations that were far easier to make than you would think everywhere they possibly could.

David: Yeah. This aspect of Musical.ly’s growth is a page straight out of the Playbook of Instagram which did this exact same thing in the early days.

Ben: That applies for Twitter.

David: Yeah, exactly, was make a really, really great utility that need the content you were creating as a creator look much better in a very easy manner. Was hipstamatic the straight utility competitor to Instagram?

Ben: Yup.

David: Yeah, and then provide that really easy sharing functionality. Really it was Twitter that Instagram grew at the back of, and then Twitter shut them off the platform, but it was already too late.

Ben: Smash and grab, job accomplished.

David: Yeah. Musical.ly does the same thing on that front. Now, by 2016, Musical.ly is on fire. They have 10 million DAU and over 90 million users up from 10 million the year before in 2015. They’re grown 10X, close to 9X in 2016. There’s also something else very interesting going in the year 2016 in social network land. There’s a bunch of things that we’ve covered on this show. But 2016 is the year that Facebook and Mark Zuckerburg are trying to crack into China.

I think this was the year he made his annual challenge two-fold. One, he was going to learn Mandarin, and two he was going to go jogging all around the world. There was this famous moment I had totally forgotten about until doing research for this episode where he goes jogging through Tiananmen Square with a bunch of Chinese Communist party officials, and he’s working super, super hard.

At this point, Facebook is still on its exponential growth curve. They’ve acquired Instagram and Zuck is looking at China and seeing the billion people there. Renren is around, but nobody has really become the Facebook equivalent of China at this point. WeChat is still in its infancy. He thinks this is going to be the next big market for Facebook.

Ben: As we would see that did not quite turned out.

David: It did not quite turn out. In fact quite the opposite. But 2016, this is the WhatsApp acquisition has happened, markets tried to buy Snapchat several times, he’s acquired Instagram, he’s acquired Oculus. What’s the Facebook Playbook for entering this adjacent large markets? It’s acquisition.

I did not know this until yesterday. But it’s been reported that in August of 2016, Zuck invites Alex. Alex moved back to Shanghai at this point to be full time with the product and engineering team in China. Zuck invites Alex to come meet with him in Menlo Park and expresses an interest in acquiring Musical.ly. Apparently the next month in October of 2016, a whole team from Facebook goes out and visits Musical.ly headquarters in Shanghai. There’s serious acquisition talks going on between the companies. Just imagine what would have been if this had happened.

Ben: Yeah, which is crazy. It’s crazy to go to China because a very large part of the business was being run out of LA at this point.

David: Yes, Sta. Monica.

Ben: Sta. Monica office, there was a North America GM. Another Alex, Alex Hoffman who was running that so well that the perception by most American using this was this is not a Chinese app. I’m not using something not built here. I’m using a social media app like any other. I think that the product team in Sta. Monica had a lot to do with that.

David: Totally, but of course, Alex and Louis are the co-CEOs of the company. Apparently acquisition talks were quite serious but the deal falls apart and hasn’t been reported why, I don’t know if it was regulatory concerns.

Ben: I don’t think it was price.

David: Yeah, seems unlikely it was price.

Ben: Looking at a $20 billion pick up of WhatsApp. I don’t think it was price.

David: Yeah. We now enter 2017. Musical.ly is still on fire from a growth perspective. They’ve just come out of these discussions with Facebook, with renewed resolve to be an independent company and continue growing not as part of Facebook. The big priority for that year that the team that Alex and Louis decide on is to launch and grow back in their homeland, in China.

I remember they had launched the initial experiment in a bunch of countries including China, but then they’ve totally deprioritized and focused on the West. First in the US and then had grown throughout North America and Europe. But in China, it was a different story and it was a different story for a couple of reasons. One, because everything is different in China. If anyone, if any kind of Western social network or Western-adopted social network is positioned to succeed in China, you would think it was Musical.ly because the founders are Chinese and at least half of the company more than half of the company is based there.

But there are a couple of things that are different. One, the business model for content is very successful in China but very different from how it is in the West. In the West, almost all media companies from traditional media companies through all the social media companies monetized their advertising. In China, the advertising market at this point was not yet anywhere near the level of maturity that it is in the West. Instead, direct monetization is the most powerful business model for social lapse in China.

Ben: Which wasn’t something I realized until we did that Tencent episode. I realized that really, Tencent invented the modern video game business model and a lot of were content in the West is shifting.

David: Virtual goods, gifting, tipping, payments being a huge part of that, and a revenue generator for the platforms. But the gifting and tipping is really, really interesting. Now I’m back to what we are talking about a minute ago with the management of the economy of the network effect between creators and consumers on a platform like Musical.ly and TikTok. The China business model is actually really elegant way to do that. If you allow for virtual goods, gifting and tipping that the consumers can show their appreciation to the creators for any given piece of content or a series of pieces of content, and then those creators are able to exchange those gifts, convert it in part or whole into actual cash, now you can start to make a living and build a middle class on a platform.

This is happening in China and Kuaishou is the pioneer of this. Remember, Kuaishou’s user base is primarily rural, so advertising, ecommerce companies and the like, don’t really have all that much interest. This is pre-Pinduoduo days (which we should definitely cover on another episode), but don’t have all that much interest in reaching these audiences. Instead, they’re able to monetize through this direct monetization. That’s one big thing. Musical.ly has to figure out how to navigate this new business model or different business model in China.

Two, though (and this is going to become much more important as we get towards the end of the story) any time you talk about a media business in China, whether social or otherwise, you are operating in a very, very different political environment than you are in the West. We touched on this a little bit in the Tencent episode. Tencent and ByteDance is going to come in here in a minute.

Basically, any content company—platform or non-platform—in China employs thousands and thousands of censors that are going through all the content, working with the Chinese Communist Party, making sure that the content on the platform is upholding the laws of the party but even the wishes of the party that is super different from a Western social network, be it Facebook, Instagram, or Musical.ly at the time where anything goes.

In late 2017, after working on this for most of the year having this be the major priority in the company, Louis gives the talk at a GGV even where he—imagine he must be a pretty funny guy—says, “I regret not having entered into China’s market earlier. Now I can hear vibrating sounds everywhere making me uncomfortable.” Most Western listeners aren’t going to get what he means there, but by “vibrating sounds everywhere making me uncomfortable” he’s referring to Douyin, which is at this point has been launched by the number one content company in China, most valuable startup in the world, ByteDance. And Douyin means literally vibrating sound or shaking music.

Ben: It’s important to know, too, ByteDance before Douyin was doing very well with Toutiao. I mean, hundreds and millions of users. This is the best news and information technology company in China. When they see this Musical.ly thing is taking off in the US, they’re not effective at entering China, and the world is starting to shift where this short-form video thing that maybe didn’t make sense a couple of years ago in China does makes sense now, it’s effectively a fast follow where ByteDance is like, “Cool, we’ll leverage all have from Toutiao to go and build Douyin, which is going to look a lot like Musical.ly does in the US. We’re going to launch that here in China and beat them to their own country.”

David: Yeah. This is basically ByteDance’s version of Instagram stories here. A word about ByteDance, which we’ve referred to a bunch in this episode. Toutiao, which Ben just alluded to, up until this point was the core app of the company and the biggest and most important product. So what is Toutiao and why does this make ByteDance such a formidable competitor to Musical.ly?

Basically, you could think of Toutiao like Apple News on steroids. Toutiao literally means headlines. It is a news and content aggregation app. Maybe more like Flipboard back in the day. But unlike Apple News or Flipboard or whatever, people spend an insane amount of time on it and like you mentioned, an incredible portion of China, something like half of the internet users of China are daily active users of Toutiao.

More importantly, really early on, ByteDance realized with Toutiao that they couldn’t be limited by formats. They have text and news on there, but they also have photos. They also have long-form video and they also have short-form video. Short-form video within Toutiao is a big driver of engagement and content with the app.

The other really key thing about ByteDance and the reason why they have succeeded above so many of their competitors in China is that their algorithmic recommendations, just like we we're talking about with Musical.ly that made Musical.ly so interesting and different, are the best in the world. They have the best AI technology to quickly suss out personalization for any given user about what they’re going to like and then go scour this immense vast corpus of content that they’re bringing in to Toutiao every single day to find the very best stuff that you’re going to love across all different types of formats.

Ben: Yup and all vetted. Thousands and thousands of censors employed by the company to make sure that that aggregated content going to users is vetted.

David: Yeah. Talk about emote here and a super easily accessible adjacent market for Toutiao and ByteDance to get into is pure short-form video. They’re seeing the super success on Musical.ly in the West. Now, ByteDance has always talked about having aspirations of expanding beyond the Chinese market and being one of the first of the new generation of Chinese internet companies that is going to be a global company. They see what’s going on with Musical.ly and they say, “Okay, this is the perfect Instagram stories, be a copier and fast-follow model for us here.”

The other reason why this is appealing to them is, we talked a minute ago about monetization models in China and advertising versus direct monetization. ByteDance has direct monetization and is capable of that within their products as well. But they’re also the first company that’s really starting to crack the advertising market in China. Again, it gets back to this super sophisticated algorithm which gets to know users’ preference. Just like Facebook advertising where they know you so well, they can recommend content to you, they can also recommend ads to you.

Arguable I would say with Facebook, it’s better recommending ad content than it is at organic content because so much of the way in the algorithm is who you know and who you follow as opposed to Toutiao and ByteDance. ByteDance over the past couple of years has been turning this algorithm into advertising, too, and they’re really starting to build for the first time, a digital advertising market in China.

Ben: Yeah, and what’s important to know here is they launched Douyin that’s going swimmingly in China. Musical.ly frankly is scared at this point because they’re like, “Okay we sat around and missed China for too long. Now, we’re probably going to get beat there.” But similarly, Douyin is launched as TikTok in the US. It does not go well in the US. Musical.ly got this passionate, large, organically-built user base.

Again, I think it’s easy to gloss over the importance of feeling like it’s a native app for your country. There’s not a lot of people using WeChat in the US. Certainly the Chinese version doesn’t feel like it’s for people in the US because it’s not, and the American version is so stripped down that it doesn’t feel right either, but Musical.ly really did. That’s a huge piece of that through the Sta. Monica office. TikTok versus Musical.ly in the US to the extent that you want to win this market, at least so far going to be Musical.ly.

David: It’s interesting. The parallels to Facebook behavior with competitors are so apt here. First, ByteDance copied Musical.ly domestically in China with Douyin. That launched at the end of 2016. Nine months later, in the Fall of 2017, Douyin already has a 100 million users and they’re serving over a billion video views a day. They’ve got this amazing technology that they lifted right out of Toutiao better than anything Musical.ly has.

Two, they’ve got this incredible scale but they’ve got the distribution relationship with consumers from Toutiao. They’re plugging Douyin within Toutiao to all their users. At this point, all the platforms (and especially the Chinese platforms) are super smart to the distribution hack of sharing all your content on to other platforms and then exfiltrating these users. There’s no way that ByteDance is going to let Musical.ly come in into the same thing on Toutiao, they’re going to do it.

We’re now in the Fall of 2017. And that’s when ByteDance launches TikTok and takes Douyin internationally. No, it doesn’t get anywhere near the amount of traction that Musical.ly has. But it’s not really a full test. It’s more like a toe in the water.

Ben: Shot across the bow, too.

David: Yeah. It’s a shot across the bow. We’re now towards the end of 2017. Musical.ly has been struggling mightily in this big effort for the year to enter China, so they’re ready to re-entertain acquisition talks. I don’t know, I don’t believe Facebook was involved in this round but Kuaishou, the original short-form video platform in China, and Tencent are really interested in acquiring the company at this point in time.

Remember, Tencent is a big investor and an acquirer of content all around the world, not just in China. Owner of Riot Games, League of Legends, investor in Epic Games and Fortnight and so many other things.

Ben: And actually, amazingly, when you look over at ByteDance, somehow that company has never taken investment from Tencent or Alibaba.

David: No. Or Baidu, I believe. I think they are the first independent startup out there.

Ben: Yeah, that was the big first generation of the Chinese tech giants, was those thee. And every other one that we’ve covered that’s been a recent.

David: Xiaomi, Meituan, Pinduoduo. I believe Pinduoduo all took money from one of those three, the BAT, the big three in China.

Ben: ByteDance is much more a traditional venture funded mega unicorn.

David: Yeah. And think about Tencent, which of the BAT is ByteDance the biggest threat to, at least right now. It’s Tencent for sure and WeChat.

Ben: TikTok is Tencent’s miss. When you think about what each of those three companies were and their lose US allegory, you have Alibaba being the Amazon, you have Baidu being the Google, and you have Tencent being the Facebook-Twitter. It’s sort of the social. For both ByteDance and Musical.ly to come up developed in China under their nose and end up being today an $80 billion valuation company, is the first big credible threat to Tencent.

David: Yeah. Tencent is really motivated and interested in potentially acquiring Musical.ly. And that’s where shot across the bow from ByteDance launching TikTok internationally right around this time is super important. Once the dust settles, it’s announced on November 10th, 2017 that ByteDance, not quite sure Tencent is acquiring Musical.ly for between $800 million and a billion dollars. The exact number wasn’t announced, but it’s really interesting. You got to think about what drove that decision to sell to ByteDance. You have to think it’s the power of thinking about wow, look at these two platforms do together.

Alex actually takes some time off, but then comes back in and he is now running TikTok, all of TikTok within ByteDance and Louis, I believe, stays on fully all the way through ByteDance, but also if we were to sell and presumably sell for equity definitely to Kuaishou, potentially to Tencent, too, to one of these other companies, and we know now that we are going to have this direct competitor from ByteDance and TikTok all around the world, what kind of slog is that going to be?

Ben: It's a great point. It's interesting to know, too, the scale of both of these platforms at the time of the acquisition. It's like, what do they get for 800 to a billion? Musical.ly had 100 million monthly active users at this point and because of the scale of China, TikTok/Douyin had 500 million monthly active users. They're buying a big company at this point, not necessarily in terms of people or revenue, but that is a thing that tons of people around the world, and really the Western world use all the time.

David: Yeah. We'll get into this maybe [...] forward, but what happened otherwise a little bit. You have to imagine that Musical.ly didn't have a ton of leverage at this point in time because Facebook is already out. We don't know what happened, but unlikely that there's going to be an acquirer. You've got Tencent and Kuaishou interested. Tencent is probably the biggest point of leverage, but Bytedance is executing a build-or-buy right in front of them. There's very little imaginable path that Musical.ly either on its own or as part of Tencent is going to win as a big standalone network here.

Ben: Billions sounds like a big number and it was only up a little bit from the post money on the last round, but when you think about it, it's only $10 per monthly active user. When you think about what does Facebook make off a monthly active user per year in the U.S? It's like $25-$30. So, to be able to go and pick up what might be the next generation of social networks and get those users in perpetuity for $10 ahead, it's a steal.

David: Yeah, totally. They do the acquisition. Initially, Musical.ly and TikTok stay separate but then clearly this makes so much sense. Partway through 2018, they merged the platforms. They renamed Musical.ly as TikTok.

Ben: They don't. This is the craziest thing. I could not believe that this is how it worked because here's what I thought. You buy this and you already have the app installed in everyones phone. You deprecate the old TikTok in the Western world and you just rename Musical.ly to TikTok and boom.

David: Interesting. I assumed that's what they did.

Ben: Me too, and I can't quite figure it out why they did it the other way, but here's what they did. They dupe the backend database. So, they basically said, "If you have a Musical.ly account then when you log into the next generation of TikTok that we'll be putting in the App Store soon, you're entire account will be maintained, so your same credentials and everything.” But they actually created a new and combined app, put it in the App Store as TikTok and told everyone to go download it and say, "Download it and log in."

David: Interesting. You have to go download a new app. Musical.ly didn’t auto convert into TikTok?

Ben: I’m 90% sure. I love anyone to check my research on this and [...]

David: That is actually crazy. If that's the case, then everybody did migrate.

Ben: Here's the nutty thing. Bytedance spent a $1.5 billion over the next several months doing a massive ad campaign in the Western world for TikTok. They spent more than the actual acquisition in advertising dollars to make sure that they made a huge splash. Not only with new users and saying, "Hey, you should go check out this new TikTok app. It's great," but ensuring that all of the existing users moved over from Musical.ly.

David: I think we've seen this on a couple of episodes now, certainly on Disney Plus, our most recent episode. I think it's tempting as a technology company and especially as a social media company, but really any tech company, any consumer facing tech company to think that product and growth hacky distribution is always the key to success. That's wrong.

It's the key to success in the early days, when you are figuring out product/market fit and getting early growth, but then once you’re passed that point and you’re trying to go mainstream, you need to be spending and spending smartly marketing dollars. You need to be doing it on a scale that is going to get you to break through.

This is what Disney had done with other content forever, that they are doing with Disney Plus. This is what Netflix does, this is what Amazon does, this is what Facebook does, and this is importantly what Bytedance did in China, and had raised enough money to be able to do, learn the playbook there, and now they are running around the world.

Ben: Absolutely.

David: They merged the platforms in 2018. That's crazy. I didn't know that's all they did there. By the end of 2018, the combined platforms Douyin and TikTok have 500 MAU worldwide which is more than 2X Snap and already 50% of Instagram. It's the most downloaded app in the iOS App Store for all of 2018. Of course, downloads don't translate to retain users but still pretty impressive. Users spend an average of 52 minutes a day in the app which I believe is significantly higher than any other social network out there. This year, in 2019, TikTok has another 300 million MAU to get this to 800 million MAU total worldwide. They are approaching Facebook and Instagram scale here.

Before we wrap up history facts, we can't not talk about the coda here with Facebook and US, and China and everything going on between the countries and indeed between these companies right now. As we all know, 2019 hasn't exactly been a banner year for US and China political relations and we talked about this a lot in the first episode of the season on our Huawei episode. In January 2019, the think tank Peterson Institute for International Economics comes out and says that TikTok is a "Huawei-sized problem." I was thinking about this during our Huawei Episode. It could be potentially larger than a Huawei-sized problem in terms of a national security threat to the US.

Particularly, for many, many reasons, but one specific use case is that lots of military personnel use TikTok. There are many videos of people in western militaries, they are using it and TikTok is getting their location data, their facial data, biometric data through that, which the company is owned by Bytedance which is a Chinese Company. If the Chinese government were to request that data from Bytedance, even if they didn't want to give it to them, they would legally be forced to comply and give that data to the Chinese government.

Ben: This news changes everyday so this may even change by the time we even release this episode. The Bytedance executives are regularly asked this question and regularly say,"Oh no, we won't do that." But as you say, you would be legally—

David: They may want not to do that. Alex has talked about this. For the version of TikTok in the western countries, not Douyin, the data is actually stored in the U.S. I believe on AWS, on Amazon servers on the US. There’s that, but again, legally, it's owned by Bytedance. Would they have to give that data to the Chinese government if they ask for it?

Then this becomes even more acute in Spring of 2019 and through the summer and through today when the protest in HongKong start and interestingly, they're blowing up on social media all around the western world, particularly on Twitter and so much discussion of it everywhere, but interestingly, not so much on TikTok. Then people start asking the question, "Why aren't people talking about the HongKong protest on TikTok?" Is it because what TikTok says, "Hey, this is a platform for goofing off. This is for making fun, entertaining content," or is it because TikTok is censoring post about the protest?

Ben: Yup. So listeners, as you can imagine, it makes some US politicians uneasy and saying,"Wait a minute, this is a thing that's taking off our country. Surely, this must be subjected to CFIUS review."

David: The Committee on Foreign Investment in the United States, which we talked about several times on this show.

Ben: Yeah. If a foreign entity wants to come in and buy a massive AI company or a massive defense company. It makes sense that the government would say,"Well, let us look at this first." We have this really interesting scenario here where these are both Chinese companies. One with the presence of the US, but tons of users in the US and now close to two years after this acquisition got done, there's now politicians calling to institute [...].

David: Yeah. Formally, a CFIUS review has been opened on the Musicl.ly acquisition which is two years ago, it's already closed in the past, but when it was done, there was no CFIUS review. I mean, (a) because I think people weren't really thinking about this at that time, but also (b) as you say, it was a Chinese company. Super interesting.

I mentioned Facebook. I think you know that all of what we said is true and these are really serious questions and potential problems and things for TikTok, the US government, the Chinese government, Bytedance, and all of the ecosystem to grapple with. At the same time, conveniently, who is out there fanning the flames of this fire and the controversy? Mark Zuckerberg and Facebook.

Remember, 2016, Facebook almost bought Musical.ly and their number one priority, Zuck’s number one priority for that year was figure out how to enter China. Here we are in 2019, and Facebook is completely out of China and proud of it because they are under tons of political pressure (to put it mildly) here in the US. They also now have this emerging threat to their social network hegemony in the west with 800 million monthly active users in TikTok. November 2018, a year ago, Facebook launched Lasso which is their TikTok competitor.

Ben: Their latest attempt to make a really jank independent app that's a copy of.

David: Super jank, fails miserably. Then in 2019, this controversy really starts to grow. Just a couple months ago, in October, Zuckerberg gives a speech at GeorgeTown University where he calls out all Chinese-owned social media in general about these issues around national security, around privacy, and around censorship. But he specifically calls out TikTok and Bytedance as a national security threat and a threat to western values and ways of life.

He may not be wrong, this are super, super important questions but it's also a really convenient misdirect from the equally valid and important questions about Facebook's role in influencing elections, Facebook's own role in free speech, et cetera. It's against the backdrop of all of this that the CFIUS review does get extensiated this month, going back and relooking at this Musical.ly acquisition. It would be really interesting to see what happens. This is probably going to take more than a couple months. Heading into 2020, if CFIUS were to rule to try and reverse retroactively this acquisition, what would happen?

Ben: How can the US force two Chinese companies to uncombine? I guess there's US shareholders of Musical.ly and lots of them. Maybe even more than 50%. I have to assume its more than majority owned by venture investors given the four rounds that they did.

David: It's really interesting, going back to benefits true of what you said about how they integrated Musical.ly and TikTok and if they actually used the TikTok app, the core infrastructure, and migrated Musical.ly onto it. It seems crazy from a product decision, but I wonder if they were thinking about this, if this is now going to be an argument of a potential US. governmental review. This is TikTok. This was never Musical.ly.

The last piece of the puzzle here that we are definitely going to watch play out, a year ago when Facebook launched Lasso (which you've never heard off), it failed miserably. But just a couple of weeks ago at the beginning of November in 2019, Facebook and Instagram launched a test of a new feature in Brazil, in the Brazilian market that they are calling Reels. Just like when they launched stories and copied Snapchat, this is a much more fully-featured TikTok competitor in a new tab, natively within Instagram, so we'll see how that performs. The plot thickens.

It's interesting, one of the reasons we spent a lot of time talking about the core of how the product operates at Musical.ly and TikTok and the algorithmic recommendation, is (1) because that's the secret to the company's success, but (2) it may end up being the moat that protects them here from Instagram copying them. When you think about Snapchat, when Instagram copied stories, it was the same network model on Snapchat as this on Instagram of I'm following, I'm interacting with people I know, or people I care about, or influencers, or whatever. Here, it's not. Is Instagram going to be able to recreate algorithmic feed within Instagram? We'll see.

Ben: That's a great question. Maybe fundamentally different in the way that stories fit in nicely, this may not fit in so nicely.

David: Yeah. All right, acquisition category?

Ben: For listeners who are new to the show, we like to categorize an acquisition whether it's a people acquisition, technology, product, business line, asset, or other. I actually call this one an asset acquisition where the asset they were acquiring was the audience. They were buying distribution instead of paying to build their own distribution. I don't have enough context to know if they actually needed to buy the product or not. I looked at this more like buying distribution.

David: At some point, I can't remember which episode, maybe it was Zillow and Trulia, we added consolidation as a category. I think that's where I would go here.

Ben: It's born [...] when you add more nodes to the network.

David: Yeah. Even with all the differences we talked about, at the end of the day, this was the same product here, with different versions of it, but the same, filling the same need and use case. Just like Zillow and Trulia, or Rover and DogVacay, by being able to consolidate these two companies and these two user bases on both the creator and the consumer side, they were able to drive a lot more scale and network effect sooner.

Ben: I definitely buy that, which I'm going to hold my comments on until grading.

David: All right, the suspense builds.

Ben: I think we pretty much covered what would have happened otherwise. Do you want to go into playbook?

David: Yeah. The biggest thing for me is that I had no idea about all of these dynamics underlying how Musical.ly, TikTok, and Bytedance work, and this really orthogonal view to how all other western social networks operate in having content, being driven by the actual content, and algorithms recommending it as opposed to the people making it. I think this is a huge trend that is super important for entrepreneurs to be thinking about across all types of content companies.

Ben: Absolutely. I would dive into that, but I want to take one step back first and say the way to emerge as a new social network, there's a narrative violation here, whether or not you like the term narrative violation.

David: Yes, I love how Acquired finally made the New York Times for narrative violations. Amazing. Thanks, Erin.

Ben: A narrative violation for sure happening right now is that you can't create a new consumer social network like, “Sorry, we live in the post-Facebook world and that's not happening,” and yet, TikTok did. So, what happened? The way that I was thinking about this is initially, to emerge as a social network and sort of “the one,” it was simple. You could just enable people to communicate with each other with messages or whatever, wallpost, and show information about themselves. Things like basic Friendster or early Facebook. This was very primitive creative expression. It was basically just a communication channel. But the way to disrupt that world is to create a new canvass for people to easily be creative within.

This comes a little bit from Eugene Wei’s theory from this amazing post, Status as a Service, but you basically need a canvass that enables people to be creative without doing a lot of work and to have a large amount of variance in what can be created, because this will facilitate a new generation of creating, sharing, following, and thus TikTok was able to be explosive in growth by nailing the format of this new method for creative expression.

You can consider that basically like an amplifier for the work that one has to put in on what they can get out the other side. By enabling this new format, this new canvass that you have the ability to paint on and be more creative than you thought you can be, it naturally attracts people to it. Then you can bootstrap a new network on top of that. TikTok is about sharing with anyone where Facebook and Instagram where about sharing with friends.

David, this is where I want to bring in your point. There's a much higher K-factor or the viral coefficient when the content can get distributed to that much larger group. This really gets to your point of winner take all. It's really like diving into Metcalfe's Law, which is that aphorism that the value of a network is proportional to the square of the number of connected users in a system or equals N squared. The flaw in applying this to the Facebooks of the world is that with something like Facebook, it's not actually N squared because when a new person I don't know joins Facebook, it's extremely unlikely that it actually increases the value for me. But with TikTok, that's not true.

David: It actually is N squared.

Ben: Yeah, this is a totally new type of network effect that we are looking at, that actually acts as a global system instead of a whole bunch of stitched-together bifurcated personalized systems.

David: As you were saying that, I actually think this trend and theme is even bigger than we've been talking about because for the last 15 years, the phrase “social network” has meant a technology-driven platform with a personal connections on it. It's just been like the friend model of Facebook, the follow model of Twitter, or Snap, or Instagram, or whatever.

It's just this implicit assumption that all social networks are based on relationships between people, but that's not at all what TikTok is. In many ways, YouTube is much more similar to this, too. The relationships are about the content and it's about relationships. It's one to many relationships between creators and consumers and unlike YouTube though, on TikTok, a much higher percentage of consumers also become creators.

Nowhere near 100%, not as high as Instagram but much much higher than YouTube because the barriers to creation is much lower because of the short-form format versus the long-form format on YouTube. Actually, I think you could make one of two arguments. Either that this represents a wholesale rethinking of what “social media” is or it's a different category altogether.

It's not social media, it's pure media, like UGC driven media and to this narrative violation of you can't create a new social network, maybe that's sort of true. If you think about how Snap came on the scene and competed with Facebook, it was a competing social network. It's just that they found a separate network of users, in younger users that weren't attracted to Facebook, but it was a substitute product and same with Instagram.

This is not that. It really isn't. Even though most of the users are young right now, that is not going to be the case forever. This is a network that's going to have a broad universal appeal just like YouTube because it's not about the people, it's about the content, and they can find the best content for you whether you're 9 or 90.

Ben: What you are really seeing is the purest distillation of social network versus social media in a way that we blur them together before. This is very much a social media, really not a social network, whereas if you look at something like Facebook, it's much more [...].

David: It's a social network.

Ben: Why TikTok has been so explosive is it's all the benefits of YouTube like true social media where someone creates content and it could benefit literally anyone around the world, not just their little community of people that they are friends with, but it's also the best of Facebook or Twitter where it satisfies that instant gratification, short-form, in-the-moment, bite-sized content.

David: Yeah. I love YouTube. We got to redo that episode because we were so wrong. But I'm never going to whip out YouTube while I'm standing in line waiting to check out at the register, but I might whip out TikTok because all of the videos are 15 seconds or less.

Ben: Yup, which actually this is a double-edged sword. This leads to my bear cases on [...] and there's a bear case that is SoftBank-invested, which is it's own bear case, and you can also say $80 billion valuation—

David: In Bytedance.

Ben: Yes, but the one that is more based on fundamentals, is...

Facebook has been entrenched in my life since 2005 or 2006 because it carries all the people I have ever met with me. And yeah, a lot of them fall off the network -- and maybe some moved over to Instagram and don't post on Facebook -- but that's based on a really solid bedrock of important things in my life.

With TikTok being so much about instant gratification -- and me not really knowing any of the people I follow -- will it actually have that sort of staying power that Facebook has had by having that social network that's important to you?

David: I think that's a really good question.

Ben: And to get back to our previous conversation, maybe social media has higher short-term value because of the incredible propagation, but social networks have more long-term staying power.

David: I think it is even more important for TikTok and other potential social media networks like it, certainly like Toutiao to constantly refresh with new fresh relevant content because that's the lifeblood. If the firehose of new content creation that is coming into TikTok everyday, if that dips or dries up, then the algorithms aren't going to have amazing new content to recommend to people and the value of the library of old content probably gets stale much more quickly than the value of digitizing your relationships with all your friends.

Ben: Which means the better comp here is actually YouTube than Facebook.

David: Yeah, totally.

Ben: Grading?

David: Let's do it.

Ben: I have a take. I was thinking about this before jumping on. The task of grading, if we think of ByteDance will make back the billion dollars they spent on Musical.ly with their current business model, it's tricky to back into that based on CPMs or average revenue they make today per user. To take a different angle at it, I want to talk about an episode we haven't done which is Facebook buying WhatsApp.

Without doing any research, I preliminarily think that's going to be an A and the major reason being Facebook seems to have a monopoly on being the dominant social network. That allows them to be the best marketing channel in the world to reach consumers targeted by demographic or interest. If you think about it, before TikTok there were six social networks with over a billion users. I looked this up a few minutes ago, it's in order: Facebook, YouTube, WhatsApp, Facebook Messenger, WeChat, and Instagram. This is global.

Facebook owns four of the six billion plus person social network or social media properties. If you take that lens on it, Facebook, which is a $200 billion market cap company only having to drop 10% of their entire enterprise value to protect against the greatest threat to them out there, it's actually still a fantastic move at that time even if they are not monetizing WhatsApp now. It's basically now a $20 billion insurance policy to allow them to keep printing that $20 billion in net income that they generate every year.

Bringing it back to Musical.ly, which is only a billion dollar acquisition, and if you believe that that was essential to enable TikTok to become the insane platform that it is today, somewhere between half a billion and a billion MAU. David, I think you estimated it at like 800 million.

David: Eight Hundred million, even though assuming nothing major changes, it will be a billion soon.

Ben: Yeah, it seems like a no brainer that it will be this sort of first legitimate challenger to Instagram, which is really what Snap was supposed to be but fell short of with only 300 million monthly.

David: But then again, I think the difference is, yes, Snap’s network effect was relegated to a specific demographic of people. I think there's a chance that's different for TikTok.

Ben: I think you are right. I think that's why if you take the top down market view and analyze it based on buying a ticket to attend that billion dollar social network dance, I absolutely think it was a fantastic purchase and probably one that will go down in history as one of the best ever, if (1) TikTok can hold on and can actually, to the point that we are talking about earlier, create lasting value, to have staying power, to be able to make sure that even though they don't really own those personal relationships that are an important part of your life on an ongoing basis, and (2) really start to turn on the gas and monetize like Facebook has been able to.

David: So, you are an A?

Ben: I'll say A.

David: Okay. I have one overarching caveat to all of this. I'm also going to be an A, but one overarching caveat which is all depending on what happens with the CFIUS review, that could throw a huge wrench in everything here.

Ben: It could be multiple of billions of dollars of lighting money on fire.

David: Totally. We are going to grade this just from a peer business perspective, assuming that there was no review of it happening when the acquisition was done over the last couple of years and let's assume that the acquisition doesn't get reversed. That's it. I'm also an A for, I'm not an A+ though, so I'm an A because for two reasons.

One, this is what makes Bytedance exciting. All of these dynamics, that's the reason why it was and is the highest valued startup privately held company in the world. They would have been completely fine without Musical.ly, but I think they would have had a very hard time penetrating into the West. They would have been able to expand outside of China into other Asian countries but getting into the West and specifically into the U.S. in such a big and quick way, would have been really hard. This is their path to do that one.

Two, as we talked about in acquisition category for consolidation, just generally for these two products in the space, combining them is going to allow them to grow much faster and with far fewer road blocks. Again, it all goes back to the flywheel effect between content that the creators are creating and the consumers consuming that content, and kneading the firehose of new compelling content by getting all of it all around the world onto the same platform. That's really going to drive things much faster.

I think it's not an A+ though, because to me, an A+ is like this one company and this one acquisition created a new category like an Instagram. Facebook was not going to succeed at doing Instagram on it's own, I forget what their clone was called. They needed to buy the company (where Apple and Next). I think that's why I'm not an A+, but with the caveat of CFIUS, totally agree I'm an A.

Ben: Cool. Do you want to do our first carve-out in a while?

David: Yeah, let's do it. I've got two saved up. One because we haven’t done it in a while and two, for the holidays. My first carve-out is the Nintendo Switch Lite. I bought it when it came out and it's awesome. I haven't owned a video game console in years, but I'm travelling for Thanksgiving so listeners, if my audio call is a little bit on this one, I apologize. It's just been so great. I played no new games on it. I just bought Breath of the Wild on Black Friday, but haven't played it yet.

Ben: You shared this with me a couple of weeks ago that you have a switch and you've only played the classic Nintendo games.

David: I've only been playing Super Nintendo games and then I bought a few. There are a bunch of both Indie titles and reissued games on previous consoles in the Nintendo EShop that are all so good. I'm not even that excited to play Breath of the Wild, I'm just enjoying going back and playing like Super Metroid, Castlevania, and all of these stuff. That's one.

My second carve out is Jenny and I were with my family for Thanksgiving and we went out last night and saw the movie Knives Out with Daniel Craig. I knew very little about it. I wasn't expecting it to be awesome, but it was really fun. Super great holiday movie, really well done.

Ben: I got to see it. Mine actually has to do with this episode, but I won't tell you how until the end so I'm going to recommend a Nine Inch Nails album from 2008.

David: I know where you are going on about this.

Ben: I remember discovering this in college. First of all, I'm a big Trent Reznor fan and a lot of the harder, more classic Nine Inch Nails stuff has when you’re really going to have some good speakers around and rock out. Unbelievable live shows. All of the soundtracks that he's done with Atticus Ross, including Social Network, Gone Girl, and most recently Watch Men have been awesome. He released this album called Ghost I-IV. It's a four disk album and it's actually my favorite music to work to. It's sort of deconstructed tracks, they are very minimalist tracks, and it's great to put it on think music.

My two favorite tracks on it are Track 26 on Ghost III, Track 29 on Ghost IV. You should go play both of those right now on Spotify because they are great, but the one I recommend today is Track 34 from Ghost IV which is the sample that is the base of the beat in Old Town Road.

David: So great. We'll link in the show notes. The New York Times did an awesome both a text piece and also a video reporting that is on YouTube, where they go and interview the producer in the Netherlands who used the sample and made the beat. It's so good.

Ben: It's awesome. It's one of the things where I always knew listening to Old Town Road, I know something like what this beat is but I never put two and two together and then watching that New York Times video, I was like, "No way. It's actually Trent Reznor under this whole thing." I just thought that was the coolest thing.

David: Amazing. Trent Reznor and Billy Ray Cyrus, Lil Nas X, and Tiktok. I’m thinking of the name of the producer from the Netherlands. But anyway, that is a true 2019 moment, if there ever was one.

Ben: Absolutely. All right, listeners. That is all for today. If you liked this episode or anything that we've done, please don't be shy about sharing it on social media or leaving us a review on Apple Podcast. We haven't mentioned that for a while, but it's an awesome way to help the show grow.

I learned recently that the iTunes charts are actually dictated by the number of subscribers per unit of time in the Apple Podcast app, so if you listen in a different app and you want to help us bumped up the charts, you should go and click subscribe in Apple Podcast. I think we are starting to get into that territory where we’re getting a bunch of nice organic traffic from people looking for new technology shows to listen to and seen us on the chart. Thank you so much for doing that, or leaving a review, or sharing with us. We really deeply appreciate you helping to grow the show.

David: By the way, if you are an entrepreneur or aspiring entrepreneur and you’re thinking about making the TikTok for a podcast, get in touch with us.

Ben: David, I have so many; email you after this.

David: Awesome.

Ben: If you want to go deeper on any company-building topics, you should consider becoming an Acquired Limited Partner. You can click the link on the show notes or go to glow.fm/acquired and all new listeners get a seven day free trial. Lastly, if you want to join us with Dan Lewis at the Convoy Live Show here in Seattle, that link is at acquired.fm/liveshow. With that, thank you to Silicon Valley Bank and we will see you next time.

David: See you next time.

— Note: Acquired hosts and guests may hold assets discussed in this episode. This podcast is not investment advice, and is intended for informational and entertainment purposes only. You should do your own research and make your own independent decisions when considering any financial transactions.

— Transcript: (disclaimer: may contain unintentionally confusing, inaccurate and/or amusing transcription errors)

[flutterwave]

In another significant achievement for the highly lauded company, Flutterwave — which has the distinction of being one of only seven unicorns (a startup valued at over $1 billion) in Africa — was recently ranked as Fast Company’s 2024 No. 1 Most Innovative Company in Europe, the Middle East, and Africa. 

“We’re thrilled,” said  Flutterwave founder and CEO Olugbenga “GB” Agboola. “Innovation is an integral part of our core values, which we continue to adopt across all parts of our business.”

 The yearly list honors businesses that make impactful advancements and reshape their industries through innovation.

Flutterwave earned a spot on the list for its highly inventive approach to fintech. Flutterwave is responsible for a significant portion of Africa’s payments and plays a vital role in maintaining the continent’s digital monetary infrastructure. Its current transaction count is 550 million unique transactions.

Creative beginnings

Flutterwave launched in 2016, at a time when moving money in Africa was mired in slow digital financial processes. When companies worked across national borders, they often endured logjams stretching from days to weeks to transfer funds, resulting in delays in paying workers, buying supplies, and meeting contracts.

Flutterwave was built to change that.

Drawing on Flutterwave founder and CEO Agboola’s tenures  at Google Wallet and PayPal, the company launched a platform to process digital payments at modern speeds. Flutterwave gave enterprise companies the ability to work faster without compromising security. The company’s early success revealed the need in the market, and Flutterwave exploded in popularity.

Today, it operates in a majority of Africa’s 54 countries and processes transactions in 150 different currencies.

The company has drawn the eyes of investors from Lagos to Silicon Valley, leading it to unicorn status and a 2022 valuation of $3 billion during its Series D fundraise.

A drive to innovate

Over the past year and a half, Flutterwave has made significant strides in expanding its services for global enterprise businesses. The company has developed solutions for payouts and collections that support the growth of multinationals across Africa.

 But while it was founded on a premise of making cross-national payments in Africa fast and easy, the company didn’t stop there. In the years since it launched, it has widely expanded its services. Today, it serves more than just enterprise clients, providing new ways for Africans to use the payment platform in life-changing ways.

 “Every day, we come to work, and we live and breathe innovation,” Agboola said.  “We’ve since built out Africa’s biggest payment network by reach, created solutions that make payments solutions, currency exchanges, e-commerce, and remittances easier for global companies selling in Africa, local businesses, and Africans alike.”

Through its remittance service, known as Send App, Flutterwave allows members of the diaspora to wire money back to Africa in a fast and frictionless way. Currently, Send functions across the United States and Canada, as well as in many European countries.

Since 2021, a significant 70% of transactions on Send App were for family support, such as medical and educational payments. Users span generations — millennials make up over 50% of users, Generation Z 22%, and Generation X not far behind at 20%.

Partners in progress 

Fast Company’s recognition places the payments technology firm alongside other industry leaders like Nvidia, OpenAI, and YouTube, which have all previously been recognized for their forward-thinking approaches.

To enhance its engineering and product development, Flutterwave partnered with Microsoft to scale its payment solutions on the Seattle company’s cloud platform Azure.

Additionally, a collaboration with Token .io has enabled open banking for customers in the United Kingdom and the European Union, connecting African businesses to the wider global market. These partnerships have solidified Flutterwave’s position as a preferred payment technology provider for multinationals seeking to enter African markets.

In addition, the company’s collaboration with the streaming platform Audiomack allows African music artists to monetize their art, and Flutterwave’s integration with Google Pay, Apple Pay, and international card payments enables Send App users in the United States, Europe, and Canada to send money to Africa easily.

Fast Company’s Most Innovative Companies list is a highly anticipated feature that identifies global leaders in innovation through a rigorous selection process. The comprehensive guide spans early-stage startups to some of the world’s most valuable companies, highlighting the bleeding edge of today’s tech landscape. The complete list is available online and in the iTunes app.

Brendan Vaughan, Fast Company’s editor-in-chief, said: “Our list of the Most Innovative Companies is both a comprehensive look at the innovation economy and a snapshot of the business trends that defined the year. We face daunting challenges on many fronts, but the solutions we celebrate in Most Innovative Companies give me plenty of hope about the future.”

[gromyb]

Unlocking Success: Strategies to Expand Your Business in Key American Cities - San Francisco, Philadelphia, Seattle, and Houston

Every city is a source of different opportunities and challenges that can be used to increase chances for success. Some of the front runners for expansion to tighten up schedule would include San Francisco, Philadelphia and Seattle with Houston as well.

• San Francisco: The Tech Hub

The survey only covered half of the Festival's main data. Secure your spot now to get a special preview of part 1 and discover the career paths digital nomads take when they change jobs. City A MInteractives NEWS provides news analysis, highlighting the need for long-term solutions to temporary issues. Last week in City A... Tech heart is beating in San Francisco. Thanks to the city's ecosystem that allows many tech giants and leftovers, it is easy for startups. This magnet for innovation attracts top talent from across the globe so that there is a constant exchange of ideas, thereby making it grow into an intellectually vibrant place. Tips for Networking & Partnership Building with TecLocals Networking is key to succeed in San Francisco. Remember to attend local tech meetups, join groups in the industry and participate in hackathons.

• PHILADELPHIA: THE CENTER OF HISTORY AND CULTURE

Which Brings Us Back to Market Diversification... Including One Part of the Very Large Customer Base in Philadelphia. The diversity of the Philadelphia market is as expansive as its history. This makes the consumers of the city interesting; SA has a rich cultural heritage and different taste buds, which is ideal for businesses that intend to serve distinct needs. Utilizing Local Culture and History Tactics in Marketing Use historical landmarks and cultural components to the city of Philadelphia in marketing efforts. Being able to connect local buyers with the rich history that a city offers and vibrant culture can really give your brand some relatability. Health And Education Sector Jobs Philadelphia is home to celebrated hospitals and universities. Businesses can look at providing path-breaking solutions and partnering with local institutions for businesses in the space across various verticals.

• Seattle: The Innovation Capital

These Platforms Are Based In Seattle & Overview - The Virtual CTO

The Seattle-area is a tech/e-commerce juggernaut, with talismans [sic] like Amazon and Microsoft in its backyard. This huge market is the best breeding ground for startups that revolutionize and innovate technologies.

How to Utilize the Local Talent Pool and Workforce

If you are serious about hiring in Seattle, learn how to partner with local universities and tech companies. Attend job fairs, provide work placements and joint working on research studies to attract and retain highly skilled individuals.

The Significance of Sustainability and Green Business Practices

Sustainability is part of the DNA of Seattle. Adhere to green business practices like sourcing renewables, and minimizing waste - this will be in keeping with local values as well attract the environmentally conscious consumer.

• The Energy and Business Hub - Houston

Assessing Houston in the Energy and Beyond

Energy is the lifeblood of Houston, but its economic reach also extends to healthcare, aerospace and manufacturing. Unique and multifaceted business environments in cities mean that market entry can only be successful if the dynamics of a city are well understood

Engagements with Local Industry and the Business Groups

Join local business networks & associations in Houston and attend industry specific events. Establishing connections to the key players - will become networks that can open doors for partnerships and business deals.

Healthcare, Aerospace and Manufacturing Opportunities

Houston is home to many of the nation's top medical institutions and research centers; so it has become a hub for healthcare. Aerospace and manufacturing also look promising. This is the area where businesses can look for rich potential areas of growth.

• Market Research and Knowing Local Demographics

Why it is Important to do an Extensive Market Research in Every City

Research is Paramount to a Successful Expansion Local demographics and preferences, as well as economic conditions also allow for a more tailored approach to market business strategies.

Demographic Data Collection Applications

Use sources like census data, market research reports and business directories. This data can provide useful insights into population traits as well as procurement habits and industry climate.

Adapting Business Strategies to Local Markets

Tailor business strategies to fit local requirements and preferences. This methodology guarantees an effort-relevance and success-likelihood in every market being targeted.

• Establishing Your Local Brand with Marketing and Promotion

Tactics to Create a Compelling Brand Identity in New Markets

Based on your target market, shape your brand identity to local taste. A consistent message, visual appearance and belief system across platforms make for a more reliable brand.

Local SEO & Digital Marketing Techniques for Beginners

Local Search Optimization for a Better Online Visibility Keyword targeting with Google location ads, maintaining a strong presence on the map and using social media to connect those in your area.

Event and Community Engagement

Hold Community Events-including hosting some. Partner with Community-Based and Nonprofit Organizations This shows local consumer focus and builds great relationships in the community.

• Navigating The Local Regulatory Landscape

City by City: Untangling Business Regulation and Compliance

Every city has its own rules and compliances for small businesses. Knowing these sets of rules is necessary to avoid legal hurdles and proper working.

How to Interpret and Apply Global Laws Locally

Seek local attorneys, business consultants. Health Ministries will be well-equipped to provide guidance on necessary regulatory requirements as well reform business practices in accordance with local laws.

The Relevance of Legal Counsel and Local Expertise

Getting an attorney in place on the ground lets you know everything that's going to happen and what they'll need - a property is one thing, code-wise while another city would ask for different things. Legal service providers help you navigate the often complex and arcane local legal frameworks.

• Building Relationships Pages Networking & Collaboration

So, It's important to network with local business leaders and organizations

Get to know the local business movers and shakers. #Networking with other businesses is a great way of gaining insight into what education or employment opportunities may be available locally. Which nurtures further the relationships with your local business community and starts supporting one another

Meeting Industry Events and Conferences Strategy

Conferences and trade shows of your sector. Such meetings are a good time for networking, knowing about the trends emerging in market and getting connected to future partners or clients.

Partnering to Grow and Support Each Other

Local businesses and organizations can connect you to new customers. Such collaborations result in collective expansion, resource sharing and market positioning.

• Conclusion

The launch in San Francisco, Philadelphia, Seattle and Houston has significant growth potential. With the right strategy in place, i.e. networking, market research and localization among other measures to ensure that your business appeals not only abroad but at a domestic scale can be successful within these growing cities. Significant potential for businesses means they must act quickly to capitalize on these new and rapidly expanding markets.

­­­­­

[kabirshahni]

Amperity reveals marketing data platform and Microsoft partnership as it aims to become Seattle’s next great startup

Amperity reveals marketing data platform and Microsoft partnership as it aims to become Seattle’s next great startup

GeekWire’s in-depth startup coverage tells the stories of the Pacific Northwest entrepreneurial scene.

Amperity co-founders Kabir Shahani and Derek Slager. Photo via Amperity.

Amperity has top talent, solid venture investment, and a tested solution to a pressing problem. Now the company is coming out of stealth mode to share its vision with the world as it aims to become one of Seattle’s top new startups.

Kabir Shahani and Derek Slager are back at it again, four years after selling Seattle-based healthcare marketing startup Appature to IMS Health in 2013.

A year-and-a-half ago, the entrepreneurs teamed up for another go in the marketing automation space, only this time with a much bigger vision for a product tackling a much more difficult problem.

The result is Amperity, which today lifted the hood on its technology that helps some of the world’s largest companies better understand their individual customers by connecting disparate data sources from across the internet.

The 40-person startup raised $9 million in February 2016 from Madrona Venture Group — which participated in the initial venture round for Appature in 2009 — along with a who’s-who list of angel and venture investors like Liquid 2 Ventures founder Joe Montana; Founders’ Co-op partner Chris DeVore; former Microsoft corporate vice president S. Somasegar; Concur co-founder Rajeev Singh; former drugstore.com CEO Dawn LePore; Isilon Systems founder Sujal Patel; and former ExactTarget chief marketing officer Tim Kopp, who now is a partner at Hyde Park Ventures.

Amperity used that cash to build out its team and create a marketing technology platform which ties together unorganized data about individual customer habits and helps clients fine tune their targeted marketing campaigns.

Based on their experience at Appature, which helped healthcare companies track and enhance marketing campaigns, Shahani and Slager knew that there was an opportunity across various industries to better leverage data to create a more complete view of a customer. They worked with Dan Suciu, a computer science professor at the University of Washington and a data management expert, to help figure out how to connect customer data across different sources without a unique identifier.

“We spent a bunch of time with Dan last year to really understand if this was technically feasible — how to handle this scale of data and how to apply machine learning to this problem,” Shahani told GeekWire this week.

Amperity had early pilot customers test its technology earlier this year and saw “extraordinary results,” Shahani said, with revenue increasing and customer acquisition costs dropping. The startup has continued to build out its technology that ingests trillions of data points from a single customer and crunches that information with machine learning to give marketers a holistic understanding of a given user.

Amperity links together several discrete data sources related to one customer — everything from an in-store transaction, online purchasing tendencies, browsing behavior, mobile app activity, email campaign responses, CRM information, etc.

Shahani noted that part of Amperity’s secret sauce is making it easy for companies to plug that data into its system. The CEO said this process has historically been human-driven and “incredibly error prone.”

“We have the scale to not only ingest that data very quickly, but actually do something really meaningful and useful with it so you can action on it to drive the kind of results we’re seeing with our customers,” he added.

The platform can help a retailer figure out customers who spent more than $1,000 last year, but only $250 so far in 2017, for example. Or, it can help an airline identify customers who flew four times in 2016, but only once this year.

“This arbitrary question you might want to ask of your customer data — this is stuff that these companies can’t do today,” Shahani said. “It’s impossible for them to quickly get that data.”

Amperity is not a predictive analysis platform; instead, its clients can take this data and then figure out how to tweak their marketing campaigns. Its technology is particularly valuable for companies that are not “internet-first.”

Amperity’s customers, which include Fortune 500 companies, range from a wide variety of industries — one of many differences from Shahani and Slager’s experience at Appature.

“We have a very big vision around what we see this business capable of being in terms of its contribution to the market and our customers, and to our employees and this community,” Shahani said. “That’s something that really drives us in a way that I don’t think we were driven by before and thought about before.”

Shahani and Slager have long-time ties to the Seattle area and are bullish about creating the next great local startup. Shahani said today marks a milestone in reaching that goal.

“If we continue to play our cards right, continue to serve our customers well, and continue to build great product, we will have the same opportunity that many of those lighthouse companies like Tableau, Apptio, and others have done,” he noted.Microsoft CEO Satya Nadella speaks at Microsoft Envision.

Being in the Seattle region also helped Amperity link up with Microsoft for a “really meaningful partnership,” said Shahani, who has spent the past year working directly with Microsoft CEO Satya Nadella. Microsoft customers will get access to Amperity via its independent software vendor system while the company will look to integrate the platform with its Adobe partnership.

“The way Amperity lights up products like Azure, Azure Data Lake, Azure Machine Learning, the Power BI stack, Dynamics — when you feed those products with better, unified data about the customer that is more complete, those products perform a lot better for the user,” Shahani explained. “Satya was very persuasive in getting us to build Azure compatibility, which is something we hadn’t done historically with our product.”

Shahani noted that Amperity is not exclusive to Azure and expects the same level of integration with Amazon Web Services in the future.

Amperity has steadily added veteran talent to its leadership team, from bringing on Dave Fetterman as vice president of engineering, to hiring Amy Pelly as its CFO, to adding Aashish Dhamdhere as vice president of marketing.

But Amperity has also seen a bit of churn with some hires. Shahani acknowledged a “sub-15 percent attrition” but said the company considers that within a normal range.

“One thing we’ve always been committed to as an operator is that if things aren’t working, you try to make it work where it makes sense, but if it doesn’t, you make the call early,” he said. “It’s not always us saying it’s not a fit, or the other party saying it’s not a fit. Sometimes you both look each other in the eye and say, ‘you know what, we thought this was a great idea, but for both of us it turns out it’s not working out.’ We’ve worked extra hard to make sure we have those conversations candidly and we do them quickly when we realize there isn’t a great fit and we treat people the way we want to be treated on the way out.”

Shahani said the company is still working off its initial $9 million investment — “we’ve been very capital efficient,” he noted — but expects to entertain additional funding conversations down the road.

Amperity is celebrating its launch with an event in Seattle today featuring executives from Crate & Barrel, Louis Vuitton Moët Hennessy, Alaska Airlines, Nordstrom, and Starbucks.

“Every brand wants to have a more personal relationship with their customers, but they often have data in disparate locations and systems,” Matt McIlwain, managing director at Madrona Venture Group and Amperity board member,’ said in a statement. “Amperity combines modern machine learning and cloud technology to create compelling customer data management solutions that help the world’s leading brands serve those customers better.”

[marketingyts]

In a surprising turn of events, Dave Clark, the Chief Executive Officer of Flexport Inc., is stepping down from his role, making way for the return of the company’s founder, Ryan Petersen. 

Clark, who joined Flexport from Amazon.com Inc. just a year ago, cited Petersen’s desire to focus on the core freight business as the reason for his departure.

The announcement came as a shock to many in the tech industry, as Clark had recently posted about his upcoming speaking engagement at a Flexport “exclusive launch event” in Seattle, scheduled for next week. Additionally, Flexport made headlines in May by agreeing to acquire Shopify Inc.’s logistics unit in exchange for a 13% stake in the startup.

[youroriginaltimemachinestudent]

Stably Launches #USD as the First BRC20 Stablecoin on the Bitcoin Network

Renton, United States, May 25th, 2023, Chainwire Stably, a leading Stablecoin-as-a-Service (SCaaS) and fiat on/off-ramp infrastructure provider for Web3 projects, is aiming to revolutionize the nascent Bitcoin ordinals market by launching its US Dollar (USD)-backed stablecoin, Stably USD, as a natively-issued BRC20 token under the symbol #USD. This groundbreaking development marks a critical milestone in the exponentially growing Bitcoin ordinals ecosystem that is now reaching half a billion dollars in total market capitalization in less than six months. #USD is a BRC20 standard stablecoin created via the Bitcoin ordinals protocol which was introduced in January 2023 after the recent Taproot upgrade. BRC20 tokens use a technique called ordinal inscriptions to attach data to individual "satoshis," the smallest unit of a Bitcoin. These satoshis can then represent anything from digital art ownership to “meme coins” and even stablecoins. According to Stably, every #USD token is backed 1-to-1 with USD in a collateral account managed by a US-regulated custodian for the benefit of KYC/AML-verified token holders. Monthly reports for the account are also conducted by a third-party stablecoin attestor to ensure #USD tokens are always fully collateralized with USD. "When I met Domo, the creator of the BRC20 standard, at the Bitcoin 2023 conference in Miami, I told him about our upcoming plans for #USD," said Kory Hoang, Stably’s CEO and Co-Founder. “He thought it was great and funny how we are creating a stablecoin on Bitcoin to enable Bitcoin trading on-chain… With a stablecoin built on Bitcoin. I’m still chuckling about it to this day, actually. In just one week after that, however, we made it happen!” The integration of BRC20 #USD into the Bitcoin network is part of Stably’s mission to power the next billion Web3 users with a seamless fiat-to-crypto and stablecoin onramp to all popular and emerging blockchain networks. The company’s upcoming collaborations with prominent ordinals and BRC20 projects, including UniSat–the world’s largest decentralized wallet/marketplace for ordinals–and Ordzaar–Asia’s first decentralized ordinals marketplace project, reflect Stably's aspiration to drive global innovation and adoption toward decentralized finance on the Bitcoin network, or “BitFi.” Additionally, Stably’s engineers are now exploring the new ORC20 standard for Bitcoin ordinals, which could significantly enhance the token properties of #USD once implemented. #USD can be issued/redeemed with Fedwire, SWIFT, USDC, and USDT by KYC-verified users across 200+ countries/regions currently, including up to 44 US states. Stably states that it is employing a manual process of issuance/redemption for #USD’s initial launch but plans to release support for automatic issuance/redemption through Stably Ramp, the company's plug-and-play fiat gateway widget, during Q3 2023. By then, users of #USD will be able to on/off-ramp via more traditional payment methods like ACH, instant ACH, and credit/debit cards, in addition to bank wires. Founded in 2018, the 20+ team member Seattle FinTech is backed by leading institutional and angel investors in the crypto space, such as Morgan Creek Capital, BEENEXT, 500 Startups, Hard Yaka, CREAM Labs, Sunny Lu of VeChain, and Paul Stahura of Donuts, Inc. The company has raised over $7.5-million in total funding to-date, $5-million of which was collected during its last Pre-Series A round in December 2021. Stably has also expanded its fiat on/off-ramp and stablecoin natively to more than ten emerging networks, including Arbitrum, XRP Ledger, Stellar, Tezos, VeChainThor, Harmony, Polymesh, Coreum, ICON, and Chia Network. About Stably Stably is a Web3 payment infrastructure provider and FinCEN-registered MSB from Seattle. The company specializes in providing stablecoins and fiat crypto on and off-ramps to users of Web3 applications. Stably’s mission is to power this decade’s next billion Web3 users with regulatory-compliant payment infrastructure across both developed and emerging blockchain ecosystems. Visit stably.io to learn more. Risk Disclaimer: Digital assets involve significant risks, including (but not limited to) market volatility, cybercrime, regulatory changes, and technological challenges. Past performance is not indicative of future results. Digital assets are not insured by any government agency and holding digital assets could result in loss of value and even principal. Bridged or wrapped digital assets (e.g. WBTC) involve additional risks, such as technical challenges, higher fees, security vulnerabilities, and reliance on third-party custodians. Please conduct your own thorough research and understand potential risks before purchasing/holding digital assets. Nothing herein shall be considered legal or financial advice. For more information about the risks and considerations when using our services, please visit: stably.io/terms-of-service. Contact Stably Head of Marketing Matthew Barrett Stably matt.barrett@stably.io Read the full article

[tototavros]

favorite place you've lived and why?

there was a place i was staying in seattle where I *really* don’t like the memories but the location was pretty good, it was right near the U District so easy to get food n shit, but was close enough to Fremont that I could walk there when I felt like really having good food and the UW Botanical Gardens that I accidentally wandered into

Also the place after that where I crashed with a twitter friend for a few days in like...North Westlake? Idk it was very very pretty and nice to walk around and get my shit together, the guy i was crashing with mostly just let me be on my own and read his books but would occasionally like, offer me a bottle of good booze from his wall as replacement for the town police having dumped out my vodka stash a few months earlier while I was in college while he was high

also an AirBnB I stayed at in Raleigh where it was *really* trying to profit off of like, an imaginary startup boom in Raleigh (maybe because that’s where the Red Hat office is?), we’re talking bitcoin house accessories and copies of “Zero to One” lying around the house, but there was a cool guy who was an Australian mech eng who made money off of selling *racetams and *finils to the local college kids during finals weeks; also Raleigh’s kinda fucked since the downtown is basically bordered by a state prison but the downtown is...kinda nice? Reminded me of like, shitty Madison

[insightsmarketreports]

Artificial Intelligence (Ai) in Medical Diagnostics Market Report - Forecast 2026

The worldwide AI in clinical diagnostics marketplace length is expected to develop from   Artificial Intelligence (Ai) in Medical Diagnostics Market Report    USD 454.Zero million in 2020 to USD four,744.6 million through 2026 at a CAGR of forty seven.9%.

 Growth in this market is basically pushed with the aid of authorities efforts to increase the adoption of AI-based technologies, increase the call for for AI tools in the medical area, increase-centered on decreasing the workload of radiologists team of workers, extra and extra complicated statistics entry, increase in AI-based startups, and growing enterprise and cooperation.

 A pandemic along with COVID-19 requires the funding of extra personnel, system, device, and other resources to ensure one hundred% whole hospitalization and, if vital, in-patient treatment. The COVID-19 epidemic is accelerating AI era by creating opportunities to apply those tools for fitness development.

 AI and radionics, used for X-ray and CT scanning as advanced imaging equipment in detecting and monitoring COVID-19, are able to detect the presence of disorder. This is due to the fact AI algorithms and radionics used for X-rays on the chest can help make first-rate screening applications. For instance, Zhongnan Hospital (China) makes use of AI to interpret CT scans and discover signs and symptoms of COVID-19 while human radiologists are not to be had. Similarly, Tampa General Hospital (Florida, US) makes use of AI-driven era to check human beings with COVID-19 before contacting health facility personnel and different sufferers. Massachusetts General Hospital (Boston, US) has also used AI-enabled robots, detecting essential signals and supplying COVID-19 affected person care. This allows health workers to lessen touch with people, which is critical to prevent the spread of the disorder.

 Providence St. Joseph Health (Seattle, US) used an AI-powered chatbot that examined and evaluated more than forty,000 sufferers, categorizing them with the extent of care needed and liberating medical doctors and nurses to recognition on at-risk people in every week-long duration. Therefore, physicians take the help of superior AI abilties and reply to wishes extra efficaciously and fast.

 Increasing recognition of the blessings provided via AI strategies and their sizeable software areas has caused elevated manufacturing of those products and services in the healthcare market. The various leading healthcare organizations input into partnerships and collaborations with main AI era vendors to come up with new AI solutions for healthcare programs. Such strategies enable these marketplace gamers to provide brilliant solutions to their clients and enhance their function in this dynamic marketplace.

 The fast growth of virtual health has empowered healthcare carriers to assist sufferers with new treatment alternatives. AI technology provides physicians with tools that help them diagnose and deal with patients better. However, there is a developing dislike among physicians approximately new technologies. For instance, there may be a misconception amongst clinical experts that AI will update docs in years to come. Doctors and radiologists agree with that capabilities along with empathy and persuasion are simply human competencies, and consequently era cannot absolutely remove the presence of a health practitioner. Additionally, there are issues that patients may also show an excessive interest in those technologies and might pass over out on needed personalized treatment, which also can be a task in lengthy-term health practitioner-patient relationships.

[robertreich]

Warren is Correct about Busting Up Big Tech

Presidential hopeful Senator Elizabeth Warren announced Friday she wants to bust up giants like Facebook, Google, and Amazon.

America’s first Gilded Age began in the late nineteenth century with a raft of innovations – railroads, steel production, oil extraction – but culminated in mammoth trusts run by “robber barons” like JP Morgan, John D. Rockefeller, and William H.(“the public be damned”) Vanderbilt.

The answer then was to bust up the railroad, oil, and steel monopolies.

We’re now in a second Gilded Age – ushered in by semiconductors, software and the internet – which has spawned a handful of hi-tech behemoths and a new set of barons like Facebook’s Mark Zuckerberg, Amazon’s Jeff Bezos, and Google’s Sergey Brin and Larry Page.

The answer now is the same: Bust up the monopolies.

The current move is bipartisan. At a Senate hearing I testified at last week, arch-conservative Republican Josh Hawley asked me, rhetorically, “Is there really any wonder that there is increased pressure for antitrust enforcement activity, for privacy activity when these companies behave in the way that they do?”

Hawley added, “Every day brings some creepy new revelation about these companies’ behaviors. Of course the public is going to want there to be action to defend their rights. It’s only natural.”

Natural indeed. Nearly 90 percent of all internet searches now go through Google. Facebook and Google together account for 58 percent of all digital ads (where most ad money goes these days).

They’re also the first stops for many Americans seeking news (93 percent of Americans receive news online). Amazon is now the first stop for a third of all American consumers seeking to buy anything.

With such size comes the power to stifle innovation. Amazon won’t let any business that sells through it to sell any item at a lower price anywhere else. It’s even using its control over book sales to give books published by Amazon priority over rival publishers.

Google uses the world’s most widely used search engine to promote its own services and Google-generated content over those of competitors, like Yelp. Facebook’s purchases of WhatsApp and Instagram killed off two potential rivals.

Contrary to the conventional view of America as a hotbed of entrepreneurship, the rate new job-creating businesses have formed in the United States has been halved since 2004, according to the Census Bureau. Part of the reason: gargantuan entry barriers put up by Big Tech.

Such size also confers political power to get whatever these companies and their top executives want.

Amazon – the richest corporation in America – paid nothing in federal taxes last year. Meanwhile, it’s holding an auction to extort billions from states and cities eager to have its second headquarters.

It also forced Seattle, it’s home headquarters, to back down on a plan to tax big corporations like itself to pay for homeless shelters for a growing population that can’t afford the sky-high rents caused in part by Amazon.

Facebook withheld evidence of Russian activity on its platform far longer than previously disclosed. When the news came to light, it employed a political opposition research firm to discredit critics.

Facebook’s Mark Zuckerberg, who holds the world’s speed record for falling from one of the most admired to the most reviled people on the planet, just unveiled a plan to “encrypt” personal information from all his platforms.

The new plan is likely to give Facebook even more comprehensive data about everyone. If you believe it will better guard privacy, you don’t remember Zuckerberg’s last seven promises to protect privacy.

Google forced the New America Foundation, an influential think tank it helped fund, to fire researchers who were urging antitrust officials to take on Google.

And it’s been quietly financed hundreds of university professors to write research papers justifying Google’s market dominance.

What to do? Some argue the tech mammoths should be regulated like utilities or common carriers, but this would put government into the impossible position of policing content and overseeing new products and services.

A better alternative is to break them up. That way, information would be distributed through a large number of independent channels without a centralized platform giving all content apparent legitimacy and extraordinary reach. And more startups could flourish.

Like the robber barons of the first Gilded Age, those of the second have amassed fortunes because of their monopolies -- fortunes that give them unparalleled leverage over politicians and the economy.

The combined wealth of Zuckerberg ($62.3 billion), Bezos ($131 billion), Brin ($49.8 billion) and Page ($50.8 billion) is larger than the combined wealth of the bottom half of the American population.

A wealth tax (also proposed by Warren) would help.

Some of the robber barons of the first Gilded Age were generous philanthropists, as are today’s. That didn’t excuse the damage they did to America.

Let’s be clear: Monopolies aren’t good for anyone except for the monopolists.

In this new Gilded Age, we need to respond to them as forcefully as we did the first time around. Warren’s ideas are a good start.  

[animesprout]

LinkedIn relocation information shows that nerds aren't leaving Seattle

Nerds are obviously leaving Silicon Valley. The pandemic has started what some portray as an "mass migration" of tech organizations, workers, and speculators who are moving to Austin, Miami, Reno, Madison, and different metros for a heap of reasons.

In any case, shouldn't something be said about Seattle, another enormous west coast tech center point and home to industry monsters, for example, Microsoft and Amazon?

New representative relocation information from LinkedIn shows that Seattle actually added 2.2 tech laborers for each one specialist that left, from March to October of this current year. That is only marginally beneath the 2.5 number recorded a year ago at animesprout.

The "inflow-surge proportion" information, given to GeekWire from LinkedIn and first provided details regarding by Alex Kantrowitz's Big Technology pamphlet, is sourced from LinkedIn individuals who have demonstrated city-to-city development on their profile.

The Bay Area saw the greatest year-over-year rate drop for the proportion cross country, falling 35% from 1.48 to 0.96. New York City has the second-greatest drop, plunging 20% from 1.08 to 0.86.

Extra information from LinkedIn shows that many Bay Area transfers are really migrating to Seattle. The quantity of individuals moving from the Bay Area to Seattle expanded 28% year-over-year from March to October.

Keith Rabois, a long-term Silicon Valley financial speculator who just moved to Miami, said he's seen a similar pattern narratively.

"Apparently, a sensible part of individuals I know expertly or socially that have left the Bay Area have likewise relocated to Seattle," Rabois said on a new This Week in Startups digital broadcast with Jason Calacanis.

Jennifer Stojkovic, leader head of the tech support bunch sf.citi, told GeekWire in July that she expected some Bay Area tech organizations and laborers to move to the Seattle zone, which offers numerous comparative civilities yet a moderately lower typical cost for basic items.

GeekWire detailed recently on Tanium, the $9 billion online protection organization that moved its central command from the Bay Area to the Seattle locale. Tanium CEO Orion Hindawi depicted California as having a "genuine administration issue."

Different California tech monsters including Oracle and Hewlett Packard Enterprise as of late declared designs to move their central command to Texas, while organization pioneers, for example, Tesla CEO Elon Musk and Dropbox CEO Drew Houston are likewise purportedly moving to the Lone Star State. Then, recently open information examination programming organization Palantir moved its HQ from Palo Alto to Denver recently.

"The designing world class of Silicon Valley may know more than most about building programming. Be that as it may, they don't find out about how society should be coordinated or what equity requires," Palantir CEO Alex Karp wrote in the organization's IPO reports. "… Our organization was established in Silicon Valley. However, we appear to share less and less of the innovation area's qualities and responsibilities."

[sciencespies]

Mother of invention: the new gadgets dreamt up to fight coronavirus

https://sciencespies.com/news/mother-of-invention-the-new-gadgets-dreamt-up-to-fight-coronavirus/

Mother of invention: the new gadgets dreamt up to fight coronavirus

LONDON/OAKLAND/BUCHAREST (Reuters) – Driving to work at his factory to the west of London last week, designer Steve Brooks had coronavirus on his mind. What could he make that would let him open a door without touching the handle?

Entrepreneurs Matthew Toles and Joseph Toles, co-founders of the company Slightly Robot, show smartbands, the Immutouch, which buzz when the wearer’s hand goes near their face, to prevent spreading the coronavirus disease (COVID-19), in Seattle, U.S., in this handout picture taken March 31, 2020. Immutouch/Handout via REUTERS

“Everyone has to use their little finger or find the bit of the door that nobody’s touched,” said the designer and owner at DDB Ltd, a company which makes office furniture. So he produced a hook to do the job.

The so-called hygienehook is small enough to fit in a pocket and made from a non-porous material, which makes it easy to clean. It is one of hundreds of gadgets dreamt up in recent days and weeks to help prevent people from spreading the coronavirus.

From furniture makers to AI software developers, companies around the world are adapting existing products or inventing new ones to help fight the pandemic or just make life easier for those working from home, in hospitals or stuck in quarantine.

The flurry of innovation comes as companies from Ford (F.N) and Airbus (AIR.PA) to luxury goods giant LVMH (LVMH.PA) retool plants to make critical equipment like hand sanitizers, ventilators and masks.

In years gone by it was large companies like these, with the financial clout and factories, who typically had to be relied upon to move rapidly from designing a prototype to manufacturing the product.

A crucial difference now, though, is that 3D printing and high-tech software mean devices can be produced faster than ever by companies big and small.

“There is definitely a ton of people with 3D resources very willing to help,” said MacKenzie Brown, founder of California-based product design company CAD Crowd.

Two weeks ago, his company launched a month-long contest for practical devices for navigating the new coronavirus world.

About 65 entries have poured in, including a wrist-mounted disinfectant sprayer, half gloves for knuckle-pushing of buttons and a device that lets you open car doors without touching the handle, aimed at cab users.

As the pandemic makes people far more aware of hygiene, some new products may have a shelf life beyond the current crisis.

‘WE HAD THE ALGORITHM’

Startups are retooling their technology.

In Seattle, brothers Joseph and Matthew Toles and their friend Justin Ith, who own a young company called Slightly Robot, had developed a wristband after college aimed at reducing compulsive skin-picking, nail-biting, and hair-pulling.

When their home city reported its first fatalities from the virus last month, they adapted the design to create a new smartband, the Immutouch, which buzzes when the wearer’s hand goes near their face.

“We had the algorithm, we had the software and the hardware. We’ve repurposed it for face-touching,” Matthew Toles said in an interview. “We made 350 devices and a website in one week and now it’s how fast can we ramp up.”

Romanian robotic software company UiPath has meanwhile found a way for nurses in the Mater Misericordiae University Hospital in the Irish capital Dublin to ditch time-consuming data entry and automate filing of virus test results. It hopes to replicate it in other hospitals.

Scylla, a U.S.-based AI company that makes gun detection systems for schools and casinos, turned its sights on the virus when China, the original epicenter of the outbreak, reported its first cases three months ago.

It has re-deployed its AI analytics software to measure the temperature of a person’s forehead, sending out an alert if it detects a fever. Taking images from a thermal camera, the software can be used in public buildings like hospitals and airports, and corporate offices, chief technology officer Ara Ghazaryan said.

The government of a South American nation has placed an order for 5,000 licenses of Scylla’s system for its public buildings and transport system, Ghazaryan said. He declined to name the country.

WORLD WAR TWO INNOVATION

Global upheaval often spawns new products and innovation.

The current burst of creativity may eventually compare to that seen during World War Two when companies, governments and scientists embarked on projects that had lasting consequences.

Technology used to help guide rockets eventually led to the first satellites and putting men on the moon.

“There’s no question that inventors will be coming up with hundreds, if not thousands, of new ideas,” said Kane Kramer, inventor and co-founder of the British Inventor’s Society. He first conceived the idea of downloading music and data in the late 1970s.

“Everyone’s downed tools and are only picking them up to fight the virus. It’s a global war.”

Many companies are donating their new wares or selling them at cost price. The CAD Crowd contest designs are free for download and use, for example. For some, though, the extra business could provide a financial cushion as other sources of income evaporate during the pandemic.

DDB designer Brooks near London has worked quickly.

Slideshow (2 Images)

Less than a week after his first design, four different models of the hook went on sale this week, selling at just under 15 pounds ($18.60) each. He is donating one hook for every one he sells.

Now Brooks is turning his creative eye to another gadget along similar lines.

“We’ve already had a request from the National Health Service in Wales about designing something for pushing a door.”

Additional reporting by Nadine Schimroszik in Berlin; Editing by Pravin Char

Our Standards:The Thomson Reuters Trust Principles.

#News

[kabirshahni]

Amperity raises $100M to unify customer data

Amperity, a Seattle, Washington-based customer data platform, today announced it has raised $100 million in series D funding, valuing the company at more than $1 billion post-money. Founder and CEO Kabir Shahani said the company will use these funds, which bring its total raised to $187 million, to expand sales and marketing, grow internationally, and invest in R&D.

The pressures of the pandemic made knowing consumers a matter of survival for many businesses. Faced with the challenge of optimizing performance without third-party data, brands recognized the necessity of having an identity graph as part of an effort to sustain customer relationships. These graphs, which are at the foundation of customer data platforms, allow enterprises to make sense of trillions of data points from customers across in-store visits, web traffic, mobile usage, loyalty programs, and other touchpoints.

How human-centered design drives data-driven experiences In today’s competitive market

183.5K

14Unmute

Duration 16:49/

Current Time 0:04Advanced SettingsFullscreenPlayUp Next

Amperity was founded in 2016 by Shahani and Derek Slager, who aimed to free engineers from integration duties while giving businesses access to the data they need to build loyalty. Prior to founding Amperity, Kabir and Derek worked together to launch enterprise marketing management startup Appature, where Kabir was CEO and Derek was VP of engineering. Appature was purchased in 2013 by IT medical services provider IMS Health, which has since merged with Quintiles.

“Amperity has created the first-party data graph and customer toolset for many of the world’s most loved consumer brands. There’s a vast universe of solutions that might provide an element of what we do, but no one can deliver a more complete customer [view] with an agnostic approach we provide at both ends — data in, data out,” Shahani told VentureBeat via email.

EVENT

VB Transform 2023 On-Demand

Did you miss a session from VB Transform 2023? Register to access the on-demand library for all of our featured sessions.

Register Now

Behind the scenes

Customer data platforms are collections of software that create persistent, unified customer databases accessible to other systems. Data is pulled from multiple sources, cleaned, and combined to create a single customer profile. This structured data is then made available to other marketing systems.

The customer data platform market is anticipated to be worth $10.3 billion by 2025, according to Markets and Markets, up from $2.4 billion in 2020. Amperity’s competitors include homegrown solutions, as well as legacy on-premises systems from Acxiom and Epsilon Independent and cloud-based services like ActionIQ and Redpoint Global.

But Shahani claims Amperity is the only customer data platform with an “AI-driven customer 360.” Each of its products is built on what the company calls the DataGrid, a fully connected customer infrastructure that processes terabytes of data each day. DataGrid streams billions of rows of data at under 100 milliseconds per API call, enabling Amperity’s AI models to provide deterministic and probabilistic individual and household identity throughout customer segments.

Amperity works with customers across retail, travel, hospitality, and financial services, including Patagonia, Alaska Airlines, Starbucks, The Home Depot, Lucky Brand, and Crocs. Recently, Amperity teamed up with a lifestyle retail client to better understand the company’s customers. In 18 weeks, Amperity says it built a dashboard with transaction, marketing, store, product, and privacy data, correcting lifecycle status for 25% of the client’s customers with interaction and revenue attribution. This led to $7.7 million in campaign revenue from predictive segmentation and churn prevention campaigns.

[mycngs-blog]

                it’s  ya  girl  𝒅𝒓𝒊  (nineteen  —  twenty  next  week  !,  she/her,  pst),  a  soft  edgy  born  with  a  name  that  means  "dark  one  of  the  lord"  on  friday  the  13th  !  some  fun  facts  are  that  i  have  the  incredibly  dangerous  combo  of  high  ambition  and  poor  time  management  and  i’d  Risk  It  All  for  a.c.e,  ateez,  and  loona  !  so,  anyway,  here’s  my  girl  olivia  !  if  you’re  interested  in  plotting  connections,  feel  free  to  im  me  or  ask  for  my  discord  (where  i  would  be  Way  easier  to  reach)  !

                𝐉𝐔𝐍𝐆  𝐂𝐇𝐀𝐄𝐘𝐄𝐎𝐍.  𝐒𝐇𝐄/𝐇𝐄𝐑.  𝐂𝐈𝐒𝐅𝐄𝐌𝐀𝐋𝐄.  ╱  was  that  𝐎𝐋𝐈𝐕𝐈𝐀  𝐌𝐘𝐔𝐍𝐆  i  just  saw  in  the  hideaway  lobby  ?  i  hear  the  𝐓𝐖𝐄𝐍𝐓𝐘-𝐓𝐖𝐎  year  old  spends  most  of  their  time  𝐖𝐎𝐑𝐊𝐈𝐍𝐆  𝐀𝐒  𝐀  𝐌𝐀𝐓𝐇  𝐓𝐔𝐓𝐎𝐑,  but  i’ve  always  just  seen  them  𝐏𝐋𝐀𝐘𝐈𝐍𝐆  𝐑𝐇𝐘𝐓𝐇𝐌  𝐆𝐀𝐌𝐄𝐒.  they  live  in  𝐀𝐏𝐓  𝟓𝐂  and  i  often  see  them  in  the  halls.  they  always  give  me  a  vibe  of  𝐃𝐎𝐆-𝐄𝐀𝐑𝐄𝐃  𝐏𝐀𝐆𝐄𝐒,  𝐂𝐔𝐅𝐅𝐄𝐃  𝐉𝐄𝐀𝐍𝐒,  and  𝐀𝐑𝐌𝐒  𝐅𝐎𝐋𝐃𝐄𝐃  𝐀𝐂𝐑𝐎𝐒𝐒  𝐓𝐇𝐄  𝐂𝐇𝐄𝐒𝐓.

* ╱  𝒒 𝒖 𝒊 𝒄 𝒌  𝒔 𝒕 𝒂 𝒕 𝒔

𝗕𝗜𝗥𝗧𝗛 𝗡𝗔𝗠𝗘:  olivia clarisse myung  

𝗡𝗜𝗖𝗞𝗡𝗔𝗠𝗘𝗦:  vi, oli, no one calls her liv tho

𝗔𝗚𝗘:  twenty-two  

𝗗𝗢𝗕:  january 12, 1997 

𝗛𝗢𝗠𝗘𝗧𝗢𝗪𝗡:  santa clara, california

𝗭𝗢𝗗𝗜𝗔𝗖:  capricorn sun, pisces moon 

𝗢𝗥𝗜𝗘𝗡𝗧𝗔𝗧𝗜𝗢𝗡:  bisexual  

𝗢𝗖𝗖𝗨𝗣𝗔𝗧𝗜𝗢𝗡:  tutor

* ╱  𝒃 𝒂 𝒄 𝒌 𝒈 𝒓 𝒐 𝒖 𝒏 𝒅

originally hailing from santa clara, california, the myung family was nothing short of a series of tech success stories. her father a machine learning engineer and her mother a user experience architect, it was to no surprise when olivia's older siblings (a sister 6 years older and a brother 4 years older) followed suit and found themselves pursuing similar careers. they were coded to be a stereotypical silicon valley family, so growing up, expectations were high for olivia, the last of the bunch.

olivia was that girl in school who knew she was smart and made sure everyone around her knew it as well. in high school, a lot of people didn’t really like her because they perceived her as a show-off, which she totally was, but she’s aight once you get past her insecurity-generated superiority complex. her parents were overprotective and pressured her to do better than her classmates, so she just grew up conditioned to be super competitive because she was kind of scared of her parents and therefore scared of failing them.

she majored in statistics at uc berkeley and ended up finishing in three years with plans to go into data analysis (she’s really good with numbers and doesn’t quite understand how people have trouble with math… Nerd).

a few months out of college she got offered a position with a startup company in seattle that she had interned for remotely in the past, so she made the trip to washington!

however, the company later began to experience major losses and had to let go of employees, which unfortunately included cleo, before dissolving completely. she had only been working there for about half a year.

olivia wasn’t ready to return home, wasn’t ready to break the news to her parents that she — in her mind — had failed, so she remained in seattle and kept up this lie of being a successful data analyst for a rising company, when in reality, she put all of her marbles in the wrong bag. she didn’t want to be the one to fail when everyone else in her family was succeeding, she didn’t want to be the disappointment, so she lied. she wasn’t that close with her family, so the vague information that their daughter was making Big Moves would suffice for them to sprinkle into conversations with their colleagues.

currently, she’s trying to get back on her feet and secure a stable position of a similar caliber, but in the meantime, she’s been back and forth between different jobs and also getting paid to tutor people (mostly over skype, sometimes irl). not being certain of what she’s doing terrifies her and Sucks because she’s not used to the feeling of not being good enough.

* ╱  𝒑 𝒆 𝒓 𝒔 𝒐 𝒏 𝒂 𝒍 𝒊 𝒕 𝒚

olivia is like... accidentally blunt a lot ?? not even gonna lie, she really does not think before she speaks sometimes (book smart but not street smart Big Time)

i don't think she ever really had a Solid friend group growing up; she was the type to be on the border and never really belong to any specific set of people

she has, like, Zero patience and a low tolerance for stupidity, so how she manages to tutor people is something many people cannot comprehend

olivia's like the gordon ramsay of academia: rude if u act like u know everything, kinder and understanding if u genuinely want to learn something or get better

her demeanor is so deceiving i would say ?? she's the opposite of someone who looks intimidating but is actually really sweet — she's like a siren or some shit, seemingly approachable but once u do approach, u regret

despite the fact that she's quite cold 90% of first encounters, over time, she does warm up to people, which bring the coldness probability to about a 50% depending on how she feels about u

she’s not heartless i promise !! it’s mostly a front bc she was Played a lot growing up and has some trust issues :// when ur smart n want friends sometimes it’s ok to be used right ?? haha ?? :(( ??

her way of caring for people is .. tbh .. kinda awkward ?? she has compassion but she doesn’t really know how to express it without feeling kinda weird about it KSDLHDS she’s the type that wouldn’t be comforting emotionally but she tries .. her Best in her own way 

did i say rly guarded ?? superiority complex turned impostor syndrome ?? someone PLEASE validate this girl , living in her siblings’ shadows did Not do her well

secretly a romantic but she thinks love is a privilege she hasn’t quite earned yet

in short, i’d say she could be classified as a Classic Tsundere

i feel like i didn't list that many redeeming traits DSGJSDG but she's got some !! she's dependable and a hard worker !! if ur close to her it's ride or die !!

* ╱  𝒇 𝒖 𝒏  𝒇 𝒂 𝒄 𝒕 𝒔

can speak english, korean, french, spanish, and knows asl

owns a large collection of books; really into personal essays

has never been in a serious relationship; claims she’s too busy but really just lacks the ability to be vulnerable so she prefers things to be non-committal

when she was 14 she had a crush on this guy but then people found out and it eventually reached him ;/ he asked her out after school with some people around ;/ she accepted ;/ turned out he was joking ;/

can play the viola, clarinet, and piano

really really really good at rhythm games, especially osu !! played local tournaments before but when her parents found out she was investing a fat chunk of time into the activity, they had her stop ;/ now that she doesn’t live with them anymore, she’s taken it up again

surprisingly holds her alcohol well and is an affectionate drunk; perhaps if u met olivia when she's drunk she wouldn't be as intimidating

incredibly bad at responding to text messages !! it's like a roulette, she either replies within seconds or the text is lost forever and suddenly it's been months

[techcocktail]

TechCo Top Stories: Made by Google, Seattle Startup Week, and Innovate Celebrate

[8stem]

Seattle Startup Week

Adam and Bruce speaking at Seattle Startup Week

Adam will be moderating the panel, ‘Music Startups in a Rapidly Changing Industry’ on October 4th at 4:30pm. Guest speakers include Bruce, Meli Darby from Upstream, and Daniel G Harmann from DistroKid.