WEBVTT - Shelly Banjo 0:00:08.600 --> 0:00:12.160 Welcome, Welcome, Welcome back to the Bob Left Sets podcast. 0:00:12.280 --> 0:00:16.759 My guest today is Shelley Banville, the TikTok expert. She 0:00:17.000 --> 0:00:20.080 is the New York World chief at Bloomberg and also 0:00:20.360 --> 0:00:24.360 host of the Foundering podcast Shelly. Good to have you here. 0:00:24.440 --> 0:00:26.600 Thanks so much for having me. Okay, how long you've 0:00:26.600 --> 0:00:29.640 been following TikTok? So, I've been following TikTok about three 0:00:29.680 --> 0:00:33.120 or four years now. Then what inspired you to start? So? 0:00:33.159 --> 0:00:35.279 I was living in Hong Kong at the time and 0:00:35.440 --> 0:00:39.000 covering tech, and I had flown back over to the 0:00:39.120 --> 0:00:41.880 US and my US tech editor said to me, what's 0:00:41.920 --> 0:00:45.279 the biggest story that everybody is missing in Asia? And 0:00:45.320 --> 0:00:48.239 I said, the rise of TikTok, hands down. We need 0:00:48.320 --> 0:00:51.199 to be writing more about TikTok and its parent company 0:00:51.240 --> 0:00:55.560 by Dance. Okay, So, at the time, it was still 0:00:55.640 --> 0:00:59.480 musically in America. It hadn't been purchased yet. It had 0:00:59.520 --> 0:01:02.120 been it had already been purchased yet Let's just assume, 0:01:02.120 --> 0:01:03.480 you know, a lot of people need to be brought 0:01:03.560 --> 0:01:08.000 up to speed here. So when was musically purchased by TikTok? 0:01:08.720 --> 0:01:11.959 So it was purchased in the end of seen, but 0:01:12.000 --> 0:01:16.160 it didn't actually switch over to TikTok in the US 0:01:16.319 --> 0:01:21.760 until Um, okay, so you say this to your editor 0:01:21.760 --> 0:01:24.440 in New York, what's the next step. So the next 0:01:24.440 --> 0:01:27.720 step is, you know, we start digging into this company. 0:01:27.720 --> 0:01:30.200 Byte Dance, I mean musically had been a big hit. 0:01:30.400 --> 0:01:34.240 This was right after bite Dance had acquired Musically. They 0:01:34.240 --> 0:01:37.680 had spent a billion dollars basically trying to buy this app. 0:01:38.240 --> 0:01:40.480 Uh that most people thought of was just this like 0:01:40.760 --> 0:01:44.640 nothing karaoke kids app. And when suddenly they spent a 0:01:44.680 --> 0:01:48.000 billion dollars on it, people started saying, Okay, maybe there's 0:01:48.040 --> 0:01:51.520 something to this that we should be paying attention to. Okay, 0:01:51.560 --> 0:01:55.080 so you start digging into bitte dance, what do you find? Um? 0:01:55.280 --> 0:01:58.280 So we I this. I started working on this business week, 0:01:58.440 --> 0:02:02.520 um newspaper, new news magazine story to kind of tell 0:02:02.720 --> 0:02:05.800 the story of this company, like who are they? And 0:02:05.880 --> 0:02:10.160 so what I started realizing was that even though a 0:02:10.200 --> 0:02:12.640 lot of people in China knew what Bye Dance was, 0:02:13.080 --> 0:02:15.840 people in the US didn't really realize it was this 0:02:15.919 --> 0:02:18.680 kind of sleeping giant that was starting to buy up 0:02:18.720 --> 0:02:22.280 a whole bunch of US tech startups. Um, they didn't 0:02:22.360 --> 0:02:26.320 quite understand what they were doing. And meanwhile, this company 0:02:26.360 --> 0:02:28.760 was getting just bigger and bigger and bigger in China, 0:02:28.919 --> 0:02:31.480 getting amassing more money and then using it to buy 0:02:31.560 --> 0:02:36.320 up companies UM in in the US. Okay, uh, we're 0:02:36.360 --> 0:02:40.480 pretty ethnocentric in the US. What is the landscape of 0:02:40.560 --> 0:02:44.840 these internet companies in China? You know, we hear about 0:02:44.919 --> 0:02:48.720 we Chat, we hear about byte Dance. You know how 0:02:48.760 --> 0:02:51.359 many of these companies are there, and what's the barrier 0:02:51.440 --> 0:02:55.160 to entry? It is ruthless. I mean you think about 0:02:55.280 --> 0:02:57.520 business being tough here in the U S and China, 0:02:57.560 --> 0:03:01.239 it is just like people are going at each other 0:03:01.560 --> 0:03:05.440 left and right. There is no kind of decorum. They're like, oh, 0:03:05.560 --> 0:03:08.000 I'll I'll be in this, you know, area of the internet, 0:03:08.040 --> 0:03:09.680 and you be in that area of the internet. You know, 0:03:09.720 --> 0:03:12.120 like we kind of had we used to have UM 0:03:12.200 --> 0:03:14.680 in the US with like Google and Amazon and Apple 0:03:14.760 --> 0:03:17.880 kind of staking their their their ways. And in China 0:03:17.960 --> 0:03:20.280 it's all like super apps, right, So like all these 0:03:20.320 --> 0:03:24.160 companies like UM, the biggest ones like ten Cent, Byte Dance, 0:03:24.200 --> 0:03:29.000 Ali Baba, they're into everything UM. They're into literally you 0:03:29.000 --> 0:03:31.760 wake up in the morning, you can buy your breakfast 0:03:31.800 --> 0:03:34.480 on it. You buy your Starbucks on it, you chat 0:03:34.520 --> 0:03:38.280 with your friends, you buy airplane tickets, it's it's it's 0:03:38.320 --> 0:03:41.280 you know, everything on these kind of super apps. So 0:03:41.760 --> 0:03:43.720 at the time, it was really these two big companies 0:03:43.760 --> 0:03:45.960 Ali Baba in ten Cent, and all of a sudden 0:03:46.120 --> 0:03:49.360 came along this third company, Byte Dance UM, which is 0:03:49.400 --> 0:03:54.240 the owner of TikTok Uh. First starting with um Jokes, 0:03:54.400 --> 0:03:57.680 an app about jokes, then getting into news. Suddenly they 0:03:57.720 --> 0:04:00.560 were the biggest newsreader in the entire world, meaning like 0:04:00.640 --> 0:04:03.160 nobody got their news any place else except for this 0:04:03.560 --> 0:04:07.080 one app UM. Then they went into short video. Now 0:04:07.120 --> 0:04:12.040 they're in e commerce and payments, you name it, education, um, 0:04:12.120 --> 0:04:15.000 you name it, They're they're in it now. Okay. You 0:04:15.000 --> 0:04:18.960 know Nixon opened up China back in the seventies, and 0:04:19.000 --> 0:04:22.360 then we had the former guy, as they say, who 0:04:22.360 --> 0:04:25.640 has had a trade war with China. And it's like 0:04:25.760 --> 0:04:29.080 a lot of citizens have not traveled at all, you know, 0:04:29.320 --> 0:04:32.680 us citizens, never mind going to China. So my question is, 0:04:32.720 --> 0:04:34.680 since you were there, and I assume you also went 0:04:34.720 --> 0:04:38.960 to mainland China, correct, Yeah, for the average person, what 0:04:39.200 --> 0:04:41.600 is life like? On one hand, we hear about these 0:04:41.600 --> 0:04:44.520 people working you know, six days a week, all day 0:04:44.560 --> 0:04:48.040 and factories that we think are sweatshops. On another level, 0:04:48.080 --> 0:04:51.400 we see people buying tesla's. I mean, what is the 0:04:51.480 --> 0:04:56.000 socioeconomic status there? It is so big that it is 0:04:56.080 --> 0:05:00.440 really hard to make one monolithic case. Or you know, 0:05:00.560 --> 0:05:04.520 if you're in um, if you're in Shanghai or Beijing, 0:05:04.800 --> 0:05:07.359 you know, working in an office tower, you kind of 0:05:07.360 --> 0:05:10.239 feel like anywhere else New York or London or something 0:05:10.279 --> 0:05:13.599 like that. If you're in the countryside, it feels very different. 0:05:13.720 --> 0:05:17.320 But one very big unifying factor is an app like 0:05:17.360 --> 0:05:21.000 TikTok which um in China is called doying and um. 0:05:21.000 --> 0:05:24.720 Whether you're rich, you're poor, you're young, you're old, you're 0:05:24.880 --> 0:05:29.080 using using the Chinese version of TikTok to um to 0:05:29.160 --> 0:05:32.680 make videos, to pass the time to you know, have 0:05:32.760 --> 0:05:35.520 a laugh with your friends. UM. It certainly is something 0:05:35.560 --> 0:05:39.280 that like cut across all different um you know sphere, 0:05:39.440 --> 0:05:44.200 socioeconomic um you know, you name it. Okay, So if 0:05:44.200 --> 0:05:46.919 you're one of those people living in the city, we 0:05:47.040 --> 0:05:49.720 you know, these apps are multifarious, much more than in 0:05:49.760 --> 0:05:54.400 the United States, would you say that they are actually 0:05:54.800 --> 0:05:58.760 technically more advanced than we are. Dependent on the Internet 0:05:58.800 --> 0:06:04.560 more less the same. So I think that people in 0:06:04.960 --> 0:06:07.839 China are just more on the Internet. I mean, we 0:06:07.880 --> 0:06:10.320 think about how the phone with the phone is kind 0:06:10.320 --> 0:06:12.440 of an extension of our arms. You know, we kind 0:06:12.440 --> 0:06:14.800 of joke about that. But you know a lot of 0:06:14.800 --> 0:06:17.560 people still buy things on buy things in stores, go 0:06:17.680 --> 0:06:21.040 grocery shopping in stores. In the big cities and China, 0:06:21.320 --> 0:06:23.560 it's like unheard of to go into a store to 0:06:23.600 --> 0:06:26.280 buy your groceries or to buy clothes, or to buy anything. 0:06:26.360 --> 0:06:30.120 Really everything is e commerce, and um, so much more 0:06:30.240 --> 0:06:33.440 of your life is on the is on the internet. Um. 0:06:33.480 --> 0:06:36.560 In terms of the advancement, I think at the time 0:06:37.200 --> 0:06:41.200 that Bye Dance and TikTok we're starting out, the artificial 0:06:41.240 --> 0:06:45.920 intelligence for those particular apps were probably more advanced than 0:06:46.600 --> 0:06:49.200 what we're seeing now. But they also took a different 0:06:49.240 --> 0:06:53.080 tax to social media. So like the facebooks and twitters 0:06:53.080 --> 0:06:56.279 and youtubes of the world, where you know, the facebooks 0:06:56.279 --> 0:06:59.560 and twitters and snapchats of the world, we're basically created 0:06:59.600 --> 0:07:02.840 around of friends. Like this idea of Okay, I care 0:07:02.839 --> 0:07:05.000 about this thing because my friend cares about this thing, 0:07:05.040 --> 0:07:08.640 so I'm going to show you that thing. But Bye Dance, Um, 0:07:08.680 --> 0:07:13.120 because of the influence of UM of the Chinese government 0:07:13.160 --> 0:07:14.920 really like they don't want you to have those kinds 0:07:14.920 --> 0:07:17.640 of social media networks. They don't want you to build 0:07:17.800 --> 0:07:20.480 these networks of communities and things like that because they 0:07:20.520 --> 0:07:23.720 don't want you to, you know, gabelle against the government 0:07:23.760 --> 0:07:25.640 or have a place to talk about it. So it 0:07:25.720 --> 0:07:29.320 was mostly built around yourself, the individual. What can I 0:07:29.360 --> 0:07:32.320 show to you that will keep you addicted on this 0:07:32.360 --> 0:07:35.000 app based on what you like, and then that change 0:07:35.040 --> 0:07:38.840 as you change, it changes UM. So you're seeing something 0:07:38.880 --> 0:07:41.800 different than your friend is saying, than your mom is saying, 0:07:41.880 --> 0:07:46.120 than your dad is saying, UM, because that appisode personalized 0:07:46.160 --> 0:07:48.640 to you. So we've seen a lot of that with YouTube, 0:07:49.040 --> 0:07:51.840 but this almost takes it to like a complete, you know, 0:07:52.480 --> 0:07:56.160 other level. They're just a couple of back China questions 0:07:56.160 --> 0:07:59.040 before we go. Now we read about being able to 0:07:59.160 --> 0:08:02.760 pay things, pay for things with your phone. Is it 0:08:02.920 --> 0:08:07.080 very technically advanced like that in the cities? Yeah, everything 0:08:07.360 --> 0:08:11.000 you can't UM. I remember one of the first takeaways 0:08:11.160 --> 0:08:14.720 when I UM traveled. I would spend about a week 0:08:14.720 --> 0:08:17.240 of every month in Shanghai or Beijing or shen Jen, 0:08:17.720 --> 0:08:21.200 and you can't UM can't use cash anywhere. Nobody takes cash. 0:08:21.240 --> 0:08:24.840 You try to give a taxi driver a bill and 0:08:24.880 --> 0:08:26.640 they look at you like you have two heads, like 0:08:26.680 --> 0:08:28.680 why are you handing me the sturty piece of cash? 0:08:28.800 --> 0:08:30.880 Like pay with your phone. That's how I'm going to 0:08:30.960 --> 0:08:34.800 take payment. That begs the question, what is the crime 0:08:34.920 --> 0:08:39.080 like in the big cities? Um, Penny crime is fairly low. 0:08:39.400 --> 0:08:42.520 I mean they are very Um, it kind of depends 0:08:42.559 --> 0:08:46.120 where where you are. Um. The real big crime is 0:08:46.160 --> 0:08:49.360 like you know, white collar crime and things like that 0:08:49.360 --> 0:08:53.120 that can definitely still happen, corruption and things like that. Okay, 0:08:53.160 --> 0:08:57.200 So it's a vast country territorially and as you said, economically, 0:08:57.720 --> 0:09:02.160 to what degree to people lie on wireless? Is their 0:09:02.320 --> 0:09:05.800 primary interconnect net connection? What I mean by that is 0:09:05.840 --> 0:09:09.280 that is their only Internet connection? Or is the country 0:09:09.320 --> 0:09:13.880 pretty wired out hard wire? So in the big cities, um, 0:09:13.920 --> 0:09:16.880 it's all wireless. Like there are lots of people kids 0:09:16.880 --> 0:09:19.920 that you talked to, who have never had a desktop computer. 0:09:20.080 --> 0:09:22.840 They don't really understand what that is. You know, it's 0:09:22.880 --> 0:09:25.679 all about this mobile phone in your hand and in 0:09:25.720 --> 0:09:30.160 your pocket because it became so cheap, um that everybody 0:09:30.200 --> 0:09:32.600 basically has a mobile phone and then even in the 0:09:33.080 --> 0:09:35.680 even in the countryside and things like that, like everybody 0:09:35.720 --> 0:09:39.480 has a phone and is coverage pretty much universal? Or 0:09:39.520 --> 0:09:42.400 can you go somewhere we have a dead spot? Definitely, 0:09:42.480 --> 0:09:44.680 can go somewhere where you have a dead spot. But 0:09:44.800 --> 0:09:49.360 you know, I remember hiking in the mountains, um outside 0:09:49.360 --> 0:09:53.240 this town outside the city called guillen Um and these 0:09:53.320 --> 0:09:55.360 you know, you're in these rice patties and you see 0:09:55.400 --> 0:09:59.720 these farmers literally getting rice. But you have this perfect 0:09:59.720 --> 0:10:01.880 cell signal and you can post on it, you know, 0:10:02.040 --> 0:10:05.040 on online and things like that. Okay, just to go 0:10:05.120 --> 0:10:07.960 deeper into a point you made, if you know, in 0:10:09.080 --> 0:10:10.520 certainly I don't like get too far ahead. But we 0:10:10.559 --> 0:10:14.000 talk about the algorithms in sharing. Let's just use the 0:10:14.040 --> 0:10:18.560 YouTube as a model. So let's assume I create a video. 0:10:19.240 --> 0:10:22.280 To what degree can that go viral in China and 0:10:22.320 --> 0:10:27.400 to what degree can I garner fame as a result. Yes, 0:10:27.679 --> 0:10:34.600 So the algorithms around TikTok enjoying in China are still 0:10:34.600 --> 0:10:37.040 a black box as they are in other you know, 0:10:37.120 --> 0:10:41.240 with other places. Um. But some of the differences is 0:10:41.280 --> 0:10:44.079 that I can just get such a bigger audience because 0:10:44.080 --> 0:10:46.760 it doesn't rely what you're seeing in the videos that 0:10:46.760 --> 0:10:49.400 you're seeing doesn't rely on how many friends or connections 0:10:49.480 --> 0:10:53.120 or likes that you have. You see videos based on 0:10:53.160 --> 0:10:55.840 anyone and it could be anyone from around the world. 0:10:55.960 --> 0:10:59.560 So you have not only like global atmosphere, but it's 0:10:59.640 --> 0:11:02.120 also tied to your friends. And because so much of 0:11:02.160 --> 0:11:06.000 it is tied to music, UM, language isn't as much 0:11:06.000 --> 0:11:07.840 of a barrier. So if you think about when you 0:11:07.880 --> 0:11:12.920 post on Twitter, someone you know, UM, you know, someone 0:11:12.960 --> 0:11:16.600 in Africa or someone in the Middle East might not 0:11:16.679 --> 0:11:20.040 necessarily want to read about your English your English post 0:11:20.080 --> 0:11:21.760 and things like that. But when you when you think 0:11:21.760 --> 0:11:25.280 about a music video, it's it's universal. So you can 0:11:25.360 --> 0:11:29.200 gain fame. You just can't connect with other people and 0:11:29.240 --> 0:11:32.280 create a social network. I mean, you can definitely still 0:11:32.320 --> 0:11:35.960 connect there is you know, you can add connections and 0:11:36.000 --> 0:11:39.000 things like that, but that's not necessarily why you're being 0:11:39.080 --> 0:11:42.559 You're you're being showed the videos that you're saying. Okay, 0:11:42.840 --> 0:11:45.520 So a company like byte Dance, what where does it 0:11:45.559 --> 0:11:51.160 get its financing? So with byte Dance, what they were 0:11:51.200 --> 0:11:54.960 really smart about was very early on they got a 0:11:55.000 --> 0:12:00.600 lot of Western venture capital money. UM. They used money 0:12:00.720 --> 0:12:04.240 from UM all sorts of big venture capital firms in 0:12:04.280 --> 0:12:07.720 the in the West, like Sequoia General Atlantic. They also 0:12:07.760 --> 0:12:12.360 got money from soft Bank um in in Japan. Uh 0:12:12.640 --> 0:12:15.280 also got Chinese money as well. But they have a 0:12:15.320 --> 0:12:18.600 really big global base of investors and they raised a 0:12:18.679 --> 0:12:22.520 lot of money, making them the most valuable private UM 0:12:22.679 --> 0:12:26.720 tech company right now. They're more valuable than Ali Baba 0:12:26.760 --> 0:12:32.320 inten sin. Well, those are public ali baba intense about 0:12:32.320 --> 0:12:35.240 a private company. Just to get into the law, don't 0:12:35.280 --> 0:12:38.360 they have laws in China that Western people can only 0:12:38.360 --> 0:12:42.480 own a certain percentage of the company. So with a 0:12:42.520 --> 0:12:47.480 with a private venture capital firm, UM, there's not really 0:12:47.520 --> 0:12:52.000 necessarily the same kind of laws around those things. UM. 0:12:52.040 --> 0:12:54.800 Now right now they're talking about, you know, doing an 0:12:54.800 --> 0:12:58.640 I p o UM, maybe going public, taking parts of 0:12:58.640 --> 0:13:02.160 their company public, and are there are you know, more 0:13:02.200 --> 0:13:06.680 ditrect laws around that. Who's the driving force of Byte Dance, 0:13:07.240 --> 0:13:09.480 The CEO of Bye Dances, this guy named John Imming. 0:13:09.720 --> 0:13:12.880 He grew up in a part of China that um, 0:13:12.920 --> 0:13:15.760 you know, really opened up to the world of business 0:13:16.240 --> 0:13:19.160 much earlier than the rest of China, and his parents 0:13:19.160 --> 0:13:22.200 were both civil servants, UM. But he got into tech. 0:13:22.280 --> 0:13:25.439 He was a big self described tech nerd. During college, 0:13:25.480 --> 0:13:28.880 he helped fix computers and um, that's kind of he 0:13:28.920 --> 0:13:31.080 tells the story of how he met his wife by 0:13:31.120 --> 0:13:35.040 offering to fix fix our computer, and um. He worked 0:13:35.040 --> 0:13:37.080 at a number of startups over the years and then 0:13:37.120 --> 0:13:39.720 decided he was going to start his own and um 0:13:39.760 --> 0:13:42.600 that's what turned into Bite Dance. And how old a 0:13:42.640 --> 0:13:48.080 guy is he today? He's in his late thirties, um, 0:13:48.240 --> 0:13:51.320 and he's you know, at the time, I think he 0:13:51.400 --> 0:13:54.920 was thirty two when he started his his company. UM, 0:13:54.960 --> 0:13:57.439 so he definitely was not the like eighteen year old, 0:13:58.000 --> 0:14:01.160 you know, Mark Zuckerberg in a door room story. He 0:14:01.240 --> 0:14:03.280 had been around the block. He had worked at a 0:14:03.360 --> 0:14:07.560 number of successful tech companies and um, he even worked 0:14:07.559 --> 0:14:10.600 at Microsoft for a brief amount of time. So when 0:14:10.600 --> 0:14:16.960 the company started, Bye Dance started, When by Dan started in, Okay, 0:14:17.000 --> 0:14:19.520 what was their ages? What was their purview? Starting in 0:14:20.360 --> 0:14:23.520 what did they start with? By Dan started with a 0:14:23.680 --> 0:14:28.000 jokes app called Neandwans And basically what that is is 0:14:28.240 --> 0:14:31.560 it was very simple. They showed you these jokes or 0:14:31.680 --> 0:14:34.080 memes and if you liked it, you'd give it a 0:14:34.120 --> 0:14:35.960 thumbs up, and if you didn't like it, you'd give 0:14:36.000 --> 0:14:39.400 it a thumbs down, and over time, the more it 0:14:39.480 --> 0:14:41.840 got to know you, how long you kind of hovered 0:14:41.840 --> 0:14:44.480 on that joke, which ones you liked, which ones you 0:14:44.520 --> 0:14:46.560 did in it kind of got to know really like 0:14:46.680 --> 0:14:49.720 your sense of humor. And they were able to kind 0:14:49.720 --> 0:14:52.120 of learn that was kind of like their learning app 0:14:52.560 --> 0:14:55.120 of how they did that. Um. But where they really 0:14:55.160 --> 0:14:57.680 made their mark was a company called Totia, which is 0:14:57.720 --> 0:15:01.480 a newsreader and they used the same exact thing that 0:15:01.520 --> 0:15:04.240 they learned about with the jokes app to Taylor news 0:15:04.240 --> 0:15:07.160 to you. So if you think about the newspapers in 0:15:07.200 --> 0:15:10.720 the US, you know, you've got real people editors who 0:15:10.760 --> 0:15:14.560 are choosing what they think is important based on news judgment, 0:15:14.840 --> 0:15:17.640 and you know, it's it's this kind of um, you know, 0:15:17.720 --> 0:15:20.320 meat and potatoes approach where they're giving you things you 0:15:20.360 --> 0:15:22.320 want to know but also the things you need to know. 0:15:22.840 --> 0:15:27.360 Tokyo the newsreader app was never never had human editors 0:15:27.520 --> 0:15:30.560 in the early days. It was all based on, you know, 0:15:30.680 --> 0:15:33.080 what people were reading and what they liked and getting 0:15:33.120 --> 0:15:36.520 to know their personalities, and they would learn kind of 0:15:36.520 --> 0:15:38.840 what you liked and offer you up that kind of news, 0:15:39.280 --> 0:15:42.560 which was so unique in China because most of the 0:15:42.600 --> 0:15:48.160 news that you get in China is government owned UM publications. Okay, 0:15:48.200 --> 0:15:53.720 So when did they view veer into the music sphere. So, 0:15:53.760 --> 0:15:57.760 the first kind of entrance into music UM in the 0:15:57.880 --> 0:16:01.600 US was with this company called lipogram Um, which I 0:16:01.680 --> 0:16:05.480 don't know if you ever remembered, but it was this 0:16:05.560 --> 0:16:08.840 is a bike dance company. No, it was a company 0:16:08.840 --> 0:16:11.760 that they bought in the US. Okay, No, but okay, 0:16:11.840 --> 0:16:16.000 so they had no presence in music until they bought Flipogram. 0:16:16.320 --> 0:16:20.520 Well they had they had launched the TikTok version dotying 0:16:20.800 --> 0:16:24.360 in in China before they launched it globally, and so 0:16:24.440 --> 0:16:28.360 that is that would be their first foray into music UM. Okay, 0:16:28.440 --> 0:16:32.240 So in China. So what year was at uh they 0:16:32.320 --> 0:16:38.120 launched doing? I think in twenty seventeen. Okay, were other 0:16:38.240 --> 0:16:41.120 people in that space in China? Who was the big 0:16:41.160 --> 0:16:45.200 cahuna in that space? Yeah? So similar a similar company 0:16:45.680 --> 0:16:50.360 called Kaisha. It was startup that was UM owned by 0:16:50.560 --> 0:16:53.400 or not owned by but backed by ten Cent, which 0:16:53.480 --> 0:16:57.080 is you know a big music UM plays very big 0:16:57.120 --> 0:17:00.880 in music UM. But they weren't really no for music, 0:17:01.040 --> 0:17:03.480 right it was it was it was a lot of video. 0:17:03.840 --> 0:17:07.840 It was not as much as music. Okay, so why 0:17:08.200 --> 0:17:15.240 does bite dance by Flipogram? So early on they realized 0:17:15.240 --> 0:17:18.680 they were kind of just stealing the music for these things. 0:17:18.680 --> 0:17:23.520 They were ripping off these UM fifteen second iTunes previews 0:17:23.560 --> 0:17:26.439 off the Internet, and just because they were so short 0:17:26.960 --> 0:17:29.280 and because they were such a small company, nobody was 0:17:29.320 --> 0:17:32.400 really paying attention to what they were doing. And at 0:17:32.440 --> 0:17:36.360 a certain point their Western backers Sequoia g A others 0:17:36.440 --> 0:17:38.520 said to them, you know, if you're going to grow bigger, 0:17:38.600 --> 0:17:41.600 you're going to have to do this legally. And music, 0:17:41.720 --> 0:17:45.720 as you know, has had a long battle of legal 0:17:45.800 --> 0:17:48.320 rights and I P and things like that. So what 0:17:48.400 --> 0:17:53.280 Flipogram had was a lot of these contracts with music companies. 0:17:53.280 --> 0:17:56.840 They had already negotiated a bunch of contracts with different 0:17:57.000 --> 0:18:00.280 UM labels and that was one of the are just 0:18:00.400 --> 0:18:03.720 reasons why they bought it, and just um a reminder 0:18:03.720 --> 0:18:06.040 because it was a small app at the time, flipp 0:18:06.040 --> 0:18:08.120 Agram was this kind of slide show app. It would 0:18:08.160 --> 0:18:10.440 kind of allow let you make these slide shows really 0:18:10.640 --> 0:18:13.240 really quickly and allow you to then share them over 0:18:13.320 --> 0:18:16.520 Twitter or Facebook or things like that with music put 0:18:16.520 --> 0:18:18.679 to it. And so flipp Arogram had done it the 0:18:18.760 --> 0:18:21.959 right way. They had you know, negotiated with with all 0:18:21.960 --> 0:18:25.400 these records labels and whatnot, and By Dance just bought 0:18:25.440 --> 0:18:28.000 them and then inherited shut down the app and inherited 0:18:28.040 --> 0:18:38.640 all the music label um agreements. So why did dance 0:18:38.720 --> 0:18:44.760 by musically? So at the time, they were wanted to 0:18:44.800 --> 0:18:48.200 become a global company, and so they were saying, okay, 0:18:48.240 --> 0:18:50.640 well we want to launch TikTok globally, which they did. 0:18:51.200 --> 0:18:53.680 It didn't really take off in the US at the time, 0:18:54.240 --> 0:18:58.399 and musically they saw was just um, you know, growing 0:18:58.440 --> 0:19:02.600 like Gangbusters top of the Apple Music charts, and they 0:19:02.680 --> 0:19:05.120 knew that there was a lot of interest in it 0:19:05.800 --> 0:19:09.800 from you know, Facebook considered buying them, other companies had 0:19:09.920 --> 0:19:14.200 discussions with them, and then they found out that Kaisha, 0:19:14.480 --> 0:19:18.400 their Chinese competitor, was also in talks to buy musically, 0:19:18.800 --> 0:19:21.480 and that really got them going because they were like, well, 0:19:21.480 --> 0:19:24.480 I'm not gonna let my biggest competitor in and buy 0:19:24.480 --> 0:19:26.720 this and get these in roads and all of a 0:19:26.760 --> 0:19:29.240 sudden get you know, a hundred million, two hundred million 0:19:29.400 --> 0:19:33.359 US users just like that, And so they decided, okay, 0:19:33.640 --> 0:19:38.240 we're gonna buy Musically we're gonna also inherit those those 0:19:38.280 --> 0:19:41.560 contracts with music labels which they had started to get 0:19:41.600 --> 0:19:45.720 at the time and automatically get you know, a user 0:19:45.760 --> 0:19:48.080 base of a hundred two hundred million people depending on 0:19:48.119 --> 0:19:50.359 how you count it in the US, which they didn't 0:19:50.400 --> 0:19:54.960 have before. Okay, so they had TikTok before they bought Musically. 0:19:55.280 --> 0:19:59.000 Were they essentially equivalent platforms in the way they operated? 0:20:00.000 --> 0:20:03.240 It was a little different because Musically was really focused 0:20:03.240 --> 0:20:07.280 on karaoke and lip syncing and um, you know, dancing 0:20:07.320 --> 0:20:10.680 and singing. TikTok was a big that was a big 0:20:10.680 --> 0:20:12.600 portion of it, but not all of it. They also 0:20:12.640 --> 0:20:15.560 wanted to build it out to all sorts of things 0:20:15.640 --> 0:20:20.640 like comedy and pranks and um, you know, cooking. Uh, 0:20:20.680 --> 0:20:24.280 there's you know, hacks, life hacks, all sorts of different 0:20:24.400 --> 0:20:25.960 ways you could do it. So that would be the 0:20:25.960 --> 0:20:29.200 one big difference between the two. Okay, so when did 0:20:29.320 --> 0:20:34.080 Musically launch When did they start? So Musically started around 0:20:34.560 --> 0:20:43.960 um um they didn't really um, they didn't. What people 0:20:43.960 --> 0:20:47.639 didn't really know was that Musically was also a Chinese company. 0:20:47.800 --> 0:20:50.080 People seem to kind of forget that that that it 0:20:50.119 --> 0:20:54.160 was started in um by two guys that were had 0:20:54.160 --> 0:20:57.639 half the half the operation in Shanghai. They had a 0:20:57.760 --> 0:21:02.440 number of people in l a UM and they started 0:21:02.480 --> 0:21:04.919 because they wanted to be an education app at first, 0:21:05.080 --> 0:21:09.200 and then realized, okay, kids don't want to learn online, 0:21:09.440 --> 0:21:12.000 they want to they want to have fun, and so 0:21:12.040 --> 0:21:15.200 they totally pivoted and in thirty days built a completely 0:21:15.240 --> 0:21:18.320 new app all around singing and dancing and things like that, 0:21:18.960 --> 0:21:22.400 and quickly realized that you know, people in China, we're 0:21:22.440 --> 0:21:25.600 not jumping onto this, but people in the US were 0:21:25.640 --> 0:21:29.080 loving it. And so these like small towns and you know, 0:21:29.200 --> 0:21:32.679 Texas for example, was one really early place where like 0:21:32.720 --> 0:21:36.560 this high school in Texas was loving Musically and m 0:21:37.080 --> 0:21:39.840 and they started realizing like, wow, we have a knack. 0:21:39.880 --> 0:21:42.600 We've hit it with American kids UM, and they just 0:21:42.680 --> 0:21:44.960 kept focusing more and more on the US and getting 0:21:44.960 --> 0:21:48.200 bigger here. So tell us about the founder of Musically 0:21:48.200 --> 0:21:52.600 and when he started. Yeah, so Alex j is the 0:21:52.640 --> 0:21:55.840 way to hear people talk about Alex Jew to me 0:21:55.960 --> 0:22:00.320 is one of the more interesting things of this Podcas asked, 0:22:00.359 --> 0:22:03.400 because people describe him as, you know, like a poet 0:22:04.320 --> 0:22:07.560 or a dreamer or you know, just this kind of 0:22:08.119 --> 0:22:10.919 totally the opposite of what you think about and like 0:22:10.920 --> 0:22:15.920 a Silicon Valley tech you know, bro culture type of thing. Um. 0:22:15.960 --> 0:22:19.439 You know, he had this vision of connecting people around 0:22:19.440 --> 0:22:24.879 the world with music and really cultivating the users. So 0:22:25.320 --> 0:22:27.160 you know, at the time, it's funny to think back 0:22:27.160 --> 0:22:31.320 on it, you know, but you know, a decade ago, Twitter, Facebook, others, 0:22:31.320 --> 0:22:34.840 they all saw themselves as a tech platform. But but 0:22:35.160 --> 0:22:37.440 musically they were like, no, we we really want to 0:22:37.480 --> 0:22:40.480 focus on these create these creators, these stars. You know, 0:22:40.520 --> 0:22:43.480 they were building that from the beginning. And so, you know, 0:22:43.520 --> 0:22:49.600 we hear these stories about him, about Alex talking about, um, 0:22:49.640 --> 0:22:53.040 you know, taking out these these creators to dinner, calling 0:22:53.080 --> 0:22:58.000 their parents at home, um, you know, just making fake accounts. Um. 0:22:58.040 --> 0:23:01.920 In the in the uh found during podcast, we we 0:23:02.000 --> 0:23:03.880 hear him talking about how he would make these fake 0:23:03.880 --> 0:23:06.760 accounts just to like interact with some of these kids 0:23:06.760 --> 0:23:09.119 who were like eight nine years old. And here you 0:23:09.119 --> 0:23:12.199 have this thirty six year old Chinese guy basically like 0:23:12.320 --> 0:23:14.520 chatting with eight year old kids to like really get 0:23:14.600 --> 0:23:17.159 into their minds and kind of like figure out, you know, 0:23:17.200 --> 0:23:18.919 like what do they want, what do they like? That 0:23:19.000 --> 0:23:25.320 kind of thing. Okay, and ultimately they merged the two. 0:23:26.240 --> 0:23:30.000 Uh you say in the podcast that TikTok I mean 0:23:30.200 --> 0:23:36.440