Speaker 1: John Poyt Bolton is one of those guys who never
Speaker 1: wanted to work at a big company because he likes
Speaker 1: the energy that comes with working at a startup. And
Speaker 1: back in things were looking pretty good for John. He
Speaker 1: was an executive at Flipogram. It's an app that lets
Speaker 1: people stitch together photos and music to make little montages
Speaker 1: for social media. We were just cruising at Flipogram. We
Speaker 1: thought we were going to be the next Instagram because
Speaker 1: the numbers we had were just staggering. And you know
Speaker 1: what happens when you get big in the startup world,
Speaker 1: either you get really really big and you go public
Speaker 1: or you get acquired. And John was hoping Flipogram might
Speaker 1: get bought by a big name tech company like Apple
Speaker 1: or Facebook. I mean, if Facebook wanted Instagram, why not Flipogram.
Speaker 1: But instead, the buyer that came calling was a company
Speaker 1: in China that John had never heard of, called byte Dance.
Speaker 1: The first time it came up, you know, like a
Speaker 1: Chinese tech company, Like, we were like no, we were disappointed,
Speaker 1: um because you know, we hadn't heard of it. We
Speaker 1: you know, we were hoping for some big exit to
Speaker 1: to a Facebook or you know, we wanted a high
Speaker 1: profile company, you know, and yeah, and so to have
Speaker 1: a Chinese tech company that we never heard of was
Speaker 1: not exciting. But this was a company that acquired Flipogram.
Speaker 1: Bye Dance had money to spend and they wanted to
Speaker 1: have a bigger presence in the US. They also wanted
Speaker 1: Flipogram because of the music deals it had with major
Speaker 1: record labels. After the acquisition went through, the CEO of
Speaker 1: Bye Dance flew to l A to check out the
Speaker 1: American company he had just purchased. And I think it
Speaker 1: was December when Yiming, the CEO By Dance, came to
Speaker 1: our office and uh he told us about by Dance,
Speaker 1: and I just remember him showing some of the data
Speaker 1: and the products, and you know, I was like, oh, wow,
Speaker 1: this is this isn't some unknown little Chinese tech company,
Speaker 1: this is this thing is massive, This is really interesting.
Speaker 1: Bye Dance was massive. They were valued at ten billion
Speaker 1: dollars in and they had just raised a huge funding
Speaker 1: ground from some major VC firms with one goal in mind.
Speaker 1: I think they were trying to get a real footholds
Speaker 1: in the United States and and you know, we're really
Speaker 1: trying to branch out of China and Though the Flipogram
Speaker 1: team was impressed by the size and scope of Bye
Speaker 1: Dance by Dances, CEO John Uming brought along something else
Speaker 1: to sweeten the deal. I think it was almost the
Speaker 1: Chinese New Year, and so they had handed out, you know,
Speaker 1: red envelopes with with cash in it, and I thought, well,
Speaker 1: that's a that's a good start. I guess it's customary
Speaker 1: in China to give small cash gifts during the New Year.
Speaker 1: But it's so funny to me that Bye Dances paying
Speaker 1: millions of dollars to acquire Flipogram, and the thing John
Speaker 1: remembers is the fifty bucks he got in the red envelope.
Speaker 1: Flipp Agram was not the first or the last startup
Speaker 1: that Bye Dance would acquire, because a year and a
Speaker 1: half later, Bye Dance buys a lip sinking app called Musically,
Speaker 1: meaning overnight, by Dance goes from having almost no presence
Speaker 1: in the US to having over a hundred million American users,
Speaker 1: and the Musically acquisition was the basis for Bye dances
Speaker 1: most famous product, TikTok. I'm Shelley Banjo. You're listening to Foundering.
Speaker 1: In the previous episode, we told you about Musically and
Speaker 1: its eccentric founder Alex jew Musically is important because it
Speaker 1: served as a blueprint for TikTok. The apps even look similar,
Speaker 1: and many of the Baby Musically users would grow up
Speaker 1: to become stars on TikTok. But TikTok's global scale, it's
Speaker 1: insane popularity, it's advanced algorithms. Well, that's all thanks to
Speaker 1: Byte Dance. This episode will tell you the story of
Speaker 1: Bye Dances Rise, It's ambitious CEO, John y Ming, and
Speaker 1: how it grew to become the biggest startup in the
Speaker 1: world after a quick break by Dances. Founder Johnny Ming
Speaker 1: is not a household name, but he's fundamentally changed the
Speaker 1: way people consume media on their phones. He's basically outplayed
Speaker 1: Mark Zuckerberg and Evan Spiegel at their own game. John
Speaker 1: says he was really surprised by Johnny Ming's personality when
Speaker 1: they first met. Founders tend to be you know, loud
Speaker 1: or you know, bullish or big personalities, overly charismatic, and uh,
Speaker 1: you know, he just didn't have any of that. Quiet
Speaker 1: and humble and and you know, always bowing in a
Speaker 1: way and you know, very un American in a way,
Speaker 1: right like, and that for someone to have created something
Speaker 1: so compelling and so successful, and to carry yourself like that,
Speaker 1: I think is actually a testament of character. Johnny Ming
Speaker 1: was born in i teen eight three. He's the only
Speaker 1: son of two government workers. He grew up in Fujian Province,
Speaker 1: which is a coastal region in China where some of
Speaker 1: the first private companies popped up when China started opening
Speaker 1: up to the world. E Main studied software engineering at
Speaker 1: Nankai University and was invited back to his alma mater
Speaker 1: in sixteen to talk to the incoming freshman students. He
Speaker 1: told them that making friends didn't come naturally to him,
Speaker 1: so he relied on his love of computers to help
Speaker 1: get him through college. So I put it, you can
Speaker 1: put the taint. How did I socialize as a science
Speaker 1: student who didn't usually participate in group activities. I mainly
Speaker 1: relied to my interest in repairing computers. I helped classmates
Speaker 1: choose components and assembled dozens of computers. Of course, a
Speaker 1: lot of them were for female classmates. Repairing computers has
Speaker 1: led to some of the great achievements in my life.
Speaker 1: I met my girlfriend at the time, who is my wife. Now.
Speaker 1: When I fixed the computer, you take a stuff. Uh well,
Speaker 1: if that's not true love, then really what is? The
Speaker 1: Means said he was bookish and quiet. He kept to
Speaker 1: himself even in college when the other students who are
Speaker 1: playing video games and card games. I spent that time
Speaker 1: reading books. And I wasn't just reading books and computer programming.
Speaker 1: I was looking at different biographies, local and international newspapers
Speaker 1: and magazines. He means love of biographies is a detail
Speaker 1: that really sticks out for me. It's something he mentions frequently.
Speaker 1: Would face on that list. I have to say, biographies
Speaker 1: work almost like a sort of chicken soup for the soul.
Speaker 1: And I've read a lot of biographies. I learned that
Speaker 1: many successful people seemed to lead ordinary lives. Four have
Speaker 1: you achieved great success? The actions looked insignificant at the time,
Speaker 1: but in the end, the dots connect and you can
Speaker 1: see the arc of the success. It's fun to imagine,
Speaker 1: you mean, as a college student spending his time fixing
Speaker 1: computers and just devouring these biographies, he studied the lives
Speaker 1: of these towering figures closely. I think that's because he
Speaker 1: yearned to build something great, just like the men and
Speaker 1: women in the books. Years later, after Bite Dance, had
Speaker 1: already gotten pretty big. I visited its Beijing headquarters for
Speaker 1: some interviews, and I remember seeing these oversized posters of
Speaker 1: book covers hanging on their office walls. They were biographies
Speaker 1: of legendary American tech founders like Steve Jobs and Jeff Bezos.
Speaker 1: I found it so unusual. I snapped some pictures and
Speaker 1: sent them to my editor. It's not every day you
Speaker 1: see an oversized photo of Jeff bezos face hanging from
Speaker 1: the walls of a Chinese company. I mean mentions this
Speaker 1: again during his first interview with Western Media. My colleague
Speaker 1: Peter Elstrom sat down with him in TV. Notice heming
Speaker 1: only brings up American tech founders. This is role models,
Speaker 1: not say a Chinese founder like Ali Baba's Jack Ma.
Speaker 1: But I read quite a lot of story about Bill
Speaker 1: Gates while I was young, and Steve Jobs and what's
Speaker 1: nek well I graduated, uh graduate from university. I paid
Speaker 1: quite a lot of attention to Amazon and Facebook. I
Speaker 1: get two things out of this tape. One he means
Speaker 1: not just some engineer who only cares about code. He's
Speaker 1: paying attention to how businesses are running. And two, he's
Speaker 1: got his eyes on the competition I paid attention to
Speaker 1: Facebook from two thousand and six, so I think they
Speaker 1: start company into Southerland four and I graduated to Southland five.
Speaker 1: Notice how he emphasizes his attention to Facebook because a
Speaker 1: few years after this interview, Meming Company would post the
Speaker 1: biggest threat Facebook had ever seen. And here he's saying
Speaker 1: that he was tracking Facebook closely, almost a decade before
Speaker 1: bye Dance even existed. After college, I mean became a
Speaker 1: software engineer. He worked at a bunch of startups and
Speaker 1: did a brief stint at Microsoft, but quit because he
Speaker 1: said it was too boring. Yeah, I disiplated several in
Speaker 1: several stops. Most such engine companies or social network companies.
Speaker 1: I think, oh for companies before our studies company in
Speaker 1: He founded byte Dance out of a Beijing apartment when
Speaker 1: he was twenty nine years old. His first product was
Speaker 1: a mobile app that showed you jokes, and it was
Speaker 1: really simple. You see a joke or a funny meme
Speaker 1: pop up on your phone and you give it a
Speaker 1: thumbs up or a thumbs down. The concept seemed pretty basic,
Speaker 1: but it was the foundation for all of byte Dance's
Speaker 1: future products. First, they figured out what makes each person laugh.
Speaker 1: Then as the comp and expanded into news and video,
Speaker 1: they were learning what individual users wanted to read and watch.
Speaker 1: They were collecting reams and reams of data. Here's Lugen,
Speaker 1: a former senior executive at Bite Dance in nineteen um.
Speaker 1: So the company was actually founded, I think, with the
Speaker 1: very simple purpose of connecting information people in a new way,
Speaker 1: in a mobile way. Then later on we um addam
Speaker 1: not only news but all formats of content, a variety
Speaker 1: of contents, you know, funny jokes, entertainment. Later she would
Speaker 1: like in the artificial intelligence behind the app to a child.
Speaker 1: She told me. It takes time to build up the
Speaker 1: child's intelligence, but once you do, they'll grow up to
Speaker 1: be a super smart adult, capable of more and more things.
Speaker 1: The technology that Eiming developed for the Joke's app would
Speaker 1: fuel the rise of the company's next hit product, Tota,
Speaker 1: a Chinese newsreader that would make Bite Dance ubiquitous across
Speaker 1: China and catch the attention of venture capitalists around the world.
Speaker 1: Let me try to convey to you just how big
Speaker 1: Tokyo is in China. It's been downloaded more than seven
Speaker 1: dred million times, the closest comparison in the US is
Speaker 1: probably Google News, but Toteo is a much bigger deal
Speaker 1: because for lots of folks in China, Tokyo has become
Speaker 1: the only place they get the news. They've abandoned other
Speaker 1: newspapers and media websites, which are largely controlled by the
Speaker 1: Chinese government. Tokyo delivers a totally different experience. AI algorithms
Speaker 1: pick and choose the articles you see based on your
Speaker 1: preferences and personality, and that gives By Dance deep insight
Speaker 1: into the minds of its users. Here's an interview with
Speaker 1: you mean during a tech event in Shanghai Yo. What
Speaker 1: if the day comes when Bye Dance knows me better
Speaker 1: than my own husband? Are you worried about that that
Speaker 1: there might be an app that understands you bader than
Speaker 1: the people around you. Computer algorithms are getting smarter and smarter,
Speaker 1: but very essentially simple and pure. How can I be
Speaker 1: sure that the algorithm will remain simple and pure when
Speaker 1: you're the guy behind the machines, well, I am also
Speaker 1: very pure. Who can guarantee that they will stay pure? Honestly,
Speaker 1: computers are basically simple and pure. A lot of people
Speaker 1: worry that computers might become monsters and do evil things,
Speaker 1: but honestly, computers break everything into small steps that people
Speaker 1: observe and control. I think we probably don't have to
Speaker 1: worry about computers, and maybe we should worry more about people.
Speaker 1: I've never heard a CEO talk about his pure intentions
Speaker 1: on TV. It's kind of bizarre. But the other thing
Speaker 1: that's interesting here is that the news anchor is really
Speaker 1: pushing him on deep day AATA mining and his apparent
Speaker 1: disregard for user privacy, and heman kind of laughs it off.
Speaker 1: He says he really believes in the purity of the
Speaker 1: technology and of his own good intentions. It's funny to
Speaker 1: listen to this tape all these years later, because the
Speaker 1: biggest controversy around TikTok basically boils down to this what
Speaker 1: are they doing with all the user data they've collected,
Speaker 1: and as China's government have access to data from Americans.
Speaker 1: Even now, ey Ming has maintained that all these fears
Speaker 1: over national security are unfounded, and his message has been
Speaker 1: pretty consistent. He's essentially saying, I'm a good guy and
Speaker 1: I built a good product. You can trust me. Ming
Speaker 1: is now one of the richest people in China. But
Speaker 1: when he started his company, his success was anything but
Speaker 1: assured because he was coming up during a boom time
Speaker 1: for the Chinese tech industry. Competition was cut throat and
Speaker 1: it was hard to know which companies were going to
Speaker 1: flop and which ones would hit it big. You're watching
Speaker 1: history from the floor of the New York Stock Exchange,
Speaker 1: America's money mecca. Ali Baba will in fact be the
Speaker 1: largest I p O in history. This is a profitable company.
Speaker 1: It's a very very profitable company. And that's you know,
Speaker 1: a lot of these I p o s are not.
Speaker 1: A percent of Americans had no idea what Ali Baba was.
Speaker 1: And you're talking about the biggest I p O in
Speaker 1: U S history. Bigger than Visa, bigger than Twitter, bigger
Speaker 1: than Facebook. This company is massive. That euphoria spiked in
Speaker 1: September when Ali Baba listed on the New York Stock Exchange.
Speaker 1: It was worth twenty five billion dollars and investors started
Speaker 1: searching for the next Ali Baba, the next Chinese success story.
Speaker 1: Around that time, you mean hopped on a plane to
Speaker 1: California with a group of other young Chinese founders that
Speaker 1: were I in the US market. There, they toured the
Speaker 1: halls of hot Silicon Valley tech companies like Facebook, Google, Tesla,
Speaker 1: and you Mean became convinced that a Chinese tech entrepreneur
Speaker 1: like himself could compete with the Googles and facebooks of
Speaker 1: the world. Eming even gave a speech at a conference
Speaker 1: held on Facebook's Menlo Park campus about China's growing texting.
Speaker 1: He called his presentation the Future of Information. During his speech,
Speaker 1: he laid out a roadbap for his vision of social media.
Speaker 1: He told the audience, we aggregate as much data as
Speaker 1: possible and analyze every action from each user. I see
Speaker 1: this is really foreboding. Eming went into Facebook's office and
Speaker 1: gave them a peek into his own aggressive tactics. It
Speaker 1: was like an early warning of what was to come.
Speaker 1: We'll be right back. In China, the tech industry is
Speaker 1: dominated by just two companies, Ali Baba and Tencent, and
Speaker 1: they have lots of money. And one thing about China
Speaker 1: is that, unlike the US, there wasn't a well established
Speaker 1: system of venture capital, so Ali Baba and Tencent essentially
Speaker 1: act as the vcs. They funneled billions to startups to
Speaker 1: get a piece of what's coming and to head off
Speaker 1: the competition. So if you're a hot tech startup like
Speaker 1: Bye Dance, It's basically understood you'll choose one side or
Speaker 1: the other, Ali Baba or ten Cent. For Bye Dance,
Speaker 1: it was ten Cent that came calling. They approached you
Speaker 1: mean to invest in his company, but you being made
Speaker 1: a very unusual move. He turned the money down. Ballet
Speaker 1: tin Atala. Earlier this year there was news that ten
Speaker 1: Cent was interested in buying a stake and Bye Dance
Speaker 1: and that you turned down the investment. Do you go?
Speaker 1: When that news came out, a colleague told me he
Speaker 1: didn't join by Dance to become a tense Cent employee,
Speaker 1: and I told him I didn't found by Dance to
Speaker 1: become a ten Cent employee either. It's not to say
Speaker 1: we have a problem with working with ten Cent or
Speaker 1: competing with Tencent or what I want is that we
Speaker 1: become a company that builds a platform that adds value
Speaker 1: to society, and that we do that by ourselves. That
Speaker 1: was you mean? Speaking on CCTV in you can hear
Speaker 1: the pride in his voice as he says he didn't
Speaker 1: want to be beholden to anyone, even if it meant
Speaker 1: turning down the money. He wanted to run by Dance
Speaker 1: his own way. So as far as your own business goes,
Speaker 1: are you running it as a democracy or a dictatorship?
Speaker 1: I think there's a fine line. Internally, everyone in the
Speaker 1: company is pretty equal. You can all communicate and express
Speaker 1: our opinions when the CEO makes a decision. You shouldn't
Speaker 1: make other people feel afraid to speak out. That's the
Speaker 1: bottom line. You need to make sure of that, otherwise
Speaker 1: you miss out an important information. Ideally, you'll left opportunities
Speaker 1: to learn, and you can afford to make mistakes along
Speaker 1: the way, and you can share the opportunities with your
Speaker 1: team members so they have the agency to make their
Speaker 1: own decisions. That was he mean on a Chinese talk
Speaker 1: show in it sounds like he's modeling his business after
Speaker 1: an American company rather than a Chinese One. Part of
Speaker 1: that is because he took money and advice from American
Speaker 1: and foreign VC firms, many of them in Silicon Valley.
Speaker 1: By Dance even looks like a futuristic Silicon Valley office.
Speaker 1: It's built out of a converted airplane hangar, so it's
Speaker 1: an expanse of space. There are few walls, no real offices,
Speaker 1: just rows and rows of engineers, staring at computer screens.
Speaker 1: Ming also tried to subvert China's corporate culture, which tends
Speaker 1: to be pretty hierarchical. It's common for employees in China
Speaker 1: to refer to their managers by their formal titles. So hypothetically,
Speaker 1: if Facebook were a Chinese company, Mark Zuckerberg might be
Speaker 1: referred to as teacher Zuckerberg or boss Zuckerberg. But Eming
Speaker 1: broke with that tradition in the office. He went by
Speaker 1: classmate Eming, and in fact he had everyone referred to
Speaker 1: one another as classmates to create a sense of equality
Speaker 1: in the office. By Dance has a flat company structure.
Speaker 1: The atmosphere is that you and your leader just call
Speaker 1: each other by name, and you don't have to refer
Speaker 1: to him as so and so teacher or so and
Speaker 1: so boss. I think that's a good thing, because that's
Speaker 1: sort of formality is pretty inhibiting. So when we were
Speaker 1: talking about certain issues, we were really just addressing those
Speaker 1: issues rather than feeling restricted by the differences in our rank.
Speaker 1: I think By Dances flat structure helped are brutual. This
Speaker 1: employee joined by Dance in when she was in her
Speaker 1: mid twenties. She asked to remain anonymous into the scene.
Speaker 1: Kind of economy in the past few years has had
Speaker 1: its ups and downs and lots of uncertainty, but I
Speaker 1: felt like Byte Dance was a different world. It only
Speaker 1: had ups. You have infinite stuff to do and infinite
Speaker 1: businesses to explore. I was so happy when I first joined.
Speaker 1: The atmosphere was so energetic and the future felt good.
Speaker 1: I could learn lots of stuff, and I remember just
Speaker 1: feeling super pumped every day. This By Dance employee did
Speaker 1: product research at the company. She says Huming was different
Speaker 1: from other Chinese tech founders. Guys like Ali Baba's Jack
Speaker 1: Maa were loud and pretty self important. In contrast, Aiming
Speaker 1: was quiet, understated, and what strikes me the most about
Speaker 1: him is that he's not someone who stands out. He
Speaker 1: dresses really casually and he just doesn't have a strong presence.
Speaker 1: He's not like I need three bodyguards and forces stems
Speaker 1: to follow me around. He's low key in group settings,
Speaker 1: and when slunchtime and a bunch of people squeeze into
Speaker 1: the elevator, he'll just stand there and wait for the
Speaker 1: next one. He's really good at fading into the background.
Speaker 1: I've had like four different people tell me that at
Speaker 1: first glance they misstook himing for a low level engineer.
Speaker 1: He chew up to work in jeans at tatters Butcher
Speaker 1: and his wire room glasses. He'd sit in the common
Speaker 1: space and code on his computer. Sometimes he'd wear a
Speaker 1: baseball cap pulled down really low. Here's John. You would
Speaker 1: not know who the founder of the company was in
Speaker 1: no way. Um and and I remember I was working
Speaker 1: with a group and in at some tables, and you
Speaker 1: know Yaman was over there at his desk the whole time,
Speaker 1: working by himself. But even though you means strive to
Speaker 1: create a casual work environment, employees say working at Bye
Speaker 1: Dance was incredibly draining, intense. It was far more fast
Speaker 1: paced and frenzied than at other companies. The employee we
Speaker 1: interviewed said she burnt out after less than a year.
Speaker 1: After a while, the excitement I felt disappeared, and I
Speaker 1: started to feel like a worker on his subly line.
Speaker 1: Every day. You entered the offices early, and when you
Speaker 1: leave it's already dark. I didn't even know what time
Speaker 1: it was because we sat on an open office floor
Speaker 1: where the lights were always on and there was always
Speaker 1: someone still at the office. The only way I could
Speaker 1: tell the changing of the seasons was by observing the
Speaker 1: leaves on the trees. When I first started, the trees
Speaker 1: were green, Then the leaves were turning yellow. Then some
Speaker 1: more time passed and the tree branches were bare. There's
Speaker 1: a neighborhood nearby, and if I knocked off early, like
Speaker 1: around seven or eight at night, I saw little kids
Speaker 1: running around. I was jealous of them. They looked so
Speaker 1: free and so relaxed. Leaving the office at eight at
Speaker 1: night was considered early to her. Because people described China's
Speaker 1: work culture as people are working from nine am to
Speaker 1: nine pm, six days a week. Work hours are definitely insane,
Speaker 1: There's no question about that. I think. I remember. The
Speaker 1: funniest things that one said is they're like the hours
Speaker 1: are actually they actually really respect work like balance here,
Speaker 1: Like we only worked six days a week, and I
Speaker 1: was like what, And then then like Saturdays the mandatory
Speaker 1: basically and um. And then the second thing they were
Speaker 1: we only have the stage and I was like, in
Speaker 1: no universes that the case in the West. This person
Speaker 1: worked with big name Silicon Valley companies for decades. He
Speaker 1: spoke to me on the condition of anonymity, but this
Speaker 1: is his real voice. He served as an advisor to
Speaker 1: Bite Dance, helping them devise a plan to take on
Speaker 1: Facebook and YouTube. I man China is here to win,
Speaker 1: are they not. I'd say the thing that was different
Speaker 1: about them versus the other company companies based in China
Speaker 1: interacted with is this one felt more like a Google
Speaker 1: Silicon Valley like company than the others. It's one of
Speaker 1: the reasons. You know, they're able at by Dance to
Speaker 1: like turn out features so so so quickly. Um and
Speaker 1: the Chinese are known for copying, but like Bye Dances
Speaker 1: is a different level of velocity UM. But like like
Speaker 1: they're like material features that they could turn out within
Speaker 1: weeks that would take another company months. Turning out new
Speaker 1: features in a matter of weeks sounds almost superhuman. But
Speaker 1: again that goes back to the intense work culture at
Speaker 1: Byte Dance, which starts at the top. Lu Gen, the
Speaker 1: senior executive at Byte Dance, work closely with Giming for years.
Speaker 1: She said he's such a workaholic that he even travels
Speaker 1: to other countries when there's a holiday in China because
Speaker 1: he doesn't want to stop working. You know, sometimes when
Speaker 1: it's a China holiday that email will say, let's go
Speaker 1: to the US, because you know he's training here. Every
Speaker 1: one doesn't work, but in the US we can still work.
Speaker 1: Lu Jen and I spoke when I visited By Dances
Speaker 1: Beijing headquarters in January, and I remember sitting in the
Speaker 1: office cafeteria afterwards and staring at a TV playing this
Speaker 1: weirdly emotional video of employee testimonies. It was right around
Speaker 1: the New Year holiday. By Dance. Employees had taped a
Speaker 1: video sharing last year's regrets in their New Year's resolutions.
Speaker 1: What stuck out was this one employee apologizing to her
Speaker 1: kids for staying at the office so late that she
Speaker 1: never saw them. I jotted down her exact words, I'm
Speaker 1: sorry to my kids that I'm never home, she said.
Speaker 1: Another told her ex boyfriend, I'm sorry I just didn't
Speaker 1: spare enough time for you while I toiled at the
Speaker 1: office five away. When we asked By Dance about this,
Speaker 1: they gave us a statement. By Dance is a unique
Speaker 1: and exciting place to build a career. Our growth is
Speaker 1: a testament to the dedication and commitment of all of
Speaker 1: our employees. Our culture is similar to most early stage startups,
Speaker 1: even as employees were working around the clock, there still
Speaker 1: weren't enough people to keep up with the company's growth,
Speaker 1: and Emi was aggressive with hiring. He wanted to get
Speaker 1: the best engineers and executives, often poaching from his competitors.
Speaker 1: He first approached Lugen while she was still running strategy
Speaker 1: for Uber in China. But the thing about Emi is
Speaker 1: Emi is a very mean as an introvert, you know,
Speaker 1: he's engineered by trading, you know, not very social and
Speaker 1: he doesn't like going out and socialized with a lot
Speaker 1: of people. But when it comes to recording palents, he's
Speaker 1: very persistent, aggressive, persistent. I don't know how many times
Speaker 1: he comes to this little cafe near where I live,
Speaker 1: near my apartment in baking you know, the east side
Speaker 1: actually the opposite side of where the company is, where
Speaker 1: he lives, and he's very persistent, can we meet? And
Speaker 1: I said, a lot of people would say, hey, you know, hi,
Speaker 1: take care. You know, I gave you some room. You
Speaker 1: know that week we connect and email. It was very straightforward.
Speaker 1: It is always a commmit. It sounds like lu Gen
Speaker 1: and Iman had a friendly relationship, or else she probably
Speaker 1: wouldn't be joking about him. Borderline stalking her. She was
Speaker 1: speaking on a podcast called The Next Billion with Bye
Speaker 1: Dance investor Hans Tongue. Around this time, Bye Dance emerged
Speaker 1: as a different sort of Chinese employer. China has a
Speaker 1: reputation for low wages and sprawling factories, but Eman was
Speaker 1: paying some of the highest salaries in the market. Here's
Speaker 1: what you mean with my colleague, Peter, what is the
Speaker 1: top of the market in RUMs of AHAs? What kind
Speaker 1: of salaries from unem sterily for the unlimited talent? She
Speaker 1: all loved to hear that unlimited salary for unlimited talent
Speaker 1: sounds like a platitude, but it's not. Let me underscore
Speaker 1: how unusual this is. At Bye Dance, there was no
Speaker 1: ceiling for how much top employees could earn. Sub engineers
Speaker 1: were making one million dollars a year, and e Mean
Speaker 1: was often paying fifty more than his competitors. Throwing money
Speaker 1: at a problem became something you Mean would do again
Speaker 1: and again. As his company grew bigger, he saw that
Speaker 1: paying top dollar to hire employees, acquire other startups, and
Speaker 1: by advertising could serve as a kind of shortcut to success.
Speaker 1: That he could turbocharge his growth by just paying for it,
Speaker 1: and as fast as he was spending money, even more
Speaker 1: money kept flowing in from venture capital backers, many of
Speaker 1: whom were American. You mean, raised almost eight billion dollars
Speaker 1: in VC money in eighteen by Dancer passed Uber and
Speaker 1: became the world's most valuable start up. It's even overtaking
Speaker 1: companies like Starbucks and Goldman sack the buckets of cash
Speaker 1: from big investors like soft Bank in Sequoia give Byte
Speaker 1: Dance a mandate and the means to start expanding around
Speaker 1: the world. Part of the purpose of that raise was
Speaker 1: for Bye Dance to essentially go global, to go beyond
Speaker 1: the borders of China and take their unique technology. Uh
Speaker 1: and really with their secret sauce, is this AI that
Speaker 1: can effectively learn a user users preference and serve them
Speaker 1: content with a precision that you know, I've not seen
Speaker 1: anyone else really do. That's John Again, who worked at Flipogram,
Speaker 1: the slideshow app by Dance acquired in He said this
Speaker 1: would be a big deal. No Chinese consumer app had
Speaker 1: ever hit it big in the US. John state on
Speaker 1: staff at Bye Dance for a couple of years, helping
Speaker 1: the company buy more American startups and sign music deals
Speaker 1: with US record labels. He says the first time he
Speaker 1: walked into Bye Dances Beijing headquarters, he was floored by
Speaker 1: just how many people were lining up to get in.
Speaker 1: I think it when I joined it was a few
Speaker 1: thousand employees, and when I left, it was like thirty
Speaker 1: thousand or something. Crazy. But I remember the first day
Speaker 1: in Beijing at headquarters, I was in the lobby and
Speaker 1: there was I don't know, like a hundred people. I
Speaker 1: met up with the woman I worked for there and
Speaker 1: I said, what's what is that. It's like, oh, those
Speaker 1: are new hires. And I was like, oh my god,
Speaker 1: that's crazy. And then when I realized that happened every day.
Speaker 1: Every day there was this huge, you know, group of
Speaker 1: new employees. We'll be right back with billions of dollars
Speaker 1: from venture capital in hand and an army of employees.
Speaker 1: By Dance was pushing out dozens of apps at a
Speaker 1: time to see what sticks they were, sometimes referred to
Speaker 1: as an app factory, you mean, was trying to find
Speaker 1: his next big product. He'd been following the success of
Speaker 1: a lip syncing app called Musically as it hit it
Speaker 1: big in the US, so he decided to copy it.
Speaker 1: It might sound unsavory to some listeners, but China has
Speaker 1: a reputation for taking technology that's popular in the West
Speaker 1: and just adapting it to the Chinese market. Ali Baba
Speaker 1: began as an eBay copycat, and wehe Chat was originally
Speaker 1: a clone of WhatsApp. By Dance successfully copied musically and
Speaker 1: created two products. One is called Doying, which was exclusively
Speaker 1: for the Chinese market. The second was an early version
Speaker 1: of TikTok which they released internationally. For simplicity's sake, I'm
Speaker 1: going to call it TikTok one point Now here's you
Speaker 1: being on a Chinese talk show. What you want to
Speaker 1: This company in the US had similar products and services,
Speaker 1: but if you take a close load, we offer a
Speaker 1: user experience that's very different. Actually, there's a lot of
Speaker 1: innovation behind what we made, and that's the main reason
Speaker 1: why Doyan and satisfied in needs of Chinese users. To me,
Speaker 1: what you mean is saying is that it's easy to
Speaker 1: copy an idea, but it's much harder to execute on it.
Speaker 1: TikTok one point Oh was successful in a handful of
Speaker 1: Southeast Asian countries, but crucially, it didn't catch on in
Speaker 1: the US, so it didn't quite fulfill you means global dreams.
Speaker 1: You know, being big in Thailand is just not the
Speaker 1: same as making it in America. So you mean determined
Speaker 1: it wasn't enough to just copy Musically. He wanted to
Speaker 1: buy it. At the time, Musically was shopping itself around.
Speaker 1: They had met with Facebook and YouTube, but actually Musically
Speaker 1: got the furthest in acquisition talks with another Chinese tech company,
Speaker 1: Quai Show, which is backed by ten Cent. For you mean,
Speaker 1: this was red alert. He was not going to let
Speaker 1: a Chinese competitor beat him to the US market, so
Speaker 1: he pounced. By Dance had deep pockets, and they offered
Speaker 1: to buy Musically for close to one billion dollars so
Speaker 1: Musically wouldn't fall into the hands of one of Ming's rivals.
Speaker 1: A few people told me this was way more than
Speaker 1: what Musically was worth. Inside By Dance, many people thought
Speaker 1: this purchase was a mistake because By Dance had already
Speaker 1: launched their own music video app. They thought the company
Speaker 1: could take on the US without Musically. Also, Musically came
Speaker 1: with a big problem, namely their super young user base.
Speaker 1: Kids under thirteen years old aren't exactly dependable customers. You
Speaker 1: can't tell if they'll grow up with the app or
Speaker 1: ditch it. Here's where I'm a a former tech banker
Speaker 1: in China and Silicon Valley. So my understanding of the
Speaker 1: stories that basically Musically was very popular with a certain demographic,
Speaker 1: but it failed to catch on with other demographics because
Speaker 1: its content was too narrow right, So it was really
Speaker 1: good for discovering and promoting these preteen stars that were
Speaker 1: but not so good at adding to the BA on
Speaker 1: the platform, and the preteen users led to a second,
Speaker 1: more serious problem. The US government was already investigating whether
Speaker 1: Musically had violated child privacy laws by collecting so much
Speaker 1: data on kids under thirteen. The issues with child data
Speaker 1: scared off potential buyers like Disney and Facebook, but Eming
Speaker 1: wasn't faced by that. He thought the Musically acquisition would
Speaker 1: fast track US growth. To him, the US was the
Speaker 1: crown jewel in a strategy to spread his apps around
Speaker 1: the world. Instead of spending time wooing tens of millions
Speaker 1: of American users, by Dance could just buy them and
Speaker 1: instantly become a global social media powerhouse. And that's what
Speaker 1: they did. By Dance bought Musically and the companies held
Speaker 1: this gigantic party in Hollywood in August. In a surprise move,
Speaker 1: they announced they were shutting down Musically and folding it
Speaker 1: completely into TikTok. This would be TikTok version two point oh,
Speaker 1: the TikTok as we now know it pretty much the
Speaker 1: same consa like Musically. That's Musically's founder Alex Ju speaking
Speaker 1: on stage at the launch party. Alex is introducing byte Dance,
Speaker 1: TikTok's parent company. One of the party goers shot this video.
Speaker 1: Is growing super super fast. It's actually most done this
Speaker 1: year Facebook aube. TikTok had invited hundreds of users who
Speaker 1: had become famous on Musically to the party. There was
Speaker 1: a lot of alcohol, dis pumping, flashing lights, and a
Speaker 1: lot of selfies. In the weeks leading up to the event,
Speaker 1: TikTok paid some of them tens of thousands of dollars
Speaker 1: per video to post on the app, asking their followers
Speaker 1: to follow them on TikTok instead of YouTube or Instagram.
Speaker 1: Is your face new go? You couldn't have racial before
Speaker 1: people I heard. At this point the crowd is going nuts.
Speaker 1: Many teenagers are holding up their phones to record Alex
Speaker 1: and screaming at the top of their lungs. Platool think
Speaker 1: the black. Let's take a look. At midnight, the Musically
Speaker 1: logo disappeared from tens of millions of phones. In its
Speaker 1: place was the TikTok icon, a neon music note on
Speaker 1: a black background. Many of the Musically users were upset
Speaker 1: when they woke up the next morning and saw their
Speaker 1: beloved app replaced. But the purchase of Musically would give
Speaker 1: by Dance a strong foothold into the American market and
Speaker 1: completely rewrite the story. By Dance's success. In the coming years,
Speaker 1: TikTok would transform into a cultural force that chaps an
Speaker 1: entire generation of young Americans through music, celebrity, culture, and
Speaker 1: even politics. But the fact that all of this came
Speaker 1: from a Chinese company with an ambitious founder operating under
Speaker 1: an authoritarian government that would make TikTok's future anything but certain.
Speaker 1: That's next time on Foundering. Foundering is hosted by me
Speaker 1: Shelley Banjo. Sean Ween is our executive producer, Jap Huang,
Speaker 1: Peter Elstrom, David Ramley, and Kurt Wagner contributed reporting to
Speaker 1: this episode. Raymondo is our audio engineer, Mark Million and
Speaker 1: Vandermay and Alistair barr are our story editors. Francesco Leviy
Speaker 1: is a head of Bloomberg Podcasts. Special thanks to everyone
Speaker 1: who helped us with the English language dubs of Chinese
Speaker 1: news footage that includes Silvio Courio, Edwin Chen, Brian Christian,
Speaker 1: Danielle Culbertson, Kevin Hines, Davy Kim, and Courtney Malone. Here's
Speaker 1: my colleague japeing Huang, who's going to credit the Chinese
Speaker 1: shows we excerpted from Hi. This is Joe pin Huangs
Speaker 1: the reporters on the show. This episode, you have heard
Speaker 1: audio from sho Ya Kwa and Gonja Mia. Be sure
Speaker 1: to subscribe and if you like our show, leave a review.
Speaker 1: Most importantly, tell your friends see you next time.