🏠 My name is TikTok

Nice to meet you

AuthorAuthor

Stephen Flanders & Jason Levin
January 20, 2023

Gm. A TikTok a day keeps focus away.

MARKETING/AI

The TikTokification of Literally Everything

TikTok's marketing strategy and For You page changed everything.

In mid-2018, TikTok reportedly spent $1 billion on advertising to get as many users onboarded as fast possible. While customer acquisition cost was high, Connie Chan at a16z explained in a recent post why TikTok was willing to spend so much.

"While many consumer startups and venture capitalists in the U.S. are allergic to relying on paid spend for growth, in China, consumer companies—particularly those focused on AI-driven recommendations and discovery—recognize that deploying a high marketing budget at launch is often the price they must pay to get off the ground. Such companies can’t wait to steadily develop a growing user base because their algorithm recommendations won’t work on small user sets. Instead, they need an initial explosion of a lot of user data, and paid spend is the fastest way to get there."

By getting as many people onboarded as fast as possible, TikTok was able to train their algorithm to know users better than their own family.

Now the TikTokification of everything is here.

Shopping

Chinese shopping app Temu is the TikTok of shopping.

"Temu is now actively following TikTok’s U.S. launch strategy. Like TikTok, it has a deep-pocketed Chinese parent company willing to invest huge sums into its launch so it can continue growing outside of the Chinese market. And like TikTok (as well as fellow Chinese shopping app SHEIN), it also needs a large number of users for its recommendation algorithm to work and to smartly decide what to show you next."

Temu is at the forefront of shopatainment: what Chan calls the combo of shopping and entertainment. No one goes on Amazon unless you need something. Chan says people scroll around Temu just for fun almost like TikTok. I tried and I do admit it's pretty fun.

Socials

On top of shopping, socials are getting TikTokified. We've seen Instagram copy a For You page and Twitter start emphasizing people's tweets that you don't follow.

People don't like it. A petition titled Make Instagram Instagram Again has 330,000+ signatures. Elon is trying to change up the Twitter algorithm (which might be why your Twitter engagement has been wack recently).

Music

"Smores is a music discovery app with a TikTok-like feed," wrote Ivan Mehta at TechCrunch in a post yesterday. Connected to your Spotify account, Smores shows you short clips of songs you might like and lets you scroll through with a vertical feed.

TikTok's parent company Bytedance also has a music app called Resso that isn't available in the US yet. It too uses a vertical feed. From recently filed trademarks, it looks like TikTok is also aiming to launch TikTok music soon.

Tl;dr music is boutta be insane.

CRYPTO

FTX, The Remix

We've been free from FTX news for a couple of weeks now, and what a glorious few weeks it's been. The sun's been shining, the birds have been singing, and the price of the magic internet money has been surging upward.

Unfortunately, all good things must come to an end.

FTX news is back in a big way, as FTX might literally be coming back soon.

John Ray's Master Plan

New FTX CEO John Ray III is in a tricky situation. He needs to find a way to make whole those who lost out in SBF's Adderal-fueled Ponzi scheme. The problem is there is not much money in FTX, which makes sense considering it went belly up.

So, what does a smart man like Mr. Ray do? Throw in the towel?

Nope. He explores restarting the exchange. Yep, that's right. You might soon be able to once again trade magical internet money on FTX.

Will It Work?

It's hard to say.

SBF definitely feels vindicated, as he's been advocating for turning the exchange back on for months now.

And FTT (FTX's personal crypto token) is up 31% following the news, so it seems the market is digging FTX V2 as well.

But it's too early to make any definitive conclusions. Ray himself is reserving judgment until they crunch some numbers to see if restarting FTX would be more profitable than liquidating it.

All we know for certain is that between the bankruptcy proceedings and SBF's trial, FTX will be in the news for months to come.

Which is just lovely...

QUICK HITS

Seed Round

Stat: $195 million: The size of Sequoia's new seed fund.

Story we're watching: OpenAI CEO Sam Altman is tempering expectations on GPT-4, saying that "people are begging to be disappointed and they will be". GPT-4 is one of the most hyped AI developments currently making the rounds on Twitter, but maybe we all have to calm down a bit and recognize that the team at OpenAI is just human. Right?

Rabbit hole: Is a Venture Studio Right for You? (Steve Blank)

WHAT ELSE IS GOING ON

GUESSTIMATE

How much did Founders Fund make dumping their crypto holdings at the top?

FUNDRAISING FRIDAY

LAYOFFS TRACKER

Notable layoffs this week:

Swiggy: 540 people (9%)

Microsoft: 10,000 people (5%)

Amazon: 18,000 people (6%)

FOUNDERS CORNER

The best resources we came across this week that will help you become a better founder, builder, or investor.

🤑 Improve your sales game with Why We Buy from the customer whisperer Katelyn Bourgoin. I've worked with Katelyn and she's as legit as it gets.

🖤 I love TheFutureParty. Their team shares 🔥 insights on upcoming trends in tech.

📆 Late Checkout founder Greg Isenberg published his predictions for 2023. Greg is an advisor at Reddit — which is killing the web2-to-web3 crossover — so I'd listen up.

FRESH POWDER

Looking at three startups that recently topped up their coffers. Congrats!

GUESSTIMATE ANSWER

$1.8 billion. Smart bastards.