ByteDance story 2: Get 1M DAU in 4 months
The article is the second one of ByteDance Story Series. You can read my first article ‘ByteDance Story 1: An unexpected breakouts’ before you read this one.
After JinriToutiao App went to market, Yiming Zhang and his team continuously focused on optimizing the personalized recommendation engine. Yiming Zhang said: “At the early time, the recommendation engine was very challenging for startups. Many people were doing similar apps. Some people were operating on a non-extensible basis, and some people tried to satisfy customers through simple customization. There are very few companies that really make up their decision on developing a recommendation engine and furthermore a lot of companies fail.”
Only the recommendation engine implemented by the algorithm can truly solve the problem of personalized distribution of content. Toutiao is striving in this direction from the beginning. At that time, Netease and Tencent’s news app did not own a recommendation engine.
It turned out that the choice of Toutiao was successful.
Rapid Growth
In Aug 2012, Toutiao App went online.
Toutiao DAU reached 1M in Dec 2012.
Toutiao DAU reached 1.6M in Jan 2013.
Tutiao DAU broke through 10M in July 2013.
According to the official report, the headline DAU has reached 120M in Jan 2019.
Funding
The good market performance provides the best talk for them to obtain capital in the primary market.
ByteDance earned angel investment which the exact amount was unknown.
In July 2012, ByteDance raised million dollars Series A Funding from SIG.
In September 2013, ByteDance raised 10M+ dollars Series B Funding from DST.
In June 2014, ByteDance accepted $100 million Series C round led by Sequoia Capital China.
In addition to the personalized recommendation engine, in the early days, Toutiao has also done some measures to reduce the use of friction. Toutiao allows customers to use a Weibo account (Twitter In China) for third-party login. They obtain the information of Weibo after obtaining the user’s authorization and directly match the content they are interested in according to the user’s favorite articles, tags, etc.
When the user opens Toutiao for the first time, most of the information they see is what they like, which will greatly enhance the loyalty of users. The personalized recommendation system will continuously optimize the recommendations for users based on the user’s browsing behavior in Toutiao. The inertia of the user’s use of the app will increase, and the growth rate of the DAU will also maintain a high level.
In many cases, what technology really solves is the solution to the scalability of a problem. When we start a business, we can solve some problems through manpower, but when your market size increases, you can’t achieve large-scale growth by relying on manpower alone. Because the company employs a large number of people, management problems are frequent, and profit itself will be affected. In the early stage, startups can temporarily choose to use human resources to solve problems but must consider whether it is possible to solve expansion problems through technology in the future.
But I think the more critical factor is the innovation and precise positioning of the product. When the product enters the market, other companies’ news apps can’t solve a problem, that is, how users find what they want in a lot of articles. Only JinriToutiao App solves this problem well. In the market at the time, it was a subversive innovation. Moreover, the company has always bundled this technology with its brand and has a clear positioning in the customers’ mind. Not every product recommended by the algorithm can be successful, and now every app can make a recommendation system. What you need to do now is a NEW thing that can make a new impact on the old market, not just an imitator.
Day1 Culture and Commercialization Exploration
After ByteDance’s Series A funding, the team quickly expanded to more than 100 people, the original apartment no longer meets needs as an office. In March 2013, ByteDance moved to the Yingdu Building, not far away, and rented the entire 10th floor of the building as a new office. Soon the 9000sqft office on the 10th floor accommodated more than 200 people, and the office’s electrical load sometimes destroyed the entire building’s power system.
In less than two years, they rented another three office space in the same building. Still, the office location was not enough, and they needed to pass sideways through the aisles between the desks. Soon they moved to a 50,000sqft building for their own use.
On the day of the move, Zhang Yiming wrote an email to the team entitled ‘The First Day of the New Office’, mentioning that many companies have gone to a good building and they are wilting. We should be alert to the ‘big company’ mentality and avoid moving to a fully functional and comfortable environment that leads to external isolation and not sensitive to users and industry. The ByteDance will name all the moving ceremonies ‘Day1’. ‘Day1’ is the first day in the new office in real sense. It also reminds everyone that you should act as ‘Day1’. The company on “Day1” is creative, vital, and pursues the ultimate. Everyone’s thought will not access the comfort zone. Even if the company grows bigger and has a new building, it will still maintain its original entrepreneurial mentality.
In 2014, the team began to earn revenue when the DAU scale was at 20M. They need advertising and other income to prove that they are a company that is capable of earning money. In order to allow more people to write in Toutiao, ByteDance divides the advertising revenue into proportions to the creators. About 60% of accounts are personal accounts, and corporate ones account for 40%. Rich content is produced on Toutiao and pushed to different people through a personalized recommendation system. More and more advertisers are choosing to advertise on Toutiao. One is because there are so many users in today’s headlines, and the other is because ads are always delivered to specific people.
This advertising model is very similar to Facebook’s, but Toutiao does not have a unified self-service platform. Like Facebook or Google, you don’t need to touch any staff or salespeople, anyone can complete the advertising on the Facebook platform, no matter how much budget. Unfortunately, Toutiao does not have such a platform. I like the self-service delivery method, and everything is controlled by myself. If you have to contact salespeople on a platform, I might give up. Chinese companies in these fields cannot be a truly global company if they don’t provide platforms as others in Silicon Valley.
How did Toutiao reach out to advertisers and know their budgets and needs? Think about the hundreds of employees in the new office. How could they all be engineers? ByteDance recruited a large number of salespeople, including SDR AE FAE, etc. They created new offices in Shanghai and Shenzhen. Signed a contract with many small advertising companies to get customers. So far, companies like Baidu, Tencent still relies on a large number of advertising agencies to obtain customers. I have received several calls from Toutiao agents, asking me if I want to advertise on their app. The process of protecting user privacy in China is still far away.
Toutiao‘s revenue in 2014 exceeded $30M.
In 2016, Toutiao’s revenue exceeded $8B.
My next article ‘ByteDance story 3：Tiktok makes Bytedance a global enterprise’ will be published in the next week. I hope you would like my article, give me some claps and reviews to help me.
I am Jasper Han. If you like my article, please follow our publication and we will have some new articles published every week.
