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TikTok Owner ByteDance’s Global App Success Started With a Failed Real Estate Business

Last Updated April 27, 2024 10:12 AM
Samantha Dunn
Last Updated April 27, 2024 10:12 AM
Key Takeaways
  • ByteDance is valued at $353 billion, making it one of the world’s leading startups.
  • The US Congress has moved to address national security concerns by potentially banning TikTok unless ByteDance divests its US operations.
  • ByteDance’s early experiences—and failures—laid the groundwork for its pivot to digital content, which led to the creation of its massively successful apps.

ByteDance, the Beijing-based parent company of TikTok, is one of the world’s most highly valued start-ups, with a market cap  of $353 billion.

The global popularity of the social media app hasn’t stopped it from facing a total ban in the US, with some lawmakers seeing the company as a threat to American security.

This move by Congress had significant bipartisan support and was part of a broader effort to address national security concerns related to foreign technology firms operating in the US.

However, before the $353 billion dollar social foray, the Chinese company had to deal with some big failures.

Impending TikTok Ban and ByteDance’s Deadline

The US government recently passed legislation  that sets a firm deadline for ByteDance to divest its American operations. Under this new mandate, ByteDance is given a 270-day window to secure a sale of TikTok’s U.S. business. This period could be extended by an additional 90 days by presidential authority if a sale appears imminent as the deadline approaches.

This deadline coincides with the inauguration of the next US president on January 20, potentially placing the decision in the hands of Donald Trump should he win the upcoming election.

Should ByteDance fail to finalize a sale within the given timeframe, TikTok faces a nationwide ban, which would involve blocking app stores and web hosts from distributing the app in the US.

Failure to divest within this timeframe would result in TikTok being banned from US app stores and web hosting services.

Security Concerns Prompting US Action

The legislative action is primarily motivated by national security concerns. US authorities, including FBI Director Christopher Wray, have expressed worries that TikTok’s operations could allow the Chinese government to access data from approximately 170 million U.S. users.

This potential data access is feared to be exploitable for surveillance but also for influencing public opinion through algorithm manipulation.

These developments are part of broader tensions between the US and China over technology and security, reflecting growing scrutiny of Chinese tech firms globally.

How Failure Led to Global Success

Before ByteDance became a multi-billion dollar business, its founder first experienced failure in a real estate venture.

ByteDance’s founder, Zhang Yiming, initially launched a real estate listing business in 2009 called Jiujiufang, which he later left in 2011. This experience in the real estate market, despite not succeeding to the level of ByteDance, provided Zhang with the foundations to move into a new sector.

There’s also a lesser-known connection between ByteDance’s early funding and a failed real estate project involving Republican megadonor Jeff Yass.  Court records, initially uncovered  by The New York Times, show that the project did not directly involve Zhang Yiming, but Yass’s involvement in the tech and finance sectors provided crucial initial support for what would eventually become ByteDance​​.

As ByteDance evolved, it shifted away from real estate to focus primarily on digital content and AI technology. This pivot was marked by the creation of Jinri Toutiao, a news aggregator app, which set the stage for the later development of TikTok and Douyin​​.

Today, ByteDance has strategically moved to divest its remaining real estate interests, further honing its focus on its core technology and content businesses​ to become the world’s most popular short-video platform with more than 1 billion videos  viewed daily.

ByteDance Ventures into Blockchain with Mysten Labs

While ByteDance navigates international scrutiny, it continues to diversify beyond its flagship app, TikTok.

Last week, ByteDance announced a partnership with Mysten Labs, focusing on the integration of AI algorithms into the Sui blockchain.

This move signifies ByteDance’s entrance into the blockchain domain, aligning its AI prowess with Mysten Labs’ technological capabilities. Given the company’s origins, perhaps we can expect another shift in ByteDance’s strategy and a new focus on broadening its tech offering.

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