Contrary Research Rundown #50
Bytedance takes a bite out of ecommerce, plus new and updated memos on SpaceX, Checkout.com, and more
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Research Rundown
Since launching in 2016, TikTok has amassed over 800 million monthly active users (MAUs) in 2023, with some estimates of over 1 billion. To put this into perspective, Twitter and Reddit combined have approximate 880 million MAUs, with Reddit having an estimated 430 million and Twitter having an estimated 450 million.
ByteDance, best known as the Chinese parent company of TikTok, is one of the most highly valued private tech companies globally. The company is valued at approximately $220 billion, having raised $9.5 billion of disclosed capital with investors like Sequoia, KKR, and Tiger Global. The Chinese tech conglomerate owns TikTok and its Chinese sister app Douyin, among others. TikTok and Douyin are nearly identical apps, with the primary difference being that Douyin is available in Chinese markets, whereas TikTok is available outside of Chinese markets. What many don’t realize is that TikTok and Douyin quietly compete in another market outside of social media against some of the biggest household names in the US, including Etsy, eBay, Poshmark, OfferUp, Walmart, and even Amazon.
ByteDance is now using TikTok and Douyin to break into ecommerce against established online marketplaces. In 2021, ByteDance enabled Chinese brands to open stores on Douyin to compete against Chinese marketplaces like Alibaba. In 2022, ByteDance rolled out a similar feature on TikTok to compete with Western ecommerce marketplaces, enabling users to open stores on their accounts and sell or shop directly within the app; these shops are embedded directly in user profiles. In TikTok Shop’s first year, it generated $4.4 billion in gross merchandise value (GMV). TikTok’s GMV in 2022 was on pace to be over double the GMV of Poshmark. But TikTok aims to nearly quintuple this value in 2023, targeting $20 billion GMV. If successful, TikTok would be nearly double Etsy’s 2022 GMV of $11.8 billion.
While TikTok is already on the stage with household names in US marketplaces, its revenue pales in comparison to Douyin’s. In 2022, Douyin generated approximately $201 billion GMV. If Douyin were based in the United States, that would make it the second-largest online US marketplace, only behind Amazon at $367 billion. To put that into perspective, Douyin, known for short video content, produces higher GMV than eBay ($74 billion), Walmart ($33 billion), and OfferUp ($32 billion) combined.
But how are short-form video apps racking up billions in ecommerce sales? First, ByteDance capitalized on the established user bases of TikTok and Douyin, giving brands access to the apps’ billions of active users. Second, TikTok and Douyin use algorithms to personalize content for individual users, meaning users will likely encounter stores relevant to their preferences. Third, since TikTok and Douyin are primarily content platforms, user engagement on these apps is higher than traditional ecommerce marketplaces. Overall, TikTok and Douyin present unique and interactive in-app shopping experiences that traditional marketplaces lack, and this new experience is especially appealing to younger generations.
SpaceX is a space transportation company that designs, manufactures, and launches advanced rockets and spacecraft. To learn more, read our full refreshed memo here and check out some open roles below:
Application Software Engineer - Starbase
User Terminal Product Manager (Starlink) - Hawthorne
Moov is a payments infrastructure platform for financial and non-financial software. To learn more, read our full memo here and check out some open roles below:
Principal Software Engineer - US (Remote)
Product Manager - Issuing - US (Remote)
Checkout.com aims to simplify the process of accepting digital payments through an end-to-end solution that handles identity verification, payment processing, risk management, card issuing, and payment routing. To learn more, read our full memo here and check out some open roles below:
Data Scientist - London
Check out some standout roles from this week.
Bluesky | SF - Founding Machine Learning Engineer, Founding Software Engineer
Kindred | Remote - Staff Product Manager, Staff Product Designer
Pipedream | SF - Frontend Engineer, Full-Stack Software Engineer
Vesto | NYC - Frontend Engineer, Backend Engineer, Full-Stack Engineer
OneSchema | SF, Remote - Founding BDR, Senior Software Engineer
Leland | LA, SLC - Fall Sales Intern
Stealth Startup, Health Tech | NYC - Founding Designer, Founding Engineer
Speaking of TikTok, the Biden Administration and TikTok have drafted a deal to avoid an outright US ban. However, critics of the deal argue that it would give the US government unprecedented power to censor and distort TikTok’s content.
Deel, a software solution for hiring, HR, and payroll, is reportedly considering an acquisition of its competitor, Papaya Global. To learn more about Deel, check out our memo.
Babylon Health, a London telehealth startup formerly valued at $2 billion, has reportedly gone bankrupt.
AI21 Labs, an Israel-based startup competing against OpenAI, is reportedly nearing funding at a $1.2 billion valuation. To learn more about OpenAI, check out our deep dive.
Databricks has announced that it has made a strategic investment in Hightouch, a software platform helping businesses synchronize and activate customer data. To learn more, you can check out our memos on Databricks and Hightouch.
Chartmogul released a SaaS growth report discussing how business grow from zero to $30 million ARR. One finding in the report discussed that the best-in-class SaaS startups reach $1 million ARR nine months after getting their first customer, whereas the median startup takes around two years and nine months.
ICONIQ released its annual report on scaling B2B SaaS companies. The report is titled, “The New Era of Efficient Growth.”
Redwood Materials announced that it has raised a $1 billion Series D led by Goldman Sachs. The funding will be used to build capacity, expand domestic battery supply chain, and allow customers to purchase battery materials made in the US. To learn more about Redwood Materials, check out our memo.
Apollo.io, a full stack sales platform, announced that it raised $100 million in Series D funding at a $1.6 billion valuation. To learn more about Apollo.io, check out our memo.
Checkout.com, the London-based payment processor, reportedly cut its contract with Binance over money laundering concerns. To learn more about Checkout.com, check out our memo.
Fig has announced that it has been acquired by Amazon and its team will be joining Amazon Web Services.
RunwayML’s CEO Cristobal Valenzuela was featured on an episode of Acquired titled “Generative AI in Video and the Future of Storytelling.” To learn more about Runway, check out our memo.
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