Making sense of Tiktok’s business model

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One of the startups I admire is a Chinese company called Bytedance. Established in 2012, it has now become one of the most valuable startup unicorns. Bytedance is the parent company of TikTok, the fast growing, albeit controversial, artificial intelligence-supported short video app known as Douyin in China. Douyin was launched in 2016, and they created […]

Interestingly, the business model of TikTok has two distinct elements that are not explicitly identified by other business model tools: their value chain and reconfiguration.

International networkTikTok had no international network when they started, so it bought the Musical.ly lip-sync app in November 2017, which already had some 200 million users to accelerate the growth of its international user base. TikTok has grown and has now been downloaded over 2 billion times, fast nearing the number of YouTube and Facebook downloads.

Reconfiguration is the rearrangement of resources, processes, activities, or offerings that can help enhance the profit goal of the company. Reconfiguration can lead to innovation and/or lower cost. It is not the same as the value proposition, but is about what you should start and stop doing in your industry in order to be different in a different way.

 

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