Shelly Banjo

I was living in Hong Kong at the time and covering tech, and I had flown back over to the US and my US tech editor said to me, what's the biggest story that everybody is missing in Asia? And I said, the rise of TikTok, hands down. We need to be writing more about TikTok and its parent company by Dance. Okay, So, at the time, it was still

musically in America. It hadn't been purchased yet. It had been it had already been purchased yet Let's just assume, you know, a lot of people need to be brought up to speed here. So when was musically purchased by TikTok? So it was purchased in the end of seen, but it didn't actually switch over to TikTok in the US until Um, okay, so you say this to your editor in New York, what's the next step. So the next step is, you know, we start digging into this company.

Byte Dance, I mean musically had been a big hit. This was right after bite Dance had acquired Musically. They had spent a billion dollars basically trying to buy this app. Uh that most people thought of was just this like nothing karaoke kids app. And when suddenly they spent a billion dollars on it, people started saying, Okay, maybe there's something to this that we should be paying attention to. Okay, so you start digging into bitte dance, what do you find? Um?

So we I this. I started working on this business week, um newspaper, new news magazine story to kind of tell the story of this company, like who are they? And so what I started realizing was that even though a lot of people in China knew what Bye Dance was, people in the US didn't really realize it was this kind of sleeping giant that was starting to buy up a whole bunch of US tech startups. Um, they didn't

quite understand what they were doing. And meanwhile, this company was getting just bigger and bigger and bigger in China, getting amassing more money and then using it to buy up companies UM in in the US. Okay, uh, we're pretty ethnocentric in the US. What is the landscape of these internet companies in China? You know, we hear about we Chat, we hear about byte Dance. You know how many of these companies are there, and what's the barrier

to entry? It is ruthless. I mean you think about business being tough here in the U S and China, it is just like people are going at each other left and right. There is no kind of decorum. They're like, oh, I'll I'll be in this, you know, area of the internet, and you be in that area of the internet. You know, like we kind of had we used to have UM in the US with like Google and Amazon and Apple

kind of staking their their their ways. And in China it's all like super apps, right, So like all these companies like UM, the biggest ones like ten Cent, Byte Dance, Ali Baba, they're into everything UM. They're into literally you wake up in the morning, you can buy your breakfast on it. You buy your Starbucks on it, you chat with your friends, you buy airplane tickets, it's it's it's

you know, everything on these kind of super apps. So at the time, it was really these two big companies Ali Baba in ten Cent, and all of a sudden came along this third company, Byte Dance UM, which is the owner of TikTok Uh. First starting with um Jokes, an app about jokes, then getting into news. Suddenly they were the biggest newsreader in the entire world, meaning like nobody got their news any place else except for this

one app UM. Then they went into short video. Now they're in e commerce and payments, you name it, education, um, you name it, They're they're in it now. Okay. You know Nixon opened up China back in the seventies, and then we had the former guy, as they say, who has had a trade war with China. And it's like a lot of citizens have not traveled at all, you know,

us citizens, never mind going to China. So my question is, since you were there, and I assume you also went to mainland China, correct, Yeah, for the average person, what is life like? On one hand, we hear about these people working you know, six days a week, all day and factories that we think are sweatshops. On another level, we see people buying tesla's. I mean, what is the socioeconomic status there? It is so big that it is

really hard to make one monolithic case. Or you know, if you're in um, if you're in Shanghai or Beijing, you know, working in an office tower, you kind of feel like anywhere else New York or London or something like that. If you're in the countryside, it feels very different. But one very big unifying factor is an app like TikTok which um in China is called doying and um.

Whether you're rich, you're poor, you're young, you're old, you're using using the Chinese version of TikTok to um to make videos, to pass the time to you know, have a laugh with your friends. UM. It certainly is something that like cut across all different um you know sphere, socioeconomic um you know, you name it. Okay, So if you're one of those people living in the city, we you know, these apps are multifarious, much more than in the United States, would you say that they are actually

technically more advanced than we are. Dependent on the Internet more less the same. So I think that people in China are just more on the Internet. I mean, we think about how the phone with the phone is kind of an extension of our arms. You know, we kind of joke about that. But you know a lot of people still buy things on buy things in stores, go

grocery shopping in stores. In the big cities and China, it's like unheard of to go into a store to buy your groceries or to buy clothes, or to buy anything. Really everything is e commerce, and um, so much more of your life is on the is on the internet. Um. In terms of the advancement, I think at the time that Bye Dance and TikTok we're starting out, the artificial intelligence for those particular apps were probably more advanced than what we're seeing now. But they also took a different

tax to social media. So like the facebooks and twitters and youtubes of the world, where you know, the facebooks and twitters and snapchats of the world, we're basically created around of friends. Like this idea of Okay, I care about this thing because my friend cares about this thing, so I'm going to show you that thing. But Bye Dance, Um, because of the influence of UM of the Chinese government really like they don't want you to have those kinds

of social media networks. They don't want you to build these networks of communities and things like that because they don't want you to, you know, gabelle against the government or have a place to talk about it. So it was mostly built around yourself, the individual. What can I show to you that will keep you addicted on this app based on what you like, and then that change

as you change, it changes UM. So you're seeing something different than your friend is saying, than your mom is saying, than your dad is saying, UM, because that appisode personalized to you. So we've seen a lot of that with YouTube, but this almost takes it to like a complete, you know, other level. They're just a couple of back China questions before we go. Now we read about being able to pay things, pay for things with your phone. Is it

very technically advanced like that in the cities? Yeah, everything you can't UM. I remember one of the first takeaways when I UM traveled. I would spend about a week of every month in Shanghai or Beijing or shen Jen, and you can't UM can't use cash anywhere. Nobody takes cash. You try to give a taxi driver a bill and they look at you like you have two heads, like why are you handing me the sturty piece of cash? Like pay with your phone. That's how I'm going to

take payment. That begs the question, what is the crime like in the big cities? Um, Penny crime is fairly low. I mean they are very Um, it kind of depends where where you are. Um. The real big crime is like you know, white collar crime and things like that that can definitely still happen, corruption and things like that. Okay, So it's a vast country territorially and as you said, economically, to what degree to people lie on wireless? Is their

primary interconnect net connection? What I mean by that is that is their only Internet connection? Or is the country pretty wired out hard wire? So in the big cities, um, it's all wireless. Like there are lots of people kids that you talked to, who have never had a desktop computer.

They don't really understand what that is. You know, it's all about this mobile phone in your hand and in your pocket because it became so cheap, um that everybody basically has a mobile phone and then even in the even in the countryside and things like that, like everybody has a phone and is coverage pretty much universal? Or can you go somewhere we have a dead spot? Definitely,

can go somewhere where you have a dead spot. But you know, I remember hiking in the mountains, um outside this town outside the city called guillen Um and these you know, you're in these rice patties and you see these farmers literally getting rice. But you have this perfect cell signal and you can post on it, you know, on online and things like that. Okay, just to go deeper into a point you made, if you know, in certainly I don't like get too far ahead. But we

talk about the algorithms in sharing. Let's just use the YouTube as a model. So let's assume I create a video. To what degree can that go viral in China and to what degree can I garner fame as a result. Yes, So the algorithms around TikTok enjoying in China are still a black box as they are in other you know,

with other places. Um. But some of the differences is that I can just get such a bigger audience because it doesn't rely what you're seeing in the videos that you're seeing doesn't rely on how many friends or connections or likes that you have. You see videos based on anyone and it could be anyone from around the world. So you have not only like global atmosphere, but it's also tied to your friends. And because so much of it is tied to music, UM, language isn't as much

of a barrier. So if you think about when you post on Twitter, someone you know, UM, you know, someone in Africa or someone in the Middle East might not necessarily want to read about your English your English post and things like that. But when you when you think about a music video, it's it's universal. So you can gain fame. You just can't connect with other people and

create a social network. I mean, you can definitely still connect there is you know, you can add connections and things like that, but that's not necessarily why you're being You're you're being showed the videos that you're saying. Okay, So a company like byte Dance, what where does it get its financing? So with byte Dance, what they were really smart about was very early on they got a lot of Western venture capital money. UM. They used money from UM all sorts of big venture capital firms in

the in the West, like Sequoia General Atlantic. They also got money from soft Bank um in in Japan. Uh also got Chinese money as well. But they have a really big global base of investors and they raised a lot of money, making them the most valuable private UM tech company right now. They're more valuable than Ali Baba inten sin. Well, those are public ali baba intense about a private company. Just to get into the law, don't they have laws in China that Western people can only

own a certain percentage of the company. So with a with a private venture capital firm, UM, there's not really necessarily the same kind of laws around those things. UM. Now right now they're talking about, you know, doing an I p o UM, maybe going public, taking parts of their company public, and are there are you know, more ditrect laws around that. Who's the driving force of Byte Dance, The CEO of Bye Dances, this guy named John Imming.

He grew up in a part of China that um, you know, really opened up to the world of business much earlier than the rest of China, and his parents were both civil servants, UM. But he got into tech. He was a big self described tech nerd. During college, he helped fix computers and um, that's kind of he tells the story of how he met his wife by offering to fix fix our computer, and um. He worked at a number of startups over the years and then decided he was going to start his own and um

that's what turned into Bite Dance. And how old a guy is he today? He's in his late thirties, um, and he's you know, at the time, I think he was thirty two when he started his his company. UM, so he definitely was not the like eighteen year old, you know, Mark Zuckerberg in a door room story. He had been around the block. He had worked at a number of successful tech companies and um, he even worked

at Microsoft for a brief amount of time. So when the company started, Bye Dance started, When by Dan started in, Okay, what was their ages? What was their purview? Starting in what did they start with? By Dan started with a jokes app called Neandwans And basically what that is is

it was very simple. They showed you these jokes or memes and if you liked it, you'd give it a thumbs up, and if you didn't like it, you'd give it a thumbs down, and over time, the more it got to know you, how long you kind of hovered on that joke, which ones you liked, which ones you did in it kind of got to know really like your sense of humor. And they were able to kind of learn that was kind of like their learning app

of how they did that. Um. But where they really made their mark was a company called Totia, which is a newsreader and they used the same exact thing that they learned about with the jokes app to Taylor news

to you. So if you think about the newspapers in the US, you know, you've got real people editors who are choosing what they think is important based on news judgment, and you know, it's it's this kind of um, you know, meat and potatoes approach where they're giving you things you want to know but also the things you need to know. Tokyo the newsreader app was never never had human editors

in the early days. It was all based on, you know, what people were reading and what they liked and getting to know their personalities, and they would learn kind of what you liked and offer you up that kind of news, which was so unique in China because most of the news that you get in China is government owned UM publications. Okay,

So when did they view veer into the music sphere. So, the first kind of entrance into music UM in the US was with this company called lipogram Um, which I don't know if you ever remembered, but it was this is a bike dance company. No, it was a company that they bought in the US. Okay, No, but okay, so they had no presence in music until they bought Flipogram. Well they had they had launched the TikTok version dotying in in China before they launched it globally, and so

that is that would be their first foray into music UM. Okay, So in China. So what year was at uh they launched doing? I think in twenty seventeen. Okay, were other people in that space in China? Who was the big cahuna in that space? Yeah? So similar a similar company called Kaisha. It was startup that was UM owned by or not owned by but backed by ten Cent, which is you know a big music UM plays very big in music UM. But they weren't really no for music, right it was it was it was a lot of video.

It was not as much as music. Okay, so why does bite dance by Flipogram? So early on they realized they were kind of just stealing the music for these things. They were ripping off these UM fifteen second iTunes previews off the Internet, and just because they were so short and because they were such a small company, nobody was really paying attention to what they were doing. And at a certain point their Western backers Sequoia g A others said to them, you know, if you're going to grow bigger,

you're going to have to do this legally. And music, as you know, has had a long battle of legal rights and I P and things like that. So what Flipogram had was a lot of these contracts with music companies. They had already negotiated a bunch of contracts with different UM labels and that was one of the are just reasons why they bought it, and just um a reminder because it was a small app at the time, flipp

Agram was this kind of slide show app. It would kind of allow let you make these slide shows really really quickly and allow you to then share them over Twitter or Facebook or things like that with music put to it. And so flipp Arogram had done it the right way. They had you know, negotiated with with all these records labels and whatnot, and By Dance just bought them and then inherited shut down the app and inherited all the music label um agreements. So why did dance

by musically? So at the time, they were wanted to become a global company, and so they were saying, okay, well we want to launch TikTok globally, which they did.

It didn't really take off in the US at the time, and musically they saw was just um, you know, growing like Gangbusters top of the Apple Music charts, and they knew that there was a lot of interest in it from you know, Facebook considered buying them, other companies had discussions with them, and then they found out that Kaisha, their Chinese competitor, was also in talks to buy musically, and that really got them going because they were like, well,

I'm not gonna let my biggest competitor in and buy this and get these in roads and all of a sudden get you know, a hundred million, two hundred million US users just like that, And so they decided, okay, we're gonna buy Musically we're gonna also inherit those those contracts with music labels which they had started to get at the time and automatically get you know, a user base of a hundred two hundred million people depending on how you count it in the US, which they didn't

have before. Okay, so they had TikTok before they bought Musically. Were they essentially equivalent platforms in the way they operated? It was a little different because Musically was really focused on karaoke and lip syncing and um, you know, dancing and singing. TikTok was a big that was a big portion of it, but not all of it. They also wanted to build it out to all sorts of things

like comedy and pranks and um, you know, cooking. Uh, there's you know, hacks, life hacks, all sorts of different ways you could do it. So that would be the one big difference between the two. Okay, so when did Musically launch When did they start? So Musically started around um um they didn't really um, they didn't. What people didn't really know was that Musically was also a Chinese company. People seem to kind of forget that that that it was started in um by two guys that were had

half the half the operation in Shanghai. They had a number of people in l a UM and they started because they wanted to be an education app at first, and then realized, okay, kids don't want to learn online, they want to they want to have fun, and so they totally pivoted and in thirty days built a completely new app all around singing and dancing and things like that, and quickly realized that you know, people in China, we're not jumping onto this, but people in the US were

loving it. And so these like small towns and you know, Texas for example, was one really early place where like this high school in Texas was loving Musically and m and they started realizing like, wow, we have a knack. We've hit it with American kids UM, and they just kept focusing more and more on the US and getting bigger here. So tell us about the founder of Musically

and when he started. Yeah, so Alex j is the way to hear people talk about Alex Jew to me is one of the more interesting things of this Podcas asked, because people describe him as, you know, like a poet or a dreamer or you know, just this kind of totally the opposite of what you think about and like a Silicon Valley tech you know, bro culture type of thing. Um. You know, he had this vision of connecting people around

the world with music and really cultivating the users. So you know, at the time, it's funny to think back on it, you know, but you know, a decade ago, Twitter, Facebook, others, they all saw themselves as a tech platform. But but musically they were like, no, we we really want to focus on these create these creators, these stars. You know,

they were building that from the beginning. And so, you know, we hear these stories about him, about Alex talking about, um, you know, taking out these these creators to dinner, calling their parents at home, um, you know, just making fake accounts. Um. In the in the uh found during podcast, we we hear him talking about how he would make these fake accounts just to like interact with some of these kids

who were like eight nine years old. And here you have this thirty six year old Chinese guy basically like chatting with eight year old kids to like really get into their minds and kind of like figure out, you know, like what do they want, what do they like? That kind of thing. Okay, and ultimately they merged the two. Uh you say in the podcast that TikTok I mean that Musically's algorithm was superior to TikTok's. Is that true? Um, the other way around. So TikTok, what TikTok infused into

musically was the algorithm. So music, well, musically was great at that was um this whole idea of really getting the zeitgeist of what kids want and what's popular and

kind of getting them to download the app. And Um, what TikTok brought with them was this algorithm that would get them addicted, that would get them, you know, get them really obsessive with the app and checking it and on it for hours and hours because it started to really get to know who you were, what you liked, and continue to offer that up and kinda get you hooked onto this app. Okay, let's jump all the way

forward to today. What do we know? Unlike yourself, most of the media is run by older people who don't understand this, who are doing their jobs, not spending hours on the Internet and the nooks and crannies, and they tend to miss what is really going on. To use some cliches, Facebook is for old people. Okay, Instagram, certainly

young people went there, they had private accounts. Snapchat has not really grown out of the younger demo, and there are these battles between Now we even have clubhouse in this Where does TikTok sit in the landscape? So I think before the pandemic, the landscape that TikTok fit into was really this younger gen Z demographic. You know, these kids were too young. You know, they don't get Facebook, they have Instagram, but it was like too much for them.

They wanted a place where they could kind of be more themselves. Gen Z is a lot more. You know. You you talk to any fifteen year old and you hear the word authentic in like the first ten minutes of them talking, and you're like, what the heck does that mean? You know, and um, this at least it was this idea that they could be themselves and have fun on this app without having this picture perfect, manicured Instagram post um. So I think that's where they fit in.

But during the pandemic, you know, everybody was shutting their homes with literally nothing to do, and people said, Okay, well download this thing TikTok that everyone keeps talking about and um, then you started really seeing the proliferation of like moms on TikTok or cooking on TikTok, you know, things that more are adults, um you know, wanted to take part in. And so once they have you, I mean the hardest thing that the hardest battle for TikTok

is getting you to download it. Once they have you, they can figure you out in a number of days and start to show you videos that that you want to see. UM. So the more adults that were on there, the more kind of grown up content there is. And the difference between Facebook and TikTok is when Facebook, when all the old people showed up on Facebook, the young people left because they didn't want their parents to see

them or they didn't want to see their parents. But with TikTok, you never see your parents because they don't show you those videos and vice versa. And that's why it's hard for adults to keep track of what their kids are doing because they never see what their kids see. Okay, Certainly, at this point in time, UH, most Americans are aware of the power of Zuckerberg and Facebook and What'sapp and uh Instagram, But historically, like with the Microsoft lawsuit twenty

years ago. The government and the public at large are behind. Can TikTok you surp the power of Facebook or do they have to exist side by side. I don't think they can necessarily usurp all of the power of Facebook, um, but they can certainly give Facebook a run for its money. And that's what you're seeing. I mean, reporting for Foundering Um. For the podcast, we just kept running into Zuckerberg over and over and over again. You'd you'd realize that, like

you know, UM, Facebook cared about TikTok. They were paying attention about TikTok. They they they're worried about TikTok. They tried to imitate TikTok and have not really successfully done that, And so I think it is definitely giving them a run for their money. And from an advertising perspective, which is really important to Facebook's future growth, all the advertisers are um on TikTok now and a lot of money is going there, and so right now I think they

can kind of exist coexist UM. But at a certain point, as TikTok gets bigger and more sophisticated, some of that money is going to just flat go away from Facebook. And over to TikTok. Okay, let's assume someone's a complete movie. You download the app. What happens next? So you download the app and all of a sudden, your full screen is taken up by a video. It's probably the first video you see is going to be somebody dancing and singing, and probably your first reaction is like, Okay, this isn't

really for me. And then you're gonna scroll up um on the on the screen, UM, as if you were scrolling through Instagram, and you're gonna see another video, probably not for you. And then you'll see that third video and be like, oh, that's interesting, and you're gonna linger on that video for a few minutes and then like boom, that's the first data point that that company knows. Okay, you don't like those two videos. You like this video

because you've lingered on it for more than a half second. UM, they'll know where you're, where you might be touching it sometimes they'll um. They'll be able to also analyze all of your data points that come with it. Where do you live, what location are you at, who are you

friends with, what age are you, what's your demographic? They'll match all of that information about you behind the scenes too, the types of videos that you like, and in about a week, you're going to be seeing all the videos that you really want to see, and then in about two or three weeks, you'll probably be spending an hour or two on the app like if if you really end up liking it um at a time because it

because it just gets to know you. Okay, once again, for those who think they don't need it, what kind of content might you see on TikTok? So you'll see whatever you're like psyche wants to see, which sounds a little bit crazy, but you it's like, it's the things you don't even necessarily know you like that you that you might end up saying. So let's say you're really into cooking. I have an editor who loves cooking and he is just obsessed with it and he's starting to

see a lot of it. UM Around the elections, I was doing a lot of digging into what kids and others were seeing around UM the US elections, what kind of Trump content, Biden content that there was out there. So you can kind of train the app UM if you're looking for something in particular, people talking about politics, UM there's a lot of dancing, there's a ton of music. UM, there's a ton of um of different you know communities. For a time, there was a military TikTok. There's fitness TikTok,

there's eating TikTok. There's kind of any any little corner of the Internet that you want to find, you can find it on TikTok Okay would I literally join that or the algorithm would just get me to see videos of that? So you can search. There is a tab on their UM a discover section. Uh. You know that's kind of like the discover section on Instagram, UM, where if you want to search for some of those things you can and there are you know, they do push content out to you, UM, so you'll see some of

that content UM if you want to UM. But a lot of the kids you talked to, they're like, do you ever look at that discover section? And they're like, no, I just kind of see what's shown to me, which is called the four you for you page. UM. But there is there is a discover section you can search if you're looking for something in particular, UM, But most people just kind of look through whatever whatever pops up for them. What percentage of the videos or music most videos.

I don't have a I don't have a number off the top of my head, but I would say, like, even if it's a cooking video, you'll put it to music, um, and they'll use like text on the on the video to to kind of show you what you're like a ten step video of how to make guacamole. They'll be like a track. Um. And there's a whole library, like it's called the sound library. You can save clips that you like, um. And you know, for the for the Foundering podcast, we weren't really deep into this whole idea

of the sounds library. Because what TikTok can do is they can see, okay, who's saving this song or this clip of this song, and they can see kind of the velocity of that, and so they'll be able to tell you what song is about to go viral, you know, a week from now, because they can tell who's saving the song to make these videos with it later. Okay, Why would someone be on TikTok as opposed to watching reels or something else on a different platform. What is

what is the raw addiction that makes TikTok superior? Well reels came later, so I think it's still kind of dealing with some of that meat, you know, copycat stuff. Um, you know, before there was reels, there wasn't really a place to go it is. I mean, real is basically copied TikTok. It's pretty pretty similar. Um. The differences is that what TikTok is able to do is give you a whole host of different video editing tools that make your videos look really cool but are really easy to make.

So things that you might have been able to do, you know, five years ago, only with like a very sophisticated video editing tools or software, you know, you can just do right there in the things like you know, the filters and the different effects like you can make you look like a mirror effect or you know, things like that, um that you know people have fun with. Okay, let's assume I'm passive and I decided to become active.

One of the steps in creating and posting a video, so you basically really hit this plus button and you shoot a video. And you you could make a basic one where you're just literally, you know, shooting a video of you know, yourself talking about the weather or whatnot. Um, but what most people do is I'll usually choose a sound to go along with it, which is like a fifteen third clip of a song. Um, they might make a dance up to um to that song, like very

tailored to that song. UM. They might go on and see other trends like and copy those trends, but like put their own spin on it. So if there's a dance trend going on, or a prank or a joke um or something like that, they would do that with their own spin. UM. For example, there was a trend awhile back that was popular about these gummy bears singing to the Adele song, and so people would like take out all these gummy bears and put the song and make it shoot the video as if like the gummy

bear as for singing the adel song. And then people would just like do that in all sorts of different ways. Um. When you follow a trick like that or a trend like that, UM, they tend to get picked up a lot uh and and get more popular and more viral because the company is usually putting some of that marketing muscle behind behind those trends. Okay, does everybody make the video right in the app or to some people with better tools make it on the computer and then uploaded

to the app. Some people do that. UM, I think that's a lot more on the like on YouTube, people will do that. UM. On TikTok, a lot of people do end up doing it within the app. But they might spend hours on a video even just to create like a thirty second video. They might spend hours trying to create something and then finally get it right or edit or stitch it together the exact way that they want to do it. Um. And so you know, as a kid, you're kind of going through this and you're like, oh,

that's so cool. You know it's thirty seconds long. How long could it take to make? But like some of these really professional creators will spend you know, two three four hours on just one video. It is there any time limit? So when they first started, there used to be like a fifteen second time limit, and now um, they brought in that out. You can do a minute for some some big creators they give um, they give

more like time limits too. But the idea is like bite bite size bits of content, So you really want to do something short. Most most videos are thirty seconds long, So let's assume I make a video, how's anybody gonna see it? So UM, you can put a whole bunch of fat hashtags on it if you want people to be able to search it UM, and if you are a popular creator, you will have followers the same way you would be anywhere else. But otherwise it's UM. It's

this kind of black box of the algorithm. They're showing it to to people that you know they think are gonna want to see it. And so your hope is, if you're trying to get popular UM, is that you know it it gets UM, it gets pushed out to a whole bunch of people, but you really don't know

how how it happens. UM. For some of the creators that are starting out and they want to really make a career out of it, they'll jump on the trends that are already happening, like that gummy bear thing I told you about, because that way they know that they're going to get views. And the more that they kind of do that, the more views that they think they're going to get. And then once you have a popular video,

the chances are that your next video becomes popular increases. Okay, let's assume I make a shitty video, Is it possible that nobody sees it? Yeah? Okay, what if I want to juice it? Can I tell all my friends, Hey, go watch my video. Try to move it up the algorithm.

You can, Um, you can do that. It just um there's not like a retweet button the same way there is on Twitter, So it would have to be it would have to be like you reaching out to your your friends being like, Okay, go to my TikTok account and click on that video. Um. It's a lot harder to share that way, and it puts a lot more of their kind of responsibility into the company's hands to know like what's going to go, what's gonna go viral,

and what's not. Okay, Well, in all these other platforms, these music platforms, there are all these people trying to manipulate them. Okay, can you manipulate TikTok? Can you manipulate TikTok? I'm sure you can. I mean people try it all the time. They are all these groups of creator TikTok creators that they have like their side groups, their side chats, um, where they have like these texts being like oh, you know, like this trend is try ending you we should jump

on it now. Um. They the company also sends out you know, emails to the top creators or even you know, not even the top creators, like thousands of popular creators saying like, hey, these things are trending, you should jump on these trends. Um. So it's all kind of directed by the company, And if you follow the way that, if you kind of follow what the company wants you to do, the more, um, the more views that you get, kind of as like a regular user type of thing.

I mean, some kids, they they they treat it just like they do with Facebook right there, like a twelve year old, fifteen year old, and they just want to make videos for their friends and themselves to see it. There's a lot of there's a lot of people who just do that as well. Do we know how many people are active as opposed to passive? So the numbers haven't been that great, um in the US in the sense of um like clarity, because they are a private company,

so we don't actually know. We we mostly know downloads and so we know it's been downloaded about two billion times globally, um, but about two million or so in the US. Okay, let's assume I'm at home, I'm a total nobody. I make a video to a song that's become come out within the last twelve months, and people

love my video. What's going to happen next? Yes, So if people are spending time on it, if they're watching it, if they're watching it over and over again, um, it might be picked up in what's called the four you page, which is the page that you see when you open up the app in lots of people's fore you pages, and so you know it's in TikTok's best interest to

get people. TikTok has two goals. One is to have people spend as much time on the on the app as possible, and to once they have people spending as much time on the app as popular as possible, to um sell advertising against that. Um So, the more time you spend on the app, the better. So the more TikTok can show you things that will keep you on the app, the better. So if you have a video that tends to be like that people like, they're gonna want to push it out to as many people as possible.

And so that's kind of where you see these viral these viral posts going out. So, for example, I spoke to one of these creators, UM, a dancer in in Houston, Texas, UM, and she made this video to the Megan the Stallion UM dance and UM Savage. And this actually wasn't a paid promotion. She just made it and she loved it and she will she you know, had UM a lot of followers, but she wasn't like a famous star or anything like that. But it was a fun dance. People

loved Savage, but loved the song. It was super catchy. And then you know, people started making dance and then some of the really popular creators started making the dance

and once that happened, it just took off. And so then it became in TikTok's best interest to promote that dance because what it was doing was promoting engagement, and it was promoting engagement with a song that they had happened to have, you know, a partnership with that they had, you know, spent marketing dollars with the app to help promote and so you know, TikTok is scouring those things.

They're looking for things that are taking off UM and they can spot it early on the rate of velocity of something taking off and then just blow it up in a way that um, you know, Twitter and and um Facebook just don't tend to do. Okay, first, you talked about followers. I can actually follow a creator, you can, and then I will see all their new work. Yes, I mean you can go actually to their page if you want to just see their work, and then if you follow them, their stuff will come up in your

in your feed. But it's not relegated to just your followers. Okay, so let's assume I'm that woman in Houston. Let's just assume, for the sake of discussion, million people watch my clip on YouTube. I literally that's monetized, and I get a check what happens on TikTok. Right, So, right now, they don't have that ability. I wouldn't put it past them for it to happen in the future. It sounds like it's something that's on the horizon and could probably happen

very quickly. But um, what does happen is that you get deals. You get deals with advertisers, you get deals with record labels, um, you get featured in all sorts of um you know, different kind of spotlights, and TikTok has kind of created this business where they're they're connecting, they're connecting creators to these brands. And so the brands, you know, they want some creator to make it seem like they're authentically loving. They're like microwave oven pasta. This

is a real story. Uh. So they like find five creators to like make a dance around microwaving their their pasta and um and it works, you know because people see it and they're like, oh, that's cool. Or this energy drink is like, uh, energy drinks have been all over TikTok and you don't realize it's an ad. It's just like some person you like, because you know, constantly drinking this energy drink in their um in their videos. But they're getting paid for it. Um. So it's not

directly monitorizable right now the way it is with YouTube. Um. But these people are making are they're making money. I mean they're making you know sometimes you know, millions of dollars a year. Okay, So you talked earlier about authenticity. If these people are aligning themselves with brands, doesn't that

undercut authenticity? Yeah? So this is what m my biggest takeaway from this whole foundering uh podcast is that TikTok accomplished is a remarkable marketing feat making everybody think that this is this fun, authentic, totally spontaneous place to be, and then behind the scenes making it as inauthentic as as possible. And so the bigger they get, the less and less and less and less everything really is authentic.

The popularity, the trends, all of that. Um. The more you dig into it, the more you ask questions, the more you realize so much of it is staged and so much of it comes from you know, TikTok's headquarters UM in Los Angeles and UM and in China. Okay, So, but the lack of authenticity is not causing people to disconnect, not yet. You know, you do talk to you do talk to people who are saying, oh, well, you know,

like I'm not into it anymore. You know, some of the some of the older teams I spoke to were saying, you know, it's just not really for me anymore. So you're seeing some that UM. But right now, I mean, their growth is they're the most popular app last year, you know, like the growth has not subsided. Okay, is there a place on the app I can go to see the top ten or so, so that there is a sense of community amongst TikTok participants. So you can go to this tab called discover um, but it's not

necessarily what's I mean? They say it's all about it's all trending, but it's not really based on what's the most popular. It's based on what the company wants you to see or what advertisements advertising deals that they have, So it's not really there's no way to tell like today, if I open the app, there's no way I could personally tell what's the most popular video on TikTok today. There's just no way you would be able to do that. Okay.

Trump had a speech approximately a year ago in Oklahoma, and uh TikTok ers gathered together to try to get tickets such to the point it looked like the event was sold out when it was not. How did they do that? So what they started doing was putting on UM, you know, one of these one of the really popular TikTok's UH stars UM you know had this had these ideas, you know, Trump is putting out this rally, let's all

buy tickets and not show up. And then they started organizing through TikTok, but also off of TikTok on Twitter, through chat groups, um, all sorts of different places around the Internet, saying like, everybody go do this, sending emails to their friends, you know, a word of mouth. You know, it became not just a TikTok thing. Um. But you know people were really you know, activating all over the place. UM. But a bunch of really popular TikTok stars jumped on this.

They made all sorts of funny videos about how to do it and what to do, and and they did it and you know, kind of joking at Trump's expense. Um. And so it just started showing up to more and more people because the more people were engaging with it, the more the algorithm pushed it out to people. UM. So you know, some of it is some of it it's definitely still um, spontaneous. You know, it's not like TikTok as far as we know, you know, did that

on purpose. But when something starts to gain traction, what TikTok can do then, and what TikTok's algorithm is set to do is to just really push it and pull those levers and make it even bigger than it already is okay, Let's assume like this girl in Houston, I make a video and it starts to become successful at what time? And will I at all here from the brass at TikTok? So pretty early on, it's not scientific. Um. You know, there there's been stories that we've heard from UM.

This rapper for example, that we talked to in the podcast flow Millie. UM. You know, she was this uh teenager from Mobile, Alabama. Nobody really heard about her. She was just making tracks on her own, posting them up on SoundCloud, you know, on the internet. UM, and then someone started using it on TikTok and it blew up.

And she didn't even have a TikTok account, but because it was so popular, TikTok's head of music Partnerships called her up, flew her out to l A, had her in the office, set up a TikTok account for her, you know, really encouraged her to get on the app and UM and she did, and she did a really good you know, she really amassed a lot of followers and she signed up with a record label and you know, now she was UM nominated for b ET Best New Artists and you know, UM and It's funny because in

the podcast flow Millie says, you know, I didn't set out to be a TikTok star, but it just happened, and I'm going to take advantage of it. Um. And that's what TikTok bets on, right that if everyone along the food chain makes money, everybody's happy. Right. So if the record label makes money, if the artist makes money, if TikTok makes money and advertising makes money, everybody's happy. Let's assume I don't want to be a musician for

whatever reason, I create great dances, great clips. At what point will I hear from TikTok to the dances have been interesting talking to some of these professional dancers on TikTok I was really fascinated by because I'm what they end up doing is the record labels have figured this out.

This started, Um, this started kind of organically where the record labels We're seeing these dancers, you know, make up dances to their music and um, and they would help help GoF on TikTok because once you had something to do with the music, you know, some sort of interaction, it became like a stickier song and um, and then the record labels caught on and they were like, oh, shoot, well we can actually just like pay these creators to do it. We don't have to wait for someone to

create like a good dance. And so a lot of them started paying these creators to create these dances, and then TikTok would catch on to that and they would you know, promote, They would do some deal with the record label company and then push those push those videos out to more people and so um and so a lot of these people who make up dances on um on TikTok started becoming popular creators in themselves because they would get more followers and be pushed out, you know,

across the across the app and and become famous in their own right. Okay, let's stop and start with the music business. To what degree are the music labels and individuals interacting with tick talk or individual TikTok ers to try to boost their music. So every music label now has a group of people who are glued to TikTok. Who are you know, whose life is to learn TikTok,

to know TikTok, to talk to them. Um TikTok is starting to do more and more live music um, which they started during the pandemic, um or a little bit before, but really picked up during the pandemic. And um you know that I foresee being an even bigger thing. Um And TikTok not only helps these labels, but also helps connect them with the creators who you know kind of make the dances and things like that to help promote the songs as well. Okay, the way business works, and

it's not only the music business. If I am a large corporation and there are three of them in the music business today, a I put out a steady stream of product, be that influences my relationship with in this case tick talk and see, there can be a exchange of money. What's the landscape in this area? So on what I will put aside? You know they are there are deals with the record companies, um, you know, to

use their music library and all of that. And that's a completely kind of different, um different business trans You know, if you use it, you get paid. But we're talking about starting the fire or promotion right exactly. So UM, a lot of these artists, you know, TikTok doesn't necessarily pay these artists to be on TikTok. Um. What they'll do is they'll connect. Let's stop. Let's stop for a second. Let's not even get that far. Let's assume I am

at one of the three major labels. I have a song by an artist who is not even on TikTok, but I believe that if TikTok has made videos, it would start the fire on this song. Hey, what do I do? First? Do I contact individual TikTok ers? Do I contact TikTok the company? And do I pay TikTok any money? Is there any way I can make money other than the usage? And see, since I'm such a big company, do I edge out the smaller players? Got it? So?

I think, Um, you'd probably take a two pronged approach. First, you would deal with the company, and you deal with them their music and the music marketing company you could pay, you know, add dollars to um. You know, get that sound up in the sound library. You know you can you can take out like what's kind of the equivalent of banner ads basically, but for for an individual sound that pops up and says, hey, consider using this sound

with your video. Um, so you could literally transactionally pay TikTok o. There, let's stout there for talking. You have any idea what that might cost and how many people do it? Would I go on that page now and see tend people offering to you that you say, use my music one none. Um, I don't know how much it costs at this point. UM. I do know that it can be substantial. UM, but I don't know how much it costs. UM in terms of the sounds that show up, you know, I will check right now while

we talk and see how many that they're offering. Okay, So in terms of like what I'm seeing when I'm about to make a video and to make a sound, so you so you pull it up and there is a kind of a banner ad at the top, and those are kind of sponsored sounds. So you know right now, UM, I'm seeing like guest playlists. I'm seeing um different um, different artists that are being you know, showcased. UM. There's uh kind of a list of different playlists that TikTok makes.

They get like famous people to make playlists. There's like trending feature sounds. You know. UM, there's dozens of UM sounds up here are being suggested to you, UM from from um from TikTok to be able to to use and then um, you know, there's depending on like what. Let's say you want to make a country, so you're

looking for country songs. So then you pick country and up pops you know, hundreds of different sounds that you can kind of go through, and people who are into this, they'll spend hours looking through these sounds and listening to them and stuff like that. But if you're a casual TikTok user, you want to put a sound on your video real quick, You're going to click on the first thing that you see. And often that spot, you know,

is paid for by them. You know, I would say a hundred percent of the time that spot is paid for by a by a record label. Okay, let's assume I'm on the very first page. Do I have to go to the next level to get a list or do I see the ads in the players? And also, don't give me like ten songs. These are the trending songs. Yeah, so there's a little thing that says like recommended and it's kind of some of the trending songs out there. Um, but when we say trending, it's like trending for you.

So what they it's trending but they think that you're gonna like So it's kind of like it's not like a Billboard Top one type of thing. It's like a mix between what's popular but also what they think you're going to want based on the previous videos that you've made before. Can I pay to be in that trending list? Yeah? You can, yes, as far as I understand. Yeah. Okay, So let's assume I'm a big deep pocket. I come with an act, I go to the people and I say, hey, listen,

I'm gonna jam this. Say okay, by a band a rod pay to be on the list. Then what so

TikTok will push back. So during that podcast, during the Foundering podcast, we talk about um this experience with Megan the Stallion where Megan's label said, you know, we want Captain Hook to be, you know, our focus track, and the TikTok's had a music partnerships told me that what she said back to them was no, no, you might think that it's Captain Hook, but we want to see what the users think first, and so what she said was, Okay,

don't just put all your money behind Captain Hook. Put out five songs on the app, and then let's let it simmer and see what people make. And then they kind of dipped into the sound the private sound libraries of everybody, UM, of all their users, and they started saying that actually, no, out of those five songs, like, it wasn't Captain Hook that got the early traction, it

was Savage that people were into. And so they saw that and they said, okay, this is an indicator that you know, people are savage is really better suited to TikTok because of the music the way that the way it is UM and because of this dance that was also trending UM. And so it was then that they waited, uh, you know a number of days that then they put up the banner ad and then they put up they started, you know, using all that money to UM for the promotion.

And so it's not just record labels saying, hey, TikTok, here's money, let me tell you what to do. It's oftentimes TikTok saying, hey, record label, let me tell you what to do based on what I'm saying, And what's going to be the most popular because it can't. It's not going to take off if if it's not if if people don't want to play with it, you know, the same way you know on radio, you're you're stuck, right, you can't go anywhere. You're in your car, you're listening

to radio. The song is on. You hear it ten times, you know, maybe after the tenth eleven time you hear it it becomes popular. You don't have a choice. Yeah, you can change the station, but your choices are limited, right, And TikTok is like, okay, well, we want to see what people are already doing and then just like you know, put that on steroids versus telling them exactly what to do. Okay, But you say, when they seeded five songs, if I heard you correctly, they within a matter of days what

the successful song is. I mean, they know it a matter of hour. They could see it immediately probably, but what they did was they did wait a number of days to see Because what this sounds folder is is someone saving a sound to make a video in the future. That could be tomorrow, that could be a week from now.

They don't know that, um, But what they do know is someone cared enough about this song or liked it enough to be like, hey, I like that, I'm gonna save that and so It's such a powerful indicator that it's like you can't even describe it because it's like literally the way people think. You know, people are thinking, Okay, I like this song, so I'm going to save it

um and so TikTok can see that. In a way the record labels can't see that, and so then they know, Okay, this is probably going to be popular because in a matter of day it's a leading indicator. In a matter of days, there's gonna be a ton of videos using this song, and then that's going to become viral. Okay, let's assume I'm a deep pocket, I have a million dollars, I have an act, lives in next door to me. Can I get access to the music department at TikTok? Well?

I think a lot of this is relationships. So all the big record labels have these relationships with TikTok, and so you know, chances are if you are one of the big record labels, you already have that relationship with TikTok and you're in constant contact with them. So what are the odds if I'm an independent are there? Do I have any chance at all? Oh? I see what you're saying, um, I think you have a chance. I think it's in TikTok's best interest to build out these music, um,

these music capabilities, particularly in different niches. So you know, they've got the popular songs cover, they've got your billboard on. What they're focusing even more now on, is you know, what country music are we building out? What Latino music are we building out? Like what you know, these kind of very specific kinds of music, because remember, what you see is different from what everybody else sees on TikTok, So they have to build out something really good for

each very particular group of people. And so it's not enough to just have one thing that's popular for everyone. They also need to build out all these other things. So if you're an independent label that's maybe a little bit off the beaten path or has a niche or something like that, then I think you have an even better chance at succeeding because they are actually looking for that kind of thing. Okay, the very first relationship do I have to pay TikTok to talk to them? That

I don't know the answer to. I mean, I really don't, because I think that TikTok would say, you know, they're constantly scouring for new and interesting and cool things. But if you're an executive at TikTok, I've got to imagine that you're busy and there's only so many meetings that you can take each day. Um. You know. The way around that, and you kind of alluded to this is Okay, let me find a popular creator, pay them fifty dollars

to make a dance with my music. Um, that can maybe have like a quicker, bigger bang for your buck. And if that song and that video does really well, then TikTok will notice. You do we have any idea how many views of a video one of those big creators gets. Oh, can be you know, tens of millions. I mean, Charlie Demilio is one of the most popular people on TikTok, and she has over a hundred million followers. So just let's assume every one of her followers sees it.

That's just a hundred million, and that's not even the people that don't follow her, you know. So Um, And then the thing about TikTok is that, like, once it gets really popular on TikTok, it's spills into everyday life, and so you're starting to see those things in UM, there's a ripple effect into Twitter, Facebook. You know, you'll see it on the g ME Fallon show, You'll see it um you know on your local news station. You know, it starts to become like a larger than life type

of situation. Okay, let's assume I do want to pay one of these creators. You're throwing out the figure of fift K. Is that what it costs? It depends. I mean, I've spoken to some creators who got paid five thousand. I've spoken to some creators who have gotten paid a hundred thousand. UM. You know, there's there. There have been instances where someone's gotten paid a million dollars for one post um. So it just really depends the level of

of creator that you're going after. Let's assume I do that. When you're saying let's just use a hundred K for an example, is it a hundred K for one video or do I have to have a campaign make multiple videos? It just depends how you structure it. So some of these people could could do a hundred K for one very unique video. Most of them will do. Most of them will do like three or four because the first one might not be better might not take off. They might like test three or four of them and see

which one. Um. The woman who created the Savage dance, which she was not paid for, um, but she has this is a woman who does get paid for her dances, but the Savage one, in particular, she did not get paid for. She made about five different dances to savage until one of them took off. Um. And so you're kind of playing with it to see, you know what what hits. So if I have a successful track, I can only watch the video. I cannot listen to the

complete song unless I go to another platform. Correct. Correct, Okay, Let's say I am nobody from nowhere and I realized it's a fast moving landscape. But the classic example here is little Nazax with Old Town Road. Can you explain how something like that becomes successful? Yeah, So Wills X is kind of like this, um, like the early story that kind of woke the record industry up to all this. UM. You know he was, um, he he spent I think it was like twenty or nineteen weeks at the top

of the billboard, uh chart. I think like it was. I love this story because he kind of like it kind of came out of nowhere. Um, but you know what it what it opened people up to the possibility was, is like what he could do with it? And so then they realized, Okay, well you could like actually, you know, pay someone. Uh you know, he could actually like pay someone for it to do to do what he kind of started to do, um naturally you know, but he you know, he like promoted himself. He created memes to

promote old Town Road. Um. You know, he he like would go on Twitter to talk about it. He made um these different challenges. You know, he he really gamed it. He really tried hard, um, you know, to do that. And so what the record companies realized was like, oh, I could just do that. I could build like a whole I could build a whole campaign around you know, doing kind of like what he did and building off of his his creativity. There. Okay, we live in a

tower of Babel society. Let's assume I create a smash in my bedroom and I don't gamify it. I don't basically say, you know, compete here. I don't blast people watch my video. Is there any chance my video can make it? Yeah, there's definitely still serendipity that happens on TikTok. You know, I don't think you can say everything is.

I think there's definitely still you know, fun stuff that happens, and it's different and unique and it's fun, and you know, people jump to it and it suddenly gets um popular. The thing about the TikTok algorithm is that it can it can recognize that very quickly early on, and so what that does is it rewards it rewards that engagement, and so there's definitely if you're a songwriter, you know, I think that hope is is definitely out there. It just gets harder the bigger it gets, and the more

the more money that gets involved, the harder it gets. Okay, So if I'm in a good little Nazics a couple of years ago, but I am an artist and I'm starting to get traction, I kind of asked this, but let's you know, at what point will I hear from the somebody at TikTok saying hey, you know, we want to be involved with you pretty early on? I mean, they have relationships with with so many people and this is their job. I mean, music is so important to

TikTok because it keeps people on the platforms. It keeps people coming to the platforms, it keeps them new and interesting and different, and so it's in TikTok's best interest to you know, continuously bring new and different and interesting people onto the app. And so there are you know, the woman we interview in our podcast UM Isabel can terrisa news. Her whole job head of Music Partnerships is to constantly be out there meeting with people, talking to them.

And yes, she has these relationships with these big record labels, but she's also reaching out, you know, to the flow millions of the world who didn't have those you know, record label UM contacts yet and because she wants they want to know these people first. It's it's in their best interest to UM, you know, find them first. And I think she told me that in the last year they had UM, they had partnered up with musicians, I think like fifty musician before they had gotten signed by

record labels. Do you have any idea how many people are working in that department? I don't. I mean in the US, it's not that big of a company, like it's you know, a thousand people or so. It's not this huge, massive behemoth. I mean in China. Um, you know, I think they're up to like sixty seventy people at byte Dance and so, um, you know. But it's but here in the U s it's it's not that many people. Okay. How many countries is uh? TikTok in like every country?

Like a hundred markets or something like that. Okay, Now this is something we've gotten from the internet. You know, it's a big world out there. So if I have success in America, okay to me, even if the song is in English, what are the chances will be pushed in foreign countries? Hi? So all of these all of these videos are pushed around their global I mean, there's a separation between China and the rest of the world.

So I would, um, you know, caution that what you're saying in China is not what you're seeing in the rest of the world. But China excluded. Um, it's all over, it's global, Okay. You also said that TikTok will reach out to creators, talk to their parents, pay them, give them hints. Can you amplify that or see if I

even have it correct? Yeah, So we talked to a number of creators that were assigned these kind of like individual agents the TikTok um you know, managers, and these people can do all sorts of things from hey, my video was blocked, can you figure out how you know, tech support issues? Um? Can you figure out why why that happened? Or why I'm offline and why can't get on something like that? Um. They also send out these emails that are saying like, Okay, this trend is trending.

We just introduced this feature. Everybody use that. If you use that, it's gonna trend and your video is going to get more people. UM. Same with hashtag hashtags. And then um, what they call challenges, which is this idea of like um, you know there's like a dance challenge or like you know remember the like water um most of like the water bucket challenge a million years ago, Like that's something that would have been on on TikTok

you know, like um this challenge. And so what creators realized was if they listen to the managers, if they if they watch what's happening in these emails and they do what they're they're asked to do, that their stuff does get more viewership. You know, because TikTok we'll sign some sort of a lot of these challenges are sponsored by brands that are um. You know, brands are paying TikTok for this, and they're being guaranteed a certain number

of views. So then TikTok will go and push those videos out to more people, and the creators that follow those challenges will get their videos seen by more people, they'll up their follower accounts, they'll get more money in the end, and it's all kind of a um a flywheale from there. Okay, are there any individual ads? Were all ads are embedded in the videos. There are also now like you'll be scrolling and it's like a takeover. UM. So yeah, those are ads that are that are there

already and um and they're coming more and more. And the other interesting thing that they're testing out is now e commerce where you can literally buy something within somebody's video, Like you click on that link to buy that item that that creator is UM is talking about at the moment. Okay, if they send one of these emails, like manager emails,

how many people are getting them? You know that I haven't been able to get down to the bottom of but I have spoken to dozens of creators and every single person I've every creator I've spoken to is getting these emails. So I don't know what the threshold is, you know, I if I were to guess, I would say something like fifty followers or something like that. Um, but every creator that I've spoken to with more than fifty hundred thousand people are getting have been getting these emails.

Let's assume I'm on the list. How often will I get an email? It was like once a week or so. Um for a number of times I got on the email list somehow, and UM, I was getting them once a week or so. I think it's less frequent now. Okay, So does TikTok today or did they ever literally paid direct cash to creators In UM China, they paid direct cash to creators and that was and they also paid people to come on UM and you know from from

other platforms. When TikTok launched in the US, the US, the global version, the X China TikTok Um, they also paid some creators to make videos. These days, it is more of a UM, hey, let me set you up with this brand. And there they do matchmaker and you know, they take a cut sometimes and sometimes they don't. Okay, let's assume I'm successful on TikTok and TikTok knows who I am. I'm literally going to get an email from them,

Hey we think or they're going to contact me. However that uh, you know this brand is interesting you should were or am I going to have to get a manager who's going to work the relationship? How does it work? So both ways? So if you have a manager, they'll talk to your manager. If it's just you, they'll talk to you and yeah, you'll get contacted by them and be like, hey, we identified you, or this brand is

interested in working with you. Or they'll send brands like a dossier of like fifteen people being like, hey this these people would fit with your brand. Um, you know you should you should reach out to them. We'll give you connect or you know, we'll connect you with them. Let's assume I've had some success and I say, this is what I want to do for my occupation. How do I make sure other than doing great content, how

do I make sure that opportunities come my way? Most of the people that we speak to you for the podcast, um for the Foundering podcast had agents, you know they really they started out without one and then at a certain level, they ended up getting a manager or getting an agent, and a lot of the things they do is those brand partnerships. Um. But oftentimes, you know, like the brands will just message them or you know, sometimes

they start off with free stuff. Hey, I'll give you this free sweatshirt if you wear it in your in your in your video, or like these unboxing videos where they're like, you can keep the stuff we send you, um, as long as as long as you make a video about it. So that's kind of like the gateway drug of of this marketing is like people will start that way with like free merchandise, um, and then they kind of build up from there. And this can be done

without any involvement from the TikTok organization. Correct. Okay, how many people are making an excess of fifty thousand US on TikTok? Oh? Gosh? I mean alone for the Foundering podcast, we spoke to a dozen, so you know, um, there's definitely you know, people who are making a lot of money. I don't have a number for you though. Okay, how

many people are making seven figures? I think you know Forbes did this uh Forbes did this piece uh that were like the richest TikTok stars, like their seven highest earning TikTok stars. Um, I remember they did this, I think yeah, last summer and um, and so they had you know, this woman Addison Ray five million dollars, Charlie Demilio, you know, two million dollars a year. Her sister Dixie

Demelio three million dollars a year. You know, these are people who are probably now making double that, given the given the popularity. Now, okay, that's a lot of money. UM, let's assume they pay me a million. I'm making a million dollars a year. Forget taxes. How much of that has net to me? Their estimation was this pre tax, pre tax earnings. UM. You know, if they don't, um, take some of that out, I'm assuming some of that

goes to their managers. My question. You know, if you're a successful musical artist, you have the manager, you have the lawyer, the accountant, you have the agent, and they're chipping away at the gross and many of them take off the top. So in this particular case, if I get a million dollars, let's assume I gotta pay an agent. Am I gonna have to pay anybody else? I spoke to one TikTok star who told me that he, you know, he makes seven figures on TikTok and then he was

mostly doing it himself. That he he had hired an assistant, some young kid out of college, and um, you know, he had a manager. But when I asked him, you know, how much are you making personally? You know, he said seven figures. Um, so I'd imagine it was still you know, his his his manager and agent is also making enough that it's worth it to them, you know, to continue doing that. But a lot of these managers, you know, they're managing dozens of people at a time. They have

these kind of big houses of of folks. Um. You know, so I'm sure that that all that that that all adds up. Okay, you have any idea what percentage the manager takes. I don't. It's a good question though, Okay, So let's talk about these houses. Give us the history in the status of these houses. Oh, the hype houses. Um, so they're called hype houses or TikTok mansions, and um, you know, I think this started it back in the Vine days. I don't know if you remember Vine, but um,

I certain yeah, like they would call it. They all there was like one house on Vine Street that they found in l A. And it was like this collaboration houses where they would all make videos together. And what they what these folks realized was that, you know, the more they make videos together, the more they can boost their view counts and the more followers they get because

people are like suddenly invested in the drama. And so it's this like real World, you know meets Shark Tank kind of um experience where it's like ten kids living in a flashy house in Los Angeles making you know, doing brand deals and with for brands, it's great, right, you make one deal with the house and you're suddenly in ten popular kids videos. Um. You know, it's a much more efficient way of doing some of these deals.

And then like the their followers get invested in the drama, and then you have like the Hollywood Reporter and other like you know, l A magazines and stuff following them around and and stuff like that, and so it starts to drum up even more business and even more followers for them. How many of these houses are there, there's definitely, I mean I can count on my like top of

my head. Maybe you know, a dozen or so, but you know, I'm sure there's a lot more smaller collaboratives of people who are like trying to trying to break into it. Okay, let's talk about a house. You know, especially some of these are enrichy neighborhoods and they're large. Who gets the house started? You know, they have you know, maybe ten or twenty K a month to rent the house. Yeah. So the person we spoke to Alex Warren, who lives

in what was originally called the Hype House. Um, he was the one who started the house with his friends and kind of recruited people. UM, I don't remember if um, I don't know who ended up footing the bill there, like the original rent for all of this. Um. But you know it's this like ten bedroom they have a pool, they have like a pool table in a movie theater,

in a game room, and you know, a million bedrooms. Um. And then they all kind of like live together and they have a they order to take out all the

time and things like that. Um. There have been stories and some you know, cautionary tales around managers who end up putting the down payment, you know, like the rental, Like, um, the what's it called when it's a down payment for rental, it's a mortgage or it's a rental, it's at least well, yeah, like the first like two months put you know, putting up front, like the first two months or something, and then like they're not making it as much money as

they wanted to and then the manager stuck with like all these kids who you know. So there's been some there's been some um cautionary tales around some of the managers who kind of take who have kind of taken a chance to kind of try to start their own and then um and then having it, you know, go

into utter failure. Well, there was a recent story. I think it was one of the Paul brothers, I'm not absolutely sure, and they said he had the house and he was giving a certain percentage to the other people in the house and taking the lion share a great deal for himself. Is that sometimes a case? Yeah, I mean it's not that expensive I mean to rent some of these houses. I mean the Hiphe house, I remember, I think it was like a nine million dollar house.

But you're renting it, so you're not you know, you're paying maybe twenty something like that, um, maybe even less. You know, for these things and you're dividing it up between ten. Some of them are stuffing like fifteen people into it, and so you know, you could take a cut that way. Um, you know, every every month, you could take a cut that way. Okay, let's just say I'm a guy in Kansas, I'm making a hundred k year,

I'm moving to the Hype House. Am I all already going to have to give a percentage of that to the hype manager just for living in the Hype House? Yeah? I think you have to pay rent, you know, for example, and you know some of the houses though, they've gotten sponsorships, so like they'll get an energy drink to like sponsor the house, and then you could that's your pay that's your payment right that they're paying their they're paying their

monthly rent for the house. Okay, if you are a successful creator, how often do you have to post a video constantly? So we uh we we did this event with one of the people, um Karen Spencer, who we um interviewed on our podcast, who's a managers who's been in digital and social media for a long time. And you know, she says that you know, you're incentivized to post often when you drop off, your fans drop off, and TikTok um you know, shows you no love when

you don't show them love. And so you know it, it goes back to the original goal of TikTok which is to keep people on as long as possible. If there's not enough content, they're not keeping people on. And if there's not enough content from the popular people, you're

not keeping these eyeballs. And so, you know, you don't realize how much time it takes to make these videos, and so you know, your you might look like you're spending the day lounging around in the pool and it looks super you know, glamorous, but you're really spending many many hours a day to make many videos a day UM to be able to keep people, keep people interested. And what about would you say, one video a day, one video a week, multiple videos a day, multiple videos

a day. Okay, let's talk about the issue of bad actors on the weather, young people on the format, people getting information they shouldn't have, trolling these people privacy, what's going on there? Yeah, So we devoted all of episode for the Foundering Podcast to this issue of UM, the young kids that are on the app, and so I think you know, the takeaway is bad stuff happens on all social media apps. Um, the differences is too. One

is some of these kids are really really young. They're eight years old, they're nine years old, they're in elementary school, and they're seeing some really really mature things. UM. The second thing is that it's so difficult to see what's going on. Apparent has a really difficult time monitoring and seeing. Unless you're literally physically sitting next to your child, it

is hard to see what they're looking at. And you can set all sorts of different things, you know, you could set words to alter out, you could set time limits on them, you can set all different things, but at the end of the day, unless you're physically sitting next to them, you don't know exactly you know, what

they're looking at. And so, you know, we tell this story where we talked to a woman UM who told us her her story about an eight year old family member who UM, you know, started using TikTok and you know, started getting comments from older, older men or what they thought were older men, asking telling him what to do, what kind of videos to make, and he made a video of himself in his underwear because he was told to make a video of himself and his underwear dancing

around to it, posted it on his feed. His feed got you know, twenty hits or something, twenty views, nothing, But then one of these men downloaded his video and then reposted it up on their TikTok account, and then it got thousands, and suddenly this eight year old is in his underwear and that's on the internet forever. And you never know what these people are going to do with that. You never know, like what some of these people are are doing, how they might find him, how

they might use the app. You know. UM. In recent years, like in January a few months ago, UM TikTok made a number of changes to make this a safer place. UM, but it's still you know, your You get exposure to things like an arexia suicide, you know, UM, anti vax stuff, UM, just all sorts of really mature content that you don't necessarily want, you know, an eight year old looking at now. In the past year, the US government, specifically under the former guy, wanted to shut TikTok down or sell it

to an American company because of privacy data issues. What's the real story there? So the most frustrating part about doing this foundering podcast and spending so much time studying TikTok is that we still don't have the answer as to whether or not this app is a national security threat or not. And so that was kind of the whole thing, right from Trump saying, we think that all this very personal data that powers your algorithms is at

the end of the day, owned by Chinese company. And in China there is a law that says, if the government asks for this data, you have to give it to me. Now, TikTok says, all of our data is stored in the US and with backup servers in Singapore, and it's not stored in China, and TikTok itself is not available in China, and so therefore we're not giving

money away to the Chinese government. Now, if you take them at face value, it could be true right now, they could also not be giving data to the Chinese government. That doesn't mean they're not amassing a massive trove of really personal data, really, you know, kind of these personal profiles of um tens of millions of Americans that could be used for nefarious purposes in the future, or that could be hacked, you know, by a government actor who

might have keys to the castle. Like you don't really know any of those things because it's impossible to prove a negative or something that will happen in the future. And so that at the end of the day is the crux of the issue is that the facts are TikTok collects a lot of data that could eventually be dangerous and dangerous hands UM, and that they are owned by Chinese company subject to Chinese laws. So those are facts. What you don't know is has anything wrong been done?

You don't we we don't know that there's no publicly available data. And Trump never made the case and UM publicly at least, and when he left office, everything was just one big question mark because the Biden administration came into power and UM basically put a hold on everything. And so this idea of banning the app or selling it to a US company or all the lawsuits that

are currently held up in court, um we're frozen. And the Biden administration said, yes, we're going to look at this UM, but not right now because we have COVID and the economy and other things that that are that are pressing, and that we're going to focus on right now. Okay, you talk about the vaunted algorithm, which is obviously great

for TikTok. Is there some special skill byte Dance has that there are algorithms are better or just good for their platform, Like do they write better algorithms than Facebook and other platforms? It's hard to really know the answer to that. Um. You know, we speak to a lot of people who say the answer is flat out yes, that is just much more sophisticated. The other UM answer that I get to that question is they have so

many more years of data. If you remember, they started in two thousand and twelve, bite Down started in two thousand twelve. So here is nine years of training your data on people and the way people think. And so it doesn't necessarily matter that that was in China, Like they share a lot of that technology and the way that the algorithm works, and so you just have a more sophisticated way of of analyzing a lot of this

data that they've been able to amass over the years. Um. What I know is that TikTok to me feels so much more addictive UM than Facebook or or Instagram do and um and so much more personalized and so you know, I'm not an expert, Like, how do you really know who has a better algorithm unless you're inside those companies and able to identify that. But it seems to be working for them because more and more people are downloading

it and staying on it. Okay, if we move towards the future, I would call all of the social media platforms i e. The audience can move anywhere. And certainly since my Space, which ultimately faded away, all of these things have continued to exist, but they are not the hot platform. Okay, what is going to happen to TikTok? I know you actually predict the future, but predicted yeah so so in uh in our last episode of the Foundering podcast, which isn't out yet It will come out

next week. Um, but I'll give you a preview is um. You know my bad is on this company getting bigger and better and they are moving fast. They are hiring more people. Uh. They got Trump off their back for at least a year. You know, they have the U. S. Government who has let them not paid attention to them for the last six months as they continued to grow. They had the pandemic help them get more people on there and they are expanding. So right now they're expanding

into e commerce. Like if you think about that opportunity, Facebook has totally failed in e commerce and degram is not really realized it's full potential. Same with Pinterest, Like if they can crack e commerce, um faster and better than everyone else, then it opens up a whole new avenue for them in a way that you know hasn't really been done before in the US, though is being done a lot of in China. So you know, I think they go up from here. I don't think it's

a fad. Um. You know, we can do this again in five years and see if I'm right. But um, but I do think that there's a that, you know, if they continue on this trajectory of moving fast and um constantly iterating new features for people, that um that they'll just keep going with their success. Now it is a Chinese company, as you stated earlier, these are multi furious companies. They're giving your news, they're giving e commerce, etcetera. Do you believe that model can be replicated in the

US and possibly by Bye Dance? So I think the hardest thing to be replica get in the US as the payment because payments are so heavily protected in the US compared to UM. You know, Walmart, for example, has been trying to get a payments license for decades and hasn't been able to do that, And so I think it would be so hard for a Chinese company to

be able to take payments in the US. And without payments, I think it would be really hard to become as big as they are and ubiquitous as they are in China, because that's what kind of how they got it in China is like they became the wallet and so everything is purchased on there and so um and so you just started doing everything on those apps. Now they could get around that they could partner with someone they could partner with like a PayPal or Amazon or someone like that.

Like you have no idea how they would do that, UM, but I think that that would be one big roadblock for them. Well, in America today we go to multiple sites for our information literally news and you know, social etcetera, etcetera. And whereas in China, to my understanding is these platforms are a black hole that will cover all three sixty degrees of life. I think byte dance wants to do that. Do you in America? Do you think it's replicable. I think that they would love to do that, UM, but

I think we're far off on that. And I think that they're big roadblocks in areas like um, you know, like payments that they wouldn't wouldn't necessarily be able to do UM in a way that they can in China. Like in China, bitte Dance has a payments license and that they got last year. I think, UM, and they are doing that, and so you can starting to buy more things there, you're reading your news. They're like more and more touch points are happening in the US. I

think it's just much harder UM. So I think for now they're going to stick with entertainment. But and but but expand into e commerce, probably education, probably language like things like that, UM that are a little less sensitive given that they are still a Chinese at the end of the day, still owned by a Chinese company. Okay, you said at the beginning, you told your editor years back, WHOA,

this TikTok is happening. You're not only covering TikTok? What else is happening right now that we should be aware of? In tech, our music or well anything tech primarily, but you can put all these different elements together. Let me think about that one. I mean you brought up clubhouse. I think clubhouse is definitely interesting. Um. You know, I am in the kind of anti clubhouse camp. I think, like I don't see the future as much as some of the people that I'm talking to. You're you're preaching

to the choir. My goal is to never talk on the phone. If the younger generation won't even have voicemail, who wants to sit there? You know, it was driven primarily by high profile people on an exclusive basis, and we've learned with clubs if you can't get in while that drives. It's not even on the Android yet, and now everybody's trying to imitate it. I don't think it's

ultimately a big company or feature. But listen, we have all the craziness with robin Hood apps, so you never know in reality anything else you can say that might be on the horizon. Yeah, I mean I do think this investing. Um. Speaking of investing, I mean, I don't think people are realizing this um massive interest from gen Z and investing and using TikTok and Facebook and Reddit. I mean, we saw with the power of Reddit, and in the financial markets, um to Rock, game Stop and

other other stocks. There's a there's an account on TikTok of like financial investing, and you know, I've spoken to one creator who was saying, like, yeah, in the stock market now because I learned all about it on TikTok. And so you don't realize like how much social media is interacting with the financial markets and how much these young kids like gen Z and younger are learning about the markets and investing real money, and they're learning all

about it through through these platforms. And I think that's kind of an overlooked area that people aren't quite realizing. And that begs a question of n f t s. Any n f t s in the TikTok world, what do you think is happening there? I am sorry, like I just don't. I still I don't. I don't get n f t s. I don't understand it. I feel like such an old person when people talk about n f t s and um, I don't know, I don't.

I don't get it. But I also, um, it's not my strong suit, Like I'm not an expert of that kind of stuff and like, but yeah, I am a complete neo fight when it comes to my question is is anybody on TikTok or Bite Dancer they monetizing via n f T s Oh, you know, I wouldn't put it past them. I know, I'm not aware of anything um that TikTok is doing with n f T s UM. I think that um, there was I think I've read there was one TikTok star that sold one video like as an n f T. But I don't think that

um TikTok itself like had a role in that. UM. But yeah, I mean I think that they're putting you know, some of these creators themselves are seeing the value in in selling an n f T of their videos. But I haven't seen TikTok itself do it well. As Jimmy Kimmel told me, it's imaginary baseball cards. On that, I

think we've covered the landscape. Thank you so much for doing this well, Thank you so much in your article just like picking apart every little bit and relating it and putting it, you know, using your vast you know, not a an experience of the record label industry and talking about um, you know, just kind of picking apart one by one the article. I was just so floored away by your thoughtful response to it, so thank you

so much for that. Well that's it, you know, as they say in today, no one can be an expert on everything, although to a great degree the information is out there if you know where to look. And the old days, there are a hundred records on the chart. Everybody who was in the business new all a hundred records. No now records go number one, you've never heard of them. So I was so impressed with your article that it went into depth and certainly was never covered in the

music press. So for those listening, we certainly have gotten the top line. If you want to go deeper, as Shelley says, you can go to the Foundering podcast, easily searchable online, where they go further in depth. Once again, Shelley, thanks so much for doing this. Thank you. Until next time. This is Bob left sex O