#59 - Learning Medley on Chinese Tech and US Big Tech post-anti-trust hearing
August 7, 2020: Learning from a series of episodes from the Tech Buzz China Podcast to learn about Tencent, BABA, Meituan Dianping and Bytedance. Expanding the depth (lack thereof) of my knowledge of the Chinese tech landscape from "1mm to 5cm”. Then, I get some perspective on the Big Tech hearings from Ben Thompson’s Stratechery summary.
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Episode Notes:
Tech Buzz China Podcast ~ First 25-30 episodes
A series of episodes on Tencent, BABA, Meituan Dianping, Bytedance
Bytedance => bought music.ly (a kind of precursor to TikTok), Douyin is the Chinese TikTok
Kuaishou is the competitor to Douyin. Backed by Tencent and the difference is that Douyin targeted the ‘wealthy’ who live in tier 1/2 cities in the South whereas Kuaishou started by targeting those in tier 3+ cities (mainly in North). There is a cultural view that the South is the posh/wealthy with the North being crass/rural. Reminds me of the stereotypes my Shanghai vs. Beijing friends have for one another
Bytedance also owns Tou Tiao, China’s no.1 news site
Capital strategy between Tencent vs. BABA => Tencent invests minority stakes while BABA always seeks to acquire + integrate. BABA’s operations end up sharing data and working cohesively together whereas Tencent’s various units play independently. In many ways Tencent has a number of teams compete to tackle the same problem
Meituan Dianping has ~55%+ market share in food delivery with Ele.me the second player. Ele.me was bought by BABA for $9.5B. BABA was also an investor in Dianping and it used to be a fiery competition between Tencent backed Meituan and BABA backed Dianping. With a sudden merger, BABA was ousted along with the Dianping Founder/CEO.
Meituan Dianping is the super app in China that is the combination of opentable, yelp, uber, bike-sharing, UberEats/doordash, groupon etc… Everything on one platform that is integrated with the merchants (but not necessarily fully with Tencent given their “minority investment” model)
WeChat came out as a result of Tencent’s decentralized culture where various teams work independently without the integration that BABA/Bytedance has.
WeChat was founded by Allen Zhang, who joined Tencent after his ‘failed’ email company was acquired by Tencent. He worked on Tencent’s own communication tool and apparently he was inspired by Canada’s Kik messenger to build out WeChat.
Apparently, Mark Ren (current COO of Tencent) has also been a pivotal individual who was ana engineer who had a ‘risk-seeking’ mentality to take unconventional career jumps and he ended up working on gaming for Tencent. Both the gaming and WeChat divisions were unsuccessful from the beginning and it took time… in many ways I wonder if the decentralized culture at Tencent allowed these teams to continue hacking away at problems.
When WeChat was starting, Allen did not believe in growth hacking and only wanted to grow users organically. An extremely product/design oriented person who is often called a philosopher, he created WeChat with a constant focus to improve the lives of its users. He believed if the product is great, it will grow and once you know it works… then you focus on growth.
The New Oriental English prep school mafia episode on the battle between WeChat and Bullet messenger is worth re-listening to. A cultural phenomenon where prep school teachers end up learning entrepreneurial characteristics… and the best succeed and in many ways they end up being great entrepreneurs because of the 'student rating’ system.
Ant Financial (33% owned by BABA) has 3 business units: Alipay, asset management and credit scores…. It’s like Square/Venmo + Bank + FICO. Alipay has ~58% of market share with WePay at 34%. They used to have 80% before WeChat entered
Stratechery - Antitrust Politics
A comprehensive overview on the hearings with the 4 CEOs of AAPL, GOOG, FB and AMZN by Ben Thompson.
Odd how Satya and MSFT was left out… wouldn’t MSFT and GOOG really be the companies that fit closer to the “monopoly” definition?
Interesting how AAPL wasn’t targeted heavily, despite the whole Hey app drama and AAPL targeting retrospective take backs of its 30% fee on apps like Classpass.
Thompson points out the importance of regulating Aggregators (i.e. FB, AAPL and GOOG)
GOOG received the most heat from congress and in many ways, I wonder if it’s their open source model vs. AAPL’s closed environment where the government is fearful of all the ’things’ that could happen with GOOG. A fear of the unknowable?