SpaceX is creating rockets and flying around. They could pull off a moon trip faster than we think. This makes one think, “Such a company should have an incredibly high valuation. It certainly must be the highest valued private company in the world.”
As a small note, a private company is one that’s not yet listed in a stock exchange or is not public (didn’t go through an initial public offering or an equivalent.) Hence, all the huge companies like Apple, Microsoft, and Facebook are already public and their fate is within stockholders rather than a single founder.
SpaceX has a high valuation. At the time of this writing, it’s around $100 billion.
However, it’s not the highest valued private company in this market. Then you could say, “Oh, of course, the financial sector always dominates the market. It’s probably a bank or a payment provider like Stripe.”
Stripe is highly valued as well. It stands at $95 billion at the time of this writing. Monetizing in the financial sector has always been very profitable, however, Stripe is not the most valued private company.
The winner of this race is a company called ByteDance. Not a lot of people are familiar with their name. Simply put, they asked two simple questions.
- What is one of the most vital human needs?
- Where is the best market to serve that need?
Their answer to this was human communication.
Yet, the communication market is saturated with Facebook, WhatsApp, Instagram, etc. So they had to enter the market in an innovative way. They focused on entertainment. They merged communication with entertainment. They’re the parent company of TikTok as well as other similar companies.
Then their next challenge was the market. The U.S. market is a vital market as the U.S. has enormous influence over the whole world. Europe is as well a very important milestone in any company’s growth. However, ByteDance’s go-to-market strategy is simpler than that. The only important variable in human communication is quantity. Everyone communicates, it’s just a question of how many people are communicating via your platform.
Hence, ByteDance focused on China and India as they have very dense populations. So, they have the number of people required to succeed. If you succeed in a communicational platform in India OR China, that could be enough for your business. These markets, China and India, constitute a big chunk of the worldwide population.
Whilst some companies are struggling with their analytics of growth, sometimes the answer is quite straightforward.
- SpaceX is making billions helping humanity in space transportation.
- Stripe is making billions helping people pay each other.
ByteDance is winning the race by investing in what is vital to all humans – communication (in an entertaining way).
They’re winning because they’re tackling humanity’s most vital need – communication.
- We don’t have to go to the moon.
- We don’t have to collect money from one another faster.
However, we will always need to communicate with one another.
As a business take-home message of ByteDance, this showcases and provides further proof of the vitality of validating your market need. This company is taking over the world by simply creating a product that allows people to enjoy spreading information. TikTok is not an innovative breakthrough product. It’s a very simple one, in fact. Snapchat stories were already there. Instagram Reels followed. What TikTok did is simply tweaked a few minor features in those platforms and exponentially grew.
If you’d seen their pitch deck then, you’d probably say “Oh, so you’re actually getting into the Instagram market… Good luck!”
This clearly shows that in our day and age, any company has room for improvement. They’ll either do it, or someone else will come and dominate.
Apple is creating fantastic products, yet one day a competitor will see something Apple didn’t and will grow.
Google is the guru of search engines, yet a time will come when there’s a tiny tweak that would allow another company to dominate that market.
An interesting similar case study would be Tesla’s market success. Creating an electric vehicle has always been there, but a few tweaks in the current EVs, along with the problems that are occurring in our environment, created the giant.
Our current business days are not days of creating companies that serve a new need. They’re days of understanding the market and perfecting it. Humans are undergoing more innovation rather than invention. At this age, success lies not in creating a new product, but in evolving a current one. It’s a direct reflection of us as humans. We’re evolving.
I’m Al, a business consultant in Zurich, Switzerland. I believe in the power of delivering value to you, the reader. I’m focusing my content to be more and more on Medium, and Linkedin. Hence, follow me on both channels to keep in touch and connect.