Somehow, a Pennsylvania court mistakenlyThousands of pages of sealed court documents related to the birth of TikTok owner ByteDanceAnnounced to the public.I read the documents before they became secret again.
The documents, which include emails, chat logs and memos, offer a fascinating window into ByteDance’s origins and show that Susquehanna International Group, a financial trading firm owned by Republican mega-donor Jeff Yass, played a larger role in ByteDance’s creation than previously known.
They also tell a new version of ByteDance’s origin story, one of ups and downs on its way to becoming one of the world’s most valuable startups.
ByteDance originated from a Chinese real estate website.
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Bytedance’s origin story as we know it has the aura of Silicon Valley legend: In 2012, founder Zhang Yiming is said to have sketched out the idea for the company on a napkin for an employee at a subsidiary of Susquehanna International Group.
His plan won the approval of Susquehanna International Group, and they decided to invest.
In fact, records show that Bytedance’s story began several years ago. In 2009, the Chinese subsidiary of Susquehanna International Group selected Zhang Yiming to run a real estate startup called Jiujiufang. The company had good search technology to match buyers with ideal properties.
The company ultimately failed, and Mr. Zhang wrote in an email in 2012 that he was tired of real estate. He stayed in touch with Susquehanna as he conceived Bytedance, which he called a “sister company” of the real estate firm.
This time, instead of matching buyers with homes, he wanted to pair users with hilarious videos and lifestyle content.
The documents show that during his tenure at 99fang, Zhang Yiming developed two prototype applications, one for funny and embarrassing pictures and the other for jokes. They were very popular.
ByteDance was originally called Xiangping.
An early investment memo describes plans for a company that sounds a lot like TikTok.
The new company is based on a simple idea: Instead of letting users choose which people or groups to follow, mine their data to select content for them.
The goal was to “pick the hottest messages to kick-start virality,” said the memo, which was written by the Chinese subsidiary of Susquehanna International Group.
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Andrew Collier, managing director of research firm Orient Capital, told me that the documents were “astonishing,” and he added that, while the project was clearly unfinished at the time, the letter “outlined a business plan that sounded a lot like TikTok today.”
Zhang Yiming became the founder of the company.
Where does TikTok’s technology come from?
Two former contractors are suing Susquehanna International Group, accusing it of giving cutting-edge search technology they developed to ByteDance without compensating them.
Susquehanna has denied the allegation and is fighting the lawsuit.TikTok’s algorithm — which serves up videos that keep people scrolling — has clearly evolved over the years.
But the documents do show that ByteDance grew out of 99Fang, an early investment by Susquehanna Group. Whether that is true of the technology is a question that may eventually go to a jury.
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Yas’s company is small but capable of achieving great results.
Susquehanna’s Chinese subsidiary valued ByteDance at about $9 million in 2012. It invested more than $2 million in early funding for the idea. It later poured in “hundreds of millions of dollars,” according to court documents.
The company is now valued at $225 billion, according to CB Insights, a firm that tracks venture capital and startups.
This is the equivalent of a home run for venture capital.
This reward also comes with risks.
Some U.S. lawmakers have raised national security concerns, saying TikTok holds too much data on Americans and that ByteDance, as a Chinese company, could use its algorithms to target users with false information and propaganda.
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Congress is debating a bill that would either ban TikTok in the U.S. or force ByteDance to sell the app.
That would be a devastating blow to Susquehanna, which owns about 15% of ByteDance, according to The New York Times and other media reports.
Yass is funding a liberal group that defends TikTok. As of the end of last year, Yass had contributed more than $46 million, making him the largest donor this election cycle, according to OpenSecrets, a research group that tracks political money.
These files have been archived again.
After reviewing the records, my colleagues and I began looking for comment. Susquehanna International Group’s lawyers responded that the documents should not be made public. They contacted the court, and the documents were sealed again.