“Everyone has a plan until they get punched in the mouth.” – Mike Tyson.
Investors of a certain age may remember Mike Tyson. He was in his pomp in the late 1980s when I was in school.
He was a boxer like no other. In 1985, he became the youngest heavyweight champion aged 20. He was just 5 foot 11 inches, which meant that his opponents towered over him.
Tyson was born in humble circumstances in Brooklyn. Tyson’s origins and short stature drove him to great heights. It gave him a focus that few could match.
He was the most ferocious fighter that ever entered the ring. Before Tyson, heavyweight boxing was like a chess match. Stamina and skill were valued.
Tyson changed boxing. His first 19 fights were knockouts. Twelve of them were in the first round. He wiped out Michael Spinks, his rival for the championship, in 91 seconds.
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Tyson had a vice-like dominance of the sport. His only weakness was the scandals. His punching did not stop in the ring. He was accused of assaulting his wife. There were reports of heavy drinking and drug abuse.
In February 1990, Tyson faced an unheard boxer called James “Buster” Douglas. It was expected to be another 90-second knockout.
Instead, there was an earth-shattering upset. Tyson’s partying had taken its toll. Douglas knocked out Tyson in the 11th round.
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With his defeat, a slew of contenders jostled for supremacy. Several claimants held and lost the crown.
Heavyweight champion
Tyson’s rise and fall may provide lessons to investors. TikTok is the heavyweight champion of the short video platform. TikTok is an app that promotes dance videos. ByteDance is the company behind TikTok. It was started by Zhang Yiming, a Chinese software engineer.
Like Tyson, TikTok came up the hard way. Zhang has poor social skills and an aversion to dancing.
Zhang’s difficulty on the dance floor has not hurt TikTok’s ascent. TikTok is at the epicentre of the creator economy. This platform has 1.7 billion users, which is more than the population of China and Russia put together.
About a third of its users are in the US, Indonesia and Brazil. These are markets where video apps are growing rapidly.
Its secret recipe is its algorithm. The algorithm directs users who have searched for, say, holidays in Bali to performers showcasing that destination. The algorithm feeds the addiction.
TikTok dominates short videos in the same way that Tyson wiped out his opponents. Over 70% of the short video users are on TikTok. Posting videos on TikTok is twice as likely to be discovered on any other platform, such as Facebook or Snapchat. TikTok has completely changed the way that labels are scouted. TikTok is the first port of call for an aspiring performer.
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Like Tyson’s travails when he was at his peak, TikTok has faced obstacles. Its dominance has caught the ire of the US and India. India banned the app in 2021 due to national security concerns. A similar fate awaits TikTok in America, with both houses and the White House tying the noose around its neck.
Though TikTok is open to creators, it is shut to public investors. Bytedance has a private market valuation of between US$200 billion ($270 billion) to US$250 billion. Public investors may need to look elsewhere.
Enter the Triller
Investors may not have to wait much longer. Triller, an American creator platform, is about to be listed on the New York Stock Exchange (NYSE) at a discount on TikTok’s valuation. Mike Tyson, himself is a backer of Triller. Triller signed an exclusive arrangement to fight at Triller’s events.
Triller has 450 million users, which is less than half of TikTok’s user base. Triller may turn out to be the Buster Douglas of short video. Its algorithm is not viewed with suspicion by the US and India. Its interface is said to be easier than TikTok’s.
It is different from TikTok in that it allows the creators to keep 76% of its royalties. This is 10 times the ratio for TikTok. Also, it uses generative AI for content creation.
Last month, Triller announced a US$4 billion backdoor listing on the Nasdaq. It will list through a reverse merger with AGBA, an HK-based financial services firm. TikTok’s troubles may mean investors must dance to Triller’s tune.
Nirgunan Tiruchelvam is head of consumer and internet at Aletheia Capital and author of Investing in the Covid Era
