TikTok

**Ben Gilbert** (0:00)
Cool, yeah, we're jamming a lot in here.

**David Rosenthal** (0:02)
I know.

**Ben Gilbert** (0:14)
Welcome to Season 5, Episode 8 of Acquired, the podcast about great technology companies and the stories behind them. I'm Ben Gilbert, and I'm the co-founder of Pioneer Square Labs, a startup studio and early stage venture fund in Seattle.

**David Rosenthal** (0:28)
And I'm David Rosenthal, and I'm a general partner at Wave Capital, an early stage venture fund focused on marketplaces based in San Francisco.

**Ben Gilbert** (0:36)
And we are your hosts. Today, we'll tell the story of the most valuable tech startup in the world, ByteDance. You may not have heard of it, but you have almost certainly heard of their most popular product, Douyin. Or wait, if you're in our Western audience, I mean TikTok. Valued at close to $80 billion, this privately held, venture-backed Chinese company has completely changed how a generation of teens and 20-somethings globally use their phones. Or another fun way to introduce TikTok, what is this machine-learning-based social media app that skyrocketed the then-unknown Lil Nas X to number one on the Billboard Hot 100 for 17 weeks, the longest of any song in history, with his breakout track, Old Town Road?

**David Rosenthal** (1:25)
After doing this research, I finally know what the EHA Challenge was.

**Ben Gilbert** (1:32)
Well, David, I mean, how on earth can this app create such a universal sensation for so many people at once to skyrocket it to number one like this? I mean, this is something that no other social media app has been able to accomplish.

**David Rosenthal** (1:46)
Well, not in quite a long time. The other fun thing that we're not gonna talk as much about on the episode, but to say upfront, to also just build the acquired theme and suspense here, you of course know who assigned the $78 or $79 billion valuation to buy Dance, right?

**Ben Gilbert** (2:08)
Is it Sequoia China?

**David Rosenthal** (2:10)
No.

**Ben Gilbert** (2:11)
They were an earlier investor.

**David Rosenthal** (2:12)
Sequoia China was an earlier investor.

**Ben Gilbert** (2:14)
Oh boy. I can't wait for this.

**David Rosenthal** (2:17)
The hits keep on coming. Although this one actually is a hit.

**Ben Gilbert** (2:20)
Indeed. Well, listeners, the way we'll be telling this story is through ByteDance's 2017 acquisition of another China-based company, Musically. Join us on this journey of ByteDance acquiring Musically to create the TikTok that we know today. This is a great time to tell you about one of our very favorite companies, Crusoe.

**David Rosenthal** (2:41)
Crusoe, as listeners know by now, is a clean compute cloud provider specifically built for AI workloads. NVIDIA is one of their major partners, and literally Crusoe's data centers are nothing but racks and racks of A100s and H100s. And because Crusoe's cloud is purpose-built for AI and run on wasted, stranded, or clean energy, they can provide significantly better performance per dollar than traditional cloud providers.

**Ben Gilbert** (3:06)
Yes, we talked about that on our ACQ2 episode with Crusoe's CEO, Chase Lockmiller.

**David Rosenthal** (3:11)
The other element that makes Crusoe special is the environmental angle. Crusoe, of course, locates their data centers at stranded energy sites. So, think oil flares, wind farms that can't use all the energy they generate, etc., and uses that power that would otherwise be wasted to run your AI workloads instead.

**Ben Gilbert** (3:29)
Yeah. Obviously, it's a huge benefit for the environment and for customers on costs since Crusoe doesn't rely on the energy grid. Energy is the second largest cost of running AI after, of course, the price you pay NVIDIA for the chips. These lower energy costs get passed on to customers.

**David Rosenthal** (3:46)
It's super cool that they can put their data centers out there in these remote locations where quote-unquote energy happens, as opposed to the other hyperscalers such as AWS and Google and Azure, who need to build their data centers close to major traffic hubs where the Internet happens because they are doing everything in their Clouds.

**Ben Gilbert** (4:02)
Yeah. If you, your company, or your portfolio companies would like to use the lower cost and more performant infrastructure for your AI workloads, go to crusocloud.com/acquired, that's crusoecloud.com/acquired, or click the link in the show notes. Now, on to TikTok.

**David Rosenthal** (4:21)
On to TikTok.
To start history and facts, we're going to go all the way back to 1920s, and Charlie Chaplin, the origins of- no. I'm kidding. Although, if we really, really wanted to give it the full acquired treatment, we would do that. But no, of course, I was referring to the great performer in the performing arts and the origins of showbiz, Charlie Chaplin. But no, we pick up the story relatively recently, this time by acquired standards, in 2012, not in China, but in the San Francisco Bay area with a man, and not a young man, as we so often talk about on this show, but a man named Alex Zhu, who is in his mid-30s. He's from China originally, and he is working-