So Kuaishou, the company which runs a short video and live streaming app in China, is filing for IPO in Hong Kong.
Kuaishou is the second largest short video platform in the world, just after TikTok/Douyin. In the IPO prospectus, the company states its vision as:
“We aim to be the most customer-obsessed company in the world. Our mission is to help people discover their needs and use their talents in order to find their unique brand of happiness.”
Certainly a lot of people find this vision (or rather the product) attractive. In the first 6 months of 2020, Kuaishou registered 257.7 million daily active users and a whooping 484.6 million monthly active users, a giant leap from 2019. An average daily active user spends close to 1.5 hours every day on the app:
The livestreaming is also a great money spinner, making CNY 17.349 billion (US$2.6 billion) turnover in the first half of 2020:
The difficulty of expansion
However, if you know about Kuaishou’s history, and read through the prospectus, you would realise one thing.
That is, aside from its core business, everything else the company has expended into yielded nothing worth mentioning:
International marktes (Europe, US, Latam), games, ecommerce, longer form videos, the list goes on.
On the surface it is similar to Baidu (or even Google) – when you have a strong cash-generating core, expansion becomes rather difficult. There are issues on product, organisation, people and ultimately leadership, which we have emphasised in multiple posts (and on which we are writing a book).
Kuaishou outside China
In the international efforts, the company actually made quite a bit of effort over a few years. We have seen its teams curating content, signing up influencers/creators, and approaching advertisers in multiple countries: Turkey, Brazil, Indonesia, the Philippines etc.
Like many tech majors, it takes a rational approach, by testing different markets and investing in those which work.
The problem here is precisely the approach – those which show promising results would get more resources (and better people), and thus become even better (read: Brazil); those which do not show promising results would get fewer resources, and thus continues to underperform, leading to eventual shutdown.
Isn’t that similar to what Amazon went through in China?
When you do not know for sure why the tests are successful, and when you do not have sufficient local understanding to interpret the data – this outcome is inevitable.
In this regard, TikTok is doing a much better job.