ByteDance’s Big Victory Dance

This morning, the business world learned two things about TikTok owner ByteDance as it moves toward a public stock offering, the most anticipated consumer tech listing since Alibaba in 2014. 

First, the company revealed its 2020 revenue and operating loss to employees—and by extension, to the press. Using some back-of-the-envelope math, ByteDance might be worth $400 billion if its stock were trading today based on those results. With that valuation, ByteDance would rank in the top 20 most valuable public companies in the world. It would also be a dramatic rise from its last private financing in late 2020 that valued the company at $180 billion.

To estimate a potential ByteDance valuation, compare it to Kuaishou, a domestic rival that also runs a short-form video app and is publicly valued at $100 billion. Not only does Kuaishou burn cash while ByteDance appears to generate lots of it, Kuaishou also grew half as fast as ByteDance did in 2020 and its revenue was nearly four times smaller than that of ByteDance. Kuaishou also doesn’t have a global business.

Because ByteDance generates revenue from advertising sales while Kuaishou generates it mostly from taking a cut of payments made by its users, Facebook may be a more helpful comparison. Facebook generated two and a half times more revenue than ByteDance did in 2020 but grew much more slowly, at 22% year over year, compared to more than 100% annual revenue growth for ByteDance. Facebook’s market cap is now at $950 billion.

It’s no surprise, then, that at least one existing ByteDance investor told The Information they recently fielded an offer to buy their shares at a price that implied ByteDance was worth $400 billion.

The second thing ByteDance signaled this morning is that it is likely to list shares in Hong Kong. ByteDance said it was audited based on International Financial Reporting Standards, an accounting method common for Hong Kong stocks. Other marquee Chinese consumer tech companies such as Kuaishou, Meituan and Xiaomi also listed there in recent years, and perhaps ByteDance will follow their lead while also skipping a simultaneous U.S. stock exchange listing.

After geopolitical tensions between the U.S. and China nearly got TikTok banned in the U.S., such a move is understandable. But ByteDance’s stock could be more volatile in Hong Kong than in the U.S., given the recent flood of Hong Kong stock buying from retail investors in mainland China. —Amir Efrati and Shai Oster

THE CLOUD WARS

Three was lots of news in Cloud-land this week, as there is most weeks in this most competitive of tech markets:

• Oracle CEO Safra Catz on Wednesday said the company would roughly double its spending on investments in data centers to support its cloud computing business. While these outlays could help Oracle finally gain traction with customers after a late entry to the cloud market, investors focused more on the expenses, and the stock fell more than 5%.
• Data analytics startup Confluent got closer to an IPO, with new financial disclosures in its paperwork for the offering. Cloud accounts for about 13% of its revenue in the 12 months to Dec. 31 and 18% in the three months to March 31. To increase that portion, it will likely have to spend more, likely widening a loss that more than doubled last year.
• Finally, there was Google, which earlier this week introduced new features for Workspace, its suite of cloud productivity apps, including one that lets companies manage their own data encryption keys. This gave Google a more attractive toolset against its rival, Microsoft.—Kevin McLaughlin

TWO SPECIAL EVENTS

Tuesday, June 22. What’s Next for Venture Capital. Join us to discuss the tectonic shifts underway in startup investing, from the venture firms on the upswing to latest deals, trends in SPACs and IPOs. Our VC reporters and editors will share what they are working on next. RSVP here.

Thursday, June 24.  The Future of Engineering—new speakers added. We’ll discuss the future of engineering and how development work that required engineering support is now being replaced with low code/no-code software solutions. RSVP here (no subscription required).

BLADE’S BODY DOUBLE

Many companies tout their lean operations, but Blade, the Uber-like service for helicopters, took things a step further. Its CEO Rob Wiesenthal admitted he saved on costs by acting as the company’s own spokesperson, using the alias Simon McLaren for about three years in interviews with numerous publications including The New York Times and CNN,  Insider reported.

Wiesenthal started to unwind the fabrication as the company went through a merger with a special purpose acquisition company earlier this year, the news outlet said. The CEO defended the ruse by saying that small businesses do this sort of thing all the time.  

There’s no evidence that is true, but a few well-known business leaders have gotten away with similar scams. Before he was president, real estate mogul Donald Trump acted for years as a source of information on Trump’s operations under the guise of spokesperson “John Miller” or “John Barron.” In 2007, Whole Foods Market co-founder and then CEO John Mackey was caught trashing competitor Wild Oats under an alias. 

Besides a raft of news headlines when these executives’ faked personas come to light, the repercussions have been fairly light: On Thursday, the day the news of Blade’s ruse broke, its stock rose 2%. —Josh Sisco 

IN OTHER NEWS…

• Instagram launched advertising inside Reels, the short-form videos that rival TikTok. Earlier this week, parent Facebook said it would start testing ads inside Oculus virtual reality headsets. 
• Defense technology startup Anduril Industries said it raised $450 million in a Series D deal valuing the company at $4.6 billion. The round was led by Elad Gil, an unusual instance of an individual investor leading a late-stage round. 
• 23andMe began trading on the Nasdaq after merging with Richard Branson’s special purpose acquisition company VG Acquisition Corp. 23andMe, co-founded by Anne Wojcicki, raised approximately $800 million in VC funding from investors.
• One of Waymo’s autonomous vehicle prototypes collided with a person on a motorized scooter while turning left at an intersection. At the time, no one involved had reported serious injuries, a Waymo spokesperson said.

NEW FROM OUR REPORTERS

Inside Jonah Peretti’s Rollup Playbook

The New York Times and The Athletic End Acquisition Talks

WHAT WE’RE READING

A profile of Doug Guthrie, a former adviser to Apple on China (The New York Times)

How Ring used LAPD officers to promote its connected doorbells (LA Times)

Forced out by activists, former Athenahealth CEO returns with new startup (Fortune)