In the late 2000s, Susquehanna International Group (SIG), led by Republican donor Jeff Yass, took a gamble on a Chinese real estate startup named 99Fang, aiming to revolutionize home buying with a sophisticated search algorithm. While 99Fang itself did not achieve the expected success, it became the springboard for something much larger—ByteDance, the parent company of TikTok, now valued at a staggering $225 billion.
The seeds of ByteDance were sown when SIG invested in 99Fang and installed Zhang Yiming as its CEO. Zhang, who had previously held a technical director position at another SIG-funded company, Kuxun, brought a visionary approach to the stagnant real estate market. Despite the initial real estate focus, Zhang was soon inspired by the broader potential of digital content on mobile platforms, thanks in part to the burgeoning smartphone adoption rates.
Court documents from a recent lawsuit reveal that SIG’s influence on ByteDance’s origins was profound. SIG was not merely a passive investor but was integral in nurturing Zhang’s career and approving the foundational ideas behind ByteDance. The documents, including emails and internal memos, suggest that SIG and Zhang discussed repurposing the real estate search technology for a more engaging application: digital content aggregation.
Zhang’s shift from real estate to digital content was marked by the prototype development of pages like “Funny Pictures” and “Pretty Babes,” which tested the waters of content virality. This pivot mirrored the dynamism found in other successful startups that adapted swiftly to market needs and user behavior.
The transformation from a real estate-focused search algorithm to a platform curating engaging content laid the groundwork for what would become ByteDance. By March 2012, SIG had valued the fledgling project, then known as Xiangping, at around $9 million, investing just over $2 million into it.
ByteDance officially came into existence later that year and eventually acquired the lip-sync app Musical.ly, integrating it to launch TikTok. The platform rapidly gained a global audience, redefining content consumption and creation on social media.
As TikTok grew, so did concerns over its Chinese ownership. U.S. lawmakers, citing national security risks, have contemplated aggressive measures, including forcing a sale of the company or banning the app entirely. The debate continues to swirl around the potential influence of ByteDance’s algorithm in spreading disinformation or sowing discord.
Amid these discussions, SIG and Yass find themselves defending the innovative yet controversial legacy of their investment. Yass, known for his significant political contributions, has also engaged in advocacy efforts to sway legislative outcomes regarding TikTok.
The unfolding story of ByteDance and TikTok underlines the unpredictable nature of venture investments. SIG’s initial venture into a modest real estate platform indirectly birthed a technological giant in ByteDance, demonstrating that in the world of startups, initial failures can sometimes lead to extraordinary successes.
As the legal and political narratives around ByteDance continue to develop, the tech community and regulators alike will be watching closely, eager to see how one of the most pivotal tales in tech unfolds. The case could reach a jury soon, with significant implications for international business and digital privacy.