Su Hua, the founder of a Chinese startup called Kuaishou Technology, was on the verge of closing the biggest deal of his career in 2017: the acquisition of TikTok, a fledgling video service. However, rival ByteDance Ltd. stepped in with a better offer, and Su missed out on what has become a global phenomenon.
Now, the 38-year-old entrepreneur is getting his just desserts. Kuaishou went public in Hong Kong in February, raising more than $5 billion on the strength of its thriving video and commerce operations. Meanwhile, ByteDance had a run-in with the US government and then became embroiled in China’s tech crackdown, likely delaying its own IPO.
Su isn’t wasting any time. Kuaishou, flush with cash from the IPO, is ramping up spending to close the gap with ByteDance, which is more than four times its size. Kuaishou intends to expand in countries such as Brazil and Indonesia rather than TikTok’s stronghold in the United States. To accelerate the roll-out of its international products, the company plans to double its global team to 2,000 by the end of the year.
In these markets, Kuaishou may have an advantage over its competitor. While TikTok is typically populated by photogenic, dancing teenagers, Su’s stars are a diverse, at times low-brow, cast of entertainers, many of whom are from rural areas. A binge-drinking farmer and a long-haul truck driver are among them.
To propel Kuaishou’s growth, the entrepreneur is employing a tried-and-true strategy of creating the commoner’s video forum, combining artificial intelligence-driven recommendations with human curation to provide a personalized experience. His company hopes to reach 250 million monthly users outside of China this year, after tripling that number in the previous six months. In China, it has approximately 300 million daily users.
Kuaishou’s international apps range from Kwai to Snack Video and Zynn. Kwai, its most successful export and international counterpart to its domestic platform, was downloaded more than 76 million times in the first half of 2021 in countries such as Brazil and Mexico, while SnackVideo gained traction in markets such as Indonesia and Pakistan.
Latin America, one of TikTok’s key markets, now accounts for roughly half of its 150 million monthly overseas users. Su’s company signed a deal earlier this year to sponsor the Copa América tournament in 2021, which is a big draw in the region. It also promised to spend $10 million over the next year to incentivize sports content creators.
Kuaishou, like all of China’s tech companies, has an added incentive to expand abroad as Beijing cracks down on its domestic industry. Chinese authorities have targeted market leaders such as Tencent Holdings Ltd. and Alibaba Group Holding Ltd., but uncertainty about future regulations has sparked a broad market sell-off. Kuaishou’s stock nearly quadrupled after its initial public offering and has since fallen near its offering price. It rose 6.9 percent on Thursday, outperforming Hong Kong’s Hang Seng Index, which rose 1.8 percent.
Tony Qiu, a former Bain Capital investor and Didi executive who helped the Chinese ride-hailing giant establish a presence in Brazil, is in charge of the company’s international expansion. Since joining Kuaishou last August, he’s been putting his knowledge of the local market to the test, leading a team with hires from Google, Netflix Inc. and TikTok. In April, Kuaishou also welcomed on board Wang Meihong, a former Facebook Inc. senior engineer, to oversee tech for its global products.
Take, for example, Joo Paulo Venancios, a 22-year-old Kwai creator from the northeastern Brazilian state of Paraba. Venancios has amassed a 2.6 million-person following on Kwai since he began in March 2020, with clips in which he and his 70-year-old grandmother reenact daily life and movie scenes. Local merchants hire him to perform in their stores, earning him around 6,000 Brazilian reals ($1,149) per month – enough to rent a house and pursue his dream of becoming a professional singer. It’s a celebrity he couldn’t have achieved on TikTok or Instagram, where algorithms make it more difficult for unknown creators to go viral.
Kuaishou’s platforms’ down-to-earth nature reflects its founder’s humble beginnings. Su was born and raised in a small village in China’s central Hunan province, despite having a net worth of nearly $9 billion. Su then aced the country’s arduous college entrance exam and gained admission to Tsinghua University, where he studied software programming before working as a developer at Google and Baidu Inc.