TikTok Company ByteDance Expands to B2B market with E-Signature Tool
Despite its rapid growth to become a worldwide phenomenon and owning a suite of apps beyond TikTok, the parent Company ByteDance is yet to have developed an internet ecosystem like Alibaba, Tencent and Baidu which technologies penetrating the economy far and deep. Recently though it has found a little area that is growing explosively in China: e-Signatures.
Economist Brian Arthur wrote in “The Nature of Technology”, “A technology is shared by other technologies, so with the improvement in the application of these technologies, a lot of progress can then be produced automatically.” E-Signature seems to be a perfect example of this theory.
Electronic signature based on digital encryption technology is such an important technology application that can drastically improve business efficiency, even though it might seem to be a small element.
Recently, according to several domestic technology media reports, ByteDance launched an online contract platform called “Electronic Pull”. Some observers believe that ByteDance’s move is intended to seize the electronic signature market with Alibaba and Tencent.
According to public information, the main body of the development of the “electronic lead” product is Beijing Matrix Decomposition Technology Co., Ltd. According to the information of the TianYanCha, the actual controller of the company is suspected to be Zhang Yiming, the founder of ByteDance and the global CEO.
During the COVID-19 pandemic, most companies have delayed resumption of work, and online office has become the only way to maintain the normal operation of enterprises. However, due to the impact of the resumption of express delivery industry, how to ensure the normal signing of contracts has become an urgent problem to be solved during the outbreak. And hence we have seen a tremendous increase in the demand for electronic contracts.
The move into the e-signature market clearly signals that ByteDance is slowing expanding to the B2B market beyond TikTok. In March this year, ByteDance launched the office collaboration app “Feishu Documents”. From the point of view of time, the launch of ByteBook was just during the outbreak of online office demand during the epidemic. According to the official website of Feishu, this is a collaborative office tool focused on media, Internet, education, retail, law and other industries. It is not difficult to find that these areas are highly overlapping with the ByteDance’s business.
The launch of the electronic signature B2B application this time launched by ByteDance followed the launch of the “Flying Book Conference” in February. ByteDance low-key incoming electronic signature business has similarities with the previous ones.
ByteDance’s Toutiao’s search business (in news) has always been regarded as a direct challenge to Baidu, but on the one hand, Baidu’s search technologies that has been built over decades still have its dominant position. What ByteDance is doing is to build up the foundational infrastructure that businesses rely on with these B2B applications. In the future they will have a chance to overtake Baidu in search once they connect their massive inbound traffic through social (Douyin/ Tiktok) with their B2B infrastructure. To get to that vision, they will need to accumulate experience by launching, failing and eventually mastering the B2B market that is relatively new to ByteDance.
Tencent pivoted to support businesses in 2018 to try to catch up with Alibaba, the largest e-commerce player in China. The explosion of cloud computing, led by Alibaba, together with big data AI technologies have fuelled the foray into the B2B market since then.
ByteDance’s advantage has always been its power to aggregrate extremely active users and traffic through its social apps. However, overtime the growth of social users has slowed down, which forces them to go outside China with a DouYin clone app TikTok, and now eventually entering the B2B market.
In the view of the Internet Jianghu team (VIPIT1), the reason why ByteDance chose the electronic signature track is that on the one hand, electronic signature is one of the few sub-tracks in the B2B business that follows the “Metcalfe’s law”. On the other hand, electronic signature is the infrastructure of B2B online business. The best way for ByteDance to enter the market is to start with general-purpose tools, step by step, and then move forward.
The so-called “Metcalfe’s law” refers to “the value of network nodes is proportional to the square of the number of nodes”. In other words, the value of a single B2B user of electronic signature is proportional to the square of the total number of users.
This is easy to understand. The more the number of users of a particular electronic signing product, the longer the stickiness of a single user and the longer the life cycle of its product. Let’s take “electronic pulling” as an example. ByteDance internally uses electronic pulling to sign online After the contract, the upstream and downstream enterprises related to their cooperation will inevitably use this product. Once the user base is large enough and the contract relationship chain is sufficiently complex, the higher the contract management cost brought by the user migration to the electronic contract platform. Secondly by attacking a general-purpose tool that is needed by every single business, ByteDance will be able to extends its brand from TikTok’s consumer domain directly into the world of businesses.
There are many typical cases of success following this strategy, including online education companies such as Netease Youdao （网易有道）, homework help (作业帮）, and ape counseling（猿辅导）.
NetEase Youdao initially started with the simple translation tool “Youdao Dictionary”, that evolved deeper into the education industry, and finally went IPO in the United States. As another example, the Homework Help was also a tool for searching questions at the beginning that extended into creating their online course contents. Ape Counselling’s Question bank at the beginning also tranformed into into ape counseling services. It is clear that a simple general purpose tool, if done properly, has the potential to become a full industry solution over time.
Objectively speaking, as a “rising star” of Internet giants such as BAT, Byte has the potential to become a first-tier Internet giant, but on the surface it is an Internet giant. In fact, the industry’s ecosystem capabilities are still relatively insufficient.
For example, Ping Duoduo (拼多多）, although users are more active than JD.com, is likely to catch up with Taobao Tmall, but it still has some “unstable foundation” in basic capabilities such as payment, supply chain, and logistics when dealing with enterprises. Taobao Tmall has Alipay and Cainiao networks, and JD.com has JD.com and JD.com logistics, while Pinduoduo depends on WeChat for payment and logistics. It depends on the three links, one reach and the tailwind, making it difficult to achieve an advantage in core capabilities.
BAT has many attempts outside of its core business. For example, Ali Tencent co-invested in Didi to lay out travel areas. The key is that the non-core travel business may become the company’s second growth curve.
As another example, Tencent Chairman Ma Huateng said in an interview with the media earlier that although he did not understand the logic of bike sharing, he still had to vote for it. The reason is not only because the giants are afraid of being “subverted”, but the more important reason is that the new business deployed by the investment department is likely to open the company’s secondary growth curve in the future, which they might not even see at that point in time.
The core of the investment logic of giant enterprises lies in the formation of overall ecosystem efficiency. A classic example is Amazon. Although not all businesses are profitable under the Amazon ecosystem, the overall production efficiency has been improved when the map of businesses are put together.
Compared with BAT, ByteDance is still slightly weaker in terms of investment layout. In terms of investment, BAT has a professional investment team and has many business investment layouts. In comparison, ByteDance does not seem to have much well-known investment layout.
Unlike Tencent, Alibaba, Baidu, and even Xiaomi, ByteDance has a lot to catch up in building its own ecosystem.
Taking Dingding as an example, as an online office product of Alibaba’s ToB, not only Alibaba’s internal use is also used by Alibaba’s ecosystem partners. In the early promotion of Dingding, Alibaba’s ecosystem partners played a vital role. . As another example, in Tencent’s cloud computing business, companies such as its ecosystem partner Weimeng are users of Tencent’s cloud computing business.
The same is true for the electronic signature market. The industry’s ecosystem partners are both allies and potential customer groups. Therefore, in the industry ecosystem formed after extensive deployment, the advantages of ecosystem partner collaboration can continue.
ByteDance is a catfish in the increasingly rigid Internet business landscape, which brings competition and challenges to BAT. But on the other hand, byte bounce will inevitably make too many enemies, and there are both customers and opponents in the fields of search, games, local life, social networking and so on. This is also a big challenge for ByteDance to enter the B2B market: allies are naturally customers, but customers are not necessarily allies, and may even become opponents in the end.
“We still have business cooperation with ByteDance, but may not renew it in the future.” The head of the marketing department of an unnamed casual game company revealed to Internet Jianghu (VIPIT1): “Although the ByteDance traffic is very fierce Since they entered the casual gaming field, we have considered moving to other (traffic) channels.”
Entering the B2B market with electronic signatures, Byte also has its own advantages. For example, To B marketing is done in the way of To C, that is, based on big data user profile analysis, B-end marketing is performed on the C-end (such as enterprise managers) of specific identity groups.
As another example, by acquiring a large customer with industry voice in an industry chain, the share of a vertical industry is increased. For example, under the leadership of ByteDance itself, it has formed a business coordination effect with Feishu, deeply cultivating media, MCN institutions, education, retail, law and other subdivision fields, thereby further forming the core competitiveness of ToB products themselves, the electronic signature.
Of course, at the moment, ByteDance is sending out a signal to do electronic signatures in the market. There are no major measures at the specific strategic level. In addition, the core of the expansion of ByteDance is now games and search, as well as overseas markets.
One thing we know for sure is that competition is waiting for ByteDance. In China, Hangzhou-based BestSign has been on a buying spree to further consolidate its leading position, and globally companies like DocuSign, eSign and HelloSign are also leading the way.
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