TikTok and the Age of Discovery

TikTok has changed the consumer experience forever with a hyper-personalised discovery experience that can beat the US incumbents.
TikTok has equalised against Facebook (which has 4 of the 5 mobile apps with 2bn+ downloads in its stable) within just a few years. With a pay-to-play go-to-market and a superior product, TikTok has done the impossible. Discovery-lead, hyper-personalised experiences are what consumers are demanding and we are seeing the dawn of a new age.

The Age of Discovery is here and it poses the biggest threat to incumbent category-leading consumer apps in a generation.

TikTok as a category killer

There are many differences between TikTok and everyone else. The biggest is its world-destroying discovery-native architecture.

Facebook (NASDAQ: META) and its limbs have enjoyed relative incumbency for a decade since crushing MySpace, Google+, and others. It has been able to copy features and leverage its superior distribution with Snapchat Stories, etc. until TikTok has come along.

With its discovery-native, fresh short-form video it has blitzed Facebook and Instagram to become the most-consumed social mobile app globally. "Data is the new oil" used to be true. Oil is a state of potential and becomes useful when you feed it into a powerful engine; TikTok’s discovery algorithm.
All incumbents should see this as a warning that even the enormous distribution advantages and the gravitational pull of market leadership can be overcome with a discovery-native application.

What is Discovery?

TikTok’s ‘For You’ is a magical consumer experience. There is a magic - a wow - to discovering something you didn’t know existed. It’s the serendipity of your favourite song coming on the radio, which generates greater overall joy than just searching for the song and putting it on. The wonder and awe of discovery is a plainly superior customer experience.

TikTok's recommendation algorithm uses data collected from users' interactions, device settings, and usage patterns to personalise video recommendations. A complex machine learning algorithm is used to analyse the data and takes into account various factors such as the video type, hashtags, popularity, and trending. The use of AI allows the algorithm to adapt and improve recommendations over time, and deep learning helps identify patterns and suggest fresh, engaging content.

Instagram is still search native, as hashtags were a legacy solution to solve for poor metadata around content tagging.

Overall, both Facebook and Instagram's recommendation algorithm focuses on personalising content for users, but TikTok's algorithm places a heavier emphasis on the content itself and its engagement metrics. For Facebook and Instagram, this can result in less discovery and a feed that's more cluttered with sponsored posts.

‍The Instagram Explore page just doesn’t yield the same experience as TikTok’s discovery engine.

The Age of Discovery Dawns in E-commerce:

Unsurprisingly, Chinese consumer internet companies have taken the discovery-first principles of platforms like Douyin and TikTok and leveraged them for e-commerce. If discovery is superior to search in social, why wouldn’t it be in commerce? Especially since China has led the way in social commerce with the likes of PinDuoDuo and facilitated the rise of Commerce as a form of entertainment.

Shein is a Chinese fast fashion brand that has leveraged a powerful discovery and real-time recommendation engine to barnstorm its way into the lucrative US fast fashion market. Knocking off incumbents like Zara and H&M is no small feat and shows the supremacy of discovery spreading beyond China and beyond social media.

Part of its popularity and speaking to the fusion of discovery social and discovery commerce is its rapid raise to become the dominant shopping haul Hashtag on TikTok:

On the other hand, Amazon (NASDAQ: AMZN) or Zara or pretty much any major western e-commerce experience is a search bar with quick links to products below; no discoverability.

More recently, Temu, a Chinese social commerce platform, has launched in the US and exploded onto the charts, becoming the most downloaded Shopping app in all the app stores in the US during peak shopping season.

Just this week, they bought a primetime Super Bowl Ad and have kicked off a battle for discovery in America. We are entering a new age in commerce.

Discovery is a 10x better product experience as TikTok, Shein and Temu have shown. The leading consumer apps of the next decade will become hyper-personalised and discovery-native. For example, grocery apps recommend lists and meal plans based on the age and type of purchaser, or restaurant recommendations based on prior order history.

Long live the Age of Discovery.

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Stew Glynn
General Partner

Stew Glynn is the Managing Partner & Co-Founder of TEN13. A co-investment platform that provides sophisticated investors access to exciting private early-stage technology deals.

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