Lemon8: ByteDance's New App
Netflix is getting into live content, Duolingo crushes earnings, and an updated "How Couples Met" chart.
If you missed it, last week I wrote about Spotify’s new feed and how it could completely change its product and business model. If you’re feeling adventurous, my tweets about the redesign got picked up by outrage Twitter. Some of these quote tweets are wild!
Today, we’re digging in to Lemon8, a new ByteDance app that just launched in the US. Netflix is hosting its first ever live stream this upcoming Saturday, and we’ll take a look at an updated 2021 version of the famous “How did couple’s meet” chart and how Duolingo grew 4.5x over the past 4 years and crushed its Q4 ‘22 earnings earlier this week.
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ByteDance Launches Lemon8 in the US
TikTok’s parent company Lemon8 (pronounced “Lemonade”?) has just landed in the US. This will look very familiar to anyone who follows Xiaohongshu in China or Pinterest in the US.
Lemon8 reportedly passed 1 million downloads in Japan mid-2022, and is currently #22 overall in the iOS App Store in Thailand. After seeing success in Asia, why would ByteDance launch Lemon8 in the US if it already has TikTok? And the app has been around since March of 2020, why did it wait three years?
Xiaohongshu (also called Little Red Book) is one of the largest commerce platforms in China. It features content primarily created around product reviews and research, and is estimated to have 15% of China’s total ecommerce market. Last I heard was more than 200 million Monthly Active Users (MAUs), primarily females with high incomes. This lends to selling things like beauty, fashion, food, travel, and home and luxury goods.
Lemon8 is simple and clean, with zero points awarded for creativity. To an American, the core product is most similar to Instagram. The biggest difference being more room for descriptions, which means the content feels like blog posts more than photo uploads. As of now, I believe they paid influencers to seed the app with content, and I think it’s possible the Lemon8 team is actually running at least some of the accounts.
I don’t sense any product or growth hooks, so my guess is they’ll brute force things initially by paying influencers to create content. CapCut’s success has proven TikTok is an effective channel to promote other ByteDance products. We may see them experiment integrating Lemon8 with TikTok, similar to the “Made with CapCut” button that’s driven it to the top of the app store (example below).
ByteDance is currently battling Xiaohongshu, or Little Red Book, in China. LRB has always been a large player in the Chinese consumer social and ecommerce space, but it emerged from the pandemic as the best channel for influencer marketing. And ByteDance needs a similar product in the US.
While TikTok continues pushing into current events, trends, and live streaming, Lemon8 heads in the opposite direction. Evergreen reviews, lifestyle content, text, and photos starts eating into the use cases of Reddit, Instagram, and Pinterest. It positions those use cases more for Gen Z compared to the RIP’s built around millennial behaviors. It’s also possible ByteDance sees Lemon8’s informational blog posts as both an extension of its initiatives in Search and/or the checkout destination for TikTok and its other media properties.
This is all beneficial for ByteDance’s merchants: it gives it more scale and the ability to sell a broader array of products. It enables product categories that don’t work as well on live and faster-moving ecommerce, but have high prices and margins that it would love to capture.
It’s still super early for Lemon8 in the US. It doesn’t rank in the app store, which means it’s likely getting less than a thousand downloads per day. But there seems to be a press push, which hints ByteDance wants to start scaling it.
🚀 Product Launches
Netflix To Air Live Special with Chris Rock: In its first ever foray into live content, the Saturday, March 4th special (6:20pm PT) will feature star-studded pre and post-show specials. This list includes Kevin Hart, Leslie Jones, Amy Schumer, Cedric the Entertainer, Jerry Seinfeld, Matthew McConaughey, Paul McCartney, Sarah Silverman, Wanda Sykes, Ice-T, David Spade, and Dana Carvey.
Netflix has said for years it doesn’t want to get into live. But it said the same about advertising, which it’s dove head first into as subscriber growth plateaued last year. My guess is this live special helps with subscriber acquisition and retention, but is also essential to differentiate the ad business and get more marquee advertisers on board that can really open their check books.
Snapcaht Launches “My AI”, Powered by ChatGPT: For now, the new AI assistant is only available to Snapchat+ subscribers.
LinkedIn Launches Ad Targeting: Wild to me this didn’t already exist. But if you run B2B-focused ads, probably worth giving LinkedIn’s new targeting a shot.
🔗 Links and Charts
Burn Multiple Benchmarks by Size: This was a great slide from ICONIQ on Burn Multiple benchmarks by size. If you’re not familiar with the Burn Multiple, low numbers are better. It measures a) total capital burned to add b) new revenue. Or simply, (a) divided by (b).
Q4 was the slowest pace of venture deployment since Q1 of 2018 according to data from Carta. Anecdotally, I’m seeing activity pick-up again, but my guess is this isn’t reflected in the data until Q2 or even Q3 of 2023.
This has been the 4th fastest rate hike on record: At least since 1971. If you’re new around here, generally speaking lower interest rates make asset prices go up. And (all things considered) the riskier than are, the higher they’re priced. On the opposite end of the spectrum, higher interest rates lead to lower asset prices, especially if they’re considered risky.
TikTok Experiments with Live Trivia: If you remember HQ Trivia from 2018, it borrows some of the same elements, but candidly did not have the same energy. Nick Gallo on the early HQ team shared his takeaways on TikTok’s first live trivia event last Thursday.
At Banana, we think there’s still opportunities to build large internet media platforms on top of live. If you’re building something in this space, we’d love to learn more. Please reach out!
ByteDance’s Lark Passes $100 million in ARR: The Slack-like tool was developed internally, and is an all-in one workplace communication platform that combines everything from email, messaging, document storage and management, spreadsheets, to calendars. Slack had $900 million in ARR when Salesforce first offered to acquire it for $28 billion in January of 2021.
I tried it three years ago and wasn’t specifically impressed. It does look like they’ve cleaned it up, so I’m curious to know who the customers are. I’m not sure if this is still a selling point, but they had a slick “automatic multilingual auto-translation” feature that could make a ton of sense for a global company like ByteDance, and explains why they built Lark internally in the first place.
Indian Quick Commerce App Zepto Launches Farmer App: Zepto Bloom will digitize everything from planting, to selling, and payment collection. Currently, over 50% of Zepto’s volume comes from fruits and vegetables. This gives it better control of its supply, and also creates an opportunity to build more tools for farmers, which should both lead to higher margins over time.
Average Credit Score in the US: There’s a stark break between the North and South. The strongest determinant is health-related medical debt, which can show up in in things like Medicaid coverage, income levels, and race. h/t Sheel Mohnot.
How Couples Met (2021): The famous chart, which samples just under 3,000 heterosexual Americans, now updated through 2021. The 5% rise in “Met in Bar or Restaurant” is most likely attributable to first dates after meeting online. This would mean 60% of new heterosexual couples in the US in 2021 met online. Looking at same-sex couples, the survey showed 65% met online (in 2019), and 0% at church since 2014.
This chart depresses me every time I see it. At least it appears to have bottomed-out since I shared it a few months ago!
On the auto front, NY-based dealer Paragon Honda added $53 million in annual revenue by providing vehicle pickup & delivery for maintenance service customers. Paragon has a total of two locations, meaning this added $25 million in revenue per store, and probably a nice boost to margins. h/t Car Dealership Guy for this wild stat.
China’s share of auto exports up 4x in two years: Most of this share has been taken from Germany and Japan.
China’s Debt Problem: Total municipal debt in China has grown almost 8x over the past 12 years. This is something to watch, especially as rates continue rising.
📚 Long Reads
How Duolingo Reignited User Growth: Duolingo reported its Q4 ‘22 earnings on Tuesday, February 28th. All KPI’s - revenue, user growth (DAUs grew faster than MAUs), and paid subscribers - accelerated over 2021. Revenue grew 42% and it reported a 15% free cash flow margin. Related to our Spotify piece last week, it increased paid subscriber penetration from 6.2% to 7.8% of MAUs. All fairly impressive, especially considering the current landscape of consumer tech.
The piece dives into some of the product changes Duolingo made over the past few years to see DAUs grow 4.5x over four years, and 62% in the past year. And if you want more, here’s another post on how they reactivated stagnant users.
Bain’s 2023 Global Private Equity Report: Lots of interesting charts in here, this one probably the most interesting to me.
Designing a 10-Star Experience with Brian Chesky: This is one of the better interviews I’ve listened to. Great story telling all the way through.
💼 Career Services
Banana Talent Drop #12 just went live this week! A Software Engineer at Meta joined to jump into a generalist early stage role, and we added multiple data scientists and two current Head of Product’s to the collective.
The Banana Talent Collective now has 220+ candidates hailing from the companies below + more. (As always, if you're at a Banana portfolio company, reach out for access).
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