Billion Dollar Unicorn Kuaishou Focuses On AI

According to a report by Zion Market research, the global digital photography market is expected to grow 6% annually from $77.66 billion in 2015 to $110.79 billion in 2021 driven by the increasing advancements within the social networking and photo sharing sites. Billion Dollar Unicorn  club member Kuaishou is already reaping benefits associated with this trend.

Kuaishou’s Offerings

Beijing-based Kuaishou was founded in 2011 by Hua Xu. It was initially set up as a mobile app that allowed people to share their photographs for graphics. Kuaishou’s photo sharing capabilities were well received in China. Inspired by the success, the company expanded into building a short video community. In less than three years of the launch of the video sharing service, Kuaishou saw more than 2.6 million daily uploads on the site. By the end of 2015, the company had a following of over 100 million users and its app was rated among the top 30 apps in the Apple store. Besides sharing short videos, it now allows users to open live streaming channels. The growth of the offerings has helped drive user base from 300 million in 2016 to more than 500 million users.

Kuaishou’s success has been attributed to its ability to connect with the rural and urban poor population in China. The video platform provides the ability to not only earn a fan following in the virtual world, but also earn money. Popular video-uploaders can make extra money through the site by sending out ads to their followers.

Kuaishou’s app is also available in the US under the name Kwai. But the app hasn’t taken off in popularity as much in the US. Meanwhile, back in China, it has benefited from the regulatory practices that have kept other tech giants out of the country. Facebook was shut out of China in 2009, but with continued pressure to deliver on user growth, Facebook is evaluating options of going back into China. Reports suggest that Facebook has been developing a software that will suppress posts from appearing in people’s news feeds in specific geographic areas to meet the demands of censorship in China.

While blocking content from being posted is not something new for Facebook, preventing content from appearing in feeds in the country is a big move. Whether Facebook will deploy the tool and its services in China or not is still undecided, but the work on the tool suggests that Facebook may be willing to compromise on its core philosophy to access the 1.4 billion Chinese user market. If Facebook were to enter the Chinese market, it may still find it difficult to uproot leaders like Kuaishou, but it will definitely give them a tough fight.

Meanwhile, Kuaishou does have to deal with local competition. Domestic competitors include Qihoo 360 Technology-backed Huajiao Live Video and Weibo-backed Miaopai.

Kuaishou’s Financials

Kuaishou is privately held and does not disclose its financials. It is expected to earn revenues through an advertising-based model supported by in-app purchases. It has raised $350 million in funding from investors including Sequoia Capital, DST, Baidu, DCM, and Tencent Holdings. Its last funding was in March this year when it raised $350 million in a round led by Tencent that valued it at $3 billion. It was valued at $2 billion at the end of 2015 when it raised an undisclosed amount.

Analysts are expecting Kuaishou to go public this year, but the company hasn’t yet confirmed any such plans. It plans to use the funds to focus on artificial intelligence.

More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.

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