Ep. 35: New WeChat Challengers: Duoshan, Toilet, and Bullet 2.0

25 min read 

In episode 35 of TechBuzz China, co-hosts Ying-Ying Lu and Rui Ma talk about competitors to the reigning Chinese social media champion, WeChat. Specifically, they focus on three apps that all decided to launch on Tuesday, January 15, 2019, two weeks before Chinese New Year: Bytedance’s Duoshan, Wang Xin’s self-proclaimed “anti-WeChat” Toilet, and Bullet Messenger 2.0. Following their releases, WeChat promptly blocked links to all three. Our co-hosts ask: Does WeChat have a reason to be scared? Why was it so defensive? Is there truly a chance for any of these companies to topple Allen Zhang’s miraculous creation? And if so, how would that come about?

Rui and Ying-Ying begin by giving their perspective on WeChat’s two main weaknesses. The first is its decreasing representation of young users, specifically, teenagers — a challenge that many other social networks that have been around for a while, including Facebook, also face. The second is the emergence of WeChat Moments as a battleground for user time. This development is a function of the intermingling of personal and professional relationships within one app, and the ensuing messy social graph that WeChat has accumulated.

Our co-hosts go on to explain that all three of the apps that were launched this week tried to capitalize on one of the opportunities WeChat leaves open. They describe each product in more detail, delving into them in descending probability of success. Rui and Ying-Ying’s top pick is Bytedance’s Duoshan. They discuss: In what ways has the product stayed true to its short-video roots? How accurate is the Toutiao insider description of the app as a combination of “Snapchat’s framework” plus “Instagram and Messenger’s GIF function” and “Apple Watch’s heartbeat”? Does it truly solve an organic user problem?

As for Toilet, which proudly calls itself “the social network dark web,” just how reminiscent is it of the bygone Secret app in the U.S.? What is the opportunity that its founder sees in anonymous social networking, which, in fact, already exists in China, including in QQ itself?  

In third place is celebrity-investor-backed Bullet Messenger’s 2.0 version. It has renamed itself Chat Bao (聊天宝 liáotiān bǎo) and rebranded with a new logo, an image of a smiling gold ingot. The ingot serves as an apt reflection of the app’s new positioning as a portal for poorer users who seek to make some money or find great deals. Rui and Ying-Ying argue that its main competitive advantage is its marketing and aggressive, gamified user acquisition tactics.

Listen to find out: What do Rui and Ying-Ying conclude about each of these new entrants, and why? As always, you can find these stories and more at pandaily.com. Do let us know what you think of the show by leaving us an iTunes review, liking our Facebook page, and tweeting at us at @techbuzzchina to win some swag! Thanks also to our listeners over at our partner, dealstreetasia.com.

Finally, TechBuzz listeners in the Bay Area may sign up for Silicon Dragon’s Silicon Valley event, taking place this week on January 24. You can find more information and sign up here: https://silicondragonvalley2019.eventbrite.com. Please use code SDValley2019Buzz for 50 percent off!

Transcript

(Y: Ying-Ying Lu; R: Rui Ma;)

[00:00] Y: Hi Techbuzzers! So we didn’t exactly plan it, but this episode is a sort of natural follow-up from the episode last week that focused on WeChat’s founding story, the philosophy of its creator Allen Zhang 张小龙 and the few major changes that came with version 7.0, its most significant update in a few years.

R: Yeah, you see what happened is that WeChat’s wild success over the last eight years has obviously made it a prime target for disruption. For even capturing a small piece of WeChat’s 1.1Bn monthly active users would be a great business and a great success.  

Y: So WeChat competitors have been launching with great regularity over the years, and we’ve seen efforts from all of the internet giants — Alibaba and Baidu of course, but also Netease, China Telecom, Xiaomi, Shanda… pretty much anyone you can imagine with end users and capital to spare has made an attempt, but none have been particularly successful, and some have failed spectacularly.

R: So we aren’t surprised that new competitors are coming online.  What made Tuesday, January 15, 2019 memorable though was that not just one, but three competitors launched. 

Y: Well, one of them is Bullet Messenger 2.0, so maybe we can call it two and a half competitors.

[1:25] R: But still. Why all queueing up for this particular day? The elephant in the room, the most valuable startup in the world, Bytedance, had put out news that it would be making a big new product announcement on this day. But then so did two others, well-known internet entrepreneur Wang Xin 王欣 of Kuaibo fame, and Bullet Messenger 2.0, the initial launch of which we covered back in Episode 21, is WeChat Bulletproof? 

Y: People joked that the companies must have all consulted the Chinese Lunar Calendar, and arrived at the conclusion that the fifteenth was the luckiest day. Or at least the luckiest day two weeks before the upcoming Chinese New Year holiday where the whole country will be off for a week celebrating with family and spending a whole lot of time on their smartphones and other screens. 

R: That’s just the first part of the joke. The second part is that Allen and team immediately blocked all links to these competing products. The top meme of the day showed the three founders each saying “Hey, today I am launching a new social network!” followed by a photo of Allen with a smartphone next to his lips, saying “tell the backend engineers to block them all!”

Y: Yup, they truly did, with great speed.  But does WeChat have reason to be scared? Why so defensive? Is there a chance for any of these companies to actually topple Allen Zhang’s miraculous creation? How would that come about? Let’s dig a little deeper and see.

[3:22] Y: Hi everyone! We are TechBuzz China by Pandaily, powered by the Sinica Podcast Network!

R: We are a weekly podcast focused on giving you a peek into what’s buzzing within the tech community in China.  

Y: We uncover and contextualize unique insights, perspectives and takeaways on headline tech news that don’t always make it into English language coverage. So you can be smarter about the world of China tech.

R: TechBuzz China is a part of Pandaily.com, an English language site that tells you “everything about China’s innovation.” I’m one of your two co-hosts, Rui Ma.

Y: And I’m your other co-host, Ying-Ying Lu. We’d like to acknowledge our partners DealStreetAsia and SupChina, creator of the Sinica Podcast Network! In addition to Techbuzz, you can also find Sinica which covers current affairs, NuVoices on women, the business-oriented ChinaEconTalk, and the Caixin-Sinica Business Brief from China’s leading business magazine. Check them out!

R: Also, a reminder for listeners in the Bay Area, our partner Silicon Dragon’s annual forum in Silicon Valley is taking place on January 24. Find out what’s trending from 20 leading VCs and innovators. As with last week, the event link and our code for 50 percent off is in our episode description and transcript!

Y: One last thing before we get started, if you enjoy listening to us, please take the time to leave us a  good review or rating on iTunes, Facebook or wherever you get your podcast!

[4:59] R: So, I think the best way to start is to give everyone the perspective — our perspective, anyhow — on WeChat’s two main weaknesses, which if you really think about it, are where the opportunities lie. And then we will show you how the competitors’ strategies match up with them, and if I may say so, I think they match up pretty nicely.

Y: Yeah, and the first one is pretty obvious, and it’s definitely not only WeChat that “suffers” from it, but also Facebook and many other social networks that’ve been around for a while. And that is the loss, or at least decreasing representation, of younger users, specifically teenagers. 

R: Last year, for example, a survey showed that just 51% of US teenagers are using Facebook, down from 71% just three years ago. That’s not very much at all, barely a majority.

Y: On the other end of the age bracket, over-55s are joining the network in droves and were expected to make up the second largest demographic in countries such as the UK by the end of last year. Us thirty and forty somethings still make up the largest bucket, but the fear is that if no “new blood” comes in, then you will just get a network full of silver-haired people.

[6:14] R: Not to say there’s anything wrong with that at all, but a general social network should reflect the distribution of the entire population, and not be too heavy on any particular demographic unless there is a good reason to be.

Y: Not that WeChat is heavy on seniors per se, but interestingly, the team also chose to highlight the same age group in its annual report released last week. Specifically, 63 million adults aged 55 and older were active on WeChat. That’s about 6% of WeChat’s total user count, and this coincides pretty perfectly with the projected number of total Chinese netizens for this age group, also 6%

R: It’s not the first time this age group was highlighted in the annual report, as it was broken out back in 2017.  In 2016, however, both those born post 1995 and those older than 55 were broken out, as 14% and 1% respectively, but since 2017, only the 55 and older group has been broken out. 

Y: It’s clearly the fastest growing group, going from 7 million to 63 million or multiplying by 9 times in just 2 years. But it’s still a little curious why this group and no others, was highlighted. 

[7:32] R: Whatever the reason, a recent survey of netizens aged 50 to 80 years old found that an astonishing 98.5% of them use WeChat, and not even one-third do any shopping online. This further gives credence to the saying that in China, for many people, and for this group in particular, WeChat practically is the internet. 

Y: While we don’t have specific [1] numbers for WeChat’s younger user base, especially those born after year 2000, there is plenty of anecdotal evidence that these users tend to prefer or at least be more active on other platforms. Tencent’s own QQ is a very popular choice and you can find plenty of articles on “Why young people like QQ over WeChat”, Weibo is also up there, and of course Bytedance’s Douyin AKA Tik Tok, although that is not really comparable.

R: OK, so the first opportunity if you want to knock down WeChat is to focus on younger users, on which they do not have nearly the stranglehold that they have on older users. What’s the second one?

Y: The second opportunity is in reimagining WeChat Moments, which has become a battleground for user time. 

[8:46] R: On a high level, as we’ve mentioned in Episode 28 on Bytedance, the Tencent family of apps has experienced a 7% decline in the share of total time spent by Chinese internet users, with most of those losses being picked up by Bytedance. We don’t know how exactly WeChat or any particular feature in WeChat has been affected, but the topic that has gotten the most attention is Moments, or 朋友圈. 

Y: We talked about it a bit in our last episode, Episode 34, the deep dive into WeChat 7.0, about the topic of social media anxiety stirred up by the Moments feature, and how that, in part, led to the launch of a disappearing feed much like Facebook or Instagram Stories called Time Capsule. Allen felt that an entirely new way of expression, a much more private one, was needed in order to bring back the sense of authentic connection that’s been accused of slipping away from WeChat Moments. 

R: How bad is it, you ask? Other than just feeling pressured to present one’s best and most perfect self, Moments is being “abused” in other more insidious ways. A recent trending hashtag on Weibo talked about a girl who was fired from a media company because she did not re-post company news to her WeChat Moments. The comments section of this post had a lot of people expressing that they were expected to do the same. Can you imagine being fired because you did not post company related PR to your Facebook feed? And yet this is the reality for some Chinese employees.

Y: You might think it’s curious that the company would be monitoring the employee’s WeChat. But that is the reality of China, where personal and professional lives are currently very much intermingled, at least in part because culturally, a personal relationship is a necessary precedent to a business one.

[10:35] R: Which means that people identify each other as “friends” regardless of whether or not a real basis for friendship, as we would define it in the West, exists. Thus the social graph of WeChat is not just family and longtime friends, as you would expect for an app built around messaging, but also business acquaintances, clients, colleagues, and even service providers, like your driver or cleaning lady.

Y: It’s basically anyone you would ever want to or need to message, in all types of scenarios and life circumstances. It would have helped if a professional social networking product like LinkedIn was more successful in China, but despite many products, WeChat mostly performs that function.

R: With the rise of enterprise productivity tools such as Alibaba’s DingTalk and WeChat Enterprise, AKA Slack clones, we might see less bleeding over of professional contacts into the personal realm in the future, but until then, there lies opportunity in breaking down the messy social graph that WeChat has accumulated, and in addressing a niche social networking need.  

Y: As Chinese entrepreneurs [2] like to repeat, “what’s going to kill WeChat is not going to be another WeChat.”  In other words, any product with a chance of disrupting WeChat has got to have significant differences.  All three apps that were announced this week tried to capitalize on one of the opportunities WeChat leaves open. Bytedance’s Duoshan is primarily about appealing to younger users, while 马桶 MT goes for the interaction that it calls the  “anti-WeChat” Moments. And it’s remixing of the popular anonymous app a few years ago called Secret, which, by the way, I briefly worked on and which Kevin of Pandaily broke news off in China.

R: The third, Bullet Messenger 2.0, since renamed to 聊天宝, also tries to innovate on user acquisition and interaction, although in an entirely different way, by rewarding users with money for practically every interaction you can think of. Let’s go into each of these in more detail in order of descending probability of success.

[12:50] R: Hey Techbuzzers, a brief announcement here.  We want to introduce you to Pandata, Pandaily’s new database on Chinese tech companies. Pandata will give you a company’s business overview, employee count, founding date, other basic information, and of course, links to Pandaily’s existing coverage on it.  So there you go, check out Pandata, your guide to China’s tech world.

[13:19] Y: So no surprise, our first pick is Bytedance’s Duoshan. Duoshan, which literally means “much flash,” was actually launched last September on both Android and iOS under another entity, presumably for testing purposes. It was then quietly removed, officially linked to Bytedance, and re-launched on the 15th.

R: What’s important to note here is that Bytedance management insists that it’s not meant to go head-to-head against WeChat, but instead to enhance the experience of Duoyin or Tik Tok users by providing them with a way to network each other. And that is obvious from the get-go. It’s not even a standalone app — you must have an existing Douyin account to log in.

Y: We didn’t get to test the app, since the Apple Testflight pretty much filled up immediately and neither Rui nor I had an Android ready, but our colleagues at Pandaily did, and you can find many screenshots of the app online.

R: It’s got the same exact UI as Douyin / Tik Tok, since they are related apps, and it’s got 3 main tabs — which are the following: messages, camera, and discover. The ability to send video messages easily is core to the product, and true to its short-video roots. However, the video messages disappear after 72 hours, although the sender will still be able to see them, and keep it as a sort of personal photo album.

[14:48] Y: Sounds familiar? Most reviewers have likened Duoshan to Snapchat. And similar to Snapchat, Duoshan is hyper focused on young people. In fact, one of the biggest headlines of its launch was that the main Product Manager of Duoshan is a girl born in 1993, making her just 25 years old and just over half the age of WeChat’s Allen Zhang.

R: In her speech, she apparently referred to Allen as Uncle or 龙叔, which at face value is a title of respect, except that the word uncle is often used colloquially to deride someone for being very unsexy and uncool. So naturally, many people took to be a snarky remark instead of a respectful one, although if it was meant to be snarky, it did exactly what was intended to do, which is to instill doubt that Allen’s age would allow him to stay relevant with younger users.

Y: So what do younger users what, exactly? Apparently lots and lots of emoticons.  Apparently they’d rather say “I’m missing you a little bit” instead of “are you there?” And according to Douyin, they definitely want the ability to send videos to each other.  When you log on, Duoshan asks for your contact list and message history, because it wants to help you connect with your closest 150 friends, ie the magical Dunbar number. And they don’t want you to have pressure when doing so, so there is no ability to “like” a post, because that would create anxiety.  

R: Honestly, I find this a bit self-contradictory, because it’s precisely in the teens and 20s age group, before the real world completely takes over, that stranger social networking is most popular, since one’s real life circle is mostly limited to classmates and one has a lot of time to make new friends. It’s one of the main reasons why this age group likes QQ over WeChat, because it is easier to discover and make new friends.

[16:50] Y: And as others have noted, if it’s really 熟人社交, or only messaging one’s close friends, which implies a high frequency and density of information, is doing a video really the best way to communicate, over photos, text or voice? It’s true that most Snaps are sent to friends versus posted, but is that necessarily going to tide over for video? I guess it could, you just never know what kids are into these days.

R: So what’s our verdict on this app that a Toutiao insider called the combination of “Snapchat’s framework” and “Instagram and Messenger’s GIF function” and “Apple Watch’s heartbeat”? By the way, I don’t really get that Apple Watch reference but it is true that youth in China are obsessed over GIFs, and regularly engage in GIF battles, or 斗图, and Duoshan’s auto-GIF suggestion function does seem really fun from the screenshots I can see. 

Y: Well, I think our verdict right now is that no, Duoshan does not provide a real threat to WeChat. Maybe the ephemeral messages really will alleviate social pressure on the target young users and to encourage them to share their true state. But mostly, the product does remind us most of Snapchat, and it’s unclear, based on how Snapchat has been doing, that that’s a wise strategy in the long run. 

R: Maybe with Douyin as the main source of traffic and as overarching ecosystem Duoshan can do better than Snapchat, and as the management has stressed, that’s the thinking behind this product.  But I do think that the way the product has been designed, it seems to be mostly either plugging holes in, or fortifying Douyin versus really trying to solve an organic user problem. For me, I am siding with Uncle Allen on this one and giving him my vote.

[18:40] Y: Honestly, for the second place app, it’s pretty close. They are both equally bizarre, but we will pick Toilet or 马桶MT, the self-proclaimed “anti-WeChat.” Why’s it called Toilet? Because the founder was inspired by an Andy Lau pop song that sang of the toilet as something that “everyone has, and will flush all your troubles away and therefore … every toilet is a friend.”

R: The story behind Toilet is that the founder Wang Xin 王欣, who formerly started a video player named Kuaibo that was really really popular, was actually jailed for 3.5 years for disseminating pornographic content. He was released in early 2018. So you’d think that he would be very much aware of content restrictions in China and not try to test the boundaries too much, having been caught and punished once.

Y: But nooo, he has created Toilet to be the anti-Wechat and calls itself the social network dark web. 人脉暗网. He’s not exactly referring to the Dark Web, the criminal and illegal one, but he’s using the same Chinese words, and it just sounds creepy.

R: His slogan is that “whatever you cannot see or hear on WeChat, or maybe even content that has been deleted, can appear here,” in Toilet. I don’t know if he’s missing his time behind bars or what, but this seems like a surefire way to get back behind them.

[20:15] Y: So it’s basically an anonymous social topic tool that allows users to discuss anything using pictures and text. If you’re interested in the content posted by other users, you can chat one-on-one with them.  His philosophy is exactly opposite to Duoshan’s, in that he believes WeChat has a stranglehold on close friend social graphs, and that the only available opportunity is in stranger social networking.

R: Aside from being anonymous, there is really nothing too special about Toilet. You log on and you aren’t given a nickname but a dynamic ID that varies depending on the chatroom you join, just like in the old Secret app.

Y: And actually in China, you can’t really ever be anonymous because all services require you to use real name registration meaning they have your ID card on file. So whatever you say, can and will be traced back to you.

R: Anonymous chat still does exist in China though, including in QQ itself. But it’s just always been a breeding ground for trolls and troublemakers. Besides, even if this product takes off, what monetization model can it support? 

[21:25] Y: I guess we won’t know for a while. The launch was pretty botched, with users complaining of slow service and inability to receive verification codes. We’re going to rank this as a no threat to WeChat. 

R: In third and last place is Bullet Messenger 2.0, now renamed to 聊天宝, or translated as Chat Treasure. If you remember from our episode on it, it has a celebrity investor 罗永浩 who has a lot of rabid fans who follow his every move, and its core innovation when it launched was very quick voice-to-text, although it doesn’t even own that technology.

Y: You could argue that its main competitive advantage is its marketing and aggressive user acquisition tactics. Which explains why it’s relying on gamification — specifically, paying users to do tasks — to grow its user base. 

R: Yeah, the new logo, instead of the original bullet, is a smiling gold ingot. It’s basically designed to appeal to poorer users who are not trying to be hip or cool, but just want to make some money or find some great deals. Remember in the past we have talked about the greater trends in China of consumption upgrade or trickle-down? Well, this one is definitely riding the trickle-down bandwagon.

[22:46] Y: Which makes its new product features pretty easy to understand. Because it’s taken the two most successful examples of consumption trickledown – social shopping app Pinduoduo, and news app for third tier cities and below Qutoutiao, and incorporated that into the app. You can earn virtual currency by buying goods on 好东西, a partnership with Pinduoduo within the app’s shopping function, or by spending time reading its news section. 

R: Those of you who listened to our episode on Bullet 1.0 are probably confused. Wasn’t Bullet supposed to be a super-efficient messenger, especially for workplace productivity purposes? Didn’t the CEO want to basically make it like a Telegram? How did it turn into this gamified, almost quest-based virtual currency earning app that’s really the opposite of productivity and all about time spent within the app?

Y: We couldn’t tell you. Celebrity investor 罗永浩, the face of both Bullet and Smartisan smartphone, has been under a lot of stress recently, with constant rumors of Smartisan being on the verge of bankruptcy. And Bullet 1.0 has, for the most part, gained no traction at all after the first few million users. This seems like a last ditch effort, a Hail Mary.

R: So same verdict as for Toilet. We don’t see Bullet 2.0 becoming a viable competitor to WeChat. Maybe it survives a bit longer than Toilet because it’s not wading into sensitive territory, but this hodge podge of functions doesn’t really make sense. 

[24:22] Y: Maybe some rural users with a lot of free time will care about the two cents you make every half hour of reading the news, but I certainly can’t imagine doing that. I’m not exaggerating. At the current publicized exchange rate of virtual currency to RMB, that would literally only make you not quite 2 cents. Anyway. So what did we learn this week, Rui?

R: Well we started off talking about the two key opportunities for new entrants to China’s mobile messaging space, which are really the flip side of two of WeChat’s current weaknesses. The first is how to engage and retain younger users, especially teenagers, because we already see in the West that Facebook, for example, is bleeding young users.

Y: The second is the battle for user time, especially on the social networking side, which for WeChat is primarily in WeChat Moments. Moments straddles the world of private and semi-public social media, because WeChat’s social graph is both personal and professional, includes both close friends and weak contacts, and does neither super well right now. In fact, this is behind one of the key changes in 7.0, the Time Capsule functionality.

[25:35] R: Then we looked[3]  at each of the 3 competitors who launched on Jan 15 and ranked them by their threat level to WeChat.  All of them, at least in their current iterations, don’t seem to pose much of a threat, but they are, in order, Bytedance’s Duoshan, Wang Xin’s Toilet, and Luo Yonghao’s Bullet 2.0, or Liaotianbao.

Y: Duoshan at least is pointedly going after the young user market with their video-heavy messaging app. Videos only live for 3 days before disappearing to the viewer but is always available to the sender. The app is most similar to Snapchat, and our main beef with it is that it seems to be designed to enhance Douyin AKA Tik Tok rather than solve an organic user problem. But it definitely has the best chance of survival and may even succeed, although in its current form, it’s not gonna topple WeChat.

R: As for the other two apps, their positionings share even less of an overlap with WeChat from the get-go. We don’t foresee either Toilet’s anonymous “dark web” social network or Bullet 2.0’s incorporation of Pinduoduo and Qutoutiao to be at all a threat to WeChat. Toilet runs the risk of dying a very very quick death, and Bullet 2.0… well I question if 3.0 will ever come.

Y: Have you tried these apps? Do you agree with our assessment? Tweet at us, vote in our Twitter poll, or write to us and let us know!

[27:13] Y: OK, that’s all for this week folks! Thanks for listening. As a reminder, our episodes will now be available every Friday instead of Wednesdays. We really enjoyed putting this together, and we are always open to any comments or suggestions. You can find us on twitter at thepandaily, at techbuzzchina, and my personal Twitter account is GINYGINY.

R: And my Twitter is spelled RUIMA. We’ll be back here the same time next week.TechBuzz China by Pandaily is powered by the Sinica Podcast Network. Pandaily.com is an English language site that tells you “everything about China’s innovation.” Our producers are Shaw Wan and Kaiser Kuo.

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