In a real statement of the current digital age, a business that’s in the business of aggregating 15-second dance videos capturing the attention of over a billion people is getting married to an aging software, once demigod, who themselves are still trying out their own dance moves – the WTF moment, think Mick Jagger tying the knot with Miley Cyrus – and you get an idea what’s coming. Oracle has seen near-zero revenue growth over the past decade. The firm needs its new database and cloud model to replace its declining hardware sales. Once run by one of the world’s smartest Entrepreneurs, Oracle is the example of what happens when you stay too long in the game without reinventing yourself. Like Mick Jagger, you are still in it because of who you were, not what you are. They are also becoming a pawn in a political game between the US and China. TikTok remains the latest epicentre of squabbles between Donald Trump and Xi Jinping and were it not for the surveillance intrusions and economic battlegrounds it might even be funny. Thinking of Trump and Jinping duking it out over dance videos stirs quite the image.
Zhang Yiming, the owner of TikTok’s parent company ByteDance, hardly bargained for this level of scrutiny when he launched the app in 2017. He is a successful and serial content entrepreneur who makes major changes any time ByteDance becomes the focus of social or economic reprimand. He has created platforms in China, Japan, the US, Brazil, India, Indonesia, and more. Yiming is familiar with the challenges of global entrepreneurship but this time it’s different.
Yiming finds himself in the middle of an “eye for an eye” game that the US is currently losing. Google, Facebook, YouTube, Twitter, Reddit, Wikipedia, WhatsApp, and a few more recognizable names were all kicked out of China mostly for censorship reasons and Donald Trump is in need of political clout. A tough stance on a popular Chinese corporation grabs attention and appeals to the fan base. TikTok and Yiming need an ace in the hole as the US provides at least 80 million customers and that ace is Oracle.
TikTok’s PEST Analysis
For all the complexities and intricacies of global political discourse, a simple entrepreneurs PEST analysis might have raised the problem earlier. The first two pillars, political and economic, would suggest that if you’re going to commandeer the attention of roughly 64 million 16 to 34-year-olds in the US, you’re going to raise a few eyebrows. Especially if you come from China, Trump’s fall guy.
TikTok has met resistance before though. In India, they were banned, then they weren’t, then they were again largely due to political issues. The legal route for resolution takes time and appears dubious at best. The centerpiece of the ban revolved around capturing user data and that at any moment the Chinese government can legally request this data. Owing to earlier end-user controversies with its first app, ByteDance agreed to be more cooperative with the Chinese government giving preference to communist party members in its hiring. Of course, it was going to be a sticking point down the line. In a lesson to early entrepreneurs, current decisions always have future implications.
Presumably, Yiming hasn’t personally offended Trump so there are always more moves to make. Microsoft talked a big game. Offering to purchase the app and make sweeping changes across the whole platform appeases Trump’s “very American” desired ownership but this isn’t how Yiming sees it. An outright forced sale is not his preference and frankly, under the threat of a barely legal ban. Law has seldom come into it for that matter. Certain companies were leaked as potential suitors, likely just to create flutters in stock market prices but what Yiming wanted was a strategic alliance. A Roger Murtaugh to his Martin Riggs for the Lethal Weapon fans. He needed a partner that ticked all the optic boxes and gave the people what they wanted. He found it in Oracle’s, Larry Ellison.
Ellison and Yiming – Two Dynamic Entrepreneurs
Murtaugh was a Vietnam vet cum LAPD officer paired with the enthusiastic Riggs. He regularly declared himself “too old for this s***” when things got crazy. Ellison is the right man in the right place at the right time. It’s hard for me to imagine that Ellison, 76, is an avid TikTok user but for many entrepreneurs, an ally just strengthens where you are weakest. Oracle was founded in 1977 in California and made their money selling database technology and cloud systems. Their first customer was the CIA. They also had a successful US IPO in 1986 which TikTok appears to be lining up. The security, software, and business sides of the deal check out.
However, it is the connections of Ellison that are the feather in Yiming’s cap. Not only is he the company director at Tesla, Oracle, and a host of other enormous firms, he is a campaign donor to none other than Mr. Trump. Regarded as the 7th richest person in the world, Ellison is a strong candidate to have in your corner when you need a pardon. Oracle and Ellison bring quite the resume to the table but why TikTok? Well much like Murtaugh and Jagger, he is in need of some wild excitement. Oracle has stagnated in recent years but with the pandemic afoot, perhaps a new lease of life has beset Oracle. Markets and politics are throwing up some lucrative contracts and options. Possibly the biggest market winner in the midst of the madness has been Zoom with an explosion of popularity. This brought the need for enhanced security and with Ellison’s newfound innovation hunger, Zoom selected Oracle as their cloud infrastructure provider. Between the new contracts, diversifications, and averaging the perceived age profile of their clientele, Oracle seems to be on a mission to reinvent.
Zhang Yiming, for his part, is no slouch either. Perhaps not as volcanic as Riggs but he is a dynamic, youthful software developer. His appetite for entrepreneurship has caught the eye the world over long before TikTok moonwalked its way into view. English teaching apps, photo and video sharing, and news content platforms feature in his impressive ByteDance repertoire. Yiming is as modern an entrepreneur as they come. The frequency with which he attracts millions of users to his platforms has given him the confidence to engage world leaders from politics and business with ease.
It’s all or nothing for the Oracle TikTok partnership
If you supply dairy to the only two stores in town and the mayor decides to ban you, there is very little you can do and that is exactly what is happening here. That was the likely scenario facing TikTok before a deal was struck mere hours before the Sunday, September 20th, deadline.
Entrepreneurship in all quarters of the world relies heavily on forging successful partnerships. Partners open doors, fix problems, bridge skills gaps, fund projects, and generally dig you out of a hole or power your launch to the next level. TikTok is under the microscope for its security issues and the potential to leak US user information to the Chinese government. Like any other entrepreneur, they are seeking to address their perceived weakness but with the highest of stakes. From the outside, Oracle is the perfect ace in the hole. As a subcontractor to the CIA, Navy Intelligence, Air Force Intelligence, and National Security Agency and as a personal donor to Donald Trump’s election campaign, you can’t imagine a better alliance to make.
For Ellison and Oracle, it is a chance to reinvent and resurge into new markets, turning back the clock on their entrepreneurial flair. While government contracts have been the staple business model, they have led to complacency in innovation. Forging new partnerships with rising stars of the social media world puts them firmly in the spotlight for new technological innovation. Rather than being seen as one of the old guys out of place at the party, they are placing themselves as a trustworthy mentor-type figure primed for helping new modern digital start-ups soar into the stratosphere.
If it doesn’t work out, it would almost seem that the 15-second dancing videos weren’t the problem after all.