Failory - What Happened to Musical.ly?

Hey — It's Nico.

In October, I'm publishing articles analyzing various startups’ shutdowns. This week, we dived into What Happened to Musical.ly, the short-form video app that eventually merged with TikTok.

🙌 Welcome to the 508 founders who joined this week.

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What Was Musical.ly? Officially launched in August of 2014, Musical.ly was a video-based social media platform that allowed users to share and view short video clips from 15 seconds to one minute long.

Users could select from different songs to add as soundtracks to their videos, and the app helped give rise to the popular lip-sync video trend.

How Was Musical.ly Started? Musical.ly was founded by Alex Zhu and Luyu Yang, a pair of Chinese entrepreneurs who met at eBaoTech, a digital solutions provider for the global insurance industry.

The original startup idea was for a different short-form video app called Cicada, which was intended for sharing educational video content. Zhu and Yang were initially able to raise $250,000 to start working on their idea, but it never took off.

With less than 10% of their seed funding left, Zhu and Yang pivoted from their original idea and came up with a new idea for a video-based app that combined music, video, and social media.

They created the first version of Musical.ly in just 30 days, unofficially releasing their MVP in July of 2014. The official version launched the following month.

How Did Musical.ly Grow? After the co-founders made a few tweaks to the functionality of their app and pivoted towards emphasizing its lip-syncing features, Musical.ly started experiencing exponential growth.

By the summer of 2015, about a year after launching, Musical.ly was in the number one spot in the App Store, and Musical.ly’s founders were rewarded with another $16.6 million in funding from venture capitalists.

In May of the following year, Musical.ly raised another $133.5 million in funding and was valued at an impressive $550 million. By the end of 2016, Musical.ly had +130 million users, of which there were 40 million monthly active users.

What Happened Next? In late 2017, the company announced that it had been sold to TikTok’s parent company, ByteDance. According to a representative of ByteDance, these were the original plans for Musical.ly:

“Musical.ly will continue to operate as an independent platform, integrating ByteDance’s global leading [artificial intelligence] technology and leveraging its reach in China and key markets across Asia to enhance Musical.ly’s offering to users, creators, and partners.”

However, ByteDance ultimately decided that it made the most sense to consolidate Musical.ly and TikTok users into a single app, so they chose to be TikTok.

All of Musical.ly’s users and content were migrated over to TikTok, making the sudden closure of Musical.ly and its merging into TikTok a smooth transition.

Why Did Musical.ly Shut Down? The main reason why ByteDance decided to shut down Musical.ly and combine it with TikTok was to take advantage of its user base and technology.

At the time of the merger, TikTok was very popular in China but struggled to expand into foreign markets. Musical.ly had done the opposite and was very popular in international markets, especially in the United States.

So, rather than split resources between two very similar apps with different markets, it made the most sense for ByteDance to simply fuse them and combine their hundreds of millions of users into one platform.

If you're interested in learning more about:

• Musical.ly's beginnings story
• how Musical.ly worked
• Musical.ly's acquisition & shutdown

➡️ What Happened to Musical.ly?​

This week I spent some time reading various startup-related resources and selected 3 of the best:

• ​WebAcquisitions: A few weeks ago, Mushfiq Sarker launched an agency providing services related to buying and growing websites. I recently purchased their Growth Strategy and I'm very happy with the delivered work. I thought it could greatly help those looking to grow their businesses' blogs.
• ​How Lex Happened: Last week, Nathan Baschez launched Lex, a word processor with an AI built in. In 24 hours, he got +25,000 signups. In this article, he shares how he built and launched Lex.
• ​What Is Growth Hacking?: "Growth hacking" is one of the most misunderstood terms in marketing. In this post, the author busts some myths about it and provide an alternative way to approach growth.

Hope you enjoyed this week's article and curated resources ;)

Cheers,

Nico