Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
All right, I want to do something completely different.
Speaker 2 (00:01):
You know, we've been following the whole TikTok thing for
a while, and TikTok is believed by many, probably including.
Speaker 1 (00:12):
Me, at least to the extent.
Speaker 2 (00:13):
That I won't put it on my phone to include
within it potential Chinese malware or spyware. And some people
who are much more expert than I am seem to
believe that that's true.
Speaker 1 (00:27):
And given the relationship.
Speaker 2 (00:29):
Between China and the United States in recent years, it's
not entirely surprising that Congress passed a law saying that
TikTok needs to either be sold to US owners or
banned in the United States of America.
Speaker 1 (00:43):
That was supposed to happen quite a while ago.
Speaker 2 (00:45):
President Trump kept extending the deadline. It was probably illegal,
but nobody's quibbling over that too much. President Trump just
signed approval for a particular kind of deal, and I
want to make sure I understand this deal and what
it means and what it doesn't mean, and what we
do know and what we're not actually sure of today.
And joining us to help us fill in those details
(01:07):
is Scott Sutton. He is CEO of the Influencer marketing platform.
Later l A T e r dot com is their website. Scott,
thanks so much for joining me here on ka Way.
Speaker 1 (01:18):
I appreciate it.
Speaker 3 (01:21):
Hey, Rosa you doing thanks for having me?
Speaker 2 (01:22):
Yeah, very very good. Hey, but one quick thing before
we get into TikTok? What is an influencer marketing platform?
Speaker 3 (01:30):
Yeah, it's a great question.
Speaker 4 (01:31):
We work with some of the biggest brands in the
world to help them connect with influencers to help promote
their products. So in our platform, they can discover creators,
they can look at their content, their historical performance, and
write out campaigns to help flow the brands. We help
creators make money and help consumers discover products.
Speaker 2 (01:51):
Gosha, I have so much to ask you about that,
so I might have to have another day to talk
about that whole the whole influencer thing I find fascinating.
Part of me kind of wants to be an influencer,
and part of me wonders about, like, are these people
just famous for being famous?
Speaker 1 (02:05):
And why does anybody care what they say?
Speaker 2 (02:06):
But we'll talk about that another day because clearly you
know what you're doing there. You got a lot of
big clients. Okay, so let's talk about the TikTok thing,
just a kind of at a bullet point level, what
do we know about what is in this deal?
Speaker 1 (02:20):
And then we'll get to what we think we know.
Speaker 4 (02:24):
Yeah, I would say you are an influencer, whether you
think it or not as an assign. But what we
know about the deal so far. You know, we had
the initial legislation from Joe Biden common and state that
we needed to split apart the app we need to
have American control. And so you know we now have
done two successive extensions.
Speaker 3 (02:43):
We're now in this third period.
Speaker 4 (02:45):
Trump signed the executive order to kind of initiate this
one hundred and twenty day process of closing the deal.
Speaker 3 (02:51):
And so how that's.
Speaker 4 (02:52):
Going to look is it's a deal value of fourteen
billion dollars. It'll give eighty percent of the ownership to
non chine entities.
Speaker 3 (03:01):
There's a wrinkle in that that a portion will.
Speaker 4 (03:03):
Be out of a Saudi fund out about Abu Dhabi,
but the investors will also include Oracle, the Murdocks, and
another syndicative.
Speaker 3 (03:13):
Adventures including silver Lake.
Speaker 4 (03:15):
So the deal will then split off a separate set
of the algorithm to be controlled by Oracle. The data
which was already split off, and the processing which is
being managed by Oracle today will continue, but they'll also
take over this algorithm.
Speaker 3 (03:30):
The profit of.
Speaker 4 (03:32):
This whole deal will be split. There's an interesting wrinkle though,
in that there will be a hefty licensing fee that'll
be paid back to ByteDance, So approximately fifty percent of
the overall profit from this new venture actually will still
go back to China.
Speaker 3 (03:46):
Yeah, so it's an interesting wrinkle.
Speaker 4 (03:49):
And then the valuation has also caused the surve Fourteen
billion is quite a low evaluation based on most estimates
for the US entity.
Speaker 2 (03:57):
Interesting, Okay, I got a few things to say about that.
When I heard four I thought it was low as well.
But when we were talking about this to begin with,
the conversation seemed to be more about somebody trying to
buy all of TikTok and not just the American asset,
So it might not Fourteen billion might not be that
(04:18):
low if half of the profit has to go or
half of the revenue has to go back to China,
so it'll be I mean.
Speaker 1 (04:26):
I don't know how profitable it is.
Speaker 2 (04:27):
I don't know what multiple to put on what number
at this point, but I'm very curious about a couple
of things. First, can you elaborate on what you said
about a Saudi or Middle Eastern investor because I hadn't
heard that until you just said it.
Speaker 3 (04:41):
Yeah, one of the investors is from the MJAX fond.
Speaker 4 (04:43):
It's it's the investors out of Saudi that were led
into the deal. So it's looking like sixty five percent
of the overall ownership will be American, fifteen percent being
with the Saudi fond, and on the remaining twenty percent
with by Dance.
Speaker 2 (04:58):
Okay, so well, I'm not a lawyer, don't know if
you're a lawyer. I thought that the original bill that
required this or that to happen with TikTok had some
limitations that whatever the deal was going forward couldn't include,
you know, some level of ongoing interaction and necessary commercial
(05:21):
involvement with the Chinese entity. And I wonder just based
on your understanding, and feel free to tell me you
haven't researched that level of detail and I haven't either,
But do you think this actually comports with the law.
Speaker 4 (05:39):
I think there were two primary concerns with the initial legislation.
One was around you know, data security, national security and
privacy and then the other was about control, which then
leads to that also. And the goal was to get
a controlling ownership.
Speaker 3 (05:56):
By a US based entity.
Speaker 4 (05:59):
And control over the algorithm, the technology, and the data
security and privacy.
Speaker 3 (06:04):
And so I think.
Speaker 4 (06:06):
In spirit we, you know, we will have accomplished that goal.
There needs to be clearly delineated separation of access to
data despite that twenty percent ownership and that fifteen percent
ownership out of Saudi, but with Oracle in the mix,
they're the ones who are you know, in charge of
governing against that kind of data security with its hosting
(06:28):
and then also controlling the algorithm from the US.
Speaker 2 (06:31):
Okay, So just to make sure I'm understanding this right,
So the US entity an Oracle will handle the technology side,
will license the algorithm, which really is the secret sauce
of TikTok. The algorithm is the thing that decides what
to show a user of TikTok next in order to
keep them addicted. So that's the secret sauce for this thing.
(06:54):
So Oracle or the entity however you want to think
of it, is going to license the algorithm and then
and then modify the algorithm in order to ensure that
all the data remains on the US servers, and that
it is not feeding stuff to China and any other
questions related to national security. So my question, I have
(07:16):
two questions for you. First, did I describe that roughly correctly?
And then more importantly, do you think that Oracle or
whoever actually has the capability to truly ensure that there
still isn't some kind of Chinese spy where embedded.
Speaker 4 (07:34):
So let's unpack it in a couple different ways. One
around the algorithm. The way it stated is that Oracle
will work to rebuild the algorithm by licensing proprietary ByteDance
underlying technology and just thinking about AI models and machine learning,
which the algorithm is just a very advanced AI and
(07:56):
machine learning model. There's the model and then there's the
data with which you train it on. And so what
will be very interesting and where I'm keen to understand
is when Oracle goes to retrain this model, will that
be with US centric data that maybe skews the model
to have a different set of characteristics.
Speaker 3 (08:16):
Rather than a globally trained model. You could think.
Speaker 4 (08:19):
About a reinforcement potentially of the US perspective or US
point of view.
Speaker 3 (08:23):
If we're only looking at US content.
Speaker 4 (08:27):
Maybe it's going to reinforce certain types of things that
Americans find more interesting than the global population found interesting.
And so, even though we have the same underlying technology,
perhaps the same algorithm, if the training data shifts, there
may be nuance ways that the algorithm shifts in its
behavior of what to suggest to different users.
Speaker 2 (08:46):
Do you think that the actual logic of the algorithm
and the true heart of the algorithm separate from the
data that is trained and will be identical to the
Chinese one? I don't mean that as a spy work question.
I just mean how it recommends separate from the training
data question. Will it be the same?
Speaker 4 (09:04):
I would say certain components of it, understanding, for instance,
what Ross finds interesting and how long you stay engaged
with certain types of content to promote additional content.
Speaker 3 (09:16):
I think a lot of that will be very similar.
Speaker 4 (09:19):
I think perhaps the way it's recommending based on the
available content. So again, if you think, if we segment
off content and I'm looking at US centric content, that
algorithm says Ross finds it's.
Speaker 3 (09:34):
Interesting, and I'm going to put it in front of him.
Speaker 4 (09:35):
But if he's already viewing US centric content, what you
see will be very different perhaps than you saw in
the past.
Speaker 2 (09:41):
Okay, so I'm just about out of time, and I
should have asked you this question before, So give me
kind of a quick answer here.
Speaker 1 (09:46):
Even though it's a big question.
Speaker 2 (09:48):
How important does this deal for I don't really care
about people watching cat videos, but I do care somewhat
about people who use TikTok to.
Speaker 1 (09:56):
Make a living.
Speaker 2 (09:58):
How big a deal, how import sortant is this for
the economy.
Speaker 4 (10:02):
I think it's incredibly important for those in the creator
economy and brands who have been leveraging this platform to
grow their businesses.
Speaker 3 (10:09):
There's TikTok merchants, what.
Speaker 4 (10:11):
Are they doing, you know, with TikTok shop tomorrow, and
there's a lot of dollars sided into secret system. One
benefit is the two successive rounds of extensions have forced
a lot of brands to become cross platform. And I
think that we'll see a growing hedging strategy from brands
and leveraging all.
Speaker 3 (10:31):
The different social networks, all the different channels, such that
if it shifts, they can adapt.
Speaker 4 (10:37):
I think, regardless of what happens, this will be a
continued source of income for brands. I think what we
don't know is how it will shift, how the strategies
to extract the most value, how to engage with audiences
will come about in a different way than it has
in the past.
Speaker 2 (10:52):
Scott's Sutton, the CEO of the influencer marketing platform Later.
You can check them out at later dot com. Scott,
that was great. I got to head you back in
the future to talk about the whole influencer thing and
that whole online ecosystem because I'm fascinated by it.
Speaker 1 (11:05):
But you're a great guest. Thanks for being here.
Speaker 3 (11:08):
Yeah, any time, Ross, thanks for having me.
All right, I want to do something completely different.
Speaker 2 (00:01):
You know, we've been following the whole TikTok thing for
a while, and TikTok is believed by many, probably including.
Speaker 1 (00:12):
Me, at least to the extent.
Speaker 2 (00:13):
That I won't put it on my phone to include
within it potential Chinese malware or spyware. And some people
who are much more expert than I am seem to
believe that that's true.
Speaker 1 (00:27):
And given the relationship.
Speaker 2 (00:29):
Between China and the United States in recent years, it's
not entirely surprising that Congress passed a law saying that
TikTok needs to either be sold to US owners or
banned in the United States of America.
Speaker 1 (00:43):
That was supposed to happen quite a while ago.
Speaker 2 (00:45):
President Trump kept extending the deadline. It was probably illegal,
but nobody's quibbling over that too much. President Trump just
signed approval for a particular kind of deal, and I
want to make sure I understand this deal and what
it means and what it doesn't mean, and what we
do know and what we're not actually sure of today.
And joining us to help us fill in those details
(01:07):
is Scott Sutton. He is CEO of the Influencer marketing platform.
Later l A T e r dot com is their website. Scott,
thanks so much for joining me here on ka Way.
Speaker 1 (01:18):
I appreciate it.
Speaker 3 (01:21):
Hey, Rosa you doing thanks for having me?
Speaker 2 (01:22):
Yeah, very very good. Hey, but one quick thing before
we get into TikTok? What is an influencer marketing platform?
Speaker 3 (01:30):
Yeah, it's a great question.
Speaker 4 (01:31):
We work with some of the biggest brands in the
world to help them connect with influencers to help promote
their products. So in our platform, they can discover creators,
they can look at their content, their historical performance, and
write out campaigns to help flow the brands. We help
creators make money and help consumers discover products.
Speaker 2 (01:51):
Gosha, I have so much to ask you about that,
so I might have to have another day to talk
about that whole the whole influencer thing I find fascinating.
Part of me kind of wants to be an influencer,
and part of me wonders about, like, are these people
just famous for being famous?
Speaker 1 (02:05):
And why does anybody care what they say?
Speaker 2 (02:06):
But we'll talk about that another day because clearly you
know what you're doing there. You got a lot of
big clients. Okay, so let's talk about the TikTok thing,
just a kind of at a bullet point level, what
do we know about what is in this deal?
Speaker 1 (02:20):
And then we'll get to what we think we know.
Speaker 4 (02:24):
Yeah, I would say you are an influencer, whether you
think it or not as an assign. But what we
know about the deal so far. You know, we had
the initial legislation from Joe Biden common and state that
we needed to split apart the app we need to
have American control. And so you know we now have
done two successive extensions.
Speaker 3 (02:43):
We're now in this third period.
Speaker 4 (02:45):
Trump signed the executive order to kind of initiate this
one hundred and twenty day process of closing the deal.
Speaker 3 (02:51):
And so how that's.
Speaker 4 (02:52):
Going to look is it's a deal value of fourteen
billion dollars. It'll give eighty percent of the ownership to
non chine entities.
Speaker 3 (03:01):
There's a wrinkle in that that a portion will.
Speaker 4 (03:03):
Be out of a Saudi fund out about Abu Dhabi,
but the investors will also include Oracle, the Murdocks, and
another syndicative.
Speaker 3 (03:13):
Adventures including silver Lake.
Speaker 4 (03:15):
So the deal will then split off a separate set
of the algorithm to be controlled by Oracle. The data
which was already split off, and the processing which is
being managed by Oracle today will continue, but they'll also
take over this algorithm.
Speaker 3 (03:30):
The profit of.
Speaker 4 (03:32):
This whole deal will be split. There's an interesting wrinkle though,
in that there will be a hefty licensing fee that'll
be paid back to ByteDance, So approximately fifty percent of
the overall profit from this new venture actually will still
go back to China.
Speaker 3 (03:46):
Yeah, so it's an interesting wrinkle.
Speaker 4 (03:49):
And then the valuation has also caused the surve Fourteen
billion is quite a low evaluation based on most estimates
for the US entity.
Speaker 2 (03:57):
Interesting, Okay, I got a few things to say about that.
When I heard four I thought it was low as well.
But when we were talking about this to begin with,
the conversation seemed to be more about somebody trying to
buy all of TikTok and not just the American asset,
So it might not Fourteen billion might not be that
(04:18):
low if half of the profit has to go or
half of the revenue has to go back to China,
so it'll be I mean.
Speaker 1 (04:26):
I don't know how profitable it is.
Speaker 2 (04:27):
I don't know what multiple to put on what number
at this point, but I'm very curious about a couple
of things. First, can you elaborate on what you said
about a Saudi or Middle Eastern investor because I hadn't
heard that until you just said it.
Speaker 3 (04:41):
Yeah, one of the investors is from the MJAX fond.
Speaker 4 (04:43):
It's it's the investors out of Saudi that were led
into the deal. So it's looking like sixty five percent
of the overall ownership will be American, fifteen percent being
with the Saudi fond, and on the remaining twenty percent
with by Dance.
Speaker 2 (04:58):
Okay, so well, I'm not a lawyer, don't know if
you're a lawyer. I thought that the original bill that
required this or that to happen with TikTok had some
limitations that whatever the deal was going forward couldn't include,
you know, some level of ongoing interaction and necessary commercial
(05:21):
involvement with the Chinese entity. And I wonder just based
on your understanding, and feel free to tell me you
haven't researched that level of detail and I haven't either,
But do you think this actually comports with the law.
Speaker 4 (05:39):
I think there were two primary concerns with the initial legislation.
One was around you know, data security, national security and
privacy and then the other was about control, which then
leads to that also. And the goal was to get
a controlling ownership.
Speaker 3 (05:56):
By a US based entity.
Speaker 4 (05:59):
And control over the algorithm, the technology, and the data
security and privacy.
Speaker 3 (06:04):
And so I think.
Speaker 4 (06:06):
In spirit we, you know, we will have accomplished that goal.
There needs to be clearly delineated separation of access to
data despite that twenty percent ownership and that fifteen percent
ownership out of Saudi, but with Oracle in the mix,
they're the ones who are you know, in charge of
governing against that kind of data security with its hosting
(06:28):
and then also controlling the algorithm from the US.
Speaker 2 (06:31):
Okay, So just to make sure I'm understanding this right,
So the US entity an Oracle will handle the technology side,
will license the algorithm, which really is the secret sauce
of TikTok. The algorithm is the thing that decides what
to show a user of TikTok next in order to
keep them addicted. So that's the secret sauce for this thing.
(06:54):
So Oracle or the entity however you want to think
of it, is going to license the algorithm and then
and then modify the algorithm in order to ensure that
all the data remains on the US servers, and that
it is not feeding stuff to China and any other
questions related to national security. So my question, I have
(07:16):
two questions for you. First, did I describe that roughly correctly?
And then more importantly, do you think that Oracle or
whoever actually has the capability to truly ensure that there
still isn't some kind of Chinese spy where embedded.
Speaker 4 (07:34):
So let's unpack it in a couple different ways. One
around the algorithm. The way it stated is that Oracle
will work to rebuild the algorithm by licensing proprietary ByteDance
underlying technology and just thinking about AI models and machine learning,
which the algorithm is just a very advanced AI and
(07:56):
machine learning model. There's the model and then there's the
data with which you train it on. And so what
will be very interesting and where I'm keen to understand
is when Oracle goes to retrain this model, will that
be with US centric data that maybe skews the model
to have a different set of characteristics.
Speaker 3 (08:16):
Rather than a globally trained model. You could think.
Speaker 4 (08:19):
About a reinforcement potentially of the US perspective or US
point of view.
Speaker 3 (08:23):
If we're only looking at US content.
Speaker 4 (08:27):
Maybe it's going to reinforce certain types of things that
Americans find more interesting than the global population found interesting.
And so, even though we have the same underlying technology,
perhaps the same algorithm, if the training data shifts, there
may be nuance ways that the algorithm shifts in its
behavior of what to suggest to different users.
Speaker 2 (08:46):
Do you think that the actual logic of the algorithm
and the true heart of the algorithm separate from the
data that is trained and will be identical to the
Chinese one? I don't mean that as a spy work question.
I just mean how it recommends separate from the training
data question. Will it be the same?
Speaker 4 (09:04):
I would say certain components of it, understanding, for instance,
what Ross finds interesting and how long you stay engaged
with certain types of content to promote additional content.
Speaker 3 (09:16):
I think a lot of that will be very similar.
Speaker 4 (09:19):
I think perhaps the way it's recommending based on the
available content. So again, if you think, if we segment
off content and I'm looking at US centric content, that
algorithm says Ross finds it's.
Speaker 3 (09:34):
Interesting, and I'm going to put it in front of him.
Speaker 4 (09:35):
But if he's already viewing US centric content, what you
see will be very different perhaps than you saw in
the past.
Speaker 2 (09:41):
Okay, so I'm just about out of time, and I
should have asked you this question before, So give me
kind of a quick answer here.
Speaker 1 (09:46):
Even though it's a big question.
Speaker 2 (09:48):
How important does this deal for I don't really care
about people watching cat videos, but I do care somewhat
about people who use TikTok to.
Speaker 1 (09:56):
Make a living.
Speaker 2 (09:58):
How big a deal, how import sortant is this for
the economy.
Speaker 4 (10:02):
I think it's incredibly important for those in the creator
economy and brands who have been leveraging this platform to
grow their businesses.
Speaker 3 (10:09):
There's TikTok merchants, what.
Speaker 4 (10:11):
Are they doing, you know, with TikTok shop tomorrow, and
there's a lot of dollars sided into secret system. One
benefit is the two successive rounds of extensions have forced
a lot of brands to become cross platform. And I
think that we'll see a growing hedging strategy from brands
and leveraging all.
Speaker 3 (10:31):
The different social networks, all the different channels, such that
if it shifts, they can adapt.
Speaker 4 (10:37):
I think, regardless of what happens, this will be a
continued source of income for brands. I think what we
don't know is how it will shift, how the strategies
to extract the most value, how to engage with audiences
will come about in a different way than it has
in the past.
Speaker 2 (10:52):
Scott's Sutton, the CEO of the influencer marketing platform Later.
You can check them out at later dot com. Scott,
that was great. I got to head you back in
the future to talk about the whole influencer thing and
that whole online ecosystem because I'm fascinated by it.
Speaker 1 (11:05):
But you're a great guest. Thanks for being here.
Speaker 3 (11:08):
Yeah, any time, Ross, thanks for having me.
The Ross Kaminsky Show News
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