O'Leary's TikTok Bid: Crowdfunding for Rich People

BY KIT EATON @KITEATON

The curious bidding war around TikTok just got more interesting: Meet "Mr. Wonderful's Plan to buy TikTok." Canadian entrepreneur Kevin O'Leary is touting a crowdfunding effort to stump up the $20 billion to $30 billion he thinks will be needed to buy the social media site, which faces a U.S. ban or forced sale after Congress acted on concerns that its Chinese parent company, ByteDance, could pose national security risks to U.S. users.

O'Leary suggested the idea of buying TikTok back in March during a Fox News interview, remarking, in his customary straightforward style, that TikTok was "not going to get banned because I'm going to buy it." O'Leary's plan joins the queue: Earlier this month, billionaire former L.A. Dodgers owner Frank McCourt also said he was going to launch a crowdfunded "people's bid" to save TikTok. And Bobby Kotik, former CEO of gaming giant Activision, also said he'd be interested in the site. Meanwhile, TikTok continues to run its business as usual, and has joined other plaintiffs suing the government to overturn the ban-or-sale law. What on earth is going on?

In an Instagram video yesterday, O'Leary said he's going to spend the week talking about TikTok. "As you know, Congress has passed a law. Within 270 days, TikTok has to sell itself into U.S. interests, so that its user data is not seen by the eyes of foreign adversaries. I think we've got to democratize the whole platform, make it a platform for Americans," O'Leary explained. His post includes a link to wondertiktok.com, and includes a note that "It's time to make TikTok WONDERFUL️ again." 

That link takes you to a page on StartEngine, a crowdfunding site that says it lets "everyday people" invest and buy shares in "startups and early-stage companies." The page explains exactly why TikTok is of interest to O'Leary: It has more than one billion active users and a "revenue stream around $16 billion last year in the United States," making it the "fifth-biggest platform on the planet." The StartEngine page has a system to let you "reserve" your interest in investing in TikTok, and is careful to note that it's not accepting payments right now.

So far, so good for the "Wonder" plan. O'Leary is a very well-known and popular public figure, thanks to years on the panel of hit show Shark Tank, and he's evidently a canny businessman who knows how to run a successful business or two, or 20, or 30. As a media figure, he's also savvy about using social platforms, which could broaden the appeal of a crowdfunding scheme.

But, as news site Business Insider points out, his "crowdfunding" effort is not necessarily like a Kickstarter or Patreon-friendly effort. Instead, because of the way it's set up, it might be subject to strict U.S. "qualified investor" regulations that "limit investors to people who earn over $200,000 or have specific finance qualifications." It looks more like crowdfunding for rich people, an effort to buy a social platform that's wildly popular here, particularly among decidedly un-rich teenagers and thousands of small U.S. businesses. This is accompanied by an avowal to reframe and "democratize" TikTok.

O'Leary's bid doesn't mention the all-important TikTok algorithm. This is the secret coding "glue" that holds the whole social network together, and drives its recommendation engine--essentially steering users to particular pieces of content on the platform. Chinese authorities have long indicated their opposition to selling TikTok, and specifically said its algorithm wouldn't be allowed to fall into foreign hands. We can only assume that O'Leary plans a wonderful new algorithm, this time with a U.S. bent.

Photo Credit: Getty Images.