"Losing billions of dollars"—Shark Tank investor Mark Cuban talks about TikTok's business shift and what's next

Mark Cuban, a Shark Tank investor, recently talked about the transformation of TikTok and how it is now gradually shifting toward commercialization. In an interview with Jules Terpak on December 17, 2024, Cuban discussed the platform's early success and the measures it had to take to become profitable. He told the Fishbowl podcast host:

"It changed, it changed the world, but when you looked at the business of it they were getting killed they were losing billions of dollars and so at some point they had to start trying to make some money."

Cuban highlighted TikTok's shift from a platform built on organic engagement and entertainment to one focused on monetization and corporate growth.

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Shark Tank investor Mark Cuban reflects on TikTok's evolution and its path forward

TikTok's early success and the shift to profitability

When Cuban first encountered TikTok, the platform was still in its early stages, having been launched as Musical.ly. Cuban emphasized the platform's initial appeal, noting:

"I remember when it was Musical.ly... I loved it because I could just turn it on and there would be 15,000 people live immediately that I could talk to. It was insane. I loved it."

However, as TikTok gained popularity, its monetary challenges began to surface. Cuban pointed out that although TikTok was famous, the app was losing millions of dollars. There was a need to turn TikTok into a lucrative platform for long-term sustainability.

The Shark Tank investor said that the platform had to evolve to be financially stable, deviating from its early and organic growth model towards a business-oriented one.

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TikTok's growing commercialization

As TikTok transitioned into a more business-focused platform, the Shark Tank investor observed a shift in its overall tone. He explained that the platform appeared "much more corporate" than it did in its earlier days. He reflected on the sense of excitement that TikTok had during its peak in 2020, saying:

"It was like another world."

However, Cuban observed that as the platform started becoming more commercialized, it lost that organic, user-driven feel. He said that the focus became more on follower engagement and monetization of content. Cuban explained how the platform, which had initially been strictly entertainment-based, became "much more corporate" with a growing emphasis on profit.

He also noted that in 2020, TikTok's algorithm played a significant role in keeping users engaged. Reflecting on how the platform's personalized content delivery was central to its rapid growth, Cuban stated:

"He who controls the algorithm wins."

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The future of TikTok and social media

In the podcast, Cuban explored the future of TikTok and social media at large, and the challenges that all platforms will face as they become more commercial. He explained that as platforms become more business-driven, the returns for both the users and the content creators begin to decline. The Shark Tank investor indicated:

"There's a diminishing return for the platform the more commercialized it gets with some exceptions for like YouTube University."

Cuban explained that he did not foresee the emergence of a new social media platform that could replicate TikTok's success. He added:

"They're all businesses...at some point if you're there to make money you have to figure out how to make money."

The Shark Tank investor stated that, although TikTok still is a leader in the space of social media, the challenge it has to deal with is the engagement of users in a market with increasing financial pressure. According to him, long-term success will depend on whether the platform can find the balance between profitability and user experience.

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