Investing in social media: Why does Gen Z love TikTok?

Tom Lombardozzi
3 min readMay 1, 2020

When looking at the Gen Z market, it is no secret there is one app that has taken our generation by storm, that app is tiktok.

There are a few reasons that this app is so popular and why it made a great investment for any private investor. To start, it’s simple short-form entertainment. As I touched upon in the Cloosiv piece, Gen Z is all about getting satisfaction as quickly as possible, when it comes to tiktok this satisfaction comes in the form of dopamine. Videos can be no longer than 60 seconds and are usually accompanied by music in some manner. These short videos can be addicting and entertaining, and users are spending an average of 52 minutes a day on the app getting caught up in this loophole.

Within most social media platforms, this is a common source of dopamine. However, what makes tiktok above all other platforms is it’s virality component that feeds the human brain more dopamine than any other social media app.

Let me explain. Kids these days look up to influencers, those people that have millions of followers and can do whatever they want because they have a pretty good amount of money. Tiktok has some special component of it’s algorithm that allows for any user to get hundreds of thousands of views. All you have to do is make a really good piece of content and then release it. To prove this, I made a short 15-second video about the stock market one day and got 3500 views. Not going to lie, it wasn’t a terrible feeling, and that is what every kids posting a video is trying to do. The difference between old platforms and tiktok is that kids know it’s possible to go viral on tiktok, they just have to make a good content. How hard can that be?

Tiktok unfortunately is a subsidiary of it’s parent company, ByteDance, which is valued at $70 billion. This means that there really isn’t much of an investment opportunity in tiktok itself.

It is no secret that the psychology behind why this app is so popular is the multiple features that spur dopamine within our brains. So, It’s important to remember tiktok next time a social media company approaches you for an investment. Ask yourself, does this company has enough features that produce dopamine like tiktok to succeed? If it only has one or two features, similar to instagram, it may not have enough to provide a meaningful ROI. This space is crowded and you need a homer to win.

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GZV provides startup-focused insights on the gen z market so that private investors can make better informed investments. See our website for legal disclosures.