Kik, a chat app that claims 40% of U.S. teenagers as users, announced a $50-million investment Tuesday from Chinese tech company Tencent that values the start-up at $1 billion.
Canada-based Kik plans to use the money to double its workforce to 200 employees over the next year, including substantial hiring in Los Angeles, as it seeks to emulate Tencent’s success in China connecting consumers and companies through chat.
Using Tencent’s WeChat app, people in China can book taxis, order food, pay bills, contact customer service representatives at other companies and play games. Kik wants to enable its users to do much the same.
Kik Chief Executive Ted Livingston offered the example of getting a coupon by scanning a code at a store and filling out a survey without ever leaving the app.
“There’s nothing new to download, nothing new to learn,” he wrote in a blog post. “Just scan, then chat. The chat app became a magic wand that empowered you to seamlessly interact with the world around you.”
Josh Jacobs, president of services, is tasked with bringing features like that to life. Jacobs, based in Kik’s Silver Lake office, has hired four people in Los Angeles since arriving this spring. They’ve been meeting with movie studios, record labels and more. Last week, Kik introduced Jam, a feature focused on linking musicians and fans.
“As we looked at making a big push, we felt this was a fantastic market for where future of media and content is going,” Jacobs said.
Kik now generates revenue through advertising and selling add-ons, like digital stickers.
The company’s new valuation is dwarfed by the $16-billion price investors put on Snapchat, a similar app that says 60% of 13- to 24-year-olds in the U.S. are users. With Snapchat positioning itself as new-age television, Kik, which is aiming to be a next-generation hub for daily tasks, considers it less of a threat. Kik's battle is with Facebook Messenger, which at 700 million users is nearly three times Kik’s size.
Livingston isn't lacking confidence, writing that out of a handful of potential competitors, only one -- Tencent -- “owns the largest Internet market in the world.” And it’s now in Kik’s corner.