What you need to know
Tan's reaction video app is turning heads and winning awards.
ReCactus CEO Bernard Tan just can’t stop winning.
The Sydney-born kid of Hong Kong and Malaysian parents this morning picked up the winner’s award at RISE Breakthough, a competition for aspiring startups from around Asia, beating out seven other Asian cities as Taipei’s representative.
It was ReCactus’ second award in as many months, following victory at the 2018 Infinity Ventures Summit in June. That win came with a 1 million yen (US$8,900) prize, this one with a trip to Web Summit in Toronto.
And it’s easy to see why judges and audiences, both of whom voted in the RISE competition, are enamored with Tan. He has an endearing shyness that takes the edge of the intensity with which he delivers an extremely well honed pitch – one that others in the space, in Taiwan and beyond, would do well to study.
It’s a strong pitch not just because Tan delivers it with poise and passion, but because ReCactus has an inviting proposition that works from front to back; growth potential to monetization.
The platform allows you to seamlessly record, edit and share responses to video, either to its own social media or to Facebook, Instagram and the like.
The premise is that, as with digital advertising dollars, social media interactions are going to shift to video.
Advertising measurement company Zenith Online estimates that global online video advertising spend will hit US$32 billion this year, while overall internet ad spending will exceed that on TV spots by US$40 billion.
"We think ‘likes’ and comments are old fashioned [and] question why they haven’t evolved to video,” Tan tells The News Lens. “ReCactus allows you to respond to video with video.”
Tan describes the frisson he felt when reviewing reaction videos to some of YouTube’s most successful stars, including the world’s most popular YouTuber PewDiePie (64 million subscribers and counting) and the dedicated reaction video channel REACT, and noticed that many of the comments asked how you go about making reaction videos in the first place.
“We realized you have to download the video illegally from YouTube and then mess around with your camera and editing software to stitch the two videos together and then re-upload it,” he said. “And you have to tweak the audio so that it’s so high pitched that no one can recognize the original, otherwise you might have copyright issues.”
ReCactus solves the copyright conundrum by streaming the reaction video off the original platform, just like you would embed the video on your blog, website or social media, while making it available to other users of the app.
It’s worth asking who might want to record themselves reacting to a video, and the answer is 14- to 24-year-olds, who constitute 90 percent of ReCactus’ base of 60,000 monthly active users. Four out of five ReCactus users are female.
“Gen Y and Gen Z don’t hate advertising, they just hate advertising with no heart,” Tan says. “We’re trying to do soft persuasion, soft sell — come do this game with us, take this challenge with us and if you take part you receive a discount voucher you can redeem in store.”
Unlike many social apps, ReCactus does not necessarily have to struggle with anemic app retention rates and reluctance among users to spend on purchases. The company has a clear path to monetization through partnerships with advertising agencies and brands that is a key driver of the Taiwanese company’s appeal to judges and investors.
ReCactus is already working with Publicis Media, one of the largest advertising agencies in the world, and is working on a campaign with a Korean fashion brand that will debut in 2019.
“A lot of brands want user-generated campaigns because they are viral and encourage participation and peer to peer promotion,” Tan says. “We’re trying to blur the line between paid advertising and native content, so not abrupt cold and invasive but advertising that has soul, heart. Even traditional companies that have lost touch with a younger audience can connect again.”
Tan picks out K-pop pose or dance challenges and reactions to live events like the World Cup or speeches by Donald Trump as illustrative of the kind of reaction video that is pushing user growth up 30 percent month-on-month. A third of those users are in the USA, another third in Latin America and the remainder split between Russia and Southeast Asia.
What about China? “We’d love to enter China but we need the partnership,” Tan says, adding that a the backing of a media agency, ad company, or social platform would give ReCactus the access to users and influencers it needs to compete in China without having its intellectual property swallowed by a second mover.
In the world of Google and Facebook dominated advertising, discovery is the bane of most startup companies seeking to put their app in front of new audiences, but ReCactus hopes that the viral nature of its reaction video campaigns will organically tempt users back to the app itself.
“We can create campaigns, challenges and fun things for different brands, say a beauty company 40-sec makeup challenge, bring in an influencer to do the challenge and then their followers to do the same and tag five friends then share it on Instagram and Facebook, so it’s a viral, USG campaign that’s seeded onto other platforms.”
Tan, who along with ReCactus CSO Marko Kong has a background in advertising, recognizes the flaws within the digital advertising ecosystem, particularly when it comes to measuring return on investment and that most slippery of beasts, engagement.
“Clients would always ask, ‘What’s engagement like?’ We can expect eyeballs but how many of them are actually engaged? On our platform you can see everything, demographics, emotional engagement, within 30 seconds. That’s missing right now on traditional platforms.”
The company, whose Taipei-based team of six includes Howard Yang, the founder of the popular Good Night voice chat app, raised US$500,000 last year after graduating from the AppWorks accelerator and is currently engaged in fundraising for US$2 million.
The aim is to use that cash to establish a marketing team in Southeast Asia, where app users are more willing to experiment with different apps than their counterparts in U.S. and European markets.
For Tan, whose work as a designer includes stints with Apple and Audi in locations including Frankfurt, London and Silicon Valley, the trick will be to ensure that he doesn't burn out or get distracted before the world reacts to ReCactus.
Read Next: HONG KONG: Tech Ecosystems Show Beginnings of Balance at RISE 2018
ReCactus, which is in Hong Kong with Taiwan Startup Stadium, will demo alongside seven other Taiwanese startups tonight at Garage Academy in Hong Kong from 6.30 p.m., and the event will also be live streamed at the TSS Facebook page.
The News Lens was sponsored by Taiwan Startup Stadium to attend RISE 2018.