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The Internet Is Running Out of Trust. Xiaohongshu Built a Business Around It.
For most of the internet's history, the winning platforms optimized for scale.
Google helped us find information. Instagram encouraged us to share our lives. TikTok perfected the art of capturing our attention. Every generation of social media became larger, faster, and more addictive.
But somewhere along the way, something changed.
Search results became cluttered with SEO content. Influencers became advertisers. AI made it possible to generate endless streams of convincing, but often generic, content at almost zero cost.
Ironically, the internet now has more information than ever before—and less trust. That is precisely where Xiaohongshu, known internationally as RedNote, found its opportunity.
Its greatest competitive advantage isn't that it has the best algorithm or the largest user base. It is that millions of people still believe what they read there.
In an era where attention has become abundant, trust may be the internet's scarcest resource.
For many people outside China, Xiaohongshu first appeared on their phones during the brief uncertainty surrounding TikTok's future in the United States. As regulators debated a potential ban, millions of users searched for alternatives, and RedNote briefly became one of the most downloaded apps in America.
Most of those users eventually returned to TikTok. But something interesting happened to those who stayed. They discovered that Xiaohongshu wasn't really competing with TikTok at all.
Instead of endless entertainment, the platform felt surprisingly practical. Users weren't opening the app simply to watch videos or follow celebrities. They were searching for restaurant recommendations, travel itineraries, tennis tips, skincare routines, cafés worth visiting, and honest reviews from people who had actually experienced them.
It looked like social media. But it behaved more like a search engine.
That subtle distinction explains why Xiaohongshu has quietly grown to nearly 400 million active users, despite competing against some of China's largest internet companies.
The Internet's Biggest Problem Isn't Information. It's Credibility
The internet was originally built around discovery.
Search engines helped users navigate an expanding web of information. Social media connected people through shared experiences. Product reviews made online shopping feel less risky.
Over time, however, incentives changed.
Search engine optimization encouraged publishers to create content designed for algorithms rather than readers. Influencer marketing blurred the line between genuine recommendations and paid promotions. More recently, generative AI has dramatically increased the volume of content available online, making it increasingly difficult to distinguish authentic experiences from synthetic ones.
The result is a paradox.
Finding information has never been easier. Finding information you genuinely trust has never been harder.
This is where Xiaohongshu has differentiated itself. Unlike many social platforms that reward virality above everything else, the community has developed a reputation for authentic recommendations and lower dependence on celebrity influencers. Users often arrive with a specific question and leave with answers from people who appear to have lived the experience rather than simply marketed it.
That trust has become the platform's most valuable asset.
Trust Is Becoming the New Competitive Moat
Technology companies have traditionally built their competitive advantages around scale.
The more users they attracted, the more data they collected. The more data they collected, the better their products became. Scale reinforced itself.
Xiaohongshu suggests a different model.
As AI lowers the cost of producing content, volume itself becomes less valuable. Anyone can generate thousands of articles, reviews, or videos in minutes. What remains scarce is credibility.
Credibility compounds differently from data.
It cannot simply be purchased through advertising or replicated by training a larger model. It emerges gradually as users develop confidence that the information they consume reflects genuine experience rather than commercial incentives.
In many ways, Xiaohongshu has transformed authenticity into an economic moat. That may prove far more durable than another recommendation algorithm.
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Why Investors Are Watching Closely
On the surface, Xiaohongshu's reported interest in a Hong Kong IPO arrives at an opportune moment. The city's capital markets have experienced a strong revival, driven largely by renewed enthusiasm for Chinese technology and artificial intelligence companies.
But Xiaohongshu's appeal extends beyond favorable market conditions.
Unlike many internet businesses navigating slowing growth or oversupply challenges, the platform occupies a category with relatively limited direct competition. It combines elements of social networking, search, discovery, and commerce into a product that users consult before making real-world decisions.
That creates unusually attractive monetization opportunities.
Someone searching for restaurants, hotels, cosmetics, or travel destinations demonstrates significantly stronger commercial intent than someone casually scrolling through entertainment videos. Over time, that allows the platform to generate advertising and commerce revenue without fundamentally changing why users visit in the first place.
For investors, that distinction matters.
Businesses built around intent often monetize more efficiently than businesses built purely around attention.
AI May Make Platforms Like Xiaohongshu Even More Valuable
Ironically, the rapid advancement of artificial intelligence may strengthen Xiaohongshu's competitive position rather than weaken it.
Most discussions about AI focus on productivity gains. Better models generate better text, better images, and increasingly sophisticated recommendations.
But every improvement in content generation also increases the supply of generic information available online.
As abundance grows, users begin searching for stronger signals of authenticity.
Who actually visited this restaurant?
Did someone really stay at this hotel?
Has this product genuinely solved the problem being described?
These questions cannot always be answered by language models alone.
They require communities built around real experiences.
That suggests the future internet may become increasingly divided between platforms that generate information and platforms that validate it.
Xiaohongshu appears well positioned for the latter.
The Real Lesson Isn't About China
It would be easy to view Xiaohongshu as simply another Chinese technology success story.
That would miss the larger lesson.
Every major technology cycle changes what becomes scarce.
During the early internet, information was scarce.
Search solved that problem.
Social media made connection scarce.
Platforms solved that.
Artificial intelligence is making content abundant.
The next scarce resource is trust.
Companies that help users separate authentic experiences from synthetic noise may become some of the most valuable businesses of the next decade—not because they produce more information, but because they help people decide which information deserves attention.
In that sense, Xiaohongshu isn't merely building another social network.
It is quietly positioning itself as one of the internet's trust layers.
Closing Thought
The history of technology is often told as a race for scale.
Bigger networks.
More users.
More content.
But scale has a curious side effect. Eventually, it attracts incentives that erode the very thing users valued in the first place.
Search became crowded with SEO.
Social media became crowded with influencers.
The AI era may crowd the internet with synthetic content.
Against that backdrop, trust becomes surprisingly difficult to manufacture.
It has to be earned, protected, and reinforced over time.
That may ultimately be Xiaohongshu's greatest innovation.
Not that it built another platform where people share content.
But that it built one where people still believe it.
Interested in learning more about AI? Check out our previous coverage here:
You've seen the AI demos. Viktor does it without you watching.
The AI tool you tried last quarter waited for a prompt, hallucinated a number, then asked if you'd like a summary.
Viktor opened a PR at 2am, rebased it against main, ran your test suite, and posted a note in #eng: "Two flaky tests in payments service, both pre-existing. Recommended merging after fixing them." Then drafted the customer reply for the support ticket the bug created.
That's 619K autonomous actions per day across 20,000+ teams. Not chat replies. Real work shipped to GitHub, Stripe, Linear, Notion, and 3,000+ other tools, from inside Slack and Microsoft Teams.
You don't supervise him any more than you supervise a senior engineer.
SOC 2 certified. Your data never trains models.
"It's what you probably originally thought AI was going to be when you first heard of it in sci-fi movies." Tyler, CEO.
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Disclaimer: The views, thoughts, and opinions expressed in the text belong solely to the author, and not necessarily to the author's employer, organization, committee or other group or individual.