Inside TikTok, Zhang Yiming's great voyage through the waves, Part 1
Zhang's early insistence on going after high-stakes markets such as the U.S. and Japan, combined with a sophisticated and dynamic country-tier system, contributed to TikTok's wildfire-like growth.
TikTok, one of the most internationally successful companies from China, marked "the first time that a content platform from China went deep into the heart of Western culture, and had set up a new paradigm for Chinese enterprise going overseas," according to this detailed and insightful piece of journalism on TikTok's story of origin by Ms. 张珺 Zhang Jun (email address: email@example.com), a Chinese business story writer. With story-based reporting, she has written many exclusive in-depth reports on Chinese technology companies.
Ginger River finds this story, which was posted on Wechat on April 25, really fascinating. It helps to explain many big questions about who exactly is this global behemoth from China that is barely 5 years old. Here are some highlights:
TikTok was no accident. Nor was it some kind of conspiracy from China. It was the fruit of an anxious and failure-ridden quest for more growth when ByteDance's original flagship Toutiao app hit its bottleneck.
Zhang Yiming, CEO of ByteDance, is a calculated, precise man with no limits to his vision and ambition. It was also not surprising for Facebook to suffer so badly from TikTok's sudden emergence, causing the largest daily evaporation of stock value in the history of stock markets. In fact, Zhang had his eyes on Facebook from the very beginning. Although ByteDance's early attempts at overseas growth were also held back by the Facebook-Google duopoly, TikTok later systemically exploited Facebook's carelessness toward this opponent, until it was too late.
From TopBuzz to TikTok, the name of a product was a crucial business decision, some even involved top-level decisions from Zhang himself.
An often-used strategy of ByteDance is to find some product shell and plug in its strong middle office providing advanced recommendation algorithms, user growth, and monetization systems. In this sense, the acquisition of Musical.ly came at a most opportune time.
Zhang's early insistence on going after high-stakes markets such as the U.S. and Japan, combined with a sophisticated and dynamic country-tier system, contributed to TikTok's wildfire-like growth across the globe.
ByteDance became the Chinese company with the most localized operations, to cope with data regulations around the world.
The selection of 周受资 Shou Zi Chew, former DST Partner and Xiaomi CFO, as TikTok's head was a calculated balancing act bridging the East and the West.
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Below is the full text (Part I):
Inside TikTok, Zhang Yiming's great voyage through the waves
Right as the political storm surrounding the disposal of North American business loomed near, Mr. Zhang Yiming, founder of ByteDance, bought a painting about waves.
It was the beginning of 2020, and he was in the United States. After high stress and long sitting in the face of the sudden political maelstrom, his chronic back pain was re-ignited, causing excruciating pain.
For many, this is a [stereotypical] Chinese entrepreneur, full of pragmatism but lacking artistic taste. So the artwork he purchased was quite surprising for some people. According to those close to him, he purchased it out of his particular liking for California.
In the last 6 years, ByteDance (parent company of TikTok) has gone through a road of internalization paved with uncertainty and difficulty. Today, TikTok commands monthly active users (MAU) of over 1.2 billion, and its Daily Active User (DAU) was rapidly catching up to Douyin (TikTok's Chinese equivalent), which is consistently above 600 million. This means that every day there are over 1 billion people on this planet who opens the short-video app from China.
The sudden emergence of Douyin and TikTok has brought about a 36-fold growth in ByteDance's valuation. More importantly, this marks the first time that a content platform from China goes deep into the heart of western culture, and has set up a new paradigm for Chinese enterprises going overseas.
The artwork about waves is not just a reflection of Zhang's international ambitions, but also an actual depiction of the challenges he has to face in the growing wave of de-globalization.
Zhang Yiming's pure personality
The port from where Zhang led the team on their global voyage was a short, nondescript building at No.Jia-48 of Zhichun Road, in the Haidian District of Beijing, dubbed as 中航矮楼 the Avic Low-rise. Starting in 2016, employees and managers alike moved to this short building with only two floors and a creamy white facade. This was where the old Aeronautics Museum used to be. There is even a helipad on its rooftop.
Zhang, usually a humble person, reminded all staff members in an internal message: "We are one of the very few companies setting up shop at Zhichun Road, the heart of Beijing.
At that time, Zhang Yiming was keen on handling administrative affairs and was particularly pleased with the short building with a mere 14-meter height and a spacious interior. This founder knows a thing or two about office space: "Many companies atrophied when they move to a good headquarters." Citing SUN, Yahoo, and Evernote as examples. He said that environment changes the state of mind, and that luxurious and comfortable headquarters not only stifle innovation but also breed comparison - for example, some company executives actually want individual elevators. "Very 俗气 cheesy," he wrote.
In the beginning, there was only one separate office room in the entire company. It was Zhang's own office, located on the top (second) floor on the east side of the building. Employees often saw him going in and out of the elevator, wearing a T-shirt and jeans, with his head down while walking and swiping his phone. At mealtime, he would take the public elevator to the cafeteria on the lower ground floor, enduring his hunger, carrying the rice tray, and waiting in line for a delicious meal with his staff.
On the northwest and south sides of the 2nd floor, near the center, sit 陈林 Chen Lin and 张楠 Zhang Nan, respectively, who played the roles of the CEO's right-hand people. At this time, ByteDance's business was simple, with only two product lines - one was Toutiao, which Chen Lin was in charge of, and the other was Interactive Entertainment, which Zhang Nan was in charge of, with 内涵段子 Neihan Duanzi and 火山小视频 Volcano Small Video in the incubation stage, and Douyin was not yet born.
Sitting on the 1st floor is 张利东 Zhang Lidong. He is the second person to be granted the privilege of a standalone office room, although it was small and converted from a storage room. The employees call Zhang Lidong “二老板” "Boss No.2" and his duty was to bring cash to the company to help it build a solid financial backbone.
In 2016, in the eyes of many people, the company then called 今日头条 Toutiao was just an information platform that started with low-quality content, crawling third-party information and algorithmic feeding. What's worse, the news apps had long been the most competitive of the competitive markets.
Zhang Yiming, who came from a background in software engineering, is less than 5'7 feet tall, has small eyes, wears glasses, and smiles at people. He speaks in a lumpy way. Many people hold him up as a data-oriented, machine-rational spokesman. Such a statement reflects a pure line of technocracy, but ignores the human side of him. He is a gentleman who looks sincere, simple, and harmless. But he also has a high level of emotional intelligence embodied by a pure personality. People who are familiar with him tell me that Zhang Yiming is good at understanding human nature and can quickly convey goodwill and make the other party aware of it. "People who have come in contact with him tend to think the young man is nice and are willing to help him."
Earlier in 2014, Toutiao faced a PR crisis. Zhang Yiming came to media agencies' doors to communicate. A source close to the fiasco recalled to me that the respected media veteran was at first furious about meeting the controversial tech newcomer, but in the second half of the conversation, the plot took an uncanny turn - the other side actually started to put himself in his shoes and to make suggestions for him.
On the other hand, Zhang Yiming does not easily get emotionally involved. He is extremely precise with people and things, and can't stomach any greyness and sands to his eyes [Ginger River: an expression for not accepting compromises to one's principles]. This makes him exude a kind of ruthlessness. In the early days, he sent the person who took away the company's code to jail.
The hidden side
For Zhang Yiming, Facebook was at the same time an idol, an enemy, and a company to emulate. In [TikTok's] voyage overseas, Facebook always loomed largely.
Once, Zhang requested his employees to explore social media products, including a product called 飞聊 Feiliao. One of [its] product managers told me that, at the internal meetings of Feiliao, Zhang frequently mentioned phrases like "We can become another Facebook!" "Why don't we create another Facebook?" "Why don't we learn from Facebook?" According to this product manager, Zhang mentioned Facebook so many times that he is pretty sure that Zhang adored and even envied Facebook.
Even before having a strong footing in the domestic market, Zhang Yiming has already cast his attention on the overseas market. In fact, TikTok, the rising star, was only a 明线 "public side" for ByteDance's internationalization. There was also a 暗线 "hidden side" that was buried between 2015-2016. It was News Master, the overseas version of the news aggregation app Toutiao. It was later changed to the name TopBuzz. Afterward, they also launched Buzz Video, which was the overseas equivalent of 西瓜视频 Watermelon Video.
The idea of internationalization originated from the expectation that Toutiao might soon reach its growth ceiling. It is well known that Zhang Yiming is a quintessential worshiper of data. According to early members of the international team, an internal assessment at the time concluded that the total market size for China's newsfeed market was around 240 million DAUs. If one supposed winner took all, and it would occupy half of the market, then there was a ceiling of just 120 million DAUs. Zhang Yiming [could] instantly grasp the worry behind this data.
This assessment was confirmed by later facts. Toutiao saw an explosive growth in 2016, reaching 30 million DAUs mid-year and exceeding 100 million DAUs during the Spring Festival of 2017 [around the end of January]. But this transient miracle was soon followed by a long and steady decline (the DAU today is about 100 million, compared with the peak of 120 million). "When you face pressure to grow further, you are inclined to think about the international markets. This is just one of the paths [you can take]"
As for target markets, Toutiao first picked the U.S., Japan, and Latin America. "I directly asked Zhang Yiming," said a former mid-level person at ByteDance, "At the time when Chinese companies expand overseas, the usual picks are Asia or Africa, but [why did] ByteDance start from the U.S. and Japan? Zhang said markets in Asia and Africa were too under-developed. Even if they managed to succeed, success would be too small. Although it's harder to develop in the U.S. and Japan, if we can take a small slice, the slice will be huge. Therefore, we have to start from first-world countries. We go to whichever market that's bigger."
But which market is bigger? This is a complex question to answer. Zhang Yiming not only looked at DAU, but would also ask subordinates to estimate maximum commercial value by multiplying DAU with potential average revenue per user (ARPU).
Zhang also never placed limits on his thoughts. "Yiming believed it's feasible to directly challenge Facebook and Google," according to another manager for one overseas market. "For him, the goal is to gain a firm footing and to take down those giants [in the end]. He would tell us, 'we are going to take this market,' 'If we want to be bigger, we have to...'"
Once, in an internal discussion, Zhang Yiming made a serious analysis: "Facebook fights from high to low, and we fight from low to high." This means that Facebook starts as a social network product. Whoever is at the core of social networks has the power to influence others. This is "high to low." ByteDance, on the other hand, is an algorithm-based recommendation product. The algorithms work in tandem with the people. As long as more people are using this App because of algorithms, then they can defend their base, expand the base and finally surround Facebook. This is "low to high."
At the end of that year, when ByteDance formulated its 2017 strategic roadmap, there were only two strategies that fell in the P0 (highest priorities) categories: interactive entertainment and internationalization.
In the next three years, when people were astounded by the tremendous growth of ByteDance's interactive entertainment business in the form of Douyin, they often overlooked another fact, that ByteDance had never stopped its internationalization efforts. In fact, they seized their second and third growth trajectories at the same time.
Every Sunday, Zhang Yiming walked out of his 2nd floor east office to the conference room and found a good seat. In 2017, he attended the Internationalization bi-weekly meeting on time, keeping the number of people at 20, with only middle-level and above participating. Most of the time, he ran his hand over his touch-screen Surface computer, listening to the meeting, typing, and not talking. One of the middle-level people who presented at the meeting recalled to me that among the sparse words Zhang Yiming left behind, only one lingers in his mind to this day.
Zhang Yiming said: "The most important thing is to run fast."
But soon, they found problems came in one by one.
The first head of ByteDance's overseas business was named 周晶锦 Zhou Jingjin, who was a No.1 science student in a county-level city in China's Zhejiang Province, and Zhang Yiming pulled him in early. Chinese Internet companies believe in the concept of "new people doing old business" and "old people doing new business." So Zhou volunteered for running the international business.
Copyright is the first big hill to climb. In the U.S. and Japan, copyright protection is extremely strict, so they could not rely on the old way of direct crawling in the country. An industry source said, there generally are two sets of policies in this area: for the contents that obviously come from big-league players (such as Disney), one can enable the "red flag" mechanism, which is to purchase its IP obediently. If the copyright party appears weak and not very litigious, one can use the "safe harbor" mechanism - basically use "third-party" accounts to distribute, thus avoiding the responsibility of the platform. But this classification system all relies on guesswork, and it is easy for guesswork to go wrong, leading to endless lawsuits in the early days of ByteDance.
Zhang came to realize that for this internalization project to succeed, he would need a mature manager with rich experience in this field. In mid-2016, he recruited 刘新华 Liu Xinhua as the person in charge, with Zhou Jingjin reporting to him. Liu Xinhua was formerly the CMO of Cheetah Mobile, and had already gained fame and financial freedom. Zhang Yiming gave this second-generation head very high authority - from the first day he came, he was given the courtesy of a 事业部 Business Unit (BU).
The Internationalization BU is ByteDance's first-ever BU, short-named as "i18n" (like the word "internationalization," which starts with "i" and ends with "n," with 18 letters in between). It enjoyed complete autonomy, which was unprecedented in the history of ByteDance, and had not been seen in the following years. Unexpectedly, this BU setup turned out to be a constraint since the whole group operated around a strong 中台 middle office at the time [中台 middle office is an organizational structure where certain resources, such as data and algorithms, are centralized, supporting various business and product lines (front office) at the same time].
After Liu Xinhua took office, he quickly promoted four things - building an offshore structure, setting up local operations, and downplaying copyright disputes. In addition to that, he led the renaming of News Master, the overseas version of Toutiao. Their research at this time found that the news product users in the U.S. were people over 45 years old. To rejuvenate the product, it was necessary to downplay the color of serious news and position itself as light-weighted information. The American slang word Buzz, which stands for something that generates buzz on social media, can refer to information and gossip, while TopBuzz refers to the best of the buzz. After the name change, TopBuzz transformed from PGC (professional-generated content) to UGC (user-generated content) creator economy and wanted to be an upgraded version of the American blogging platform Medium.
An operations director of the product believes that in developed countries, the ultimate dilemma for information products is growth. He told me that there is a world of difference between Chinese and foreign mobile Internet channels for growth and monetization - in China, the cell phone pre-installation market is large, the exposure channels are scattered, and the overall price is fair. The overseas ecology is that user growth and monetization are in the hands of two duopolistic giants: Facebook and Google. "The project is competing with them. The users come from these two, and the monetization channels also come from these two, and so the growth model is a dead-end cycle."
He gave me a calculation. Toutiao could find cell phone manufacturers to do pre-installation in China. For each user, they can earn around RMB 0.3 yuan (about 0.05 U.S. dollars) per day, so in 50 days of a user life cycle, you can earn 15 yuan, while pre-installation costs only cost 5 yuan, which makes them profitable ("life cycle" means how many days will the user uninstall the App after getting a new phone). The numbers in the overseas markets are very different. For example, in the United States, a user costs $3 to acquire, but can only earn close to $1 in revenue over the full 30-day life cycle. "You can not earn back the money. It turns out that you are effectively paying taxes to [the channels]," the above-mentioned operations director concluded. "In overseas markets, if you want to do content or social products, your ceiling is Facebook. It is a giant."
ByteDance spent 2017 in anxiety, as they were running out of sexy new stories [for growth]. In July, the strategy department wrote a report and submitted it to Zhang Yiming. The report showed that there was little hope for the internationalization of information products, and transformation was urgently needed. But Zhang Yiming could not accept retreat - "Yiming firmly believes that vigorous efforts can produce miracles." i18n BU employees said that, in Zhang's mind, since the model was proven in China, it should be able to go global. The project persisted for another year.
On the other hand, Liu Xinhua thought that the big trend of 图文 text and picture-based products had gone, and his interest became few and far between and he shifted his energy to video. According to people close to the top, Liu went to Japan and found that there were strong products for Japanese information and the chances were slim, so he gave up on text and picture-based products and just did Buzz Video, which saw good growth early on. Short videos gave him a taste of sweetness. However, the drawbacks of the BU, essentially an independent kingdom, were becoming increasingly apparent, as it became difficult to pull resources from the middle office. Liu wanted to do video, but this was not in line with Zhang Yiming's expectations of him, and there already had been people working on videos in ByteDance. So, due to these difficulties in cultural integration and product direction, Liu left to join 快手 Kuaishou after only one year in office.
At the 2018 project discussion, the bigwigs sat down around a square table with the middle-level managers sitting around behind them. On normal days, Zhang Lidong, who held the money tap in his hand, often spoke with great weight. He was a former journalist who rose to the rank of vice president of the 京华时报 The Beijing Times. He is more sentimental than Zhang Yiming, but his judgment is often cold and decisive. People at the meeting relayed to me that on that day, Zhang Lidong, with a hoarse voice, suddenly spoke: "We should give up on this project. It can not earn money..."
At once, the room was filled with silence. No one dared to speak.
"This project still has a future. We can still take another look at it." Zhang Yiming took over.
After Liu Xinhua left, the i18n BU was carved into several pieces. Product and operation were taken over by 陈林 Chen Lin and 赵添 Zhao Tian, who were in charge of the corresponding lines at Toutiao at that time, while the algorithm and technology team reported back to their respective middle offices. Later, 康泽宇 Kang Zeyu joined ByteDance from Baidu and took over the internationalization products. Here he incubated the India-based social product Helo.
It wasn't until August 2018 that the company resolved to cut off the internationalization of information products. TopBuzz, with its obsolete product format, ended badly under the heavy pressure of copyright and growth problems. ByteDance's first BU came to an end. The only fruit it left behind, Helo, did not escape the fate of being banned by the Indian government later.
Neihan Duanzi and Volcano Small Video, both under Zhang Nan, also tried to go overseas. They also failed.
No one has ever seen the color of sulking creep onto Zhang Yiming's face, as if he was an emotional insulator. But the attendees of the meeting heard him say, "I will not have any angry emotions now. My biggest negative emotion for a person is disappointment."
Black T and White T
Zhang Yiming is a pragmatic guy, focused on return on investment (ROI). So he normally will not care that much about a name, as long as it performs well according to data. The name 抖音 Douyin stemmed from a combination of A/B testing and some fortune-telling.
But when it comes to TikTok, it is called TikTok directly because of the personal decision of Zhang Yiming.
A key figure that went through the beginning stage of TikTok has told me that at the time the team was undecided after many proposals and A/B tests. They were on the verge of kicking out "TikTok" among an army of cool English words. TikTok was the name of a popular song in 2009 in the West, and was taken from tick tock, depicting the ultimate nightclub revelry. What made the team hesitate was the fact that although this was a popular song, it was also quite vulgar in American culture. It has a few advantages, chief among which is, that it is easy to pronounce. Of course, picking a name is often serendipitous. When ByteDance first launched the internationalization of short videos, it focused on Japan and South Korea. In these two countries, TikTok sounded good, with a hint of playfulness.
"Yiming felt this was it!" And the team thought, since there was no obviously better choice, they would just use it. They could change it later anyway. Nobody foresaw that this meaningless phrase could become so contagious -- "it can be pronounced in every corner of the world, in every language, in much the same way!" --- It went viral throughout the world.
For a content-based application, ByteDance's decisive weapon is its recommendation algorithm. It tends to find a product shell and put its long-trained algorithm into it and supplement it with the systemic combat ability that integrates user growth and commercialization. As I explained in 《抖音内幕，时间熔炉的诞生》Inside Douyin, The Birth of the Time Furnance, ByteDance, whether it is about its recommendation algorithm, user growth, or commercialization, was always supported by a strong middle office. One can say that these three sets of capabilities were confirmed to work and accumulated on Toutiao. But if it stops right here, this company will just be another news app provider.
Musical.ly came in at an exceedingly opportune time. For ByteDance, Musical.ly provided a second product shell and an ocean of contents as fuels [for its algorithm]. Spectacular energy was generated after its marriage with Bydance's strong algorithms. But the two companies went through a period of struggle on the eve of this combination.
[The following part was abbreviated due to the word limit. It covers the merger between TikTok (the Black T) and Musical.ly (the White T)]
On the left-upper corner [on the facade] of the Avic Low-rise, there used to hang 4 big Chinese characters 今日头条 Jinri Toutiao. In mid-2018, the company took them down and put up a new blue sign similar in color to Facebook's - "字节跳动 ByteDance". That year, Douyin was on fire, with DAUs breaking 200 million, surpassing that of Kuaishou.
This company has entered a new era. It is now competing with Facebook in the same swath of ocean.
Nine months after the acquisition of Musical.ly, ByteDance consolidated a 400-strong team from Musical.ly. At the same, ByteDance started to plug its algorithm into Musical.ly. The growth would be re-ignited, but not so fast.
At the same time, Zhang Yiming started the campaign to change Musical.ly's name, as promised [to Musical.ly's management]. There was a backup plan as proposed by Musical.ly's team, which was to continue with the "ly" tradition to the name Vedio.ly. But after some A/B testing, the data performance was worse than TikTok. So, the name TikTok was finally adopted for all overseas versions of Douyin. In August 2018, ByteDance announced the comprehensive integration between Musical.ly and TikTok with great fanfare.
In the decision-making chain, changing name is a big deal that requires concentrated effort. A huge user base has already known Musical.ly. So a forced integration not only could cause loss of users, but it would also take a considerable amount of cash flow to rebuild the new brand, so it may 陪了夫人又折兵 "lose the wife and the troops" [Ginger River: an idiom from the Three Kingdoms describing an act costing twofold failures]. An ex-member of ride-hailing giant Didi's internationalization team said, when Didi acquired 99Taxis in Brazil, Didi hesitated for a period of time on whether to unify the brand names, but for complex reasons, they finally gave up on this thought. Bytedance's choice presented a stark contrast to Didi's. In Zhang Yiming's eyes, on his map of the world, TikTok has always danced around one byte, as part of one big chessboard.
There are some [notewothy] details in this integration. Black T and White T did not really combine their product packages. They changed the logo of Musical.ly to TikTok but preserved Musical.ly's icon in the corner. The tagline was also changed to "TikTok-including Musical.ly." It was only over half of the year after the new brand gained a foothold in the user's mindshare, was the phrase "including Musical.ly" taken away. Yet later it was found the White T actually performed better than Black T, so they let every app adopt the product package of White T. This shows that the new TikTok we see today is really a combination of co-evolution of ByteDance's algorithms and Musical.ly's products.
Next, a splendid money-spending spree took place. Big cash-spending campaigns have long been a mainstay in China's fierce Internet jungle, not to mention that the initiator now was ByteDance, who is used to stirring up this kind of storm. So it's not surprising [for them to spend a vast amount of money to expand]. Only this time, they are bringing this war overseas. What was so dramatic was that for a period of time, Facebook not only did not obstruct TikTok but also regarded the latter as its most valued customer.
After the integration was completed, TikTok gave an order to enter the frenzy of spreading money, spreading money, and spreading money like crazy. Their most important placement channel was, of course, their old [presumed] enemy Facebook. "From the third and fourth quarters of 2018 to the first quarter of 2019, TikTok's promotion budget grew by more than 100 percent every quarter," a person close to Facebook told me, " Facebook's revenue in Greater China was about $5 billion a year, and TikTok was planning to contribute about $1 billion for three years."
The entire industry chain is swept up in this money dance. The salesperson in charge of Facebook Asia Pacific was a Chinese national, who, thanks to TikTok, added glory to himself and became the global sales champion. At the end of 2018, the company gave him an excessive year-end bonus, "Probably in the millions." "Colleagues in Singapore and Hong Kong are saying that he stepped into a s**tload of luck." -- At this moment, Facebook was not raising enough alarm.
The reason for Facebook to let its guard down was simple: TikTok's retention rate was really too bad. "Is this company stupid? Facebook's internal view is: I'm directing traffic to it, but since it can't retain users anyway, it doesn't pose any threat," said a Facebook internal source. In early 2019, 柳甄 Liu Zhen, then senior vice president in charge of ByteDance's internationalization function, took a special team to Facebook and signed an annual strategic cooperation agreement with its Greater China executives.
In fact, the cost-effectiveness of buying traffic on Facebook was extremely low. At this time in the U.S., to acquire a user, the amount was as high as $10. However, ByteDance, a company that is good at accounting, has quietly upgraded its strategy. People close to ByteDance told me that they were no longer obsessed with how long it takes to earn back the cost but instead chose to observe the ARPU value. Simply put, it's how much money you can earn from a daily active user.
This is where the cunning of business warfare comes in. ByteDance set its targets not by empty design. They were targeting Facebook dead-on. ByteDance paid high salaries to poach a group of management from Facebook, and some of them brought business data from Facebook with them. The numbers were very granular, some of which were not disclosed in the earnings report. For example, how many DAUs and how much money Facebook could make in each country ... ByteDance even produced a beautiful table covering more than 100 countries accordingly. They then cleverly used Facebook ARPU as a target to work backward on how much money needed to be spent on placements.
What Facebook failed to see was that, unlike social networks, video content can cross borders. A short video from the U.S. can be consumed in Europe, Japan, and Latin America, inherently sitting on scalability. Moreover, the product is just too human-friendly, which imposes another layer of magic on it. Plus, a global product has a camouflaging effect. If you look at the data of each country alone, it may not be outstanding. But for ByteDance this is a strategy of divide and conquer, and the cumulative effect of eventually bringing together more than 100 countries can be astounding.
One of the reasons why TikTok and TopBuzz's fortunes were so different from each other was that the former was able to grow naturally. What's more, the business jungle has forged this company to be quite savvy. They soon knew that they had to reduce their dependence on Facebook as fast as possible.
In the first half of 2019, after completing a beautiful sneak attack, TikTok shifted its placement position to Google and Snapchat. According to people from ByteDance, this was to prevent Facebook from potentially "doing small moves in the dark" - including but limited to, snooping data, secretly raising the cost, and artificially causing inaccuracy in recommendations. In the TikTok budget chart, Facebook's share has been slipping month by month, from 20 percent to less than 10 percent, and Google, Snapchat, Apple Search Ads, Twitter, and some local apps were all ahead of Facebook.
Then Facebook finally woke up from its slumber. It was now already mid-2019, and TikTok had reached over 100 million DAUs globally. Facebook tried to block TikTok with Lasso, a short-form video app in Mexico and the U.S. However, it didn't take long for a black swan event to hit the world.
Up 110 million bi-monthly!
-- "Don't be complacent" "We are just [flying] pigs in a draught"
Apart from Zhang Yiming, if we have to name another core member of TikTok, employees would not hesitate to vote for Musical.ly's co-founder 朱骏 Zhu Jun. He is known internally by his English name, Alex.
Zhu Jun has built up influence in ByteDance at a slow pace, and he is a rare manager who I have not heard employees show negative emotions [when being discussed]. Just after the acquisition, the company constantly adjusted Zhu Jun's role. He initially reported to Zhang Yiming, but was in a marginal position, and Zhang Yiming was said to be uncomfortable with his Western style until his product capabilities were recognized. After a period of time, Zhu Jun reported to 张楠 Zhang Nan, who was in charge of Douyin and TikTok. in June 2019, Zhu Jun briefly took over as head of Douyin, nominally reporting to Zhang Nan, who continued to be responsible for overseas business. In the above three stages, Zhang Yiming was not very happy with the development of TikTok.
It wasn't until October 2019 that the company was restructured once again - Zhang Nan was in charge of domestic business and Zhu Jun fully took over the overseas business, reporting directly to Zhang Yiming - an elevation of his influence. TikTok saw a period of rapid growth.
Zhu Jun is older than most executives in ByteDance and was born in 1970s. With a goatee beard, he has an exquisite demeanor and speaks standard English. Zhu Jun is a native of east China's Anhui Province, graduated from Zhejiang University, and worked in the field of corporate services. He is also a man of nature who loves to drink and recite poems. He often wears a gray shawl in the office, with loose hair and wooden clogs on his feet. "Like a practitioner."
Legends of him circulate internally. "I often meet him on the subway. He rides the subway in Shanghai, a man who has reached financial freedom," said an operations staff, "In the company, it is rare to see a man with gray hair like him, holding the door for female colleagues in the elevator room, letting others go first." "A kind old man," says a product manager (employees of ByteDance are mainly born in 1990s, making the ones born in 1970s "old" in the company), "Alex likes to drink, and when he wasn't so busy, he would take us out for drinks." "Alex has been in the U.S. for many years, and the company was a blend of East and West with him joining us," said a mid-level employee, "Listening to what Alex spoke in the bimonthly summaries was a treat. His English is particularly authentic, and he can explain Chinese culture in English. Wow! It's really great!"
At the moment he took over, antagonism pervaded TikTok's Chinese and foreign employees, so Zhu proposed [TikTok's] mission, vision, and values. According to employees, "Alex constructed poetic expressions." "Foreign employees are especially BUY IN," Here is how Alex put it, "TikTok is commerce, a bridge, and windows."
Zhu Jun's (Alex) appointment came at the right time. He took the pilot's seat, held the team together, and sailed the globalized fleet into the dark night. In early 2020, TikTok had less than 250 million DAUs. The people in the boat are unaware that a massive storm is approaching.
The novel coronavirus quickly spread - A global pandemic, as well as an outbreak of TikTok, swept the globe.
First, at the end of February , an overseas interview blew up in the senior group of ByteDance. "The growth numbers are faster than we've ever seen." Facebook COO Sheryl Sandberg said in an interview mentioning that TikTok's growth rate worried her. What TikTok felt [regarding Sandberg's words] was not joy, but trepidation. Zhu Jun called an emergency meeting: "Sandberg is already concerned about us."
Immediately afterward, the virus spread rapidly around the world, giving TikTok a shot of catalyst. "From March to April 2020, TikTok's DAU went up by 110 million in one bi-monthly period," one TikTok source told me, "It was crazy." (The amount was pretty much the equivalent of getting the entire country of Japan on an app in a month)
However, the rapid rise in numbers made the senior management of ByteDance more and more worried. One day at noon, Zhu Jun formed an online discussion group including several key executives on the enterprise software 飞书 Lark, which is developed by ByteDance. People close to the management told me that Zhu Jun asked in the group, "What is the risk to us if we remove the Facebook SDK (software development kit)?" The situation was so urgent that he asked the group to hurry up and evaluate the situation, and the discussion was finished at 1 p.m., and the feedback had to be given to him at the end of the day at the latest.
The most important question hanging over their heads is: should the Facebook SDK be removed immediately? Once the Facebook SDK was installed, it was like Facebook had placed eyes in TikTok. Information such as the number of users logged in every day and the numbers of users forwarded [a video] was all in sight of Facebook. But if the access was denied, TikTok user experience would be harmed. These endpoints were like milk-feeding machines.
As expected, all departments assessed that there would be a loss - removing the Facebook SDK would result in not getting accurate personal profiles when acquiring users, affecting the growth and realization efficiency. Zhu Jun asked everyone to further clarify how much the user experience would be harmed. The team came to the conclusion together that it was no more than 20 percent.
Zhu Jun then ordered: cut it off immediately.
Finally, it took less than a week for TikTok to unplug all the Facebook login interfaces without a single one left. They decided to "wean."
The uneasiness did not dissipate. At TikTok's bi-monthly summary meeting, Zhu admonished managers, "Don't be complacent" and "We are [flying] pigs in a draught [meaning just riding the tide]."
Just when Zhu Jun was making efforts to help TikTok climb the globalization wave, his old partner in Musical.ly, 阳陆育 Yang Luyu, ran to ByteDance's education sector to continue his dream of education - He led the team to develop the "Dali Intelligent Learning Lamp." He cut off his original small curly hair and had a buzz cut.
"What was TikTok's key development point?" An employee who has worked at TikTok for almost two years gave the answer without thinking, "It's the pandemic. TikTok accomplished a sudden soar to the sky."
Due to the size limit, Ginger River will deliver Part II of this article later. Part II will cover Bytedance's expansion strategy, how Zhang's early insistence on going after high-stakes markets like the U.S. proved prescient, how Bytedance became the Chinese company with the most localized operations, and why the selection of Shou Zi Chew, former DST Partner and Xiaomi CFO, as TikTok's head was a calculated balancing act bridging the East and the West.