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Inside TikTok, Zhang Yiming's great voyage through the waves, Part 2
The pandemic has taken TikTok on a wild journey while also ripping it apart.
Ms. Zhang Jun (email address: firstname.lastname@example.org), is a Chinese business story writer. She has long followed Chinese tech companies such as TikTok and writes ambitious reports. Most of her stories are 15,000 to 20,000 words long. Through exclusive interviews and special storytelling, she has established a unique style in Chinese business reporting. You could follow her on Linkedin.
Ginger River has heard that Part 1 has created some stir among some investors overseas. In Part 2, you will glimpse into the ruthlessly effective growth strategy of TikTok, how TikTok went through its magnificent growth and the even more magnificent political crises in U.S. and India in 2020, the great lengths TikTok went through to become the most internationalized Chinese company with the most localized operations, and the organizational balancing acts TikTok played to placate its uniquely multi-cultural workforce.
You can also download the full story (Part 1 & 2 combined) and share it with your friend.
Lave No Gaps, Absolute Suppression
Sitting at the easternmost corner on the top floor, Zhang Yiming saw internationalization as a key project. In early 2020, Zhang Yiming redistributed the power structure of the company - he handed over China and appointed 张利东 Zhang Lidong and 张楠 Zhang Nan as China chairman and China CEO, respectively, while he himself took a big step upward and acted as global CEO. The "three Zhangs" constitute the center of power.
At this time, on Zhang Yiming's bi-monthly OKR (objectives and key results), there was a line that wrote: "不留空档 Leave no gaps." Some who are close to the power center told me that this was a actually a code for "不留空档、全面压制 Leave no gaps. Absolute suppression." These 8 characters from this reserved and unaggressive-looking boss represented the supreme command to TikTok.
Under this 8-character command, TikTok adopted an unwritten rule, that no matter in which region, as long as its competitor went there, TikTok must go in to snuff it out. As soon as competitors rank higher anywhere, TikTok team must defeat them at whatever cost within a week. Even if it was a Pyrrhic victory, as long as it delivered a victory, any cost was acceptable.
The User Growth (UG) 中台 middle office (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) was vanguard executing the supreme command, headed by 赵祺 Zhao Qi. With a Ph.D. in computer science from Peking University, Zhao is a well-mannered man with black-rimmed glasses and was the co-CEO of a startup called “车来了” "Car is Coming", which was not a successful venture for him personally. But big companies are so strange - sometimes they favor people with entrepreneurial experience, even if it is a failed one, to take the lead. Perhaps it is the hints of tragedy surrounding them, their bold experience in managing a complex project, or just the words of truth after someone has gone to the bottom of a business, that always helps them win the heart of a [big company's] CEO, with a heart to heart pity.
At ByteDance, his colleagues call Zhao Qi "the person who spends the most money in China’s Internet". To put it simply, the UG middle office headed by Zhao spent money on user growth to make the product grow, and the commercialization middle office headed by Zhang Lidong earned money back by selling the product. At this time, for TikTok, spending a lot of money to promote growth was the top priority while considering commercialization was too early for the company.
TikTok set out from China, stretching across the world like the feet of an octopus, in an ever-expanding globalized landscape. They classified the world into four levels: S, A, B, and C, and the strategic priorities are in descending order (with changes every two months):
S-class: the United States, Japan, the UK and India (later banned)
A-class: Germany, Brazil
B-class: between 15-20 countries, generally including Western European countries such as France, Italy, Spain, the Netherlands, Eastern European countries such as Russia, Asian countries such as South Korea, other populous countries such as Indonesia and Mexico, and other developed countries such as Canada and Australia. (Note: usually B-class countries are either countries where Facebook has attained high ARPU (Average Revenue Per User), or has big population, or has high mobile penetration rate).
C-class: between 20-30 countries, including Thailand and Vietnam in Southeast Asia, Saudi Arabia and the UAE in the Middle East, Egypt in [North] Africa, and Argentina in South America. (Note: C-class countries are generally “weaker” than B-class ones)
Other: the remaining 160-170 countries. (Note: these countries need no placement budgets and only rely on [cultural centers] to radiate. For example, when you purchase traffic in Russia, the traffic in Ukraine will go up. When you purchase traffic in France, the traffic Switzerland will go up)
Just like Toutiao’s first attempt at internationalization, developed countries was TikTok’s key targets. For cultural products, once key hubs are conquered, and then radiation to other regions comes naturally in a cultural 降维打击 dimensionality-reduction attack. [Ginger River: this widely used term came from Chinese sci-do fiction The Three Body Problem, in which a high-dimensional civilization use advanced weapon to obliterate low-dimensional civilization without the latter party even understanding it, in much the same way a high-dimensional human crushed an ant] (Douyin is also implementing this idea in China, starting from first- and second-tier cities.)
Source with the knowledge told me that among the global placement budgets, the U.S., the UK, Germany, Japan and other developed countries took the majority of the money. India won strategic funding because of its large territory. Latin America and Russia had to be funded because the competitors 快手 Kuaishou and Likee (owned by JOYY) went to these two markets, respectively, and TikTok has to stick to its four-word policy of "leaving no gaps" (Russia was originally in C-class, but was later promoted to B-class).
The energy from the cultural dimensionality-reduction attack was too great. Southeast Asia was at the downstream of Chinese culture, and so TikTok topped the Thai App Store with only a small number of placements and won the number one spot on both App Store and Google Play in Vietnam. "It just came up so suddenly." In the Middle East, TikTok only placed in Saudi Arabia and the UAE while influence the surrounding countries simply by natural radiation. For example in Iraq, TikTok had never spent a penny. But during the pandemic, TikTok Daily Active Users (DAUs) [in Iraq] surged to 6 million, while Iraq's total mobile Internet population was about 25 million, so the DAU penetration rate was 24 percent, and Maily Active User (MAU) penetration rate was up to 40 percent.
"Everyone is stunned," the above employee concluded, "The biggest difference between TikTok and Kuaishou and Likee is that it manages to occupy developed countries. It has a public pool in which the U.S. contents supply to the markets across the world and Douyin's contents supply to East Asia and Southeast Asia. The power is really strong."
In contrast, the internationalization of Kuaishou has taken a lot of detours. Former Kuaishou employees say they used the so-called "horse racing mechanism" and changed their names in various regions - Kwai, Snack Video, Zynn (closed). These small teams took root like bamboo shoots, fighting independently. The person in charge has been changing non-stop. 仇广宇 Qiu Guangyu (Tony), who just announced his departure, originally came from Didi and was already the fifth generation of leadership.
Qiu tried as much as possible to gather and focus during his term. They also thought about whether they should learn from TikTok to unify their name, but had been wavering, and in the end shelved this thought. For one thing, Kuaishou’s cash pile was not as plenty as ByteDance. For another, their content was not as potent as TikTok in terms of radiation across geographies. They only managed to keep some volume in the Brazilian market.
To help to illustrate TikTok’s path of developments in different countries, it is necessary to introduce some concepts. Generally speaking, TikTok needs to go through four stages, in which “inflection point” is the most beautiful moment.
The first is mainly about reckless spending. Douyin proved the extraordinariness of this business story. So TikTok simply replicated this same playbook every where it went. This is the so-called “简单相信、傻傻坚持 Simply believe it and persist like a fool.”
The second stage is building up of the content ecosystem. In this stage, operations would try to reach out to cooperate with all KOLs from YouTube, Instagram, Pinterest, etc. If the competitor’s price tag was 10K, then TikTok offered twice the amount. At the two ends of the device are users and contents. The users kept growing on one end, and KOLs kept coming in on the content side. A great chemical reaction was thus formed, creating a fly-wheel of user experience.
At the third stage, a milestone moment came: the inflection point. ByteDance has an Inflection Theory, and pays special attention to the metric “DAU penetration rate.” The higher the DAU penetration rate, the higher the user stickiness. The previously low retention rate that had both bugged TikTok while let Facebook misjudge, gradually went up. According to their experience, when a DAU penetration rate hit 20 to 30 percent in any country, the inflection point would be hit.
The inflection point is a moment of magic. Once this point has been hit, the spread of an app will grow naturally through words of mouth. The ratio between acquired traffic and natural traffic will move step by step from acquired traffic as majority to natural traffic as majority. Looking globally, acquired traffic used to account for 70 to 80 percent of users. Now it is only about 20 to 30 percent. “A natural, healthy growth has been achieved.”
The final stage is brand building and monetization.
The S/A/B/C classification system would not stay fixed. Any country can be placed on the “elevator.” The determinants were complex, not only related to hard factors such as population, per capital GDP, internet penetration rate, market ceiling for digital advertising, but also had to do with soft factors. TikTok is a mirror for different cultures.
Indonesia once belonged to B-class, but was promoted to A-class for some time due to strong desire to self-express of Southeastern Asian people. TikTok’s publishing rate in Indonesia was as high as 10 percent, compared with less than 5 percent of Douyin in China, and only 2 to 3 percent in Japan. “People in East Asia tend to be more reserved,” said a person in charge of country strategies.
South Korea belonged to A-class in the beginning, but was downgraded to C-class due to lack of DAU growth, and was elevated back to B-class later. Some employees speculated that this may have to do with “xenophobia of South Koreans.” “Look, Samsung and LG occupy 85 percent of South Korea’s smartphone market. They don’t use Chinese phones. They don’t use Apple either.” Another possible reason may be that “South Koreans really have too many options for entertainment.”
Thus, TikTok hammered out a moat with speed and cash. Someone close to strategy-making told me that from 2018 to 2020, TikTok spent huge amount of cash into four directions: marketing, growth and branding took $5 billion, subsidies for content buildup took $2 billion, server bandwidth cost $1.5 to $2 billion, and the rest went to staff costs. According to this tally, in total $10 billion was spent (equivalent of valuations of 10 unicorn companies combined).
The above-mentioned source believes that for any other platform to create a competing product, the user transfer cost would be at least twice or thrice that much, which would be between $20 to $30 billion. This is a hefty sum that will create big hesitation for whichever big player out there.
Zhang Yiming was daring enough to spend this amount of money. But he also relied on the assistance of Zhang Lidong, who sit downstairs from him at AVIC Low-rice. Zhang Lidong was the “cash generation machine,” the “money god” in this company. He stuffed the coffers of the company through monetization at Toutiao and Douyin.
Big Political Adventure
However, the joy of exponential growth was quickly drowned in the political storm.
Back in 2016, the EU adopted the General Data Protection Regulation (GDPR). It was interpreted by outsiders as the strictest bill ever, with a staggering maximum penalty payment - 4 percent of global annual turnover or €20 million. At the beginning of the implementation of GDPR, the relevant authorities immediately targeted Facebook, which suffered a fine of €10 million in 2018. The adoption and implementation of GDPR triggered countries to pay attention to personal privacy, and global data networks began to move from commonality to fragmentation under increasing regulation.
TikTok has also experienced "the first shot" of political censorship as economic growth in the West declines, populism rises and local protectionism becomes prevalent.
At the end of 2019, then U.S. President Donald Trump, cited ByteDance's acquisition of Musical.ly without filing with The Committee on Foreign Investment in the United States as a reason to put the company in a difficult situation. In response, Zhang Yiming stayed in the U.S. for several months [trying to solve the issue].
In fact, Zhang Yiming recognized the situation in advance. It was before the political storm knocked on the door. In order to prevent data risks, TikTok's overseas "localization" action began in an orderly manner. A TikTok person told me that, at the beginning of 2019, ByteDance started to evaluate the isolation risk internally and make a plan. From the third quarter, "localization" action was officially launched. The campaign was never as simple as a technology switch, but [a switch] for the audit, operations, servers, and then technical product staff. The ponderous process took more than a year.
Facing the quiet switch, the staff involved were hit hard. The first wave was affecting the auditors. A former ByteDance employee said that more than 300 people were laid off from the auditing team at this time. These employees were mostly bilingual workers specializing in minor languages, and although they were allowed to transfer to other jobs, they were limited by the type of their previous work and had little chance of winning.
In the first quarter of 2020, just as the pandemic gloom spreads globally, TikTok embarks on a second wave of migrations targeting operations staff. Their duties were to seek out talent and control the style of content and pictures. Overnight, power was transferred from China to overseas in many regions, such as the China-based team for European market that the operations team was nearly disbanded, [team members] were transferred or left the company. Only those China-based operation teams for regions that do not involve geopolitical risks, such as the team for Southeast Asian region, can remain in the company.
Among the people who left, there were a lot of people who had made a difference, including two girls of Musical.ly headed up operations in Western and Central Europe after Musical.ly merging into TikTok. The general manager of TikTok Europe, named Rich Waterworth, ordered the two to quickly hand over their work to the European team within a week. "The two girls felt particularly wronged. 'We have worked hard here for three or four years and you asked me to hand over in a week with all our team cut and work being handed over there'." A person who has contacted them said that the two later switched to other sectors in the company, one doing games, another doing public welfare.
After the first two waves of "localization" were completed in earnest, the epidemic in the U.S. intensified. Around March 2020, Zhang Yiming, staff of his president's office, and Liu Zhen returned to China on a chartered flight. By this time, Zhang Yiming was already a highly visible global technology mogul, making headlines with every move he made. He entered the country and was quarantined in a hotel, directing the company in storms via video.
After returning to China, Zhang Yiming soon had further actions. In May 2020, ByteDance (Global) announced a high-profile personnel appointment, and the Chinese and American tech circles were in an uproar. Kevin Mayer was the first American to gain supreme power at ByteDance, not only being COO, but also CEO of TikTok. Mayer's past career achievement was built in Disney. In the kingdom of Mickey Mouse, he led the major acquisitions such as Pixar Animation and Marvel, and launched the streaming service Disney+, with a strong track record. Zhang Yiming is counting on his American identity and local influence to help ByteDance broker its way through the intricate forces in America.
Meanwhile, the "localization" had moved to its third phase, with the migration targeting the servers. It looks like the Trump administration is already seeing TikTok as an obstacle on the way to re-election, and the drumbeat of the political storm has intensified.
A participant in TikTok's biweekly meeting recalled that Zhu Wenjia, who is in charge of algorithm technology, said: "It will take two months to complete the algorithm code decoupling." "Can it be done in 15 days?" Zhang Yiming couldn't wait. The answer is yes. And the fourth and final wave of migration is for product and technical staff. TikTok executives, including Zhu Wenjia, were transferred to Singapore.
2020 was a year that ByteDance suffered a political failure. The pandemic has taken TikTok on a wild journey while also ripping it apart. No sooner had the U.S. crisis subsided than their other S-class country, India, fell. Just after Mayer first took office in June, the Indian government issued a blocking ban.
Within days of the incident, Mayer called an all-hands meeting, which became the most rushed plenary meeting in ByteDance's history. In less than five minutes, Mayer told everyone not to worry, that the Indian team was actively communicating [with the Indian authorities] and that the situation was not yet under control. But he went back on his word.
The second-ranked short video app in India is Snack Video, a subsidiary of 快手 Kuaishou. With the banning of TikTok, Snack Video saw a rapid climb, with its Daily Active User (DAU) surpassing 150 million. But the joy didn't last long, as Snack Video was also banned in India five months later.
Back on TikTok's U.S. side, the critical situation took a sharp turn - in July 2020, senior U.S. government officials stated that they would block TikTokl In August, Trump issued a 45-day ultimatum ordering TikTok to divest its U.S. business or shut down. Zhang Yiming was forced to negotiate a sale, with potential deal targets including business giants such as Microsoft, Oracle and Walmart, as well as ByteDance's U.S. investors. Zhang Yiming was ostensibly involved in the spin-off negotiations, but secretly upheld the wish to keep every piece in one body.
Less than three months after taking office, Mayer suddenly announced his departure. Some say his plan was to sell TikTok's U.S. segment in conjunction with shareholders, which seemed to be in his personal interest. Others say he was not that capable and was simply "intimidated." Vanessa Pappas, general manager of TikTok North America, became the interim CEO.
During this period of time, the three words that the company talked most from top to bottom were: geopolitics, China-U.S. confrontation, and Force Majeure. In fact, 99.9 percent of the people [of the company] do not know what the company is going through, and they do not know what their individual fate will be. The uninformed middle and senior management comforted the uninformed grassroots, saying, "Do your best and leave the rest to God's will."
Zhu Jun (Alex), the "Internet poet" and already head of ByteDance Strategy, gave a speech: "In this era of [some countries] erecting walls, TikTok's mission is to go and build bridges so that people around the world can connect with each other and have fun." This generous speech has inspired a group of people.
The confusing crisis finally eased after Trump's campaign loss. "What does the whole thing look like? I lay there without any movement and feel like they're going to 'die' one day and they're really 'dead'." A veteran of the industry who closely followed the event said that a slight misstep could lead to ByteDance losing its entire U.S. assets. Zhang Yiming's negotiations objectively extended the time of the whole process, which help ByteDance survive the U.S. election. After the new U.S. President Joe Biden came to power, the blocking ban was lifted and ByteDance thus avoided a disaster.
He believes that this incident is much tougher than ByteDance's previous efforts to "escape the hunt from giant companies" in China. ByteDance has been active around the giants and went together with them, but it has never swung to any camp, and it has developed the skill of "sitting on the fence and benefiting from both sides." But in the TikTok incident, ByteDance was facing a more passive situation, and the object of the game was much bigger, "It's like a leaf floating in the sea." The person used the analogy of a car driving into a narrow 胡同 hutong in Beijing (a hutong is a lane or alley formed by traditional courtyard compounds lining both sides. Hutongs range from little alleys 40 centimeters wide to streets 10 meters wide), which no one expected: "It went through the hutong once, drove in again this time, and came out again."
Governments have different controls on data security. In order not to put themselves at risk again, ByteDance has set up exceptionally strict isolation mechanisms. According to legal sources who know about this, for sensitive data such as personal accounts, addresses, social security cards, and consumption records, the general principle is that "Data in China is [kept] in China, and data overseas is [kept] overseas." TikTok has data centers in the United States, Europe, Singapore, etc. Data from different parts of the world will be transferred to the data center according to laws and then according to the principle of proximity. For example, in the United States, where the crisis happens, data will not flow out of the U.S. border even if other data centers are more geographically advantageous.
"It's a huge project." A source close to ByteDance's senior management said the company spent a lot of money perfecting the matter, isolating data at all levels, encrypting it and designing highly sophisticated authentication mechanisms so that people with different permissions "could both support the work and not look at the data."
Then ByteDance has become the Chinese tech company with the most localized operations. "There is no Internet company in China that relies on local people so much," said one employee. Even the 中台 middle office that relies on headquarters has to be localized, such as the user growth middle office that holds the key to growth, which is actually very difficult to recruit overseas. But ByteDance has local growth strategy teams in the United States, the United Kingdom, Japan, Brazil and Germany. Some markets have also had teams from both sides [the team in China and the local team] compete with each other for some time.
The purpose of doing so is not to compete, but to use competition as a way of training and let the Chinese help the locals grow. And here is where it hurts the most. The Chinese team grows the market, builds up the methodology, and then they recruit the local team themselves to pass on the skills. Knowing full well that the result would be 乱拳打死老师傅 "the apprentice learns the skills and beats the master," "We worried every day if it was going to happen to us," said one of the employees involved in the process, "but it was a slow infiltration."
"They work far less diligently than the Chinese, generally "965" (start at 9 a.m., finish at 6 p.m., work five days a week)." Chinese employees complained, "We do what the locals don't do, and we have to clear up the messy situation when they get into trouble." And now the situation is "TikTok basically doesn't recruit people in China, and only those who can't be recruited abroad are recruited at home."
Globalization has squeezed the job opportunities for the Chinese. The powerful "localization" has created a situation where a Chinese citizen has about three options to get on top of the big ship of ByteDance's internationalization: One is to change the permanent location to Singapore, Los Angeles, etc., so as to access local data. The second is to get a U.S. green card and access local data via VPN, but with restricted access. The third is to move from the core department that has access to data to a department that does not have to rely on data, relatively away from the decision-making center.
After the political adventure, although they (the Chinese employees) knew that localization was the right path and the way to go, they were still the sad ones on ByteDance's fleet. Shortly afterwards the sad ones disembarked.
The Fleet through the Waves
After coming back from the political valley of death and waking up to the fact that the appointment of Kevin Mayer was a mistake, Zhang Yiming further mulled over his globalization fleet. Organizational construction is a delicate job. It is all about subtle measurement of human nature.
After May 2021, the head of TikTok was neither the Chinese nationals like Zhang Nan or Zhu Jun (Alex), nor American managers like Mayer or Pappas. Zhang Yiming handpicked 周受资 Shou Zi Chew, who has Chinese heritage, Singaporean nationality, British and American education background, and a handsome and friendly oriental face, as TikTok's general manager. Many employees told me that this was the result of careful consideration and an all-around "balancing act.""It's a balance between the West and China."
After being on site, Zhou delivered a speech at the all-hands meeting, and his handsome appearance and elite background captured the hearts of the people. Employees who were not present at the meeting watched it on video, and in the comment section there were lines like: "So handsome," "Face blast," and "Enlarge the picture to the maximum for me." "Shou Zi is so perfect," one employee said.
Some employees shrugged and said he was just talking about "cliche." "I've heard it three times."
The script is always the same: going school in Singapore, joining the army, going to university in the UK, an opportunity to befriend the world-famous Russian boss Yuri Milner, investing in Chinese companies such as Xiaomi, Didi and Alibaba during his five years at DST, then receiving an offer from Harvard Business School, and returning to school despite Yuri's request to stay. Chew even expressed envy and regret about the mouth-watering deals Yuri invested in during Chew's departure. "A little bit of 凡尔赛 Versailles [Ginger River: popular Chinese internet slang, a way of show-off by complaining], but not really annoying." He focused, of course, on how he met Zhang Yiming [in the speech]. The speech was also laced with a dash of personal anecdotes of meeting his life partner, feeling even better.
Chew sit atop the chain of command of the fleet. The two most important admirals under this commander-in-chief are 朱文佳 Zhu Wenjia, a Chinese, and Vanessa Pappas, an American. Zhu is in charge of product and development, while Pappas manages the regional general managers (GM), who in turn are focused on local operations.
Or more simplistically, Zhu is in charge of majority of Chinese employees, while Pappas is in charge of most non-Chinese ones. Chew sits above these two people and plays a balancing act between Chinese and non-Chinese with his elegant multi-cultural background.
Now let's look at the left hand side of this fleet's org chart.
Zhu Wenjia, with dark skin and black-framed glasses, is a veteran employee of ByteDance. He first reported to 杨震原 Yang Zhen Yuan, who is in charge of Data IES (interactive entertainment community). This technical executive, who has been nurtured by the ByteDance culture, has a similar temperament as Zhang Yiming. He once said in an internal sharing session that he could not drive because he thought it was too much of a waste of time. He takes a taxi to and from work. During the hour and a half round trips day after day, Zhu Wenjia would sit in the back seat of the cab and study papers. Every two weeks, he is able to read a good-quality doctoral dissertation. A doctoral dissertation is more systematic and in-depth than [usual] documents, and contains full English reading of more than 100 pages.
In the managerial ladder of ByteDance, it was Douyin that made Zhu take a big step forward. When Douyin was far from its soaring success, Zhu, as a middle manager, brought his team in to make its recommendation algorithm and achieved a growth that was "armed to the teeth." When Douyin's DAU broke 100 million, he got the highest performance "O" (outstanding). Only those who have made outstanding contributions to the company could win this award, and the year-end bonus was said to be a hundred months - many colleagues mentioned this and thought it would be a sky-high number that would make people gulp. Next, Zhu boldly asked for transition to become a product manager, acting as CEO of Toutiao. Everyone knew that Toutiao's growth had already stopped long ago. The surge of Douyin even cannibalized Toutiao. But on this training ground, Zhu transformed from a simple technical manager of recommendation algorithms to a leader with both product and tech capabilities. In February 2021, already a legend, Zhu moved to TikTok.
As the chart goes further down the hierarchy, there are several key individuals reporting along the solid or dotted line to Zhu Wenjia, namely:
梁宇明 Liang Yuming, the head of R&D (former head of Hulu China data and advertising team), reports to 洪定坤 Hong Dingkun, the head of ByteDance Engineering Middle Office on the solid line, and to Zhu on the dotted line.
徐劼 Xu Jie, the head of recommendation algorithm, reports to Zhu Wenjia.
谈斯奇 Tan Siqi, the head of product (formerly worked for 火币 Huobi and 小红书 Little Red Book), reports to Zhu Wenjia.
王率丁 Wang Shuaiding, who is in charge of content style, reports to Zhu Wenjia.
王赢磊 Wang Yinglei, head of live-streaming, (had startup experience and worked for Snapchat). Wang reports to 韩尚佑 Han Shangyou, the person in charge of ByteDance Live-streaming on the solid line, and to Zhu Wenjia in the dotted line.
刘涵宇 Liu Hanyu, head of growth (worked for Baidu and Tencent), reports to 赵祺 Zhao Qi, the head of ByteDance's User Growth Middle Office on the solid line, and Zhu Wenjia on the dotted line.
Coming from Zhu Jun's era, TikTok had two coveted product leaders: Wang Yinglei (Adam) and Tan Siqi. Wang was in charge of strategy at TikTok, which included "country" [strategy] and operational products [strategy] (content understanding and content style). Tan Siqi was in charge of product features.
ByteDance is a company keen to promote young people. Wang and Tan can represent the typical portrait of such people - born in the 1990s, winners from the education selection systems, returnees from famous overseas schools, smart and nimble. Even more importantly, they have a sincere heart for the company, and are also obedient.
Among them, Wang Yinglei single-handedly built a "country" product manager team, accommodating more than ten people, playing the role of a bridge. The team crossed the bridge between China and the regional GMs, channeling divisions and emotions, and carrying business targets on their shoulders. However, this team was like an intermediate form of power transition from China to overseas, and already existed only in the name when Zhu Wenjia arrived. Currently, Wang Yinglei is responsible for TikTok live-streaming. Wang Shuaiding took over the rest of his operational products functions (content understanding and content style).
Now let's look at the right hand side of this fleet's org chart.
Vanessa Pappas, is a tall woman with short blond hair and a powerful aura. "She has an aura that makes you think she's a Hollywood star." With her strong personality and meticulous style, she is one of the few American professional managers who works hard and can swallow the bitterness of the "996 culture" of Chinese companies. ByteDance scooped her up from YouTube.
The employees recalled that in the U.S., once at nightfall, the huge office on the first floor which could accommodate one or two hundred people, was almost empty. In the end, the only people left in the big, empty house were three people: a Chinese employee, Pappas and the security guard. "It had been like this for almost seven or eight days straight. She really took the lead in front of her troops and left work as late as nine or ten o'clock," lamented the Chinese employee who also fell alone. "Americans really do not mind their bosses. Not a single GM left, but the subordinates were all gone."
Under Pappas, most of those reporting to her are local GMs, who hold local jurisdiction
Pappas herself serves as GM for North America.
Rich Waterworth, GM of Europe (excluding Eastern Europe), is a white man with dark-framed glasses and a stout build. In late 2020, he posted an open letter in the UK's Evening Standard saying that [ByteDance] had over 100 million MAUs in Europe.
The GM for Australia is Lee Hunter, who has worked at Google for more than a decade as head of global branding for YouTube and was also the CEO of an ASX-listed company.
Yoichi Sato, GM of Japan, is a Japanese national who has worked at Google and Yahoo for many years and is a veteran who has witnessed the changes in Japanese marketing.
Qi Xiangqian, GM of Eastern Europe, is one of the few Chinese among the GMs, with experience in Russia and was the head of Alibaba's culture media in Russia.
A special exception on the TikTok fleet is Erich Andersen, an American with white hair and over half a century of age. He serves as ByteDance's global general counsel, in charge of legal affairs, government relations and public relations. Andersen has a halo of mystery. One employee specifically pointed to his name and said to me, "He's the one who can go straight to Zhang Yiming."
At ByteDance, Andersen did not immediately show his talent. He benefited from the political storm, as he helped Byte sue the U.S. government and thus won Zhang Yiming's trust. Andersen worked for Microsoft before, rising from a legal officer to the top as chief intellectual property counsel. People who know him say that Andersen, based in New York, is an authoritative yet benevolent leader who tends to be understanding and encouraging to his employees. He is more experienced in the global perspective than 柳甄 Liu Zhen as he had helped U.S. companies enter the Chinese market in the past, and now was helping Chinese companies to try to expand into the U.S. market. He may be able to act as a ballast for the fleet when it is going through huge waves.
In addition, TikTok's commercial head Blake Chandlee and CSO Roland Cloutier also reported to Chew. Before 2021, TikTok did not emphasize commercialization metrics such as ad load and focused on growth. After 2021, TikTok accelerated monetization, which has led Chandlee to play an increasingly important role. His global sales team is analogous to the Zhang Lidong's team in ByteDance China.
In this delicately sculpted structure, ByteDance has set up, with good intentions, some additional mechanisms to both balance human nature and speed up the operation of this giant fleet.
In the past two years, ByteDance has emphasized the mechanism of "solid and dotted line reporting." Among them, the balance between the middle office and each business line is the most important. Take the user growth middle office as an example - the head of European growth, reported to Zhao Qi, the head of user growth middle office, along the solid line, and reported to Rich Waterworth, the general manager of Europe along the dotted line, so that "Rich can feel safe."
An analyst who has researched on TikTok said that the essence of ByteDance's globalization management is to “管得住、放得开” "keep control and let go." For example, TikTok has basically done [products that covered] all the minority languages in India. This can only be done by local people - it requires both organizational tolerance and the ability to correct mistakes.
The practice of PMO (project management office) has also been all the rage in the last two years in ByteDance. PMO is a means to counteract the rapid expansion of companies, departmental walls and miscommunication. Project management personnel works for specific project services, management project planning, scheduling, and plays the role of "firefighting captain" in case of emergencies. They are like the small motors on the fleet, the lubricant on the main engine. After Zhu Wenjia's arrival, a PMO department was established and more than 20 project teams were set up.
PMO enables flexibility in business warfare. In April 2021, when Kuaishou witnessed a big surge after generous spending, TikTok set up a specialized task force to support its user growth middle office. They closely monitor rankings in different countries, and spent heavily to execute the command of "Absolute Suppression" [on rankings]. Gradually, TikTok regained its advantage.
Nonetheless, no matter how high they are in the fleet's command structure, the power they have is still limited power. The person with actual power surrounds himself with a delicate kind of security by implementing an information tier system.
It looks like that the GMs are in charge in their respective territories, but they actually have no access to check which of the S/A/B/C classes their territories belong to, especially when theirs fall under the categories of B/C/Others. More importantly, the company does not let them know how many budgets have been allocated to other countries. These differences can only create troubles for the management. So ByteDance manages to tear down any barriers with an iron fist in order to ensure smooth operation, but it also has another fist to bury down [a different kind of] barriers, putting power under the control of a selected few.
Plaid Shirt, Mooncakes, and Cosmic Tiao
On this outbound fleet, Chew was the fifth person at the helm. Zhang Yiming always knows what kind of people should be employed at what stage.
There are many professional managers - Zhou Jingjin and Liu Xinhua tried and tested for him on the road to internationalization. Liu Zhen helped him build early contacts. Zhang Nan and Zhu Jun alternated to straighten out the products for him. Zhu Jun, especially, stitched up part of the cultural divide. The company hoped to use Mayer's American identity to smooth out the U.S. government, but the plan fell through. Pappas temporarily filled the position in the crisis. Employees have long been accustomed to the senior management team coming and going, summarizing it as "completing the task of a stage." Now, the fleet is in Chew's hands.
At first, the working staff were worried that Chew only understood finance, strategy and investment, and lacked business understanding, but after a period of time, they found that [he was] "a little beyond expectations." Moreover, Chew has a very high level of emotional intelligence. After he arrived at ByteDance, he made imperceptible changes.
One of the most notable was that he immediately downgraded from his suit-wearing CFO style at Xiaomi - to a plaid shirt. One employee even told me accurately that the change happened in his second month on the job. Because in the first month, the company was counting on him to get the company to the hall of capital markets like he did at Xiaomi. But in the second month ByteDance urgently announced that the IPO plan was cancelled and delayed indefinitely, and so he immediately changed his style. "Like a chameleon."
To fit into Zhang Yiming's culture, many employees have observed that Chew has quietly emptied his Twitter and Instagram accounts, "He's mimicking and fitting in with the executives over here." His former employer, founder of Xiaomi, Lei Jun, was an enthusiast who liked high-profile publicity. Zhang Yiming was the opposite. Chew saw this through.
He rarely comments on operational details. Last year, though, he proposed a key direction of change -- "depoliticalization." "[TikTok] should become a pure entertainment product," said a person close to TikTok.
Another thing he has repeatedly thought about is how to further adapt the organization to reduce the cultural shock in the framework of globalization.
Among Chinese companies, ByteDance has become the content platform company that accommodates the most foreign staff. ByteDance is not like Huawei and Xiaomi who are hardware companies that internationalize by sending Chinese people to leave their hometowns and cross the ocean, and then comforting them with lucrative salaries. For content products with cultural attributes and regional genes, ByteDance [needs to] recruit a large number of locals. This has led to a constant culture clash between Chinese and foreigners - even a few boxes of mooncakes can cause strife.
Should only Chinese employees be given mooncakes for the Mid-Autumn Festival (a traditional Chinese festival), or should they be given to all employees worldwide without discrimination?
In the past, ByteDance chose the first option. Then a group of foreign employees complained about the unfair treatment. Later, ByteDance learned to be smart and sent out questionnaires in advance, allowing overseas employees to voluntarily choose whether they want mooncakes or not. This approach was beyond reproach - sending warmth while leaving room for detours. Unexpectedly, another group of employees, led by Americans, came forward and questioned, "This is spreading Chinese culture." The company later managed to placate them.
Chinese people are more like collectivists and more likely to obey; Americans are raised to be individualistic and have a strong sense of individuality. This forced TikTok to do spiritual massaging on the one hand to subdue "demons" and on the other hand to conform to the unique culture and values of each country on its journey of overseas expansion - the latter was a brand new issue for most Chinese companies.
Some employees said that ByteDance employees overseas, especially in the U.S., mentally believe they worked for TikTok, not ByteDance. A sign was that their LinkedIn pages generally only showed TikTok jobs and did not mention ByteDance.
Therefore, ByteDance paid extra attention to the management of overseas personnel. All-hands meetings in TikTok China were sometimes postponed for various reasons, but the all-hands meetings in the U.S. were always guaranteed on time. At the same time, ByteDance had internal communication staff in each region. Overseas employees often asked questions about corporate responsibility, human rights, gender equality, and racial equality, and the communication staff had to coordinate and embellish answers according to local characteristics. To meet the challenges of global management, in 2020, Zhang Yiming added a new article to ByteDance's cultural code: diversity and compatibility.
"TikTok is an excellent example of globalization," an analyst at a leading brokerage firm told me, "And many overseas users don't necessarily understand from which country TikTok comes from."
The ByteDance internationalization team does not have a headquarters. Although there have been frequent leaks in the press that they were considering a new headquarters, it has been slow to materialize. "It's not set in stone yet, and there probably won't be a headquarters." An employee said. Even Singapore -- where Chew, Zhu Wenjia, and key product and research staff are based - has no claim to a headquarters. Like Chew's adhesive effect, Singapore is a place of balance between Eastern and Western civilizations.
Step by step, TikTok has grown into a giant virtual network of unseen nodes, hovering over the world.
In terms of data, TikTok used to struggle to catch up with Douyin. When TikTok was just to get close, it was suddenly blocked in India and DAU went back down to little more than 100 million. It took more than a year for TikTok to catch up again. According to a number of people familiar with the matter, as of early 2022, TikTok's DAU had exceeded 700 million, and "the growth rate was still very fast." For Douyin, the past year has seen very little growth, with about 670 million DAUs, so TikTok has surpassed it as expected. With the two combined, this product suite broke 1.3 billion DAUs worldwide. At the same time, its download volume surpassed Facebook, ranking the first globally among social products.
In terms of organization, Bytedance is undergoing a change from 中台驱动 middle office-driven to 事业部驱动 Business Unit (BU)-driven. In the context of diluting the middle office and strengthening the BU, 赵祺 Zhao Qi, the head of User Growth (UG) middle desk, handed over the mature task of growing domestic business to various BUs and only led overseas growth himself. At the same time, he took over the commercialization product, 穿山甲 “Pangolin,” and incorporated himself into 张利东 Zhang Lidong's system. "The head of a department that spends the most money is beginning to do commercialization, with UG becoming into a secondary department." A source close to the commercialization of ByteDance believe that this is not only in line with the current trend of reducing cost and improving efficiency, but also a reflection of the evolution of the commercial stage of TikTok.
After jumping over the most exciting "inflection point" in the four stages of business, TikTok is no longer dependent on UG middle office, and the growth flywheel can spin naturally, and has come to the final stage: accelerated commercialization. At present, TikTok commercialization still has a lot of potential. According to foreign media reports, TikTok may reach $11 billion in revenue in 2022. A source mentioned above said that there is a more aggressive internal target in the range of $11-20 billion.
The biggest risk for TikTok is still geopolitics.
Looking back, after the birth of Douyin (TikTok's Chinese equivalent) and TikTok, the volume of ByteDance employees grew explosively from 3,000 to over 130,000 (including outsourcing), up more than 40 times. The valuation rocketed from $11 billion to nearly $400 billion, up almost 36 times. It "took off" from the low-rise building where it could park a helicopter. The company, which constantly proclaims its intention to shrink ego, has a spectacular name: 宇宙条 Cosmic Tiao (a nicky name developed from 头条 Toutiao).
In mid-2021, ByteDance held a small celebration party due to the promising performance data of Douyin and TikTok. Sources close to the situation said that during a presentation to U.S. shareholders, the president's office brought up a small cake with a lit candle on it. Although Zhang Yiming does not like this cheesy situation, he still came over to blow out the candle.
After completing a major global expansion at a high rate, Zhang Yiming has stepped down as CEO and retired to the second line at the end of 2021. 梁汝波 Liang Rubo, the current CEO of ByteDance, started businesses with Zhang Yiming when they were in the university dormitory and is a more modest, introverted, and low-key co-founder than Zhang Yiming. An insider reminded me of the fact that Liang Rubo has a technical background, which is good for ByteDance's global brand image. His English has improved a lot and he can answer up to every question from foreigners. Moreover, his [Chinese] accent [in speaking English] is quite weaker than Zhang Yiming's.
Finally, as we turn back the clock to twelve years ago when Zhang Yiming and Liang Rubo had just founded the company 九九房 99fang, and 2010 was the company's second year. Zhang Yiming on that Christmas watched the movie that influenced a generation of mobile Internet entrepreneurs - "The Social Network." The young and famous founder of the social network in the movie, like Zhang Yiming, was born in 1980s. Mark Zuckerberg is even one year younger than Zhang Yiming.
After watching the movie, Zhang Yiming clicked on the 豆瓣 Douban App (a Chinese social networking service platform that allows users to record information and create content related to film, books, music, recent events, and activities in Chinese cities) and wrote a short review, "The most impressive word about The Social Network is paranoid." He gave the movie a four-star recommendation (movies can be rated from one-star to five star on Douban).
One year and three months later, Zhang Yiming founded ByteDance. For many years afterwards, Facebook remained buried in his heart. Now, however, he no longer mentions the company that often.
It is true that Zhang Yiming led TikTok out against the waves. In this world, if you are not swallowed by desire, perhaps you can swallow desire in one bite. Enditem