Extra Buzz 010: Bytedance Gets Its Own Captain Buzz Lightyear America
Dear Extra Buzzers,
Many apologies for missing last week’s newsletter and also for the tardiness of this one! I was in the middle of a big move and grossly under-estimated how big of a feat it would turn out to be! Rather than send a half-assed newsletter, I thought I’d make it up by writing each of these next two weeks. I also have to confess that as a US citizen, the events of the past week have been pretty tough / unsettling / disturbing … ok just plain nightmarish to watch. Here’s to hoping the situation does not worsen the next time you hear from me. OK … /end aside.
A bit of housekeeping before we start today though – if you’ve noticed, we’ve been spending quite a bit of time on Bytedance recently (each of the last two episodes have been on their gaming & education as well as non-TikTok / Douyin video initiatives respectively). There’s a good reason for that! I’m working on writing a short e-book on Bytedance. I originally conceived of it as a series of episodes, but despite being just eight years old, the company is quite sprawling, and my most interesting findings about it didn’t fit neatly into a product or market narrative, so a separate e-book seemed more suitable. I’m still in the middle of research and interviews so it’s going to be a bit before it’s ready, but as Extra Buzz subscribers, depending on how things go, you may be getting a sneak preview at what I’m writing! No promises, but that’s what I’m working towards. Meanwhile, if you’re interested in getting a drip of what I find fascinating about Bytedance, do follow this thread that I’ve created on Twitter – I’ll be adding relevant things to it –
To that end, the podcast will be taking a sabbatical from its usual format for the next couple of months so that I can focus on Bytedance. We’ll still be pushing out episodes, they’ll just be high quality edits of the webinars that we have been holding. Speaking of which, there is one coming up next Thursday, 6/4 from 10-11AM on livestreaming e-commerce in China with fellow SupChina podcaster Lauren Hallanan. We’ve talked about it many times on Tech Buzz, but here’s your chance to ask questions to an actual practitioner of social media marketing in China.
And now onto the main course … !
Best,
Rui (& Ying)
Bytedance Gets Its Own Captain Buzz Lightyear America
Many of you are public market investors, and so were probably well acquainted with the triumphs and disappointments of long-time Disney exec Kevin Mayer. But those of us less steeped in blue-chip traditional media, this was the first time we encountered his impressively square-jawed all-American visage. Sure, all of us in China tech knew that a TikTok CEO search has been urgently underway for a few quarters now, with founder and now-global CEO Zhang Yiming spending a “significant” amount of time in the US, but I personally hadn’t given much thought to who was going to want to take over the hornet’s nest that is TikTok in the US (and maybe India, although the current wave of outrage seems mostly user-driven). I mean, the (repeated?) congressional hearings over TikTok’s threat to American consumers and the proposed ban on federal government devices made it seem like the job was going to involve a significant amount of political activity. Let’s face it, there is a very small intersection in the Venn diagram of the circles that make up a) someone who can credibly run a (very large!) technology company and appease the various stakeholders and shareholders b) someone who can mollify politicians and the associated security (cyber? national? is it all the same anyway?) agencies, c) someone who would have the dexterity, the patience, and just … the gall? to attempt these actions with a Chinese internet company. What am I missing? A rainbow-making unicorn while we’re at it?
I certainly didn’t know anyone who might fit this bill, nor did I even have the imagination to think I might have even heard of someone who did. While the first two requirements already pose a great challenge, it’s really the third that probably weeds out the most candidates. If you are up to the first two tasks, then surely there is no lack of dizzying alternatives for you.
Kevin A. Mayer, new CEO of TikTok and COO of Bytedance.
And so it kind of makes sense that the person who ultimately took the job is someone who is repeatedly referred to as having been “passed over” for one of the most coveted CEO jobs on the planet. Who knows if he actually was – it only matters that he is definitively declared as having been in contention. In either case, it certainly worked in the West – media seemed mostly positive, with The Information even declaring his hiring as a sign of growing openness from Chinese firms to hire Western executives. In China, it was met with applause as well, but also skepticism. Citing much the same list as The Information – Xiaomi’s Hugo Barra, Tencent’s David Wallerstein, etc. – CNBeta concluded that most Western executives either had very short-lived stays (even Chinese-born Lu Qi couldn’t hack it for too long at notoriously political Baidu), or were relegated to marginalized roles far away from the company’s real power centers. The one exception being James Mitchell of Tencent, who wields real power, but is also extremely low-key. Which is why some were taken aback that Mr. Mayer would be named COO of the entire Bytedance organization, in addition to being named TikTok CEO.
But if you have spent serious time like I have watching old Zhang Yiming interviews and speeches and looking through his old Weibo posts, then all this actually seems kind of inevitable. It’s just that until it actually happened, it had been difficult to imagine just how he was going to make it happen. There were always signs though, that he really does mean to build a global empire, and not in the rule-from-China way that past Chinese entrepreneurs have gone about it. Here are some of them:
1) Bytedance had internationalization in mind from the start. In fact, most native Chinese speakers will note that 字节跳动, its Chinese name, is awkward, and is a direct translation of its English name, which is odd to see the least, given that most names are transliterations. Zhang’s own speeches indicate that the English and Chinese names were decided concurrently because globalization was a distinct possibility for his generation of entrepreneurs. Shortly after Toutiao was launched in August 2012, discussions of expansion were had in earnest and even made it into the company’s 2013 management presentation.
Jan. 2013 Management presentation calling for internationalization and monetization attempts.
2) Zhang Yiming has spent significant effort “upgrading” himself for a global-facing role. What doesn’t get talked about enough in English media is his ties to Wang Xing, founder of Meituan, and a US-graduated, globally minded, ever curious entrepreneur if there was one. Zhang was in fact Wang’s technical partner (sometimes translated as co-founder, but I take to mean key hire) at Wang’s failed Twitter clone, Fanfou. The two also share the same hometown – considered a deep affiliation in Chinese culture – which is how they got to know each other in the first place. After Zhang Yiming made his first visit to Silicon Valley in 2014, he ramped up his English learning, with another spurt post 2017, when he spoke to Western media re: the acquisition of Flipagram and was observed to have “halting English.” He was not pleased with that assessment and seems to have taken it personally. Either way, he’s always been a big fan of quoting English, as evident from his early Weibo posts and more recent company speeches. And he’s been known to pressure his (Chinese) executive team to learn English as well, although so far this hasn’t been compulsory. The efforts have been serious – in 2019, he was reported to have spent two-thirds of his time outside of China.
3) Zhang Yiming has never wanted to be just a Baidu (China top dog) – it was always Google and Apple (global empires) that he has set his eyes on. Chinese companies – aside from consumer hardware – have largely used investments and acquisitions to expand abroad, and there are very few whose products have been exported “as they are” to non-Chinese speaking users. Zhang Yiming (and those of his generation, like Pinduoduo’s Colin Huang) do not believe in the impermeability of such boundaries. As he has repeatedly stressed, a good product logic does not need to be re-calibrated for each region … it’s only the operations that need to be localized. Ahem, he might have to modify or at least clarify that philosophy for TikTok, which is going to need to demonstrate complete independence from the mainland for the aforementioned political and security reasons, but this is largely consistent with how the company has been built, which is as a somewhat functional (vs. divisional) structure. The Information, again, has an outdated but still very informative organizational chart on Bytedance. Unlike Facebook, which is divided into separate business units each representing a flagship app, and all with its own engineering teams, Bytedance has a head of Recommendation and head of R&D, who then oversee various engineering staff attached to different products. Its Monetization department is similarly structured. Zhang Yiming was reportedly inspired by Apple’s dedication to its famously functional corporate structure. Which explains in part, at least to me, why Kevin Mayer has also the COO title at Bytedance, and why that is not necessarily just an empty label for ego-stroking. And which brings me to my next point …
Preview of slightly outdated Bytedance org chart by The Information. Paywalled.
4) The commitment to global expansion has been consistent, public, and specific. TikTok was launched only in late 2017. Yet by early 2018, Zhang Yiming was already predicting publicly that Bytedance would have more than half of its users coming from abroad in three more years. Based on download data at the time, this would have been considered a pretty bold statement. Of course, private company CEOs are generally lauded for their “visionary” optimism and rarely held accountable for statements made last quarter, much less many quarters ago, so it’s easy to dismiss this as just more corporate PR. But Zhang Yiming hasn’t backed off from this timeline. Yes, there are murmurs that this could be adjusted downwards to one-third given regulatory headwinds abroad, but that would still be incredibly impressive.
5) All of this advance preparation means Bytedance truly has room for an international C-level. So back to what I said at the beginning … Bytedance’s globalization only looks sudden and drastic to those of us who hadn’t been keeping our eye on the company. But in fact, it has actually been in the works for many years, even since its first months of existence. However, it is also true that everything prior to bringing Kevin Mayer on board has been “small potatoes” compared to naming a global COO. Sure, there have been many foreign names hired already into high places – Ole Obermann, Erich Andersen, Roland Cloutier, Vanessa Pappas, Richard Waterworth etc. – but none have been ushered into the uppermost echelon of power at the company. This is a fundamentally different exercise from every other Chinese internet company’s expansion abroad. Zhang Yiming truly wants a global executive team, not as a PR stunt, but because that’s what he truly needs. I mean … have you seen the Bytedance Board of Directors? Aside from Sequoia China’s Neil Shen … everyone else is a foreigner.
So there you go. Bytedance had tried, but was ultimately only marginally successful, internationalizing its first real “recommendation engine powered” win, Toutiao. (That attempt was called TopBuzz, which we cover in our first episode devoted to Bytedance.) But he was quick to realized that he needed to diversify his efforts. In 2016, Zhang Yiming announced that the company was going to adopt a both build & buy strategy for expansion abroad. As for “build,” it’s already well set up to do that … but buy, well, that would be Kevin Mayer’s claim to fame, having helped Disney acquire its most valuable assets, including the owners of both of his nicknames, Captain America and Buzz Lightyear. Deal-making will be crucial for not just TikTok but also the adjacent verticals Mayer will be looking into – music and gaming. Music, in particular, has been very problematic for TikTok. So the more you look at this, the more it doesn’t seem like such an awkward fit – the 6’3” former MIT footballer and 5’7” soft spoken engineer from Fujian. There is a complementariness after all that Bytedance has been looking for for a while now.
That doesn’t mean this is a fully win-win situation, of course. In addition to the very real risk that Mr. Buzz America doesn’t work out, Bytedance is already seeing its earlier saviors make their exodus. I am talking about the fact that Liu Zhen, formerly “head” (of Strategy) of Uber China and Bytedance’s SVP of Corporate Development for the past four years, has just announced her resignation. She is part of the powerful Liu clan – her uncle is the founder of Lenovo and cousin Jean Liu is the President of Didi. She was one of the main forces behind the history-changing acquisition of musical.ly at the then-astronomical sticker price of “up to $1 billion” back in late 2017. (Let’s not forget that musical.ly had no shortage of interested suitors though, including, most notably, the Zuck himself, and also now-archnemesis Kuaishou, whose efforts were allegedly thwarted by the greed of musical.ly’s angel investor Fu Sheng.) Anyway, with her Silicon Valley power lawyer background (she practiced for years as counsel at illustrious tech law outfit Fenwick & West), and having played an integral part of Uber’s meteoric rise in China, she seemed groomed for global empire-building. But she has chosen to leave just as Bytedance is once again stirring up rumors of an imminent IPO, so … does this have anything to do with Captain Lightyear’s hire? The answer is likely yes.
Liu Zhen, who has just resigned as Bytedance SVP of Corporate Development.
Lest you think I am super positive on this union – I am not. I’m only hopeful, instead of downright pessimistic. There are so many risks to this coupling, all mentioned above. My point is merely that unlike in marriages past, where the Chinese company was often a bad-faith actor trying to leverage the halo of an exotic hire in a song-and-dance scripted to soothe investors, Zhang Yiming seems to have truly sincere intentions in building a real partnership. Out of pragmatism, anyway, which has always been his distinguishing characteristic. Well before the regulatory hurdles surfaced, he had been pushing for global expansion and hiring locally for operations. This is the only way Bytedance has a true shot at the global domination it has dreamed of since conception. Will it work out on this first try with Kevin Mayer? Maybe not. But Zhang Yiming would probably go on anyway. Develop a company like a product, he’s fond of saying. I take that to mean much like how one would release a product, Bytedance intends to test out its corporate strategies in the real world, and quickly iterate based on feedback. Unlike Disney, which is a highly stable business, Bytedance is a “Super App Factory” that is constantly creating new products. Will Kevin Mayer be the upgrade Bytedance needs? It may very well depend on how quickly he can iterate himself and keep up with the company. All eyes on you, Captain Buzz.
