ByteDance founder steps down as CEO ahead of Mega’s IPO

(Bloomberg) – ByteDance Ltd. founder Zhang Yiming will hand over the reins of TikTok owner to a former roommate and college lieutenant, stepping down from running the world’s most valuable startup ahead of his much-anticipated debut on the market.

Zhang will hand over the post of general manager from owner of TikTok to director of human resources Rubo Liang, he said in an internal memo posted online Thursday. The billionaire entrepreneur remains president but plans to give up most of his day-to-day duties as they were an increasingly heavy load on his time, a person familiar with the matter said.

Zhang, who will instead focus on a longer-term strategy, is stepping out of the limelight as Beijing steps up efforts to curb the influence of internet companies and their billionaire founders, Jack Ma’s Alibaba Group Holding Ltd. at Tencent Holdings Ltd. This antitrust campaign coincides with a series of ByteDance moves that could turn the country’s internet landscape upside down.

Liang is taking the lead as ByteDance prepares for a much-anticipated initial public offering in the US or Hong Kong. He’s also orchestrating his next big act – a move to e-commerce that could pit him against Alibaba and Meituan in a $ 1.7 trillion Chinese arena.

“I think I did not achieve as much as I had hoped on my previous goals in the areas of new strategic opportunities, organizational management and social responsibility,” Zhang said in his memo. “After several months of thinking about this, I have come to the conclusion that the transition out of the role of CEO, with all the associated day-to-day responsibilities, would allow me to have a greater impact on longer-term initiatives.”

Read more: Leaked ByteDance memo shows successful income projections

Zhang’s transfer is reminiscent of a similar decision by Pinduoduo Inc. founder Colin Huang, who handed over the management of his own company to a deputy two months ago. The pressures of running fast-paced, hyper-competitive companies while facing increasing regulatory demands may have taken their toll on Zhang, who had begun to delegate his responsibilities. The two will work side by side over the next six months to ensure a smooth transition.

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In 2020, he appointed two executives to lead the Chinese side of ByteDance’s vast business. This month, he elevated Shouzi Chew, former CFO of Xiaomi Corp., to CEO of its US operations. Zhang said in the note that he started discussing with a small group the possibility of having Liang as a new CEO in March.

“The regulatory environment for tech companies in China has become ever-changing and it requires a lot of energy and effort,” said Shen Meng, director of Beijing-based boutique investment bank Chanson & Co.. considerable because ByteDance is just too stressful. “

Zhang founded ByteDance in 2012 before using highly refined AI recommendation engines to create the successful Toutiao news service and global viral video app TikTok. His first big hit was Toutiao, which means “titles” in Chinese. TikTok has become a global phenomenon, while its cousin Douyin leads the Chinese domestic market. The founder now ranks among the richest people in the world after ByteDance shares traded in the private market at a value of more than $ 250 billion, people familiar with the transactions said.

Liang, an entrepreneur like Zhang, will guide ByteDance’s move into new arenas, from e-commerce to educational devices. The low-key executive and Zhang studied microelectronics at Tianjin Nankai University and shared a computer for coding, Zhang said in a public speech in 2016. The couple co-founded 99fang.com – a real estate search service. – in 2009 before joining forces to create ByteDance three years later.

Read more: ByteDance plans $ 185 billion new business ahead of IPO

The internet titan is now looking to boost the advertising revenue of its China-based companies, including Douyin and Toutiao, to 260 billion yuan ($ 40 billion) this year, from 183 billion yuan in 2020, Bloomberg reported. News. The target excludes the feel of a short TikTok video. It is also targeting a gross value of e-commerce goods of up to 600 billion yuan, up from 170 billion yuan last year. Douyin is targeting 680 million daily active users, up from around 610-620 million in March.

The aggressive targets underscore ByteDance’s intention to take on China’s biggest internet companies, Alibaba Group Holding Ltd. to Tencent Holdings Ltd., in their territory.

ByteDance – whose overall revenue more than doubled to $ 35 billion last year – has started preparations for an IPO of some of its core businesses, including Douyin, and chooses between Hong Kong and the United States as the location for listing, people familiar with the matter said. He could raise at least several billion dollars through a listing of Chinese assets, although deliberations are only at an early stage.

If ByteDance hits its sales target, its Chinese branch will have done in nine years what it took Facebook 13 to achieve, and that excludes TikTok and other companies overseas. At $ 40 billion, fledgling advertising activity is said to be about double that of YouTube. Reuters first reported Zhang’s decision.

“ByteDance is mature enough to take a step back,” said Ke Yan, Singapore-based analyst at DZT Research. “He can now selectively do what he thinks is important, instead of being a CEO who has to deal with serious matters.”

(Updates with analyst comments from the seventh paragraph)

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