A CEO of a multi-billion-dollar technology company suddenly announces his retirement to explore long-term projects to help humankind solve bigger problems. His replacement is not his trusted second-in-command but rather an old friend and long-term comrade with an engineering background.
In a plot usually found in fictional stories, the above scenario happened in China twice over the past year.
An unexpected departure
On the morning of May 20, Zhang Yiming, the founder and global CEO of ByteDance, announced his resignation as CEO of ByteDance in an internal memo sent to all employees. He will be replaced by Liang Rubo, his college mate, also the co-founder and head of human resources of ByteDance.
In the past year, Zhang’s counterpart Colin Huang also resigned as CEO and chairman of Pinduoduo, China’s second-largest e-commerce company he co-founded.
The change in leadership at ByteDance came suddenly and unexpectedly, many employees at ByteDance commented that Zhang has never mentioned that there was a chance of him leaving the company. The email caught many by surprise. Perhaps the only hint of his departure was how Zhang stopped updating his new OKRs since the beginning of 2021.
Zhang disclosed in his letter that he did not update his OKRs because he was not pleased with how he performed in his last year’s OKRs, which include: a) New strategies to explore long-term goals; b) Research into organization development and management and c) Increase social responsibility.
Zhang claims that he is not a mature manager, and the busy schedule of his CEO role has prevented him from either freely brainstorming ideas that deserve but lack thoughts or learning about new technical developments. After leaving his role, Zhang is able to dedicate his time to studying and researching so that he can create more possibilities for the company in the coming decade.
Timing is important. ByteDance is currently the most valuable non-listed company in the world. Its latest valuation has exceeded 400 billion USD, but the path to listing is uncertain, and it recently announced in April that it has no plans for an IPO anytime soon. Its operations in China are facing a bottleneck in terms of advertising revenue, and ByteDance is trying to pivot into e-sports, e-commerce, and online education to diversify its product offerings. Its most popular international product—TikTok, also faces regulatory threats from different governments that are difficult to navigate out of.
Dormmate slash co-founder
The incoming CEO, Liang Rubo, is Zhang Yiming’s roommate in China’s prestigious Nankai University. They were co-founders in Zhang’s first venture 99fang.com, a real estate search engine, and subsequently worked together at ByteDance on various projects, including Toutiao, and developed various systems for online advertising and user growth.
Liang Rubo has been traveling between Beijing and Singapore since the start of the year and was tasked with building up the management team in Singapore, according to a report by local media LatePost.
Singapore is one of ByteDance’s international headquarters that accommodates teams spanning across product design, research and development, human resources, as well as legal and compliance. The newly appointed TikTok product head Zhu Wenjia and TikTok’s new CEO and ByteDance CFO Chow Shou Zi has already started work in Singapore. ByteDance’s international team is being developed steadily, and this has been Liang’s main task over 2021.
Pinduoduo’s employees describe Ah Bu, Pinduoduo’s COO, as being omnipresent in the company, but it’s Chen Lei who succeeded as CEO instead of Ah Bu.
Besides Zhang Yiming, ByteDance has other heavyweight C-suites, such as China’s director of commercialization Zhang Lidong, or its China CEO Kelly Zhang. But Zhang’s successor is Liang, rather than them.
Zhang Yiming and Liang Rubo’s anticipated handovers should occur within the upcoming half year. The reporting lines and management structure of ByteDance will change, respectively. If the current management structure is kept in place, Zhang Lidong and Kelly Zhang will both report to Liang.
Many employees who have previously worked with Liang have said that he is intelligent, humble, and not aggressive; he is a gentle “techbro.” The same characterization also applies to Zhang.
Another ByteDance employee told reporters that Zhang Lidong and Kelly Zhang are actively involved in their respective duties; they are strong-willed alpha characters with a clear and sharp business sense. Rather than concluding who is more suitable to lead the company, one thing is clear: they have very different personalities from Liang.
ByteDance’s commercialization departments have kept their distance from products and engineering units for far too long. Many employees have commented that the commercial departments operate like an independent company. Its performance assessment mechanisms and organizational culture are now very different from the other departments. Zhang is also not interested in the sales and advertising side of the business and has rarely made public comments about sales and advertising.
Within 20 minutes of Zhang announcing his departure on the morning of May 20, Liang also issued an open letter to thank Zhang and the colleagues. He expressed that he will be taking over a part of Zhang’s management role to allow Zhang to focus on longer-term projects that would, in time, create new opportunities for the company. Liang said that taking over as a CEO is a “huge challenge with immense pressure.”
No other senior management of ByteDance shares what Liang has—a trusted bond with Zhang over 20 years, built over being roommates, sharing a computer to learn coding, to managing the world’s most valued startup.
Liang is Zhang’s college classmate and roommate. Zhang has mentioned Liang many times across different interviews—when Zhang’s computer was stolen in his college days, leaving him only with a monitor, Zhang got Liang to buy a CPU so they could both share a computer.
Since Zhang’s first project in 99fang.com, Zhang and Liang have been co-founders. ByteDance is the second company which they have both founded. In both ventures, Liang has always been in charge of the technology and engineering. After 2016, Liang became the project director for Feishu and Xiaolv. Since 2020, Liang has taken over Hua Wei’s roles and has been in charge of human resources and management ever since.
What Zhang wants
Zhang has said that he is not a mature manager, and Liang is a better candidate to improve the organization’s management and allow the company to develop stronger.
Many competitors of ByteDance have shared with our reporters that they think after Zhang resigns from his CEO role, he can spare himself some managerial roles and provide a layer of protection for himself against external conflicts involving his company, including the geopolitical tussle the company is now facing in several countries, as well as the growing regulatory scrutiny domestically.
Many employees of ByteDance believe that Zhang’s resignation is the same play as Pinduoduo’s Colin Huang, where resignation does not equate to retirement. Even after resigning as CEO, Colin Huang is still in active management of Pinduoduo, mapping out their strategy and directly influencing Pinduoduo’s many projects.
A founder stepping down is not a founder retiring into oblivion. A company faces multi-faceted challenges in a complex environment, and these challenges are even more acute for big and international ones. When an entrepreneur steps out of the limelight, they can enjoy the anonymity and security that otherwise weren’t available.
No matter who the CEO is, they have difficult problems to solve.
As the anti-monopolist laws and online education regulation come to the forefront of Chinese authorities, managing a tech business in China is increasingly difficult. TikTok is also facing challenges internationally with data privacy laws, and Biden’s ambiguous attitude towards TikTok also creates risk for its operations in the US.
Zhang Yiming has said that he has been relying on his past knowledge over these three years; he feels out of touch with the latest technology while new technology revolutions are already underway. He raised the example of electric vehicles. While it became popular only in recent years, Tesla had started research into this area 18 years ago.
Leaving the role as a CEO allows Zhang to focus his thoughts, and explore his interests in life sciences, virtual reality, computer science, and understand new technologies.
This is a rare opportunity where Zhang speaks about what he wants personally. Across the past decade of building ByteDance, Zhang’s identity has been inseparable from ByteDance as a company.
He emphasizes that his departure is for the betterment of the company. He hopes to view the company from the lenses of an outsider where he can shed off the burden of managing 100,000 employees and view the company from new angles.
Liang Rubo said that Zhang’s departure as a CEO and leaving behind the daily management of the business is to focus his energies on matters which are “important but not urgent” to the company.
In the past year, various tech CEOs who departed from their role have all said that they prefer to focus their energies on other projects apart from the daily running of their company.
When Jeff Bezos resigned from being the CEO of Amazon in February this year, he claimed, “Being the CEO of Amazon comes with heavy responsibilities which are very draining, to the point where you have nothing left for other projects.” After resigning from his role as CEO of Amazon, Bezos will continue making important decisions with Amazon, but he will focus on his charity work, Blue Origin (a rocket company), and the Washington Post (which Bezos owns).
As for Colin Huang, when he departed from the role as Pinduoduo’s CEO last July, he expressed that he wanted to spend time researching different business structures and business management theories. When he resigned from the Board of Directors this year, Colin Huang explained that he might research food or life sciences.
Zhang Yiming inevitably went down the same path.
These days, it seems that the CEO is no longer the most important role in a company.