Founder of ByteDance steps down as CEO to do more 'daydreaming'

ByteDance founder Zhang Yiming will cede the reins of TikTok’s owner to an old college roommate and lieutenant, stepping back from running the world’s most valuable startup ahead of its highly anticipated market debut.

Mr Zhang said he preferred "reading and daydreaming," AFP reported. "I'm more interested in analysing organisational and market principles ... than actually managing people."

Mr Zhang will hand off the chief executive role at TikTok’s owner to human resources chief Rubo Liang, he announced in an internal memo posted online Thursday. The billionaire entrepreneur remains chairman but plans to relinquish most of his day-to-day duties because they were becoming an increasing burden on his time, a person familiar with the matter said, according to Bloomberg. Mr Zhang will instead focus on longer-term strategy.

Mr Liang takes the helm just as ByteDance engineers a series of moves that could shake up China’s internet landscape. It’s preparing for a highly anticipated initial public offering in the US or Hong Kong, and orchestrating its next big act - in China’s $1.7 trillion e-commerce arena.

“I feel I did not achieve as much as I had hoped to on my previous objectives in the areas of new strategic opportunities, organisational management, and social responsibility,” Mr Zhang said in his memo. “After several months of thinking about this, I came to the conclusion that transitioning out of the role of CEO, with all of the related day-to-day responsibilities, would enable me to have greater impact on longer-term initiatives.”

Mr Zhang founded ByteDance in 2012 before using highly refined AI recommendation engines to create hit news service Toutiao and viral global video app TikTok.

His first big success was Toutiao, which means “headlines” in Chinese. TikTok became a global phenomenon, while its cousin Douyin leads in China’s domestic market. The founder now ranks among the world’s richest people after ByteDance shares traded in the private market at a valuation of more than $250 billion, Bloomberg reported, citing people familiar with the dealings.

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

The internet titan is now seeking to increase ad revenue for its China-based businesses including Douyin and Toutiao to 260bn yuan ($40bn) this year from 183bn yuan in 2020, Bloomberg News has reported. The target excludes short-video sensation TikTok. It’s also aiming for e-commerce gross merchandise value of as much as 600bn yuan, up from 170bn yuan last year. Douyin is targeting 680 million daily active users, compared with around 610-620 million in March.

The aggressive targets underscore ByteDance's intention to take on China's largest internet companies from Alibaba to Tencent on their turf.

ByteDance - whose overall revenue more than doubled to $35bn last year - has kicked off preparations for an IPO of some of its main businesses, including Douyin, and is choosing between Hong Kong and US as the listing venue, Bloomberg reported, citing people familiar with the matter. It could raise at least several billion dollars from a listing of the Chinese assets, although deliberations are at an early stage.

If ByteDance hits its sales goal, its Chinese arm will have done in nine years what it took Facebook 13 to achieve, and that excludes TikTok and other businesses abroad. At $40bn, the nascent ad business would be roughly twice that of YouTube’s.