Zhang Yiming established ByteDance as one of the most recognizable names in Chinese technology. Now, at the age of 38, he is stepping down as CEO, becoming the latest young Chinese tech entrepreneur to resign while leading a rapidly growing company.
Zhang, who founded Tiktok owner ByteDance in Beijing nine years ago, announced Wednesday that he will leave the company at the end of the year to “focus on long-term strategy.”
“Since the beginning of this year, I’ve spent a lot of time thinking about how to better drive real long-term breakthroughs,” Zhang wrote in a letter to employees that the company posted publicly. He added that he made the decision after several months of thinking, and decided that leaving the “day-to-day responsibilities” behind would allow him to have a “greater impact on longer-term initiatives.”
“The truth is, I lack some of the skills that make an ideal manager,” he said. “I’m not very social, preferring solitary activities like being online, reading, listening to music, and daydreaming about what may be possible.”
Liang Rubo, ByteDance co-founder and head of human resources, will succeed Zhang as CEO.
Zhang’s decision to leave may appear unusual, especially when compared to the paths taken by his counterparts at Western tech firms. ByteDance has skyrocketed in popularity over the last few years.
Zhang oversaw a number of significant acquisitions that aided ByteDance’s global expansion, including a 2017 deal for Musical.ly, a video-sharing app that ByteDance merged with TikTok. The popularity of its flagship app has skyrocketed, making it one of the few Chinese-made apps to gain significant traction outside of China.
Even after a dramatic battle in the United States last year over concerns that the app posed a national security risk, TikTok avoided a ban and remains popular. In the United States alone, it has approximately 100 million users. (National security claims have been debunked by TikTok.)
According to multiple media outlets, ByteDance is also considering a massive IPO. According to Bloomberg, the company has been valued at $250 billion in private trades.
“Zhang was a young software engineer without significant business experience when he suddenly found himself running a massive company in rapidly shifting markets while operating in an extremely complex regulatory and political environment,” said Brock Silvers, chief investment offer at Hong Kong-based Kaiyuan Capital.
While Liang’s appointment as CEO indicates that the company’s strategy will not change, it is unwelcome news ahead of a potential IPO. “Founders abruptly leaving their heavenly perches may well signal a significant red flag to public markets,” Silvers added.
Zhang’s decision, however, is similar to that of some of his peers. Colin Huang Zheng, the 41-year-old founder of Pinduoduo (PDD), announced in March that he would step down as chairman to pursue other goals, including his childhood ambition of becoming a scientist or researcher. In less than a decade, he had transformed the company from nothing to a platform capable of competing with Alibaba.
These top tech executives have a lot on their minds right now as Beijing tries to bring order to the industry.
To “maintain social stability,” Chinese President Xi Jinping has called for restrictions on the internet sector. Regulators have slapped Alibaba (BABA) with record fines, ordered a reorganization of its financial affiliate Ant Group, and opened antitrust investigations into Tencent (TCEHY) and Meituan.
Those in the tech industry who have close ties to their companies are at risk of being caught up in the crackdown. Alibaba co-founder Jack Ma, who resigned as executive chairman in 2019, has been the subject of intense scrutiny since he slammed financial regulators last fall and watched as Beijing cancelled an IPO for his company.
Ma, who made a name for herself as an outspoken celebrity entrepreneur, has since stepped away from the spotlight.
Others have unintentionally gotten themselves involved in controversies. Meituan’s stock dropped by billions of dollars earlier this month after founder and CEO Wang Xing shared a 1,100-year-old poem on social media, which many people mistook for a veiled shot at the government. Wang later clarified that he was referring to Meituan’s industry rivals, but the stock remained volatile.
“The environment is now so opaque and difficult that even the iconic master-operator Jack Ma has paid a very dear price for missteps,” Silvers said. “Zhang Yiming and Colin Huang are intensely aware of this example, and their desire to not follow in Ma’s most recent footsteps probably played at least some role in their respective decisions to step down.”
While “this may be beneficial or necessary from Beijing’s standpoint,” he added, “over the longer term it cannot bode well for China’s tech ecosystem.”