GGV Capital’s Hans Tung and Zara Zhang interview Liu Zhen, the Senior Vice President of Bytedance (Toutiao), one of the fastest growing Chinese tech start-up that has made a lot of headlines. You may know Bytedance through its flagship product, Jinri Toutiao (今日头条), a content discovery and recommendation mobile app platform that uses artificial intelligence to recommend content to its users. What you maybe less familiar with is that Bytedance also owns some of the most popular short video apps in China, and has demonstrated its global vision with its recent merger with Musical.ly, a top ranking short video app in many countries with hundreds of millions of users, and a GGV portfolio company. Prior to Bytedance, Liu Zhen led Uber’s China team before it was acquired by Didi Chuxing (a GGV portfolio company) in 2016.
From being a lawyer in Silicon Valley, to helping Uber scale in China, to spearheading Bytedance’s global expansion, Zhen had unique experiences that inform her views on the tech ecosystem in China and the US.
Hans Tung: Hi there. Welcome to the 996 Podcast, brought to you by GGV Capital. Co-produced by the Sinica Podcast. On this show we interview movers and shakers of China’s tech industry as well as tech leaders who have a U.S.-China cross-border perspective. My name is Hans Tung. I’m a managing partner at GGV Capital and I’ve been working on startups and investing in them in both the U.S. and China for the past 20 years.
Zara Zhang: My name is Zara Zhang. I’m an investment analyst at GGV capital and a former journalist. Why is this show called 996? 996 is the work schedule that many Chinese founders have organically adopted. That is, 9 a.m. to 9 p.m., 6 days a week.
Zara Zhang: To us, 996 captures the intensity, drive and speed of Chinese internet companies, many of which are moving faster than even their American counterparts.
Zara Zhang: On the show today we have Zhen Liu, Senior Vice President at ByteDance, one of the fastest growing Chinese tech giants that has made a lot of news both literally and figuratively. Most people know ByteDance by its flagship product, Toutiao, a news aggregation app that uses artificial intelligence to recommend content to its millions of users who on average spend 74 minutes per day on the app. But ByteDance also owns 4 out of the top 6 short video apps in China and has also demonstrated its overseas ambition with the acquisition of the U.S. short video app Flipagram and most recently merging with music.ly, a top ranking short video app in many countries with hundreds of millions of users and also a GGV portfolio company.
Hans Tung: GGV co-led music.ly’s Series B and C and has been on the board of the company since 2015. Upon the ByteDance-music.ly merger, GGV has become a shareholder in ByteDance as well. On this show, we’ll talk about significance of this deal, as well as how the founders got to know each other and why we think that Toutiao may be the best positioned amongst Chinese startups to go global.
Zara Zhang: So Zhen, welcome to the show.
Liu Zhen: Thank you for inviting me. It’s really my pleasure.
Hans Tung: Thank you. You’ve had a very interesting career. You grew up in China, went to study abroad in New Hampshire during high school, and then came back to China for college and then attended law school at Berkeley and worked as a Silicon Valley lawyer and then came back to Asia for work before taking a leading position at Uber China and most recently joining ByteDance.
Hans Tung: So let’s start with your first formative experience. When you first came to the U.S. as an exchange student in high school, you went to, interestingly, a predominantly white town in New Hampshire. What was your biggest takeaway from that experience and why that particular state?
Liu Zhen: I was 17 when I went to Concord, New Hampshire. I went to a local high school, stayed with an English speaking host family, actually a Jewish family, for the entire year. They have 3 kids. The entire one-year experience was really eye-opening.
Hans Tung: This was an exchange student program?
Liu Zhen: It was an exchange program. I decided to take a gap year. When I look back, the biggest takeaway is that I was able to learn the other side of the story at a very early age. I’ll give you an example. When I went to learn history, I was in my senior year and I took a history class. What I learned even about Chinese history is very different from what I learned when I was in China. I remember that I even got into a huge debate with my classmates and teachers. They said what I said is wrong. And I said why? My English wasn’t very good and I couldn’t really articulate the reasons, but I found out that they said one sentence that I still remember today: they said, “You said that because you were taught that way.”
Liu Zhen: And I think that’s very important. I am fortunate enough to be involved in a very small entrepreneurial community that consists of a lot of well-known, established entrepreneurs of tech companies. One of the topics said we spend a lot of time on today is about artificial intelligence and education. We actually have an education conference this afternoon. And then Yiming, our CEO and founder, will have a fireside chat with Yuminghong, the CEO of New Oriental.
In that group, we discussed what AI will change in education, what topics are going to be replaced, what skills or subjects that are actually not really trendy or forward-looking, as AI and technology develop. I think education is very important and I think there are a few people who actually had the opportunity to learn Chinese history in China, and then also had the same exposure in the U.S. to learn the other side. What they say about the Qing Dynasty, Chinese history, about revolutions.
I think that’s very interesting. I am a strong supporter of having kids exposed to, immersed in not only a multi-language but also a more diverse and multi-cultural educational system. It’s not about the language, it’s about the information avenue and the channels of how you receive information. So I always wanted to hear the other side of the story to be able to form my own argument and to have a more objective, real perspective on things. I think that’s very important and I think I benefitted a lot from my earlier experience.
Zara Zhang: I think that resonates for a lot of us who studied abroad at an early age: the feeling that our opinions are shaped by how we grew up and how we were taught. So you studied law. You said before that you like risks and ventures. But law is a pretty risk-averse career. So why did you choose to study law and become a lawyer?
Zara Zhang: My grandfather was actually a patent lawyer. A very renowned patent lawyer in China. In law, you have to take the bar and get a law certificate and be able to practice with a license. His Chinese license number is #2.
Zara Zhang: Wow, the second ever lawyer.
Liu Zhen: Yeah, he’s a patent lawyer. He started his law career in his 50s. He’s 50 years old and he actually went to Hong Kong and started a patent firm and in his 70s he started the first limited partnership law firm in China. It’s called Liu, Shen & Associates and it’s very well-known within the patent community. To me, he’s not one of those typical lawyers that you see who drown himself in paperwork or do a lot of deed execution or follow whatever way. He’s really a founding lawyer of patent law in China. He’s a lawyer with strong entrepreneurship.
I think not only me, my entire family actually, we’re learning from him. My aunt is also a patent lawyer and my youngest cousin also went to law school in the States and is also practicing law in New York. So a lot of our family members actually wanted to become a lawyer. But not a traditional lawyer. Because the way that we imagine legal and law as a profession is never as that lawyer with the big suitcase and paperwork and checking formatting and everything. It’s more of being a problem-solver, pioneer kind of lawyer. To me, that’s my impression of being a lawyer.
Hans Tung: So when you first worked in law, what was your field and how did you change from that to going to tech?
Liu Zhen: I mean, I think I was very lucky that I went to law school in California.
Hans Tung: Yep, Berkeley.
Liu Zhen: Yeah. That’s a very entrepreneurial environment. The firms I worked at, they’re all those typical Silicon Valley law firms. Like law firms on the East Coast, they even have an investment committee and investment arm that they invest out of. If the clients fail to pay cash in the very early stages they will decide to take options. It is interesting that I was very much involved. I was a corporate lawyer so I represented clients setting up their companies. I would go to their board meetings and help them fundraise and help them enter into China, took them public in the U.S., did some M&A and also took them private.
In the very early couple years, I started my career at Wilson Sonsini as a corporate lawyer under Carmen Chang, who is great mentor to me. In 2006, most of our clients back then were VC funds in the U.S., Sequoia China had just started and we helped Sequoia U.S. with starting Sequoia China and represented their and looked over their portfolio companies that they decided to invest in. Later we represented entrepreneurs who were studying abroad, such as MBA students from Stanford. They drove their second hand cars to our office and wanted our help.
Later on, we started representing those Chinese entrepreneurs who studied abroad and were actually starting to receive funding from Chinese VCs or maybe the China arm of U.S. VCs but who have a stronger China presence, such as IDG, Sequoia, GGV, DCM China and all those. Later we started representing more entrepreneurs than VCs, which is a conscious decision for law firms who wanted to grow with the companies. Then we started working with companies that were receiving funds from Chinese VCs and entrepreneurs started having interesting, more diverse backgrounds. Some of them never studied law. They just grow up and some of them can barely speak English. So you see the changes. It’s very very interesting.
You go to the board meetings and at first, the board meetings are very rigid in corporate governance. Just like typical U.S. companies, you have a very sound board. You go through the routine and then you have a little bit relaxed boarding environment. And nowadays, sometimes the board will hold meetings on WeChat! So you see all the changes, you think it’s very very interesting to see all the dynamics of the changes.
Hans Tung: These days, we’re starting to see more companies from China that have a mixed management team: tubie as well as haigui. There’s a lot more companies that are going out and as such you need people who are more bicultural, if not multicultural. Do you see that as a sustaining trend? Will we see more of those companies or do you think companies like music.ly and ByteDance are more of outliers?
Liu Zhen: No I definitely think that the management team today, especially in tech sectors, would have more diverse board members and also management teams with people who have different backgrounds. I also have to say that just being on the entrepreneur side, I’ve seen great entrepreneurs, leaders actually, are consciously wanting to diversify their management.
Some entrepreneurs talk to me. I took a little gap between my Didi and ByteDance and they can talk to me and they didn’t know. They said, ‘Well we just want to really diversify our management team.’ But they do have this implanted in their mind that today, we hire a lot of people with very interesting backgrounds. You never know what they come up with.
Hans Tung: For example?
Liu Zhen: I’m one of them and we do have a couple in our management team that we recently hired that do not have a background in technology and some of them are not even from mainland China but they come in and they bring very interesting different perspectives when we discuss things. I think that’s very important and that’s a very healthy trend that you see as the company’s becoming more global.
Zara Zhang: You moved from a legal career to tech. What was that learning curve like for you? Because it’s a very different profession.
Liu Zhen: I guess it depends on what type of lawyer you were. If you were corporate lawyer, most of the time to some extent you were more like acting general counsel for a company. I was actually brought out to UTStarcom for 6 months. I remember that I was pregnant with my first child. I commute to the company. The company’s in New Oriental and I stayed in haidian, so I commuted everyday. I was pregnant and until they found a replacement, I was their acting general counsel.
Hans Tung: So you’re very involved with the operation of the company as a result.
Liu Zhen: Yes. And as a service provider, you wanted to just solve their problems.
Hans Tung: If you hadn’t chosen UC Berkeley, would you end up being where you are today? Had you gone to a different law school on the East Coast would you still end up being where you are today?
Liu Zhen: I think probably not. I think the location matters a lot. Sometimes, I ask my husband actually went to Carnegie Mellon for undergraduate. And then he worked at Bloomberg, New York, for 3 years. And sometimes, that’s the same question he keeps asking himself, if he went to Stanford, Berkeley, he studied computer science, would he end up on Wall Street. It would have been very different. Very different.
So I think location matters and I do think that because I went to school at Berkeley in the Bay Area in general.
Liu Zhen: So you explained before that you want to be the one making the decision and not just advising people how to make decisions. At what point did you realize that’s what you want to do?
Liu Zhen: I was actually preparing last night. I was preparing my speech that I’m going to give to graduate students at Tsinghua tomorrow afternoon. It’s all about entrepreneurship. Part of being an entrepreneur is being an owner not a renter. And I think not everyone can become a founder of a company, but everyone should have this entrepreneurship when they work at a fast growing tech company. That means that you need to take as much ownership as you could.
And you are. You have options. You’re part of the company. So you are making decisions and you are responsible for moving things forward. I think there’s a mentality not only for me, I think for everyone who works at ByteDance, that they should feel that they are making the decisions and they’re moving things forward and they are taking responsibilities or liabilities to bear the consequences.
Hans Tung: You spent a couple of years at Uber. What made you decide to make that jump to work for a foreign company in the U.S. because as you know, in the history of Silicon Valley companies, no Internet company has succeeded in China. So what made this one be the one for you to join?
Liu Zhen: When I look back, I think Uber, among those tech companies, fast-growing startups in the Valley, is the most Chinese Internet company. Since I’m with ByteDance and I do think ByteDance, to me, and at this scale and size, I think it’s definitely the most Silicon Valley company that has ever been in China.
Hans Tung: So it’s the intersection of the two worlds.
Liu Zhen: Yeah, in both cases. I know a lot of people: the firm I worked at was also advising and providing legal advice to Uber and we know common investors, including investors of Uber. I think that Travis and Uber are just very interesting, it’s a fascinating company. They very much believe in creativity and originality. If you look at all the Uber China employees, they all have very interesting and different backgrounds: from auditing firms, consulting firms. It’s very interesting. I think they all share the same passion and entrepreneurship and they want to originate and create things as opposed to just borrowing things or borrow experience from something similar. So that’s why you see a lot of creativity, originality from Uber China and marketing ideas in all this.
Zara Zhang: How did you first meet Travis?
Liu Zhen: We have common friends and they were in China back in the winter of 2015.
Zara Zhang: So you were introduced through mutual friends.
Liu Zhen: Yeah, we were introduced through mutual friends.
Zara Zhang: I think you’ve said before that one of your proudest achievements Uber was being able to cultivate a very amazing team of employees. I’m wondering how did you find the team members and where are the ex-Uber China employees now?
Hans Tung: Before you answer that, I’ll add a bit of background because as you know, Uber in the U.S. has its share of controversies and that’s not a topic of this podcast. Some of them are questionable and regrettable but after the Didi Uber China deal, GGV actually hosted events featuring some of team members from the Uber China team. We were actually very impressed with the quality and the integrity of the team that we met. Obviously we’re investors in Didi, and we’re very proud of Didi as well, obviously Didi is amazing. It was interesting to see a collection of talent in a Silicon Valley China team and to have that kind of originality and ability to make decisions and be great. So that’s why this is a question for this discussion. This was very interesting to me: how you guys put the team together and were able to build a different culture that worked in a Chinese setting.
Liu Zhen: Maybe I can share one instance that I never really shared with other people.
Hans Tung: That’s what we want to hear!
Liu Zhen: I remember on August 1st when Travis was in the Beijing office to announce the merger to our employees of Uber China. And one of the employees that I actually recruited raised his hands. He said, ‘We are all very proud of Uber’s cultural values. What if we join another company that doesn’t really support or endorse such values?’ and Travis said that if you really appreciate, understand and learn that culture, the culture actually becomes part of you.
When I reflected, I actually pulled out the cultural values that Uber had: we can share with you. A couple were: principled confrontation, be an owner not a renter, make magic, meritocracy and toe-stepping, optimistic leadership, always be hustling, super pumped, let builders build, making bold bets by taking risk, customer obsession and champion’s mindset. Those are very deeply implanted into every single Uber China person and they’re very proud of it, they actually executed all of this. I think that’s part of it, everybody’s part of it. Nowadays, some of them actually joined a bike sharing business. That’s for another podcast. But I think they definitely carried on that spirit.
Hans Tung: Very good.
Zara Zhang: How did you first meet Yiming, CEO of ByteDance?
Liu Zhen: Let’s start with Yiming’s personality a little bit. I met Yiming a long time ago: I was with Uber and we were speaking at the same conference and Yiming actually WeChatted me and I didn’t know where he got my WeChat because it was not really searchable. He said, ‘Can we talk before or after?’ I thought it was kind of out of nowhere.
Hans Tung: That’s before he even heard you on the panel.
Liu Zhen: I think we met each other in Seattle.
Zara Zhang: Which year was this?
Hans Tung: 2015.
Liu Zhen: I think that was the first time we met but I heard about the company a long time ago: I’m a user of ByteDance. And then in the following event in China, he WeChatted me. I didn’t remember. His speech was before me. I didn’t remember the details but the thing about Yiming is that Yiming is very much an introvert. He’s an engineer by trade, not very social and he doesn’t like going out and socializing with other people. But when it comes to recruiting talent, he’s very persistent, aggressive: I don’t know how many times he came to this little cafe near my apartment where I live in Beijing on the east side – the opposite side of where the company is and where he lives. He’s very persistent. I remember, after the merger – I think the second day after – he said, ‘Can we meet?’ A lot of people would say ‘Hey, hi, take care,’ give you some room and then reconnect. Yiming was very straightforward. It’s always ‘Can we meet?’ I think that’s interesting.
When it comes to recruiting talent even today, Yiming is persistent, he’s become very social and is actually very open-minded to embrace people from different cultures and different backgrounds.
Hans Tung: I’ve been impressed with that.
Liu Zhen: He’s super humble.
Zara Zhang: What was the reason that he used to convince you? What were you persuaded by?
Liu Zhen: I have to admit that I didn’t know much about the product. I’m an active user.
Hans Tung: You’re not the target user.
Liu Zhen: I’m a user actually.
Hans Tung: You’ve become a user now.
Liu Zhen: No, I was a user. My mom used to joke that that he wanted me to join Toutiao because this is a product, a platform that provides all her daughter’s information. She didn’t know that it is actually personalized.
Anyway, so I think I was just very impressed by Yiming’s ambitious attitude. And also I think he has a very high tolerance for people with diverse backgrounds. I think that’s very important. And of course, I roughly know the company. That was a very quick decision for me. I didn’t want to join another company that was basically burning money.
Liu Zhen: For our listeners who may not be as familiar with ByteDance, could you give an overview of its products?
Liu Zhen: Sure, I’m happy to. ByteDance has a variety of products that are content platforms powered by machine learning. It’s really a discovery platform that provides personalized content to the audience. Its flagship product is called Toutiao which has over 100 million daily active users in China.
The second bucket of products are what we call UGC products. A lot of Chinese people are familiar with short video products such as Duoyin, Huoshan and Neihanduanzi, that are more focused on interactions over personalized content.
The third bucket of products is overseas products, including music.ly, which we just recently announced the merger. musical.ly is really a great platform that covers the U.S. and Europe, where most of their users are. These are regions where we didn’t have too much coverage before. So I think there are definitely great synergies between musical.ly and us going forward in terms of tackling the global market.
Zara Zhang: How would you summarize the mission of ByteDance in a sentence or two?
Liu Zhen: I wanted to tell you know why ByteDance, this content platform, was founded in the first place. The company is 5 years old. 5 years ago, in late 2011, 2012, Yiming realized that the information agent was transforming from PC and newspaper to mobile, accompanied by the development of machine learning and AI technology.
Hans Tung: But there’s already Sina news, Netease had an app.
Liu Zhen: Yes, but those are all based on the PC.
Hans Tung: But Netease had a reading app on mobile as well.
Liu Zhen: The first app we developed is called Neihanduanzi. It’s actually a very simple content platform that focuses on providing jokes similar to Reddit with less political content. But at the very beginning, Yiming was actually using machine learning to pull out the key features, to rank those jokes. So I think we are really the first one who used applied machine learning technology to content distribution and discovery.
Hans Tung: That was the breakthrough, that was the innovation.
Liu Zhen: And then we applied this technology to all the products we have today, which makes us different from other other approaches when it comes to content platforms.
Hans Tung: One of the reasons why musical.ly decided to merge with ByteDance, on of the reasons why I was in favor of it, is that there’s very unique capability can boost almost any company you work with. Most people haven’t had the opportunity or the chance to develop the algorithm and also machine learning capability. You guys have something that can be applied across multiple products, like a platform.
Liu Zhen: Yes.
Zara Zhang: How many engineers does ByteDance have?
Liu Zhen: We now have about 3,000 engineers and data scientists which is, I think, a rare asset that we are proud that we have today in China which is also not easily accessible to find today except in very big companies.
Zara Zhang: I know that ByteDance has been very successful at recruiting many top talents in machine learning and AI algorithms.
Hans Tung: Especially from Baidu we heard.
Liu Zhen: Now I think it is everywhere from the Valley.
Zara Zhang: What are the top reasons that you use to convince people to join ByteDance? What would you tell them?
Liu Zhen: I was with Uber which is a very operationally driven company and ByteDance is very much a technology, product type of company. So I guess different types of companies would have different recruiting styles. I think for any operationally driven companies, what I’ve found is that they’re really storytellers.
Hans Tung: Values driven.
Liu Zhen: Yeah. They can be very convincing.
Hans Tung: Inspirational.
Liu Zhen: Yeah but for tech companies, at least our style, Yiming always says we do not want to raise high expectations for candidates, but you should bluff – that’s how you sell. When I first came, I said, ‘We should definitely really boost our recruiting strategy. Let’s get some recruiters from Uber because they can really sell!’ Almost all the Uber China people joined Uber China and took one-third of their salaries. We should really do that! Talk about the upside of your stock and all that.
But ByteDance is a very down-to-earth company and they really just tell you the truth. I think the most inspirational slogan I heard was ‘Join the company, work with interesting people, do interesting things’ for engineering recruiting. But then it can be very, very data driven where we are right now, where we want it to be in the future. Then you gave above market compensation. If you ask Yiming what the best trick to recruiting talent is, it’s really to raise the compensation, raise the bar.
Hans Tung: So Uber wants to change your world. It’s inspirational. ByteDance is very solid, reliable and working on interesting products. How did Yiming, who is very solid and reliable, decide to go global and expand beyond China? What prompted him, the company and you guys to make that decision?
Liu Zhen: We started our international expansion in 2016. The company was a little bit more than 3 years old. So it was very early on that he started and decided to go global. I do see this in many entrepreneurs of his generation: they think globally and they never intended to be a Chinese company.
Hans Tung: These are entrepreneurs in their mid- to late-30s?
Liu Zhen: Yes. Also, I think in the pure online content social media space, this is just the right thinking. That you can’t really contain yourself in one region. It is just impossible. From a product, user’s perspective, it is a platform business. They said we’re a global company that happens to be headquartered in Beijing.
Zara Zhang: I think you personally also worked on a lot of Toutiao’s recent deals with companies outside of China. How is this process of negotiating with non-Chinese companies and because Toutiao’s and ByteDance’s brand names are very strong in China but overseas, not many people have used its products or they use it but don’t know it’s part of ByteDance.
Liu Zhen: I think the straightforward answer is, ‘Trust me, it’s much easier than negotiating with label companies on music deals.’ First, the strategic acquisitions we’re doing are more for strategic reasons, meaning that we do see the product, engineering or talent synergies. Thus, we feel that we can help the company. So whenever we approach a non-Chinese company, which are most founded by product people or engineers, it’s very easy for us because we can really have a conversation – we’re not financial investors. We were talking to one company and after we presented 10 slides on the areas that when we get in, we could improve the products, and the founder smiled and showed me the recent presentation to his board: six identical slides.
We really think alike. It is much easier than negotiating with business, finance people.
Hans Tung: You did fine, you did a great job of negotiating.
Liu Zhen: And with music.ly, we had the chemistry as builders, as product people. So I think it’s straightforward. You have to demonstrate that you speak the same language and share the same innovation.
Zara Zhang: So Hans, would you like to comment more on the significance of the musical.ly Toutiao deal?
Hans Tung: When we invested musical.ly it was the first company that happened to be based in Shanghai with a very China dominated team that ends up building a product that became mainstream in the U.S. That was extremely hard to do and no one ever did that before. That was interesting. And then over the last few years you can tell that musical.ly has something that’s amazing but it could use extra help to get the vision fulfilled. While it’s possible for them to pick an American partner, I think collectively as a board and shareholders, we all felt that going with someone like Toutiao would be something quite special and offer a lot more upside. The cultures are so similar in both firms: both do the 996 schedule – 9 a.m. to 9 p.m., 6 days a week. You can improve product extremely quickly.
I’ve know Yiming for a few years, from even before I joined GGV 5-6 years ago. It’s amazing to see how much he has matured like Liu Zhen said. It’s amazing. For us to get a deal done, Yiming had to figure out a way to with Fu Sheng at Cheetah Mobile and then Yiming plus Liu Zhen were able to solve that and make that happen. So it was not an easy deal. I don’t think anyone else could have really done it – that is, not many people can. But you guys did it in extremely efficient fashion. So for all of us, the musical.ly board including other VCs like SIG and Qiming and Greylock, we’re all impressed.
Zara Zhang: No content company in the world has been able to succeed both inside and outside of China. So in that sense it’s a milestone.
Hans Tung: A huge milestone.
Liu Zhen: Thank you.
Hans Tung: All of us are very bullish and optimistic, thinking like a champion and want you guys to do more even in a lot of markets around the world.
Liu Zhen: Thank you. The two teams, the music.ly team and our team, were integrated very well. And we’re ready for the holiday season. The holiday season is very important to content products and platform companies.
Zara Zhang: Who would you say is the target audience for ByteDance’s products both in and outside of China?
Liu Zhen: I think in China because of the large user base, the demographics are kind of evenly distributed just as the distribution of smartphone distribution because of the large space. For UGC products, China has a huge disparity between first tier cities and the fourth and fifth in the countryside. It’s a city in the countryside. So we have other UGC video products that are more targeted to different regions and different generations. Duoyin which is basically the Chinese version of musical.ly, has a lot of audience in the younger generation, school-age people. We have a product called TikTok, which has ranked #1 consistently for the past 3-4 weeks on the app store in Japan. So we think Japan, Korea, Southeast Asia, India, U.S. and Europe are all our target audience. Now we have different products cover different regions but the ByteDance recommendation engine is the same.
Hans Tung: Without that engine, it’s almost impossible for anybody to have multiple successful products. You have leveraged Toutiao as a great way to market other products on top of Toutiao but also have the same AI engine in the backend. To be able to do both – this is the first time only.
Liu Zhen: All the engineers and product people are based in China so we share the same backend and also we do cross-products marketing, as you said that we will be able to promote other products on the flagship platform Toutiao. And outside China, music.ly will definitely be one of the top priorities that we will promote in the coming years in other regions, not only in the U.S. but also in other regions.
Hans Tung: For Toutiao to become a platform, I think one of the stats show that it is amongst the top 5-6 most often used or has the most reading time of all apps in China. How did you guys get to that achievement and made that possible in such a short period of time?
Liu Zhen: I think someone just did the statistics that in terms of reading time, media content consumption time, we’re about 6.6% of the aggregate user time on mobile phones in China. You’re right, we’re #5. So each daily active user now spends over 70 minutes in China on the Toutiao app. I think this very long engagement rate comes from first, on the supply side, you definitely have more diverse content ranging from traditional OGC content, organizational generated content where we partner with probably all the major media outlets in China, to PGC, professional generated content, and UGC, user generated content. And also in a variety of formats. You have text, news, blogs, pictures, question and answers, video. Half of the 70 minutes is spent watching videos, so we definitely see videos are becoming a big timeshare. And we also launched a Twitter type of Toutiao feature that encourages users to create content directly on mobile. So if you look at the reach format, and advertisements are just another form of content for us. When you do a personalized ads product very well, and you can embed it in the product where it is itself actually content. When you have a variety of reach content and content formats and you distribute it with the algorithm that we’re able to build in with targeted distribution, I think you definitely engage with the audience a bit more. That’s why the time spent is more.
Zara Zhang: One issue that many media platforms both in and outside of China struggle with is monetization. Could you talk a little bit about how ByteDance makes money?
Liu Zhen: We really have an advertisement revenue model business. And I think it’s different from social platforms. Media platforms hosts public content and we think of advertisements as really just one of the public contents. That’s why we’re able to monetize. It’s actually better to monetize public content than instant messages, than those social content. A newsfeed basically, advertisement, I think it was. A lot of the big companies didn’t pay a lot of attention to this area.
Hans Tung: The monetization on Toutiao is amazing. We won’t be able to discuss that on this one due to the sensitive nature that we respect. As you try monetization on the UGC apps, the short form mobile video apps, will you be looking at different ways to monetize beyond ads?
Liu Zhen: I think we’re exploring that. But I think it’s important to realize the power and potential of this one-stop content platform. That not only because of technology-wise, you would be able to use the user behavior, watching videos to recommend to them tasks, advertisements, questions, pictures and others and maybe recommend interesting celebrities’ Toutiao accounts. There are really synergies among those reading behaviors on different formats and you can monetize it. So I think a one-stop platform has a lot of potential whereas it’s harder to discover some standalone products from a monetization perspective as well.
Hans Tung: Yeah. I understand what you’re hinting at.
Zara Zhang: What are the biggest lessons that you’ve learned from your family?
Liu Zhen: My mom, actually, is a very career-oriented woman. She’s very successful and she always encourages me to step forward and be more involved. Sometimes when I am struggling or deciding between attending my kid’s school events or go on this business trip, she is always the one encouraging me to go on the business trip. She said, ‘Kids are going to forget about it,’ which is the truth.
I think this it’s very important that I was actually sent to a boarding kindergarten when I was 3 years old. I stayed in that kindergarten and came home on weekends. And I love my parents, I adore my parents. My mom is very encouraging of me.
Hans Tung: This was in Beijing?
Liu Zhen: Yes, in Beijing.
Hans Tung: Boarding?
Liu Zhen: Yes, boarding. They even had a little hospital inside. I remember once, I had a fever and I wanted the teachers to call my mom. For some reason, they just put me in this onsite hospital and I stayed through the entire week.
Zara Zhang: What did your mother do for her career?
Liu Zhen: My mom works at a government. All-China Women’s Federation, it’s a quasi-government. So it’s interesting. She’s very encouraging. I think my husband is also interesting. I view us as more of a partnership as opposed to traditional husband and wife. We share equally and in some of the kid stuff, he’s better than me, and some of it, I’m just better than him so we share equally in terms of household.
Hans Tung: After my wife listens to this I’m going to get a hard time.
Liu Zhen: I think that’s also very helpful that you have very strong family support and you are also able to leverage all the resources you have. I think that’s important.
Hans Tung: Now that you have worked both in the Valley as well as here, these days, do you see much difference in aggressiveness, pace or drive between entrepreneurs in the two regions?
Liu Zhen: Oh I definitely think that Chinese tech companies are more aggressive. At Toutiao, we have this 996 schedule and now we work every other Sunday. We work five days a week and every other week, six days a week. For us, it is 10 a.m. to 10 p.m., but it’s the same concept. We started that 5 years ago, that people come to work every other Sunday and today, we’re still doing that, which is pretty rare if you ask other tech companies.
Here, it’s all the trainings and all the meetings on Sunday. When we talk about working on Sunday, it’s not just coming in for 5 hours. It’s the entire working day. If you look at our schedule, it’s meetings from the morning to that night. I’m responsible for a lot of things overseas, the content moderation team is within my scope as well as the PR, GR, legal and corp dev. 4 weeks ago, I did a survey and said to the departments, ‘I’m okay if you decide to opt out.’ Because the legal and finance teams actually didn’t come on Sundays and I am okay if you opt out. The majority response was that they want to work and come on Sundays because there are a lot of meetings. They also feel that if the company is growing very fast and it’s fast pace, they feel a little bit left behind. And Jingjing (ByteDance’s PR team member) once said that she didn’t want to come on Sundays, which is fine, but she ended up coming in almost every other Sunday because of the work and meetings that we require her to do.
Hans Tung: So as a woman in tech and with a family, you probably get a lot of people asking you, ‘How do you do it all?’ That’s probably one of the most common questions you get. What does it take to be able to do a lot of things and juggle all the things and make that work in a very extremely fast moving, always evolving environment?
Liu Zhen: To be able to juggle through this workload and having 2 very young kids, I think the most important thing is how much free time you have on your own. Do you feel excited about your own life, what’s your own dream? I think it’s very, very important to be able to do something for you, to make yourself happy, energetic. Then I think you can take on more challenges to be able to accommodate more. I think that’s important. Anyone who can take care of themselves, especially women. Men always take care of themselves.
Hans Tung: We’re selfish.
Liu Zhen: No, I think it’s good. Women should definitely block some time to be able to concentrate. Are you feeling happy? Your feelings matter the most. I think you have to understand how you manage them, what you care about the most and what you care about the least.
Hans Tung: That’s very true. You want to do it well. Yes. You have to be able to give up, let go certain things.
Liu Zhen: At work, we always say that we want to make magic. We want to achieve perfection. But at home, I care less. There’s really a lot of things that I care the least about, for example, what kind of clothes my kids wear, what kind of milk they drink, are they dressing properly for school, am I attending every school event? I actually taught them about this. For school events, I can go half and I cannot go the other half. If Daddy can go the other half, that’s great, but if not, that’s fine. I think that’s all fine. It’s really how you manage it, how you prioritize.
Liu Zhen: Apply lessons you learned in work to your family.
Liu Zhen: Yes, and no. On the perfection side, definitely not. My home is a mess.
Hans Tung: Having lived both here as well as was in the Valley, I think it’s easier to do that here than over there.
Liu Zhen: Yes, and no. I think in the Valley, I definitely see some families are able to also build up some similar domestic system. And also I think it’s easier to do to some extent in the Valley because you just go to Whole Foods and buy a lot of food for dinner, right? The infrastructure on that side is easier.
Hans Tung: That’s true, but in the Valley and in New York, some of these places, the mother is somehow expected to spend more time attending school functions for the kids and that’s a huge amount of time sunk.
Liu Zhen: I think you have to educate your children on what the conventional truth is and you should not always follow the conventional truth. You have to put in their mindset very early on that that’s the expectation. To be honest, I’ve also seen Silicon Valley moms returning to the workforce because they wanted to demonstrate to their children, especially if they have daughters, that a woman’s role is not only defined to do domestic work, but also can take a role just as their dad is, in society. I definitely see this need from the children’s side, pressure even from the education side, for a stay-at-home mom to return to the work.
Hans Tung: One interesting tidbit is in the U.S., after you get married, women are more expected to change their last name to their husband’s last name. I don’t ever see that in China or parts of Asia but in the U.S. everybody almost expects it. Psychologically, it was eye opening for me because it’s not what I’m used to. In Asia, women keep their last name after they get married, they’re still their own person. But in the U.S., you are socially expected to change your last name. It’s a small thing, but it is something different than what I expected. It’s interesting because I’m in charge of booking all the family trips and my husband is responsible for executing it but I’m in charge of booking everything. So whenever we travel to a hotel they always call my husband Mr. Liu. He is fine. I think it’s more of a culture and history thing in the western world. But in China I think women are very, very confident and they’re confident in a way that they even if they change to their husband’s name, which I don’t mind, I think the confidence is more important. That’s very essential.
Liu Zhen: It’s interesting because I’m in charge of booking all the family trips and my husband is responsible for executing it but I’m in charge of booking everything. So whenever we travel to a hotel they always call my husband Mr. Liu. He is fine. I think it’s more of a culture and history thing in the western world. But in China I think women are very, very confident and they’re confident in a way that they even if they change to their husband’s name, which I don’t mind, I think the confidence is more important. That’s very essential.
Zara Zhang: The last part of the podcast is a round of quick fire questions. The first one is, who is the entrepreneur that you admire the most and why? Other than Travis and Yiming, who we already talked about.
Liu Zhen: My grandfather and my uncle.
Zara Zhang: Could you talk about why, elaborate a little bit?
Liu Zhen: My grandfather was just this phenomenal entrepreneur of his generation. He was a pioneer, really the founder of Chinese patent law. And then my uncle founded Lenovo and is now the chairman of Legend Group. I admire him as a business leader as well as a big family zhangbei. He’s the older brother of my dad and two younger sisters so we definitely view him as the most respected family member. I always come to him if I have questions, concerns or troubles.
Zara Zhang: What’s the most memorable advice that your uncle has given you?
Liu Zhen: He is very, very good at tackling complicated problem. To be able to become a business leader in his generation and continue that today, he has encountered a lot of complicated issues. He teaches us really by telling those great examples. I think it’s hard to just say one conclusive word or sentence. He always asks what the issue is. Different problems would have different boundaries and when the boundary changes you have to use a new solution to solve that problem. So there is no universal solution. He’s very good at listening and tackling those complicated issues.
Zara Zhang: What do you think is the best and worst decision that you’ve ever made?
Liu Zhen: There is always the other side of the consequences after making a decision. I don’t see either as the so-called best or worst. I could definitely have spent less time on being a lawyer than the corporate work.
Hans Tung: We hear that Carmen’s an is amazing mentor.
Liu Zhen: I think that’s something that if I were able to choose again, I think I would be on the business side sooner.
Zara Zhang: What’s a habit that you’re glad you have?
Liu Zhen: I think I’m very good at multitasking. Sometimes I do conference calls while I’m running on a treadmill.
Hans Tung: I can tell, even though it’s not obvious, that when you’re talking to me, you’re also engaging in other conversations at the same time. You’re very good at it. I never feel that I’m being ignored.
Liu Zhen: I’m busy and I’m a very fast executioner. I want to reduce execution as soon as possible. So that sometimes requires multitasking.
Zara Zhang: It was really fun to have you. Thank you so much for your time.
Liu Zhen: It’s really a pleasure to share a lot of things with you guys.
Hans Tung: I enjoyed the podcast as well as the collaboration we had earlier this year on your music.ly. so thank you.
Liu Zhen: Yeah thanks. Looking forward to continuing our partnership.
Hans Tung: Likewise.
Hans Tung: Thanks for listening to this episode of 996. By the way, we also produce a weekly e-mail newsletter in English also called 996 which has a roundup of the week’s most important happenings in tech in China. Subscribers have told us it is informative and fun to read. The newsletter also features original content and analysis from Zara and me. Subscribe at 996.GGVC.com.
Zara Zhang: GGV Capital is a multi-stage venture capital firm based in Silicon Valley, Shanghai and Beijing. We have been partnering with leading technology entrepreneurs for the past 18 years from Seed to pre-IPO. With $3.8 billion dollars in capital under management across 8 funds, GGV invests in globally minded entrepreneurs in consumer internet, e-commerce, frontier tech and enterprise.
GGV has invested in over 280 companies with 29 IPOs in 22 unicorns. Portfolio companies include Airbnb, Alibaba, Ctrip, Didi Chuxing, DOMO, HashiCorp, Hellobike, Houzz, Keep, Slack, Square, Toutiao, Wish, Xiaohongshu, YY and others. Find out more at ggvc.com.
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