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TikTok billionaire Zhang Yiming, one of the richest men you've never heard of

Zhang Yiming, the founder of viral video app TikTok’s $100bn (£79bn) parent company ByteDance, is now China’s tenth richest man with a personal wealth of $16.2bn
Zhang Yiming, the founder of viral video app TikTok’s $100bn (£79bn) parent company ByteDance, is now China’s tenth richest man with a personal wealth of $16.2bn

It was a grovelling apology which could have put Mark Zuckerberg to shame. Posting at 4am on the Chinese social network WeChat, Zhang Yiming confessed that he was "filled with remorse and guilt, entirely unable to sleep".

His company Bytedance, he explained, had undermined "socialist core values", failed to respect the "guidance" of China's powerful state censors and betrayed a "weak" understanding of the theories of China's leader, Xi Jinping

"All along, we have placed excessive emphasis on the role of technology, and we have not acknowledged that technology must be led by the socialist core value system," he wrote. "I am personally responsible for the punishments we have received."

Thirty eight-year-old Zhang, the founder of viral video app TikTok’s $100bn (£79bn) parent company ByteDance, is now China’s tenth richest man with a personal wealth of $16.2bn after TikTok was downloaded more than two billion times. His company is the most valuable start-up in the world.

Zhang announced in his 2018 WeChat apology that he would shut down ByteDance’s first app, a social network for jokes called Neihan Duanzi, after the Chinese government accused him of hosting “vulgar” content.

In response, Zhang promised to increase the number of censors it employed to delete content and pledged to favour Communist Party members when hiring new employees.

One servant, two masters

For Zhang, running the first Chinese app to seriously conquer the West is a curse as well as a blessing. It has forced him to flatter two mutually hostile governments and to try to hold together an empire that spans two worlds.

“Any Chinese entrepreneur with a growing product faces the dual pressures of conforming to Chinese law and staying in the good graces of the Chinese Communist Party (CCP), while at the same time convincing those outside China that the company is independent of the Chinese government,” says Stanley Rosen, a professor of political science at the University of Southern California.

Zhang’s life story could easily be that of any US founder. He graduated in 2005 with a degree in software engineering from Nankai University in the sprawling port city of Tianjin. Like Facebook founder Zuckerberg, he met his wife during his studies. He felt stifled during a short stint working at Microsoft and had one failed start-up before founding ByteDance in his Beijing apartment in 2012.

ByteDance's break

His core idea, reportedly gleaned from watching strangers walk about absorbed by their smartphones, was prescient: users were moving en masse from desktop to mobile computers, but contemporary mobile apps made it hard for them to find what they wanted.

“I saw that the wave of mobile internet was going to be very, very large,” Zhang said in 2018. “In 2007, Apple released the first iPhone. I was shocked when I bought it. I could build a website or write a program on it.”

Zhang Yiming was forced to shut down ByteDance's first app  - Bloomberg
Zhang Yiming was forced to shut down ByteDance's first app - Bloomberg

Baidu, China's equivalent of Google, was dominant but burning users' trust by making adverts look like real search results.

The solution, Zhang figured, was artificial intelligence (AI) that learned users' preferences as they browsed.

Chinese venture capitalists turned him down flat. It was an American venture capital firm, Susquehanna International, that gave him his big chance with a $5m funding round, allowing him to launch the app for which ByteDance is still most famous in China.

Toutiao, meaning "headlines", shows its users news stories and learns their interests through its AI. The app has grown to more than 260 million monthly users.

Like many tech bosses, Zhang is adamant that Toutiao is "not a news business", but it's not a social network either. "We are more like a search business or a social media platform," he said in 2018. "We push information, not by queries, [but] by news recommendation."

That strategy of picking users' content for them, freeing them from the burden of choice, was what supercharged TikTok's growth in the West.

The secret to success

Called Douyin in China and aimed at young users, the app's first version was built in 200 days and had 100 million users within a year. Zhang himself didn't know what teenagers wanted to see, but he didn't need to: AI could do that job for him.

Twitter and Facebook have the fundamental problem that they are useless until new users follow someone or add a friend. Both companies have spent years furiously trying to lower that first hurdle.

TikTok, however, just runs right through it, requiring no input before showing music videos and skits to its users. Instead of picking from a menu of options, users make tiny and often unconscious choices: liking this video, skipping that one, letting another play for just a few seconds longer than normal. TikTok watches, and it does not judge.

For a while Zhang too only watched ("it's a product mainly for young people", he said at the time). But then he started to make his own videos, and soon imposed on all his senior managers a brutal regimen requiring them to post TikTok content and hit a quota of likes or else do press-ups.

TikTok only achieved major international growth after Zhang acquired Musical.ly, a Shanghai start-up which had attracted more than 200 million users and had opened an office in California.

Zhang’s acquisition of Musical.ly was a clear signal that his ambitions weren’t limited to success within China. Instead, he saw a global audience for ByteDance’s stable of apps.

“Google is a company without borders," Zhang said in 2019. "I hope Toutiao will be as borderless as Google. Personally, I hope to do things that are interesting and meaningful to society.”

It was a good dream, and why shouldn't it have come true? China's app makers are no less ingenious than America's. TikTok is one of the very few advertising-based apps that has come anywhere close to challenging the market dominance of Facebook.

In the first four months of 2020 it was downloaded at three times the rate of Facebook-owned Instagram.

And its net revenue increased by a hefty 159pc.

Zhang is also now spending more time overseas. He spent around two thirds of 2019 outside China and has said that he particularly enjoys London’s museums and West End musicals.

US takes a closer look

But borders would have their revenge. ByteDance has had the misfortune of going global at the precise historical moment that three decades of ever-increasing ties between the Chinese and US economies began to dramatically unravel.

American politicians, concerned at the rapid growth of a Chinese app, have expressed alarm at TikTok’s spread.

Mike Pompeo, the US secretary of state, hinted earlier this week that the US government may ban TikTok. “We have worked on this very issue for a long time … I don’t want to get out in front of the president, but it’s something we’re looking at,” he said.

Disney executive Kevin Mayer has joined ByteDance as its chief operating officer - Getty Images North America 
Disney executive Kevin Mayer has joined ByteDance as its chief operating officer - Getty Images North America

TikTok is fighting hard to convince American politicians that it’s not a threat. In May, Zhang poached high-profile Disney executive Kevin Mayer to become his second in command at ByteDance and the new chief executive of TikTok.

ByteDance has also separated TikTok’s technology from its parent company and is seeking an international headquarters for the app outside of China.

But these steps have not eased the concerns of US regulators, who this week launched a probe into how TikTok handles the data of users aged 13 and under.

TikTok's own transparency report on Thursday painted a worrying picture of the app. It found almost a quarter of the videos TikTok took down in 2019’s second half involved inappropriate behavior by minors, from illegal drug use to sexual activity. A TikTok spokesman said the videos removed represent less than 1pc of all content on the app.

The report said 24.8pc of the clips removed were “depicting harmful, dangerous, or illegal behavior by minors, like alcohol or drug use, as well as more serious content we take immediate action to remove.” Another 15.6pc “violated our suicide, self-harm, and dangerous acts policy".

The uncomfortable truth for Zhang is that the only way to end persistent worries about TikTok is to cede control over it.

“The only permanent solution would be to spin off the overseas entity as a completely separate entity, with an overseas majority shareholder, so that the Chinese parent company has no legal control over it,” says Rich Bishop, the chief executive of AppInChina.

Senior executives at Bytedance are discussing options such as creating new headquarters outside of Beijing and a new management board at TikTok to distance the company from China, according to a report in the Wall Street Journal.

But for now, at least, Zhang has a different route in mind for his company: Going public.

“Currently the IPO is not pressing and we don’t have any imminent plans,” Zhang said earlier this year. “But internally we are making preparations as if we’re working on an IPO.”