Understanding
TikTok & ByteDance
China’s Attention Factory
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Understanding TikTok & ByteDance
ByteDance The Algo Wizard
Zhu Wenjia The Ad King
Zhang Lidong
The Pioneers
Alex Zhu & Louis Yang
The College The Product
Buddy Queen
Liang Rubo Kelly Zhang The Boss
Yiming
The Investor
Joan Wang
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Understanding TikTok & ByteDance
ByteDance Apps - Overview
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Understanding TikTok & ByteDance
What Led Us to TikTok?
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Understanding TikTok & ByteDance
ByteDance Growth Stages
TODAY BYTEDANCE is a sprawling
corporate leviathan. Much like other
large internet conglomerates, it has
expanded into a myriad of online
services consisting of gaming,
education, enterprise productivity,
payments, and much more. This is
made possible by three flagship
businesses: Toutiao, Douyin, and
TikTok.
These are the core drivers of the
company’s valuation and fast growth.
The rise of these businesses reveals
three distinct growth stages that
enabled the company to reach
hundreds of millions of new users.
Each stage featured a family of sup-
porting applications, both self-
developed and acquired, which
extensively diversified the company’s
offerings and product categories.
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Understanding TikTok & ByteDance
This report is adapted from Attention Factory
Available in Paperback and Kindle e-book.
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Table of Contents
I. Structure 7
II. People 16
III. Products 26
IV. Recommendation 31
V. Monetization 41
Opinions, predictions, and interpretations expressed in this report are those exclusively of the author and do
Disclaimer and Methodology not reflect those of ByteDance, TikTok or any of its affiliate companies. This report is not sponsored or
supported by any organization. All source material is drawn from the book Attention Factory.
Structure
Image: the large central "fishbowl" glass meeting room at ByteDance’s
Beijing head offices, former aviation museum AVIC Plaza.
Understanding TikTok & ByteDance
Bytedance Structure (Overview)
BYTEDANCE is not divided
into divisions by business
lines. There are only three
core functional departments:
user growth, technology and
commercialization.
User growth is responsible
for user acquisition and
retention. The technology
department handles product
development while the
commercialization
department is focused
exclusively on monetization.
8 Source: GeekPark
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Understanding TikTok & ByteDance
The Legendary “Middle Platform”
EACH APP has its own team of
product managers, engineers
and operations staff, but will
rely heavily on the services and
support provided by the
company’s “middle platform,”
about which much has been
much discussed and written
about in Chinese.
This structure allows every app
to easily access the company’s
best in class technologies such
as recommendation engines,
video classification, or
augmented reality capabilities.
Most of the “heavy lifting” is
done centrally with resources
shared across the entire
company’s product suite,
avoiding waste and duplication
of efforts.
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Understanding TikTok & ByteDance
Case study – Universal Interest Graph
THE SHARING of infrastructure and
systems across products leads has
multiple advantages. An instructive
example is the universal user
interest profile.
What a user does in app A, can
directly affect the content
recommended to him or her in
app B,
In this way, even a small brand
new ByteDance app can leverage
the company’s recommendation
engine and user profile data to
offer a highly personalized
experience which could potentially
place it ahead of competitors.
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Understanding TikTok & ByteDance
ByteDance Technology System Infrastructure Overview
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Understanding TikTok & ByteDance
Beijing
Head Offices
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Understanding TikTok & ByteDance
ByteBounce, ByteJump, ByteDance
Original logo 2012-2018
THE NAME "ByteDance," is allegedly inspired by a
famous Steve Jobs quote:
"Technology alone is not enough. That it’s tech-
nology married with liberal arts, married with the
humanities that yields us the result that makes our
hearts sing." bd
The logic being that "byte," the unit of information
in a computer, was technological sounding, and
"dance" represented the liberal arts. From this, they
devised the Chinese name, Zì jié tiàodòng (字节跳
动), which literally translates as Byte Bounce, a
slight change that was made in part due to
concerns the company might be mistaken for an
agency to hire dancers.
If you think the name sounds a little strange in
English, it arguably sounds stranger in Chinese.
Other names allegedly considered were Byte Jump
Current logo 2018 Onwards
(zì jié tiàoyuè 字节跳跃.)
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Understanding TikTok & ByteDance
ByteDance Corporate Legal Structure
BYTEDANCE IS registered
offshore under a Cayman
Islands entity. This approach is
similar to other large Chinese
internet companies such as
Alibaba Group Holding Limited
and Tencent Holdings Ltd.
The lion’s share of revenues are
generated by the Mainland
China operating entities which
are driven primarily by the
advertising businesses of Douyin
and Toutiao.
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Understanding TikTok & ByteDance
Investors
BYTEDANCE IS a privately held company which
despite constant rumors for several years has yet
to go public. Notable early investors are SIG Asia,
Yuri Milner and Sequoia Capital China.
The company famously met with difficulty in its
early years, finding it hard to secure venture
capital funding. Many of China’s best-known VCs
turned down the opportunity to get involved in
ByteDance’s rounds missing what could have
been a career defining opportunity. In the end, it
was an outsider, Russian Physicist Yuri Milner, who
stepped in to lead the company’s Series B.
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People
A peek inside at some of the most important people at ByteDance
Understanding TikTok & ByteDance
张一鸣 Zhang Yiming
The Boss
ZHANG’S YOUTHFUL APPEARANCE and mild
“
mannered, calm exterior have fooled many. Make
no mistake, the 37-year-old mastermind behind
ByteDance is a battle-hardened serial By many quantitative
entrepreneur, determined, focused and willing to metrics, Zhang Yiming is
make bold bets. the top entrepreneur in
the world.
Computer science graduate Zhang, is known as a
”
voracious reader and consumer of information
who personally led research and development of
the first version of ByteDance’s now famous
recommendation engine. Increasingly his focus Time Magazine, 2019
has shifted towards optimizing company structure
and organizational information flows.
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Understanding TikTok & ByteDance
张利东 The Ad King
Zhang Lidong
FORMER JOURNALIST and traditional newspaper
industry advertising executive Zhang Lidong is
Chairman of ByteDance China. He serves as the
legal representative for at least 36 different
“
ByteDance has two
irreplaceable people—one
ByteDance branch companies. is Zhang Yiming, and the
other is Zhang Lidong.
Lidong joined ByteDance at a time when the
”
company had yet to generate any revenue. He
fast tracked the company’s monetization drive
using many of the tried and tested sales
techniques and key-account connections from his Lin Chufang
years in the newspaper advertising industry Former Vice President of
A sizable chunk of ByteDance’s entire workforce Public Relations, Toutiao
consists of salespeople and staff focused on (Bytedance)
commercialization overseen by Lidong.
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Understanding TikTok & ByteDance
张楠
The Product Queen
Kelly Zhang
CEO OF BYTEDANCE CHINA, Kelly She oversaw the key development
Zhang was hired along with her stages of several of ByteDance's
startup, Picture Bar, in 2013. She was most important properties including
already an internet industry veteran the original version of TikTok,
and serial entrepreneur having been Douyin, short video app Huoshan,
a founding employee of two and meme aggregator Neihan
previous internet companies. Duanzi.
Kelly has built a reputation for Zhang was also nominally head of
deeply understanding how to TikTok during 2019. She is now
cultivate online communities, an exclusively focused on China.
essential process for user generated
content platforms.
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Understanding TikTok & ByteDance
朱文佳The TikTok Algo Wizard
Zhu Wenjia
WHO MADE TIKTOK so damn In 2017 it was Zhu’s team that led a
addictive? If we must ascribe this major upgrade of Douyin’s backend
achievement to one person, then it’s infrastructure that led to astounding
probably Zhu Wenjia. results. Shortly afterwards user
numbers and engagement spiked to
There are many extremely talented previously unseen levels. This same
algorithm engineers at Bytedance, backend system is used by TikTok.
yet Zhu Wenjia is widely considered
to be one of the very best in the Zhu was hired from search giant
entire company. Baidu in 2015. He is currently CEO
of Toutiao, the company’s original
flagship news aggregation app.
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Understanding TikTok & ByteDance
`
梁汝波
EMPLOYEE NUMBER 3, Liang is
The College Buddy
Liang Rubo
In his time at Bytedance Liang has
Zhang Yiming’s close friend and held various senior technical roles,
trusted advisor. The two were including Director of Technology.
university dorm roommates for More recently he has shifted to focus
several years studying computer to HR.
science at Nankai university in the
Northern coastal Chinese city of Liang, known for his infectious smile
Tianjin. and positive energy, is often listed as
a “founder” of Douyin, the original
Before joining ByteDance, Liang version of TikTok.
worked at CEO Zhang Yiming’s
previous internet startup, real estate Douyin was set up under a subsidiary
search portal 99Fang.com. company, “Beijing Weibo Vision
Technology,” which was registered
under Liang’s name.
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Understanding TikTok & ByteDance
朱骏 阳陆育
The Pioneers
Alex Zhu & Louis Yang
ALEX & LOUIS pioneered the 15 After Musical.ly’s acquisition. Louis
second full screen vertical short and Alex continued to work for
video app experience that we now ByteDance. Louis currently focuses
know as TikTok. The two co- on innovative educational AI
founded Musical.ly, an app products in Shanghai.
extremely popular with European
and American teenagers. Alex went on to lead TikTok before
becoming VP of Product and
Bytedance first cloned their app and Strategy in May after the hire of
later acquired their company, Disney executive, Kevin Mayer.
eventually merging Musical.ly
together with TikTok.
The two previously held director
positions at eBaoTech, a Shanghai
based insurance services company.
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Understanding TikTok & ByteDance
王琼 The Investor
Joan Wang
THE MOST IMPORTANT investor in SIG’s investment into ByteDance
ByteDance’s company history is Joan holds legendary status in China’s
Wang. venture capital world. Especially
given ByteDance had much difficulty
Joan works as managing director for securing early investments. Many of
SIG China a venture investment arm China’s most prominent VCs turned
of the American financial services them down missing the opportunity
firm Susquehanna International to make a career defining deal.
Group (SIG).
Joan believed in founder Yiming at a
She came to know Zhang Yiming time when few fancied their chances.
through backing two of his previous In 2013 SIG owned roughly 12% of
startups, travel search site, Kuxun, ByteDance and are reported to have
and real estate portal, 99Fang.com. remained the largest institutional
investor.
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Understanding TikTok & ByteDance
Higher Management (mid 2020)
THE ROLES, responsibilities
and titles of ByteDance’s
higher management team
change frequently.
There has been a merry-go-
round of executives
responsible for TikTok over
the past 2 years including
Alex Zhu, Kelly Zhang, Kevin
Mayer and currently Vanessa
Pappas with TikTok now in
the midst of separating itself
from the rest of ByteDance.
Other key executives include
early employee and former
CEO of Toutiao, Chen Lin, Xie
Xin heads up the company’s
drive into enterprise
productivity with Lark.
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Rapid Headcount Growth
THERE ARE FEW companies, even in tech, compensation and generous share options to Picture left: Estimates of ByteDance staff head
which are growing as fast as ByteDance. secure top candidates. Offices in Mountain count in comparison with other industry
Within China the company has built a View, California and Shenzhen, China, have peers.
fearsome reputation for aggressively been set up within close proximity of wary Picture right: The entire ByteDance company
poaching talent from other internet rivals Facebook and Tencent respectively. in 2014.
25
companies, offering above market
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Products
Image: just some of ByteDance’s many apps
Understanding TikTok & ByteDance
ByteDance Apps - Overview
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ByteDance Apps China
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ByteDance Apps International ByteDance Apps Discontinued
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Understanding TikTok & ByteDance
The First ByteDance App – It Started From Memes
EVEN BEFORE the company had been
officially registered, the embryonic
ByteDance team had cobbled together their
first app entitled Hilarious Goofy Pics, (搞笑
囧 图 gǎoxiào jiǒng tú) that served an
endless addictive feed of entertaining
memes and silly pictures.
During ByteDance’s early years the company
held a notorious reputation for serving its
users trashy mindless click-bait content. The
company completely transformed its image
with the arrival of Douyin and later TIkTok.
“We must face the fact that for 96% of peo-
ple, their needs are so vulgar,” explained
Gao Han, a senior UI designer, and
ByteDance employee number 22.
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Recommendation
Image: Musical.ly co-founder Louis Yang’s conceptualization of short video content distribution methods
Understanding TikTok & ByteDance
Fragmented Time
2005
PEOPLE USE smartphones
in radically different ways
from desktops and laptops.
Mobile internet usage can
be typically split over 30-
40 shot sessions per day.
Sometimes less than 60
seconds. 2016
How does video
entertainment work in
such an environment?
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Informational Overload – The Recommendation Era
METHODS OF informational
distribution have evolved over the
internet’s 30-year history. From
the curated web portals (AOL,
Yahoo!) of the 90s through to
search engines, RSS, and email
subscription lists, social networks
and most recently
recommendation engines.
The amount of information online
has exploded. Today we are
bombarded with online articles,
videos and more products than
we can possibly choose from.
Recommendation is an efficient
and accessible solution to the
deluge of information.
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“People looking for Information” to “Information looking for People”
THE DIFFERENCE between search
engines and recommendation
engines is encapsuled by the
concept of “people looking for
information”, vs. “information
looking for people.”
Search requires an explicit
declaration of intent from the
user, a “search term.”
Recommendation infers our
preferences based our past
behavior. This model is more
suitable for the small screens,
fragmented time and information
overload issues which
characterize the mobile era.
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ACCURATE MATCHING of content
with users was the biggest
difference between Musical.ly and
TikTok. Superior classification and
recommendation was the key to
content diversification beyond the
popular categories of teen lip-sync
and dance.
Without accurate video classification
and recommendation niche content
cannot find appropriate users. User
generated videos often have poor
or inaccurate metadata. Under these
conditions, search is an inefficient
method to match users with content.
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Understanding TikTok & ByteDance
Short Video – a Saturated Market
Left: Short video apps
launched from 2011 to 2016
(non-exhaustive).
THE ORIGINAL China
version of TikTok, was
launched in late 2016 under
the name A.me. It was a late
mover in an already heavily
saturated market.
Yet another uninspired clone
destined to enjoy a fleeting
moment of fame before
withering away
unceremoniously into
internet obscurity.
Not even ByteDance’s own
staff were optimistic, seeing
the app as somewhat of a
side bet.
36 The original version of TikTok, A.me
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The Turning Point
Q4 OF 2017 was when everything
came together a critical turning
point for the fortunes ByteDance.
Over October, Douyin’s daily
users doubled, 30-day retention
rates jumped from eight to over
20%, the average time spent in
the app soared from 20 to 40
mins.
It was as if some magic rocket
fuel had suddenly been added,
boosting every key metric. What
had changed?
One of ByteDance’s most capable
engineering teams led by Zhu
Wenjia, was assigned to work on
Douyin, harnessing the full power
of company’s content
recommendation backend.
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Breaking into the Mainstream
EARLY PIONEER Musical.ly, had
failed to break into the Western
mainstream, remaining an app
used exclusively by teens.
In China, Douyin was able to
reach a much broader
audience in part by cleverly
altering its positioning. The app
originally mimicked Musical.ly,
targeting female pre-teens,
later shifting to become a place
for young trendsetting art
students and hip-hop idols. By
early 2018 the app saw another
significant shift in its positioning
to the simpler, more neutral
"Record beautiful life."
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Dual Flywheels – User Generated Short Video
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Understanding TikTok & ByteDance
The Iconic Logo
THE TIKTOK LOGO is a musical surrounding dark stage.
note in the shape of the letter Inspired by the psychedelic
‘d’ which stands for, Douyin, visuals at the live event, he set
the name of its original sister about creating an image that
app. The Chinese name Douyin would capture the show’s eu-
translates as “shaky beat”. phoric feel and decided to toy
around with the musical note ♪
Given music played a vital role sign. He ran the icon through
in the app’s experience, the various filters and settled on
idea was that both the creators using something known as a
and their audience would glitch effect.
unwittingly move their bodies
to the music. The app’s signature black color
scheme was inspired by other
The young designer tasked popular Chinese video app
with the creating the logo had Meipai
his epiphany when attending a
rock concert lit up by beams of Left: original design concepts
swirling colorful lights with a for the now iconic logo.
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Monetization
Image: TikTok advertising on the London underground December 2018
Understanding TikTok & ByteDance
ByteDance – an Advertising Juggernaut
BYTEDANCE’S share of China’s
online digital media market
spend grew from just 2% in 2015
to become the second-largest
player with 18% by the first half
of 2019. During the same period,
search giant Baidu’s market
share roughly halved from 29%
to 15%.
The rise of TikTok represents a
potential challenge to the
Western market online
advertising duopoly of Google
and Facebook.
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Douyin – a License to Print Money
BYTEDANCE’S commercialization commerce. "Others," includes
teams had brainstormed a blue tick account verification fees
multitude of ways to capture and "DOU+," a system through
value, converting eyeballs into which any user or creator can
dollars and squeezing every last pay the platform to boost a
cent out of Douyin. video’s visibility.
The lion's share, roughly 80%, Right: The estimated 2019
was attributed to advertising but revenue breakdown of Douyin
there were many other sources.
"Extended businesses," included Data source: EqualOcean
revenues generated through Analysis
games, paid knowledge, and e-
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Coming to TikTok Soon...?
DOUYIN offers a window
into the future of TikTok
given that the China short
video market is 12-18
months ahead of the rest of
the world. Successful Douyin
features pioneered in China
have a high chance of also
appearing in TikTok.
Right: Screenshot examples
of Douyin’s various
monetization models,
including in-feed video ads,
games, virtual gifting, and e-
commerce.
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Short Video - Sucking up Advertising Budgets
USD $ Billions
THE RISE of short video
represents a broad shift in
internet consumption habits.
It is a compelling format for
viewers and advertisers alike.
Right: Internet advertising in
China by category. Short
video became China’s
second-largest advertising
category behind e-
commerce and exceeding
search, a shift that was
primarily led by Douyin.
Source: SCMP reporting and
analysis, QuestMobile,
Qianzhan Industry Research
Institute, iResearch, IDC
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For More Insights …
Written by China internet specialist and internationally
recognized speaker Matthew Brennan and edited by
TechCrunch journalist Rita Liao, Attention Factory is
packed with over 300 pages of original analysis and
exclusive reporting that you cannot find elsewhere.
Paperback and Kindle e-book. Get it now.
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Chinas-ByteDance-ebook/dp/B08L1578B6/
Understanding
TikTok & ByteDance
China’s attention factory
Composition and Research
Matthew Brennan
Rita Liao
Illustrations
Valentina Segovia
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