The announcement of yet another Chinese tech founder stepping down from the front-lines has people rushing to point the finger at Beijing. Yet executive retirement, especially in the transitional phases of a company, should be celebrated and encouraged.
Zhang Yiming (張一鳴), who started content platform ByteDance in 2012, intends to relinquish the CEO position to college friend and cofounder Liang Rubo (梁汝波) by the end of the year, he said in a letter on Thursday last week.
The action is similar to Colin Huang’s (黃崢) exit from the chairmanship of Pinduoduo in March, after departing as CEO last year.
In both cases, the moves by young executives — Zhang is 38, Huang 41 — at the height of their powers and in the prime of their careers has been viewed as a move to avoid or even appease authorities. China’s rulers, the theory goes, are not particularly enamored with the prospect of rich and powerful people overshadowing their political leadership, so it is best to jump before being pushed.
Jack Ma’s (馬雲) downfall after an ill-advised speech railing against regulators in October last year served as a reminder of who is truly in charge. Regulators swiftly nixed the Hong Kong listing of his Ant Group fintech business, and six months later fined its affiliate Alibaba Group Holding US$2.8 billion for antitrust infractions.
Investors are so nervous of any perceived slight committed by executives against the government that a post this month from Meituan CEO Wang Xing (王興), which contained a few verses from an ancient poem about the misguided attempts of China’s first emperor to quash dissent, saw the online commerce platform lose US$26 billion in market value over two days.
There is nothing to suggest that Zhang has found himself on the naughty list. Indeed, the engineer is generally considered to be more shy and low-key than most of his contemporaries, despite ByteDance landing at the center of the US-China tech cold war.
The Beijing-based company’s most famous product, the short-video app TikTok, drew ire in Washington for alleged data collection that resulted in an attempt by then-US president Donald Trump to have it banned and the US division sold off — which did not happen.
However, with a listing likely in the US or Hong Kong in the coming year, at what is expected to be a heady and possibly record valuation, Zhang would not be able to escape the scrutiny of China’s leadership.
In the current environment in China, people can possibly get away with being rich or being powerful, but certainly not both. As Bloomberg columnist Shuli Ren (任淑莉) wrote last month, the nation’s billionaires have tried to downplay their wealth by giving it away, tinkering with company share structures or burying holdings in conglomerates.
However, people should look past all that and consider that resigning at this point in ByteDance’s history makes sense. Tech companies are generally started by eager and innovative engineers whose primary focus is to build a product. In the early days, the CEO has a role in how something is designed and built, whom the start-up hires and the way it connects with customers. By the time a company grows to thousands of employees, there is a good chance the person who launched it is not even familiar with the code base, let alone all the engineers who developed it.
After Zhang’s letter was released, writers and analysts seized on one line where he says: “I lack some of the skills that make an ideal manager,” as if that shows he is not good at the role. In fact, there is a sense that he was actually quite adept.
The online publication The Information, citing colleagues, said that Zhang “had proven himself more than capable of running a company of more than 60,000 employees.”
Yet Zhang’s words, if taken at face value, reflect a curious and innovative engineer whose role made him fall behind in the area that sparked his passion to begin with.
“While I do my best to bookmark technical articles online, I haven’t had the time to make much progress digging into the area. During technology meetings, this sometimes means I actually struggle to keep up with the discussion,” he wrote.
Pinduoduo’s Huang shared a similar sentiment in March, when he told investors that he was choosing to step “out of the business and the comfort zone to embark on a journey of exploration.”
This kind of self-awareness, and the willingness to address it, ought to be recognized and applauded. A company functions best when every staff member is doing the work they are most passionate about and best-suited to, and this includes management.
This “should I stay or go” dilemma is not unique to China. Sergey Brin and Larry Page hired industry veteran Eric Schmidt to take over from them as chairman and CEO of Google (later renamed Alphabet Inc) in 2001, three years before its NASDAQ listing.
However, US founders generally remain through the IPO and a long time after. Amazon.com’s Jeff Bezos announced only recently that he is relinquishing his CEO position, almost 27 years after starting the company.
Upon stepping down, Zhang plans to spend more time on big-picture issues, including strategy and social responsibility, saying that “giving back to society” is an important piece of what ByteDance can achieve in the coming decade.
This altruism seems genuine, yet echoes sentiments that tech leaders have often spoken of.
Even Tencent Holdings, with founder Pony Ma (馬化騰) remaining at the helm, this week told investors about its new Sustainable Social Value organization, which is intended to “bring technology benefits to society,” despite that it is expected to be a drag on earnings this year.
In March, Pinduoduo’s Huang wrote that the business “should create value for the public, rather than being a show-off trophy for a few.”
In China, this emphasis on social responsibility is more than just ticking boxes in an annual report — it is crucial to survival. Whatever the founders’ motives are, moving on when the time is right is one of the most valuable gifts they can give.
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