ByteDance’s Road to Being the Most Valuable Startup in the World; what made it so successful?
ByteDance’s Road to Being the Most Valuable Startup in the World; what made it so successful?
ByteDance has established itself to be a stunningly inventive and profitable firm over the last decade. This is true not only for TikTok but for many of the company’s other applications, which have a large user base. What is the company’s trade secret? To drive innovation, it employs a shared-service platform or SSP. The writers of this article discuss how ByteDance has utilized its SSP to fuel development and growth in various ways.
ByteDance, the world’s most valuable company, has surpassed growth records at just ten years old. With 1.9 billion monthly active users in 150 countries and over 110,000 employees, the corporation generated a staggering $58 billion in sales in 2021.
Most consumers are primarily familiar with the firm through its popular short-video app TikTok, which has been downloaded over 3 billion times worldwide, second only to Meta and its family of applications.
But ByteDance has cranked out one spectacularly successful product after another, including Toutiao, China’s most popular news app, which now boasts 320 million monthly active users, and Douyin, a short-video app that predated TikTok. Toutiao and Douyin each account for 20 percent and 60 percent of advertising revenue.
Zhang established Bytedance in 2012 as Today’s Headlines, often known as Toutiao, a news aggregation service. Bytedance swiftly became one of China’s most valuable internet startups because of the site’s clever algorithms, which could personalize the home page to fit every viewer’s interests best.
Zhang used Toutiao’s success to establish TikTok. This video-sharing app has become the most popular social media app among American teenagers and several other products. However, not all Bytedance solutions have achieved the exact market or regulatory acceptance level as TikTok.
ByteDance has more than 20 applications, spanning from news and video to music and mobile gaming. Some, such as TikTok, have a global reach. Others, such as the news aggregation Toutiao, have only been available in China thus far.
Bytedance has done more than any other Chinese internet business to break into the United States under Zhang’s leadership, dominating the market with its enormously popular TikTok app. However, Bytedance appears to have received minimal backing from Beijing due to TikTok’s popularity.
TikTok is being utilized by over 1 billion people every month, according to the most recent report dated September 28, 2021. It’s gotten so much attention that ByteDance, TikTok’s parent company, was just named the world’s most valuable startup.
YouTube, Sina Corporation, Baidu, Kuaishou, and Hyperconnect are among ByteDance’s main competitors. ByteDance is a technology business that creates content that informs, educates, entertains, and inspires people across various channels.
How has ByteDance been able to maintain such a high level of success? Our innovative approach, which focuses on a shared-service platform, or SSP, is a significant contributor.
An internal corporate service called a Shared Services Platform (also known as an Internal Developer Portal or an Infrastructure Platform) allows application developers to self-service infrastructure environments. SSPs are prevalent among firms that have grown to the point where they desire to share a common infrastructure and automate infrastructure provisioning for development teams.
Kubernetes (K8s) quickly establishes itself as the de facto control plane for contemporary clouds, and it’s routinely used to power these internal systems. An SSP aims to boost development productivity while keeping security, networking, compliance, and expenses under control. Pulumi makes it simple to model and provide the SSP control plane and automate data plane stack provisioning.
Product teams tweak existing technology that the SSP has previously created in certain circumstances. Algorithms are a good example.
ByteDance’s product teams collaborate with SSP algorithm developers to fine-tune their colossal recommendation engines. User-growth teams, which help find and attract targeted consumers; content teams, which form partnerships to acquire new material; analytics teams, which help build deeper user insights; and sales teams, which drive monetization, are all part of the SSP.
Because so many capabilities have been integrated within this huge SSP, product teams are small and focused, which is to be anticipated, especially during the exploratory period. For example, Douyin started with a few people, and the education team had only two. Notably, the SSP and market-facing teams have a symbiotic and mutually beneficial connection. ByteDance’s success is due to this virtuous circle of continuous discovery and development.
Teams of Experts
Bytedance uniquely employs its SSP platform compared to the majority of businesses. The product teams or divisions of the firm do not have control over their operating resources. Instead, many everyday companies, technical, and operational tasks (such as HR and legal) are centralized and grouped into teams.
The teams are highly specialized, allowing the necessary personnel to be discovered and quickly deployed to each new project. ByteDance is able to manage this seemingly complicated organisational arrangement thanks to cloud and shared operating tools, some of which were built in-house.
While product and associated teams continue to focus on meeting consumer expectations, they rely on other SSP teams to help them expand and grow faster.
For example, if ByteDance assigns a new venture team the duty of exploring user wants and market potential, the team can seek data assistance from the SSP’s user-research professionals, saving time on market analysis.
In other firms, these activities are delegated to the product team, which is seldom the best qualified to acquire such data. Following that, when a use case warrants establishing a new app or product feature, the product team is matched with engineers at the SSP level to develop the new product or feature.
In certain circumstances, product teams tweak existing technology that the SSP has previously created. Algorithms are a good example. ByteDance’s product teams collaborate with SSP algorithm developers to fine-tune their colossal recommendation engines.
User-growth teams, which help find and attract targeted consumers; content teams, which form partnerships to acquire new material; analytics teams, which help build deeper user insights; and sales teams, which drive monetization are all part of the SSP.
Because so many capabilities have been integrated within this huge SSP, product teams are small and focused, which is to be anticipated, especially during the exploratory period.
For example, Douyin started with with a few people, and the education team had only two. Importantly, the SSP and market-facing teams have a symbiotic and mutually beneficial connection. ByteDance’s success is due to this virtuous circle of continuous discovery and development.
ByteDance has built unique innovation and growth methods based on its SSP. Broad exploration, quick iteration, selective focus, maximum-capability cross-pollination, and productizing platform services are the five primary features of these techniques.
ByteDance’s SSP approach, which aims to speed up new initiatives by offering rapid access to best-in-class technology and operations, has proven to be so effective that many other firms are likely to follow suit.
However, few organizations have duplicated ByteDance’s strategy’s success. Why? They haven’t implemented the organizational enablers that helped ByteDance overcome fiefdom mindsets that stifle cooperation.
Three of these organisational enablers are very critical: OKR system, flattening hierarchy, and data-driven culture. ByteDance has built unique innovation and growth methods based on its SSP. The following are the five major features of these strategies:
A broad investigation is carried out. ByteDance has been on the lookout for fresh product possibilities since its inception, and it isn’t afraid to send many teams into the same market. In its first six months as a firm, it notably released 12 entertainment content applications and 20 apps to investigate foreign-market prospects in 2015.
At the same time that it was running Douyin, it had two additional teams incubating short-video projects. Between 2018 and 2020, the firm has at least 140 apps accessible in app stores across 11 different verticals.
ByteDance is also known for its rapid product development and market entry, aided in part by their SSP. According to one employee, it took the business only four months to build an education software that would have taken competitors 18 months to launch.
ByteDance, on the other hand, terminates non-performing products and dissolves or reorganises the product teams involved almost as rapidly as it introduces new ones. Unlike other organizations, ByteDance staff might cycle through several projects each year, with some of them never seeing the light of day that is, they never get launched.
Focus on a particular area
However, ByteDance’s broad investigation does not imply a lack of concentration. For a few years, the corporation devotes significant resources to a few core initiatives. The first three years were dominated by text- and photo-content trials tied to the success of Toutiao, the company’s news app, while 2016 saw a shift to short video.
After three years of testing, ByteDance decided to make expanding its education business a priority, introducing 11 distinct products in seven different market sectors. While this project was put on hold in 2021 due to adverse government laws, it exemplifies the company’s philosophy of testing extensively within certain emphasis areas.
Cross-pollination at maximum capacity
ByteDance’s SSP also enables new product teams to quickly and efficiently integrate best-in-class technologies and features, saving time and money. For example, when one group was looking at HR prospects, it was able to use AI technologies developed by the SSP algorithm team, such as interview transcription and resume scanning.
SSP features, including voice recognition, image recognition, and search, were used in the company’s smart education gadgets, including an intelligent assignment lamp that can record, assess, and analyse pupils and allow parents and tutors to oversee children’s homework remotely.
Productizing platform services
Platform services are being turned into products. Shared services are frequently introduced as new features, but they are promoted to SSP status if usage, real or expected, grows across many products, as it did with live streaming.
External cloud goods are sold for several of the company’s shared services, including many of its algorithmic solutions. For example, Lark, the company’s work-collaboration tool, was created with internal needs in mind.
ByteDance’s SSP approach, which aims to speed up new initiatives by offering rapid access to best-in-class technology and operations, has proven to be so effective that many other firms are likely to follow suit. However, few organisations have been able to duplicate ByteDance’s strategy’s success. Why? They haven’t implemented the organisational enablers that helped ByteDance overcome fiefdom mindsets that stifle cooperation.
Three of these organisational enablers are very critical:
The OKR system is a method that allows you to keep track of ByteDance’s strategy and operations are guided by a transparent, bi-monthly Objectives and Key Results (OKR) structure that flows from the top-down, synchronising SSP and product teams’ objectives and activities. It is inspired by Google . Everyone’s OKRs, including the CEO’s, are visible to everyone else.
At ByteDance, achieving OKRs, which often require numerous teams rather than individual team accomplishments, accounts for the majority of one’s performance. This aids in the elimination of compartmentalised thinking.
Hierarchy has been explicitly simplified.
ByteDance employs a 360-degree performance-evaluation system to encourage cooperation and sharing. It has also removed the use of titles and purposefully compressed its structure to only a few levels, unlike most other Chinese organisations, so that employees may focus on their jobs rather than worrying about their position.
Employees say higher-ups are easy to reach and highly helpful, thanks to shared OKRs and a lack of concerns about rank differences. Mentorship is also popular in the company and among peers, who perceive each other as collaborators rather than rivals working toward a similar objective.
A culture that is based on data
Zhang Yiming, the company’s founder, feels that its data-driven organisational culture is the company’s most basic competitive edge. One executive noted that time spent watching videos on Toutiao had grown dramatically, prompting the company’s venture into short video.
TikTok’s steady growth from its teen-dancing user base to the far larger audience it enjoys today has also been aided by well planned marketing based on data-driven insights.
ByteDance uses the same three main advantages it has established in its primary business sectors, such as news curation and short-form video, with each new product it launches:
1.A user base that is both youthful and active. ByteDance, like Facebook before it, is growing by utilising an audience of actively engaged young people. According to reports, 60 percent of TikTok users in the United States are between the ages of 16 and 24. Two-thirds of the world’s population is under the age of 30.
2.Products that are designed to spread like wildfire. ByteDance looks to have tapped upon something powerful in the way people now desire to interact with content through TikTok. The top 50 TikTok content producers have more followers than the combined populations of Mexico, Canada, the United Kingdom, and Australia.
3.Algorithms for personalization and recommendation ByteDance may be thought of as an artificial intelligence lab that focuses on building algorithms that can match consumers with content, ranging from video and music to news and e-commerce.
ByteDance is competing with global digital giants like Google, Facebook, and Amazon and their Chinese rivals Baidu, Tencent, and Alibaba for a position on the stage. However, a permanent position at Big Tech is far from certain.
Concerns about ByteDance’s attitude to user privacy are growing, and both established tech corporations and startups are seeing ByteDance as a danger and building products to directly compete with it.
ByteDance will have to show that its viral products aren’t just a passing fad.
This research examines ByteDance’s growing product range, demonstrating how the company’s primary advantages are manifested in each product. We have also looked at how the corporation is increasing its global reach, with an emphasis on three key markets: China, India, and the United States.
ByteDance’s SSP-based innovation approach has undoubtedly aided the company’s rapid development in its first decade.
Using centralized but flexibly deployable technological and operational stacks, the organisation has been able to incubate quickly and globally and grow economically. Because of the commonality across its numerous algorithm-driven goods, this technique has worked effectively for the firm.
ByteDance is currently looking into new product categories and tweaking its approach to make it more appropriate for its changing organisational architecture and procedures, but no matter how the firm evolves, its SSP-based innovation strategy will undoubtedly play a key role.
Edited and published by Ashlyn Joy