The Donald Trump administration wanted the Chinese firm,
which owns the ubiquitous TikTok video-sharing platform, to get rid of assets.
Beijing was cracking down on tech businesses, and India
blacklisted some of its social-media apps.
For all the obstacles, ByteDance kept growing. Now its
founder, 38-year-old Zhang Yiming, is among the world’s richest people -- a
distinction that lately has carried increased risks in China.
Shares of the company trade in the private market at a
valuation of more than $250 billion, people familiar with the dealings have
said.
At that level, Zhang, who owns about a quarter of ByteDance,
could be worth more than $60 billion, placing him alongside Tencent Holdings
Ltd’s Pony Ma, bottled-water king Zhong Shanshan and members of the Walton and
Koch families in the US, according to the Bloomberg Billionaires Index.
ByteDance, famous for its short-video apps and news
aggregator Toutiao, more than doubled revenue last year after expanding beyond
its core advertising business into areas such as e-commerce and online gaming.
It’s now weighing options for the initial public offering of some businesses.
“Zhang is someone who’s known for thinking long-term and not
easily dissuaded by short-term setbacks,” said Ma Rui, partner at venture-capital
firm Synaptic Ventures. “He is set on building an enduring, global business.”
Surging valuation
During its last fundraising round, ByteDance reached a $180
billion valuation, a person with knowledge of the matter said. That’s up from
$20 billion about three years ago, according to CB Insights. But in the private
market, some investors recently were asking for the equivalent of a $350
billion valuation to part with their shares, people familiar have said.
The company’s value for private-equity investors is
approaching $400 billion, the South China Morning Post reported. That would
mean an even bigger fortune for Zhang.
ByteDance representatives didn’t respond to requests for
comment.
It’s a tough time to be wealthy in China as the government
seeks to rein in the country’s most powerful corporations and their billionaire
founders.
Just ask Jack Ma: After opening an antitrust probe,
regulators fined Alibaba a record $2.8 billion and the central bank ordered an
overhaul of his Ant Group Co fintech empire so it’d be supervised more like a
bank.
On Tuesday, China ordered 34 internet companies to rectify
their anti-competitive practices in the coming month.
While ByteDance hasn’t been singled out as a target, its
dominance in social media and war chest for deal-making are sensitive areas the
government is looking into.
“There are no more silly games in the US with Trump and
potential bans or forced asset sales,” said Kirk Boodry, founder of investment
research firm Redex Holdings. “But the pressure on tech-share prices and China
in particular might make $250 billion a tough sell,” he added, referring to
ByteDance’s value in private transactions.
Born in the southern Chinese city of Longyan, Zhang, the
only son of civil servants, studied programming at Tianjin’s Nankai University,
where he built a following on the school’s online forum by fixing classmates’
computers. He joined Microsoft Corp for a brief stint after graduating, later
calling the job so boring he often “worked half of the day and read books in the
other half,” according to an interview with Chinese media. He went on to
develop several ventures, including a real estate search portal.
His breakthrough came in 2012, when working in a
four-bedroom apartment in Beijing he created ByteDance’s first hit -- a
joke-sharing app later shut down by censors. It then turned to news aggregation
before winning over more than 1 billion global users with its short-video
platforms TikTok and Chinese twin app, Douyin.
In the process, it attracted big-name investors such as
SoftBank Group Corp, Sequoia Capital and proprietary-trading firm Susquehanna
International Group, making it a rarity among Chinese internet startups that
usually get absorbed into the wider ecosystems of Tencent and Alibaba Group
Holding Ltd.
Novel concept
One of Zhang’s earliest supporters, Susquehanna has become
ByteDance’s largest outside backer with a 15% stake, according to a Wall Street
Journal story in October.
The initial bet was made at the start of 2012, when
ByteDance’s news app Toutiao was just a concept that Zhang had drawn up on
napkins, according to a 2016 blog post by Joan Wang, who led that investment
for Susquehanna’s Chinese venture-capital unit.
With TikTok facing scrutiny in the US and India, Zhang has
put more effort into ByteDance’s nascent and fast-growing Chinese businesses,
which range from gaming to education to e-commerce. That helped it increase
sales to about $35 billion last year and operating profit to $7 billion, a
person familiar with the results said.
Investors are eyeing the IPO of some of ByteDance’s
businesses after Chinese competitor Kuaishou Technology raised $5.4 billion in
February in the biggest internet listing since Uber Technologies Inc, with its
market value now nearing $140 billion.
Last month, ByteDance hired former Xiaomi Corp executive
Chew Shou Zi as its chief financial officer, filling a long vacant position
that will be crucial for its eventual market offering.
But for Zhang, it’s not all about immediate payoffs. The
affable founder is known for his business philosophy of “delaying
satisfactions” as he puts the focus on long-term growth -- a message he
stressed again during his spiel to employees at the company’s ninth anniversary
celebration last month.
“Keep an ordinary mind, that’s something that sounds easy
but important to do,” he said. “Put in the plainest words, when hungry, eat,
when tired, sleep.”
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