Zhang Yiming: Do Challenging Work with Outstanding People

Zhang Yiming: more important than managing people is doing challenging work with outstanding people. Zhang wrote this article years ago, when Toutiao was still a small company struggling to recruit. It offers useful advice on how internet product and technical talent should choose employers. Drawing on his own experience, he discusses which criteria should guide that choice and what deserves attention. ----- I have been a little frustrated lately. Another candidate turned me down. Rejecting and being rejected happen often, and neither necessarily frustrates me—except when candidates choose another company for reasons like these: 1. They just raised x hundred million U.S. dollars, so the company feels bigger. 2. Online-to-offline (O2O) is hot and closer to making money, so it seems a better business. 3. They offered a senior-director title and a team of more than one hundred people to manage. 4. A giant invested in them, so they must be a sure thing. 5. If they, a competitor, reach a third of your scale, they might be acquired. Joining now could still offer a good return. 6. You have already grown so large and reached such a high valuation that options must have less upside, and all the positions are filled. I wish everyone well and respect their choices, but I disagree with some of these reasons. Here are a few thoughts on the criteria product and technical talent should use when choosing a company, for your consideration. ---- # Organic growth capacity matters most People often use “unicorn” to describe an outstanding startup. Another important concept is the EC ratio: enterprise value divided by total funding. Enterprise value is approximately valuation minus cash. The EC ratio can indicate a business’s internal growth capacity. Historically, Google, Facebook, Instagram, WhatsApp, and Tencent have all had extremely high ratios. A very low EC ratio combined with substantial funding can make a company look as though capital has fattened it up. Some founders feel secure only when they see money sitting in the bank. Others feel secure only after investing that money in many other companies. Neither is necessarily wrong. Overall, however, organic growth capacity is an important reference point for judging a team’s creativity, efficiency, and business model. Companies that maintain relatively high EC ratios as they develop often have stronger organic growth capacity. Organic growth means sustained growth in revenue and profit achieved through the company’s existing assets and team, rather than reliance on outside forces—external funding and resources. ---- # First-rate technical talent should choose leading technology companies If you are considering an internet company, consider a fast-growing technology company. This is especially true if your background is technical. Not every internet business, however, deserves to be called a technology company. Recently, many innovations have combined the internet with traditional industries: using internet marketing to transform clothing sales, flatbread sales, pig farming, and so on. I do not oppose these combinations and recognize their contribution to progress. They use online marketing and existing internet tools to seize business opportunities. But to me, that is more the work of businesspeople than technologists. # Technical talent should innovate to make fundamental advances or solve previously unsolvable problems. A popular “downshifting” argument asks why anyone should do something so ambitious. Use technology for lower-risk activities with less competition, it says; those elite casualties left on the beach look foolish. I do not oppose different people, or people at different stages, choosing less ambitious work. But some people and companies should set higher goals. # First-rate technical talent should join leading technology companies. # Leading technology companies should dare to break new ground. What is a leading technology company? How do you assess an internet company’s technological creativity? The most important factors, I think, are investment in technology and technology’s contribution to the business. What proportion of the value created for users comes from technical investment rather than money burned on field promotion? Technical investment includes the proportion of technical staff, the number of servers, and investment in algorithms and architecture. From this perspective, I personally admire Elon Musk, written “Elon Mask” in the original. From PayPal and SpaceX to Tesla and SolarCity, he works on genuinely technology-intensive things that bring the future forward. The same was true of Apple, Microsoft, and Google in the past. ---- A “wealthy family” or powerful patron is not necessarily a good thing Before our company was a year old, a giant made us a very tempting investment offer: A valuation higher than venture capitalists offered, distribution through more than one hundred million bundled installations, tens of millions of unique web visitors, data, and more. Accepting it could have multiplied our business growth rate within six months. I agonized over it for a full week, but ultimately declined because: 1. I thought these forms of help were stimulants that would suppress our endogenous strength before we had developed our internal capabilities. 2. Some resources distort strategy. We had not planned to focus on the web, for example, but with that much traffic, we would keep investing resources there. 3. The downside of giants: being drawn into their wars, forced to take sides or assigned a side by others, and losing freedom of thought. 4. Remaining independent better attracts the very best talent, because the dreams and possibilities are unlimited. The benefits are obvious; the drawbacks are hidden. In such situations, people easily overestimate the benefits and underestimate the costs. That typically reflects an insufficient ability to delay gratification, or insufficient confidence in the long term. Some companies sell their future and vision, even accepting highly unfavorable terms to marry into a wealthy family. Founders may have a chance to cash out, but I strongly advise other talent to be cautious rather than speculative. Such companies may see traffic rise rapidly in the short term, yet have low retention, weak engagement, and distorted strategies. #A team blinded by appearances finds its core capabilities constrained. It is fundamentally a tower built on shifting sand. Examples abound. For job seekers, then, let me slightly adapt a saying by 范爺 (Fan Ye): Do not join companies that marry into wealthy families. Marrying into one makes it hard to become one. Join an outstanding company and become a great one together. ---- # Do challenging work with outstanding people # More important than headcount # More important than titles “How many people will I manage after joining, and what title will I have?” Questions like this often frustrate me too. Sometimes I want to ask, “How large are WhatsApp’s and Instagram’s teams?” Does managing more than one hundred people at some company, doing unchallenging work, really feel so good? Do the best teams not consist of exceptional, highly capable people doing things ordinary teams cannot? As for titles, their inflation is worse than the ruble’s. I once considered following Facebook’s approach: let people use whatever title they want, even CEO++. HR often asked whether we could be more flexible about titles, and I nearly agreed. On reflection, holding the line might be right. It should help us find people interested in the work, drawn to challenges, and focused on personal growth. A company made up of people who want to manage large teams rather than do first-rate work, and who like inflated titles, cannot have high talent density. Fundamentally, such people care little about the quality of their colleagues and are unwilling to collaborate openly with other outstanding people. They would rather act as labor contractors. When interviewing experienced Silicon Valley engineers, I asked whether they cared about the size of the teams they managed. Several answered, “Not at all. I care more about the work and the stock.” They also said that after a long time in management in Silicon Valley, it becomes difficult to join an emerging company, because early-stage companies do not need directors from large corporations. Doing challenging work with outstanding people should matter more than managing people or holding a title. ---- # Choose outstanding teams # Choose leading companies One feature of China’s stock market is that small-cap, low-priced shares can easily be bid up despite poor performance, because investors think low prices make increases easier. Recently, I have noticed a similar tendency among some candidates. Some think that because a company is smaller and valued lower than ours, reaching a third of our scale and being acquired could still produce a good equity return. Others think joining a smaller company gives them more room to grow and a chance at larger returns. I disagree. Were Alibaba and Tencent early-stage or late-stage companies five years after their founding? Both subsequently grew more than a hundredfold. Were they early-stage or late-stage in 2010? They grew more than twentyfold within four years, faster than most startups. Early and late are therefore relative. # The scale of future potential is the absolute yardstick. A team leading in fierce competition also often continues to lead, widening the gap with those behind: Alibaba versus 慧聰 (Huicong), for instance, or Baidu versus 中搜 (Zhongsou). Do not choose the runner-up with a speculative mindset. Finally, most internet companies follow a winner-takes-all pattern. Rationally, then, choose the leader. Leading companies also have more energy to break new ground and build larger platforms, rather than follow and imitate. A runner-up content with a small slice can easily adopt an acquisition-minded outlook. Speculation becomes a more or less inevitable and rational choice for it. Which would an outstanding person choose? In summary, if product and technical talent ask me what makes a company worth joining, I would look in the short term at stable returns and sufficiently rapid user growth. In the long term, consider the product model, potential revenue scale, industry outlook, and whether you will do interesting, challenging, meaningful work with outstanding people. I know these judgments do not suit everyone, and not everyone will like them. Some prefer stability, some prefer familiar, comfortable work, and some want to stand out more. All deserve respect. Whatever the choice, I hope outstanding young people find companies that suit them, and I hope to meet more people who share these ideas.