Summary of Key Points
ByteDance has announced the merger of Lark (Feishu) and DouBao. Lark CEO Xie Xin reports to DouBao’s leader Zhao Qi, and Lark’s sales team has been integrated into HuoShan Engine (HuoshanQing). This marks a crucial step in ByteDance’s AI commercialization strategy: by leveraging DouBao’s AI capabilities and combining them with Lark’s existing enterprise office solutions, the company aims to target the B2B (business-to-business) market and office scenarios, which are the most profitable areas for AI. By consolidating resources and focusing efforts, ByteDance seeks to become one of the most profitable companies in the AI industry.
The Business Logic Behind the Merger: AI + Office Solutions Are Highly Profitable
In the AI sector, there are two particularly lucrative areas: providing services to businesses (B2B) and developing office software. DouBao had already launched paid and enterprise versions of its products, but AI alone was not enough; businesses need practical tools that can be directly used in their daily operations. Lark, being a seasoned player in the enterprise office space with a stable customer base, is an ideal partner for this integration. By combining the two, Lark users will be able to utilize DouBao’s AI features (such as document creation and data analysis) within their office software, which should naturally encourage businesses to pay more.
Additionally, Lark made prior adjustments that paved the way for this merger. In 2024, the company laid off 20% of its staff, mainly from the product and R&D teams, while the sales team was largely unaffected. This indicates a shift towards a sales-driven approach. With DouBao’s AI capabilities added, Lark’s sales team now has a more powerful tool to compete with competitors like DingTalk.
Who Is Zhao Qi? ByteDance’s Hidden Expert in Growth and Organization
Zhao Qi may be unfamiliar to many, but he is a highly accomplished individual within ByteDance:
- Background: A Ph.D. in computer science from Peking University, he previously worked at Douban (a platform for intellectuals) and PeaPod (an idealistic startup). Although he has an intellectual background, he approaches tasks in a rational manner.
- Growth Expertise: He led ByteDance’s growth platform, which enabled products like Toutiao and Douyin to share a unified growth strategy without the need for separate experimentation. He transformed growth strategies from relying on intuition-based advertising to data-driven ROI (return on investment) calculations, earning him the nickname “the person who knows how to spend money best” – effectively making every investment profitable.
- Organizational Skills: Later, he took charge of the struggling Flow team (ByteDance’s AI division), which was divided between those maintaining old products and those with innovative ideas but facing resource allocation issues. Zhao Qi focused resources on DouBao, turning it into a successful product that surpassed DeepSeek. His strength lies in his ability to bring together talented individuals to form an effective team.
His appointment to oversee Lark and DouBao reflects ByteDance’s confidence in his skills in both driving growth and managing organizations.
ByteDance’s Traditional Approach: Compete First, Then Consolidate
One of ByteDance’s successful models is “product competition followed by resource consolidation.” Multiple teams develop similar products, and the best one receives additional resources before being integrated with related businesses. For example, Douyin emerged from several short-video projects, and now DouBao has stood out from Flow’s various AI initiatives.
The merger of Lark and DouBao follows this approach: first, DouBao will be tested in the consumer market (C-side) before being integrated with Lark’s B2B services to create a powerful “AI + office” solution. This strategy allows for the leveraging of Lark’s enterprise customer base while monetizing DouBao’s AI technology more efficiently.
ByteDance’s AI Ambitions: Going Beyond Internal Circuits to Profit from Enterprises
ByteDance has already had success with AI, such as the XianYing video editor and the SeedDance model, which generated revenue through the Douyin ecosystem. However, the company is not content with only internal applications; it aims to sell its AI capabilities to external businesses.
The core goal of this merger is to transition DouBao from serving primarily consumer users (who are less willing to pay) to targeting professional and enterprise customers (who are more willing to spend). For instance, Lark already allows users to ask questions using DouBao’s AI, and in the future, DouBao’s technology will be further integrated into Lark’s office functions, making it more attractive to businesses.
Although ByteDance may not have the most powerful large-scale AI models, it excels at combining technology with existing services to create profitable products. This is its core competitive advantage.
Xie Xin’s Special Status and ByteDance’s Patience with B2B Business
Xie Xin has been able to stay at ByteDance for a long time, even when the company lagged behind competitors, thanks to two factors: the B2B business requires long-term investment (unlike consumer products), and Xie Xin was once Zhang Yiming’s mentor at Kuxun. His current role reporting to Zhao Qi reflects ByteDance’s desire to accelerate progress in AI for business-to-business solutions. This shift indicates a shift from a patient, long-term approach to a more aggressive strategy for monetization.
In Conclusion
By merging Lark and DouBao, ByteDance combines AI technology with enterprise office solutions, aiming to capture a significant share of the lucrative AI market. While it may not have the most advanced technology, it is well-positioned to become one of the most profitable companies in this field.