ByteDance Pushes Feishu to the Front amid Office Automation Boom in Virus-Hit China
The quarantine period triggered by COVID-19 has spurred the growth of SaaS, especially the OA sector, now being heated to a ‘white-hot’ state by the Black Swan of the virus.
The year 2020 started in an unexpected way; disasters came in bundles and undermined the foundation of the world economy. For China, COVID-19 pressed the deacceleration button for the country’s economy. The National Bureau of Statistics released that PMI (Purchasing Managers’ Index) for February dropped to 35.7%, which is 14.3% lower than the number for January. Compared to the threshold of 50.0%, a low PMI implies a slowing-down of economic activities as well as being a red flag to all economic bodies.
Presumably, without the influence of COVID-19, enterprises and factories were to be back to work at the beginning of February. The disease put the country’s economy into hibernation and the back-to-work time is yet to be determined. Except for factories and go-outside business, companies are seeking solutions to sustain their business during the particular period while employees have to stay at home. This situation yielded a boom of remote work SaaS, which allows people to work together without violating the quarantine order.
Acceleration caused by deacceleration
Work collaboration tools were pushed to a vertex in one month. Among those tools, Feishu (飞书), the work collaboration platform designed by TikTok’s parent company ByteDance, rushed in the front, as well as Ding Talk (owned by Alibaba) and WeChat Work (owned by Tencent). Worth to mention, Feishu is the version for China market and its sister app, Lark. is for markets outside China.
The remote work topic peaked as a search term on February 10th – the first workday after holidays. However, only a few companies resumed on-site work mode. Ding Talk attracted the most attention, then followed by WeChat Work and Feishu. Meanwhile, Ding Talk was topped in both IOS and Android app stores during February and sustained the ranking for straight 29 days. As Ding Talk disclosed last year, it had accumulated over 200 million individual users and 10 million enterprise accounts on its platform. Though the number presents a great success, the penetration of SaaS in China tells a different story.
The manufacturing industry presented the highest SaaS penetration rate in 2018 while most other sectors remained below 5%. SaaS can be divided into several categories by its function such as CRM, ERP, HR, SCM, OA, IM, and so on. Among businesses requiring intervention due to the disease, OA and IM are the two most boosted SaaS types.
How are the twins, Lark and Feishu?
The three platforms Ding Talk, WeChat Work and Feishu have become the most popular work collaboration tools since the quarantine. They feature instant message, file sharing and some other OA functions. Being different from Ding Talk and WeChat Work’s parent companies, Lark, or say Feishu, is the first approach from ByteDance to dabble in the 2B business world.
As an inner-incubated OA software, Feishu tries to make internal communication and work collaboration run smoothly; all other OA software offerings apparently failed to satisfy ByteDance’s own needs. The so-called ‘product factory’ launched Feishu as early as 2017. In looking at ByteDance’s investment activities, traits are apparent.
Since 2016, ByteDance has begun to invest in and buy out startups whose core product might be integrated into Feishu. For instance, Sortime (朝夕日历), a calendar management SaaS startup, was purchased by ByteDance in 2017, and its CEO Chen Hao (程昊) joined the Feishu team at the time. In the meantime, ByteDance granted Feishu the highest degree of freedom – almost an independently-run company.
Founder of ByteDance, Zhang Yiming (张一鸣), wrote on Weibo, “Develop a company as a product.” ByteDance has been mocked as the Foxconn of mobile applications for its fast pace in product development. It is undeniable that ByteDance is excellent in making C-end products like Toutiao and TikTok. ByteDance has green fingers in culturing the garden of million-user apps for the C-end market. Still, it must know how to improve enterprises’ efficiency to stand in the 2B service market. This pre-requisite is bringing success to Feishu’s competitor Ding Talk in China, even though its parent company, Alibaba, is not the best ‘product manager.’
Alibaba is the behemoth in e-commerce, ably covering B2B, B2C and C2C. With nearly two decades of practice, Alibaba knows its customers’ needs – to be more specific, enterprises’ needs. It penetrates every ring of commercial activities: purchasing, transaction, logistics, marketing and so on. Synergy matters and for Alibaba, it has developed a service matrix to help its clients do business.
The e-marketplace is the backbone of Alibaba’s business and products and services developed in the past two decades have contributed considerably to today’s prosperous e-commerce. Experienced in communicating with B-side clients, Alibaba’s Ding Talk was born with a natural advantage – relying on the mega-size client pool of Alibaba.
Compared with the 6-year-old Ding Talk, Feishu seems to be a latecomer in the OA game, as it was founded in 2017. ByteDance is not as enriched in 2B experience as Alibaba, but from the perspective of digital marketing, it is a big vendor on a global scale and is still in a fast-growing status. Ding Talk is well-design for the majority of China’s firms based on Alibaba’s understanding of its clients. WeChat Work relies heavily on the national IM app WeChat, which has a billion-sized user pool. Either Feishu or Lark hardly depends on ByteDance’ pre-existing products like Toutiao, TikTok and Douyin (China version of TikTok), but its design fits better for Internet companies because Feishu was originally designed for ByteDance, the biggest new unicorn app producer in the world.
Tools are designed for efficiency
“Work tools reflect productivity level and Internet companies may prefer using Feishu on accounting; so Feishu is well-tailored for Internet companies…” said the former VP of Ding Talk, Zhang Sicheng (张斯成) in a previous interview with EqualOcean. Lark was first released in the overseas market, mainly the United States and Europe. In the second half of 2019, ByteDance released Feishu in China. Since then, its marketing team has lit the match and intends to heat the OA market via this product.
Conversion costs are often a pain for users switching products, something which applies to OA services. Ding Talk acts like a platform and involves third-party SaaS developers, who provide varied add-on functions for Ding Talk users, including e-documents, payroll management, legal services, etc. As a pioneer in the OA area in China, Ding Talk has enjoyed the first-mover advantage – a deepening user pool introduces more developers and a bigger service matrix attracts users who need these functions.
Feishu is light at the current stage, and it is a tool emphasizing work collaboration, which is vital for Internet firms. Third parties are joining the platform to provide SaaS products as well. For the SaaS market, products may share some similar functions, but their features explain what pain points they target at in an enterprise’s daily operation. Ding Talk serves companies with a clear vertical structure and Feishu fits better for horizontal organizations.
Different products are designed for different needs and needs are changing as enterprises step into the next phase. Because of COVID-19, the quarantine flooded millions of new users into OA, and Feishu stands at the same beginning line with Ding Talk and WeChat Work. Ding Talk and WeChat Work are just as equal as Feishu – at least it is a comparatively fair game for Feishu. How does Feishu rush to the front when Alibaba’s business ecosystem has rooted deeply and firmly in the land of China? The question can apply to other SaaS services created by giants like Huawei and Tencent. The sunny side of this question goes back to the beginning of the topic – the SaaS market is still a blue ocean in China and the market is yet to be educated.