TMTPOST--Just three months after a round of layoffs, Feishu, a productivity superapp for team collaboration developed by ByteDance and a leading player in China’s SaaS industry, has announced that its CEO, Kelly Zhang, has stepped down. This move has sparked speculation about the future of Feishu and the broader software as a service (SaaS) industry in China.

Feishu, competing with other major platforms like DingTalk and WeChat Work, has been at the forefront of China’s SaaS market. Despite the company's strong growth, with an annual recurring revenue (ARR) exceeding $200 million in 2023, challenges such as low human efficiency and poor daily active user (DAU) metrics have persisted. Coupled with the current uncertain economic environment and unclear future expectations, Zhang's resignation seems reasonable to many industry observers.

Critics argue that these issues highlight the inherent problems within China’s SaaS industry, such as an immature market and reluctance to pay for services. Even Feishu, with a strong backing from its parent company ByteDance, has struggled to overcome these hurdles.

While these external speculations swirl, Feishu has not provided a specific reason for Zhang's resignation or details about her future plans.

ByteDance's recent departmental layoffs reflect a significant shift in its organizational objectives. Building an AI-centric organization has become ByteDance's primary focus. This strategic pivot is evident from multiple layoffs across various departments, such as PICO and Nuverse, to redirect resources toward AI innovation.

In early November 2023, ByteDance’s XR department PICO underwent massive layoffs, cutting its workforce from 2,000 to a few hundred and integrating the mobile OS team into the company's broader product development structure. Shortly after, the gaming unit Nuverse also announced substantial layoffs and project shutdowns.

Meanwhile, ByteDance's new AI department, Flow, was established. Led by Vice President of Technology Hong Dingkun and Zhu Wenjia, head of TikTok products and the large model team, Flow quickly became the focal point of ByteDance's AI initiatives. This was further emphasized in January 2024 when Qi Junyuan, founder of Teambition and Vice President of Feishu products, transitioned to Flow.

In February 2024, ByteDance CEO Liang Rubo announced personnel changes within the Douyin Group. Kelly Zhang, then CEO of Douyin Group, stepped down to focus on CapCut, which is now integrating AI creation technologies. With her departure, Douyin Group also eliminated the CEO position, restructuring its reporting lines to increase efficiency and focus on AI-driven projects.

These changes underscore ByteDance's commitment to AI innovation. In internal communications, Liang highlighted the transformative potential of AI in content creation and the company's strategic emphasis on developing and leveraging AI technologies.

Feishu's recent adjustments align with ByteDance's broader strategy to concentrate on AI. Although Feishu has made significant strides by leveraging the trend of "collaborative office," it now faces the reality that continued growth requires integration with AI technologies.

The capital market's focus has shifted towards large model and generative AI projects. In the first half of 2024, numerous AI-related projects secured significant funding, indicating a strong investor interest in AI innovations. For instance, MiniMax received $600 million in equity financing from Alibaba and Sequoia Capital, while Zhipu AI secured $400 million from Saudi Aramco's venture capital fund Prosperity7.

Companies are rapidly applying generative AI, recognizing its potential to reshape traditional business models. For example, Feishu recently hosted a developer meetup to promote the use of large models in multi-dimensional spreadsheet applications, aiming to break through SaaS growth bottlenecks with the power of AI.

Other industry peers, such as DingTalk and Weimob, have also launched AI initiatives, underscoring a collective shift towards AI-driven solutions. This trend is reflected in Tencent's Yuanbao and ByteDance's Doubao, which have introduced innovative AI applications to enhance user engagement and functionality.

According to Statista, the global generative AI market was projected to reach $44.8 billion in 2023 and exceed $200 billion by 2030. Gartner's data indicates that over 60% of Chinese enterprises plan to deploy generative AI within the next 12 to 24 months.

As Feishu and other SaaS providers navigate this transformative landscape, embracing AI technologies will be crucial for sustained growth and competitiveness. The future of SaaS lies in integrating generative AI to create more dynamic, efficient, and innovative business solutions.