Feishu currently has over 5,000 employees. Can the heavily downsized Feishu continue to soar?
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Following last year's layoffs in the VR headset PICO and gaming teams, Feishu is undergoing another round of layoffs.
Feishu CEO Xie Xin announced in an all-staff letter that the company will appropriately streamline its team size and provide compensation packages or transfer opportunities for affected employees. Moving forward, Feishu aims to focus on more targeted business directions, a more efficient organizational structure, and a more competitive team. Insiders reveal that this round of layoffs may affect around 1,000 employees, and internal transfers may not guarantee suitable positions.
The 1,000 layoffs account for approximately 1/8 of Feishu's current total workforce. In 2023, Xie Xin publicly refuted rumors that Feishu had 8,000 employees, stating the number was over 6,000. However, considering this round of 1,000 layoffs and the over 10% reduction (more than 1,000 employees) between 2022 and early 2023, Feishu's employee count may have reached over 8,000. For comparison, WeCom and DingTalk each have around 2,000 employees. It's no wonder that DingTalk's Ye Jun and Kingsoft Office's Zhang Qingyuan both questioned: What exactly are Feishu's 8,000 employees doing?
Such a massive workforce has also exacerbated Feishu's losses. According to Leiphone, Feishu's annual total costs during its peak period reached as high as 10 billion yuan. However, Xie Xin, in an internal letter to Feishu employees, pointed out that in 2023, Feishu's software subscription revenue exceeded $200 million, doubling from 2022.
But can this round of layoffs truly enable Feishu to gain greater competitiveness in the collaborative office market? Can it address the current issues of organizational bloat, low efficiency, and continuous losses? This remains debatable. 01. Behind the 'Ultimate Experience': A Team of Five to Six Thousand R&D Personnel
From a product experience perspective, Feishu is undoubtedly an outstanding product. Li Xiang, founder of Li Auto, not only publicly recommended Feishu on his social media but also brought NIO and XPeng on board. The collective adoption of Feishu by 'Li-NIO-XPeng' became a benchmark case in the industry. When Zeekr switched from Feishu to WeCom, the significant gap between the two platforms impacted Zeekr's office efficiency.
The 'ease of use' of Feishu is underpinned by ByteDance's substantial investment. To support Feishu's 'all in one' strategy, ByteDance acquired multiple products, including ZhaoXi Calendar, Tower, and Heipa Cloud, along with their founders. According to related reports, Feishu's R&D personnel account for two-thirds of its team, totaling five to six thousand people—a number that exceeds the R&D team size of Douyin. Li Wei, a product director from a leading Chinese internet company, told DoNews that Feishu's product doesn't actually require such a large R&D team. Internet companies configure different numbers of product managers and technical personnel based on factors like product functionality, company size, business scenario complexity, and corporate priorities.
Taking OTA (Online Travel Agency) products as an example, flight ticket services involve multiple airlines, payments, user refunds/changes, insurance, price fluctuations, after-sales service, and other complex business scenarios. Medium-sized OTA companies typically allocate 2-3 product managers for flight ticket services.
For businesses like hotels, finance, or insurance that collaborate with third-party companies, one product manager with corresponding business development personnel is usually sufficient. Technical teams are flexibly adjusted according to business urgency levels. Many of Feishu's features such as approvals, payroll, reports, daily/weekly summaries, business trip applications, and payment applications are initially researched and documented by a single product manager before launch. Afterward, they mainly require functional maintenance, leaving limited room for innovation.
More importantly, as a ToB product, Feishu doesn't involve as many post-sale user issues as products like airline tickets. Product managers don't need to frequently coordinate with customer service to handle user complaints.
Image source: Feishu PC version As Li Wei mentioned, the core functionalities of current internet apps have already met, or even over-satisfied, users' fundamental needs. This leaves limited room for any single internet company to make significant breakthroughs, and the pressure to deliver major functional updates is immense.
From December last year to now, Feishu's version updates have either been minor optimizations of existing features or seasonal event integrations, without any major functional upgrades. Even though Feishu offers PC versions in addition to Android and iOS—unlike many other internet companies—the question remains: with thousands of R&D staff still employed post-layoffs, is this ratio still disproportionately high?
Source: Qimai Data The lack of major version updates stems from severe overstaffing in Feishu's R&D team, which has exacerbated internal inefficiencies. When a business unit becomes significantly overstaffed, it often leads to various office cultures such as infighting among middle management, factionalism, and the prevalence of small cliques. Moreover, when multiple people are responsible for the same product module, issues like unclear responsibilities, overt and covert conflicts, and wasted time on trivial details arise, resulting in severely reduced efficiency. This environment prompts top talent to leave at an accelerated pace.
In February 2020, Xu Zhe, Feishu's product lead, left the company, and in July, Chen Manyan took over as the head of Feishu. From Xu Zhe to Chen Manyan, and later to Qi Junyuan and He Tongyao, changing the product lead almost annually has become a "tradition" for Feishu. It's not just the product leads that change frequently; the overall product leadership has also alternated between Xie Xin and Zhang Nan.
However, Xie Xin himself is known for his stubborn personality, focusing intensely on the product itself, even obsessing over minute details. Former Feishu employees have complained on social media that thousands of R&D personnel were pressured by Xie Xin to scrutinize trivial aspects of the product, such as which lines were too thick, whether colors were too dark or too light, or where an extra pixel appeared. Even high-performing teams were often competing to work on insignificant and trivial tasks. However, in Li Wei's view, obsessing over minute details like lines and colors in apps is completely futile. When employees need to request leave approval from supervisors on Feishu, they hardly pay attention to such design minutiae.
Moreover, ByteDance offers top-tier compensation in the internet industry, with its UI designers predominantly being elite graduates from prestigious domestic and international art academies. Do you really think these professionally trained artists with years of aesthetic education would lack color sensitivity or design judgment?
When an "enterprise's" core workforce becomes consumed by internal conflicts, it not only keeps Feishu's daily active users stagnant at the million-level but also limits its growth potential in overseas markets. Can Feishu, now severely afflicted with "big company disease," truly resolve its systemic issues through one or two rounds of layoffs? 02. Is It Feasible to Apply ToC Product Models to ToB?
The biggest challenge Feishu currently faces is applying consumer product growth strategies (ToC) to enterprise solutions (ToB). While excellent usability and strong user experience can drive key metrics like new user acquisition, daily active users, and user retention for consumer mobile apps, these factors don't necessarily translate to increased paid enterprise customers.
Looking back at Kingdee's ERP products from 10 years ago by today's standards, they might not seem particularly user-friendly. Many first-time users even needed training to operate them. Yet by 2014, Kingdee had already achieved revenues exceeding 1.78 billion RMB - surpassing Feishu's 2023 revenue figures. Compared to Feishu, DingTalk may still have significant room for improvement in UI design, product pages, and user experience. However, data from Quest Mobile shows that from October 2022 to September 2023, DingTalk averaged 214 million monthly active users and nearly 100 million daily active users, far surpassing Feishu's daily active users in the millions.
The difference lies in whether the SaaS product is user-friendly, which is not a primary concern for client-side executives. After all, many client-side executives use SaaS products infrequently, with frontline employees being the primary users post-purchase. To complete tasks assigned by management, employees continue using SaaS software even if the experience is subpar. Rather than complaining about the environment, adapting to it is more practical—employees have little incentive to risk their jobs over the usability of SaaS products.
For SaaS products targeting the ToB sector, client-side executives are only willing to pay if the product aligns well with their business scenarios, helping to reduce internal costs and improve efficiency internally, while lowering customer acquisition costs externally. In the 2021 enterprise SaaS market segments, retail e-commerce SaaS accounted for the largest share. The essence of retail lies in circulation efficiency and category management. Given the massive volume of product SKUs and orders, daily inventory management, substantial supplier payments, and the high efficiency demands of same-day or next-day delivery, retail SaaS has become essential for digital management.
It can even be said that without SaaS, the efficiency of the retail industry would become extremely low, which fundamentally distinguishes it from other industries in terms of SaaS transformation necessity.
Source: iResearch ERP enhances manufacturing digitization, and financial SaaS improves financial efficiency for medium and large enterprises, both possessing the aforementioned attributes. Expense control SaaS like Ctrip Business Travel operates on long payment cycles and customer relationships, with stable cash flow being critical for business survival. This is another reason for the continuous growth of Ctrip Business Travel orders in 2023.
Compared to ERP, financial SaaS, and expense control SaaS, the willingness of business owners to adopt collaborative office SaaS for digital transformation may not be as strong. Many companies, considering data security and risks, often opt to build their own internal OA systems for functions like approvals and payroll on platforms like Feishu. Companies like Mengniu, SF Express, and medium-sized internet enterprises with technological advantages all have their own internal OA systems. In the context of enterprises pursuing cost reduction and efficiency improvement in 2023, many small and medium-sized enterprise (SME) owners consider additional investment in collaboration software unnecessary. Features like online communication, recruitment, and training offered by Feishu are often deemed dispensable by small business owners. Some even argue: "Would employees stop working if we don’t provide them with collaboration tools?"
SME owners already exhibit low willingness to pay, yet Feishu raised its service fees in February last year, further deterring small businesses. Compared to SaaS and cloud service products, pricing remains a crucial factor for vendors to attract customers, which explains why Alibaba Cloud frequently initiates industry price wars.
While internally investing heavily in R&D to refine trivial details, Feishu’s external price increases are driving customers away. Has Feishu strayed from the right path in its collaboration software journey, and does it need correction? 03. How to Attract More Large Clients?
Small and micro enterprise clients are characterized by high churn rates, poor compliance, and overly centralized decision-making in a single person. Currently, there are few SaaS products in the market that successfully cater to small and micro enterprises. The key to survival for SaaS companies undoubtedly lies in serving large clients.
Feishu seems to have recognized this issue as well. However, in its bid to capture large clients, Feishu appears to be operating at a loss, prioritizing market share over profitability. In 2019, Feishu assembled a 300-person customization team to secure China Resources as a client. Assuming an annual cost of 1 million yuan per employee, the labor cost alone reached 30 million yuan. When factoring in server expenses, routine travel, and client-related costs, the total expenditure was likely even higher. However, China Resources ultimately paid Feishu only a few million yuan, and Feishu has yet to cover all of China Resources' product lines.
The same scenario played out with Xiaomi. To win Xiaomi's order, not only did Zhang Yiming and Xie Xin personally lobby over a dozen executives, including Lei Jun and Wang Chuan, but ByteDance also spent hundreds of millions of yuan on Kingsoft Cloud services. Yet, Xiaomi paid Feishu only about 2 million yuan, meaning ByteDance not only failed to profit from the Xiaomi project but also suffered substantial losses.
If the initial strategy was to secure orders from these major clients to boost brand awareness and product visibility, this approach may now exacerbate Feishu's financial losses. On one hand, the service cycle for large clients is relatively long, spanning from initial development and mid-stage requirement confirmation to product delivery and subsequent payment collection. In many industries, sales personnel rely heavily on commissions, and the extended sales cycle exacerbates turnover among Feishu's sales team. For sales-driven products, regardless of the industry or company size, a major concern for many business owners is the risk of sales personnel leaving and taking clients with them.
On the other hand, considering factors such as data security, compliance, and business risks, large enterprises like China Resources and Xiaomi typically opt for customized private SaaS solutions. To ensure a clear understanding of client needs during customization, Feishu must assemble dedicated teams covering product, technology, business, and enterprise consulting.
To secure a major client, Feishu must bear high costs. However, given the relatively low prices offered to Xiaomi and China Resources, coupled with the SaaS industry's tendency where price reductions are easier than increases, future price hikes for other large clients will likely be limited. Without greater pricing power in the market, Feishu's profitability may be constrained. Beyond major clients, Feishu currently faces challenges in expanding its ToG (To Government) client base. Internet company employees are inherently unskilled at dealing with government sectors – they tend to mix Chinese and English in conversations and frequently use industry jargon like "empowerment" and "fission." However, many government leaders dislike this communication style, which not only irritates clients but also easily leads to lost deals.
Feishu might be aware of its own issues and has chosen an indirect approach when serving government clients. For example, in its collaboration with China Resources mentioned earlier, Feishu was only the third-party contractor for the China Resources Group. The actual second-party contractor was China Resources Digital Science, a subsidiary spun off from China Resources. Feishu didn't sign directly with China Resources but served as the contractor for China Resources Digital Science. After layers of subcontracting in customized projects, how much profit is left for Feishu?
Zhang Lidong once said that Feishu represents a high-ceiling opportunity with global potential. If successfully globalized, it could become "one of ByteDance's main future competitive advantages." Liang Rubo also emphasized that Volcano Engine and Feishu still have breakthrough opportunities. Feishu, bearing the hopes of ByteDance's top management, may find that layoffs are just the first step towards a true turnaround. The path ahead includes exploring commercialization, transforming internal organizational culture, securing more client orders, and much more that Feishu aims to change.