Top AI engineers getting sports-star pay packages

Beijing company offers millions in talent mining

China may have a reputation for low wages and sprawling factories, but in a sign of changing times, one startup founder has embraced a strategy of paying top employees the highest salaries in the market.

Beijing ByteDance Technology Co. is the brainchild of entrepreneur Zhang Yiming. The company is best known for a mobile app called Jinri Toutiao, or Today’s Headlines, which aggregates news and videos from hundreds of media outlets. In five years, the app has become one of the most popular news services anywhere, with 120 million daily users.

Toutiao is on pace to pull in about US$2.5 billion in revenue this year, largely from advertising. It was just valued at more than US$20 billion, according to a person familiar with the matter, roughly the same as Elon Musk’s SpaceX.

In China, the company is controversial because of its recruiting. ByteDance hires top performers from such giants as and sometimes raising salaries 50 per cent and tossing in stock options.

“Our philosophy is to pay the top of the market to get the best,” says the slight 34-year-old in an interview at the company’s headquarters, his first with foreign media.

Top performers can make US$1 million in salary and bonus a year, plus options, according to people familiar with its hiring. Total compensation can exceed US$3 million. Zhang declined to comment on specific figures, saying most employees prefer stock.

This is part of a bidding war for talent in the most coveted fields. The most senior AI engineers in China can command compensation of US$1 million or US$2 million, though most of that is stock. Another startup recently agreed to a package worth US$30 million over four years if certain targets are met, according to a person familiar with the matter.

It’s a sign of bubbly times in China. VC funding soared 10-fold between 2013 and last year, to about US$50 billion, fuelling battles for talent and concerns the startup market is overheating. Ride-hailing giant Didi Chuxing, groupbuying service Meituan Dianping and Toutiao are now among the most highly valued private companies anywhere.

Toutiao may be unusually vulnerable. Unlike virtually every other startup in China, it hasn’t forged an alliance with one of the big three internet companies, Tencent, Baidu and Now all three are refining their news apps to steal business from Toutiao.

One reason Zhang is recruiting so aggressively is that he has ambitious plans to expand, with a dozen apps in the works. One is a version of Toutiao for English speakers.

ByteDance’s headquarters is in a former aerospace museum in Beijing. On a recent sunny day, Zhang is dressed in a blue T-shirt and oval glasses. His English isn’t perfect, but he’s confident and forceful in explaining his company’s progress.

He got the idea for Toutiao from the changing habits of Chinese commuters. He was used to seeing people outside subway stations selling newspapers, but then in a matter of months they disappeared. He realized people were reading on mobile phones. And, he knew machine learning and artificial intelligence were evolving. “I keep wondering, is there a general, universal way to use all these features?”

The Toutiao app, introduced in 2012, was made for mobile devices. Click and there’s a list of stories under several tabs. Choose to follow prominent people or create a tab for special interests. What sets it apart is that it learns what each user likes and adjusts content.

Toutiao pulls in advertising like Google and Facebook do. Search for stories on Italian restaurants or Korean pop stars, and relevant ads pop up alongside the results. Follow fashion or financial news, and targeted ads appear within feeds.

Toutiao’s business strategy is controversial: it pulls content from hundreds of newspapers, video services and websites, hosting it on its own servers so people often never go to the original source’s site. (There’s not a single editor on staff.) A flurry of copyright lawsuits argued Toutiao was essentially stealing stories.

Zhang says the complaints began as his company raised venture money, which prompted media companies to push for compensation. He negotiated deals to share revenue, and created a platform allowing individuals to create content for the app and get paid.

One of the beneficiaries is Cao Huan, a 24-year-old from Guizhou province. A year ago, he was helping fellow villagers build houses; now he makes three- to five-minute videos with his younger brothers about rural life and says he makes as much as 40,000 yuan (US$6,000) a month, mostly from Toutiao.

Such efforts haven’t quelled the controversy. Tencent sued the company this spring over copyright.

“Nuisance lawsuits are an all-too-common competitive tactic in our industry, but these have had no impact on our business,” says Liu Zhen, senior vice-president of corporate development at ByteDance, noting the company has also sued Tencent and other rivals. “Our philosophy is to pay the top of the market to get the best,” says Zhang Yiming, founder of Beijing ByteDance Technology Co.