Google and competition have never coexisted. Founders Brin and Page have ensured that Google occupies the search throne everywhere across the world. Everywhere except China that is. Here, it is Robin Li who rules. The Founder and CEO of Baidu, China’s popular search engine, had the pleasure of seeing Baidu’s stock whoosh past NASDAQ ticker symbol GOOG for the first time last year. That was only the beginning of Google’s losses and Baidu’s gains.
For a company born during the dotcom bubble in 2000, that’s a phenomenal achievement. But Li’s passion for computers goes much beyond that. The son of parents who were factory workers, Li’s academic brilliance brought him to the portals of the State University of New York, where he earned his Masters in computer science in 1994.
Soon after, he landed a job with a division of Dow Jones where he developed a software program for the Wall Street Journal’s online version. At the time, Li’s attention was riveted on one of the biggest problems that the Internet faced then, which was the meaningful sorting of information. After considerable research, in 1996, Li developed and patented a search method that ranked a web site’s popularity based on the number of other web sites that linked to it. Named Rankdex, this formed the building blocks of Baidu’s search technology later on.
Li joined Infoseek, where he oversaw search engine development. But two years later in 1999, Li quit as he saw the company’s focus on search wavering. Entrepreneurship beckoned. Armed with his newly developed search tool, Li returned to China a year later. With a seed capital of $1.2 million raised from two California-based venture capital companies, Baidu was born.
Baidu, which means “hundreds of times,” started out by offering search services to Chinese websites. By licensing its technology to other websites, Baidu’s registers rang each time a user had a query. And while other companies scrambled to copy the Yahoo and Google business models, Baidu stuck to its faith in the potential of search. “We were skeptical about search. But…Robin said he had a unique opportunity to build a brand around search. And he was right,” remembers Scott Walchek, a board member of Baidu, to the New York Times.
By 2004, Baidu was driven by advertising. Advertisers paid money to reserve a spot in the top search results. Baidu also allowed them to bid for ad space and each time a customer clicked on the ad, Baidu earned money. The same year, ‘China’s Google,’ as Baidu came to be known, turned its first profit of $1.8 million.
Boasting revenues of $5.1 million by 2005, Baidu made its debut on the NASDAQ exchange in August the same year, at $27 per share. At the end of the day, the company’s shares were up 354% to $122, and the search sensation created history as the most successful Initial Public Offering (IPO) since the dotcom bust in 2000.
The reality is that there are more choices in China for search than in US.
— Robin Li, 2010
Google made its appearance in China in 2006, but by then Baidu was well established. From the beginning, Google was plagued by various problems like frequent downtime and slow speeds. More importantly, Google could not grasp the pulse of the Chinese market, while Baidu had it down pat. “The fact is 70% of China’s Internet users are under the age of 30. Most of them are single, only children. They’re looking for entertainment,” explains Richard Ji, an analyst with Morgan Stanley. Li leveraged that inside track and tailored Baidu’s information accordingly. Baidu also managed to handle censorship better than Google, which lost its footing totally in 2010, when it disagreed to comply with the demands of Chinese authorities to censor its search results.
With a net worth more than $3.5 billion, the soft spoken and charismatic Li was ranked the second richest person in China by Forbes in 2010. After all, the 42-year-old commands the world’s largest Internet market with 420 million users. And Baidu has a grasp of more than 70% of that search market. Now, Li is seeking new worlds to conquer, by foraying into the e-commerce and video market this year. The search never ends.
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© Thomas White International, Ltd. 2019