(Chinese Version)

Editor's note:

The Tieba incident has cost Baidu a great price and the pain lasted for almost one year till now. The company’s founder Li Yanhong has no choice but personally handle these PR crisis brought by the major financial loss mentioned in the fiscal report, public opinions and the authority.

Li Yanhong stated that if Baidu didn't stand its ground then the company would go bankrupt. Caijing’s exclusive interview report with Li Yanhong recently has gone viral. What follows is an opinion piece on Baidu and Li Yanhong from Zhao Saipo, writer at TMTpost: 

The biggest impression I get after reading the exclusive report is that Li Yanhong is wronged and that Baidu is deeply troubled.

The suffering Li Yanhong

In some way, Li Yanhong is wronged by the misunderstandings the pubic has on Baidu. For example, Caijing’s journalist asked Li Yanhong in the interview that why Baidu didn't hold on to some certain products and dropped them very quickly, and about the bidding mechanism for the search result. Li Yanhong then explained to the journalist what Baidu’s bidding ranking is actually like:

In 2001 I wrote an article called The Third Law of Search Engines when BAIDU.COM’s online search service came online. The first law is lexicon statistics. The first generation search engines are all based on lexicon statistics. The second law is hyper text statistics, which I invented in the U.S.

The third law is the confidence law: When users search a certain word, who pays more means that he has confidence in his content that’s relevant to the word, and therefore his content would be put in the front. At that time I called it the bidding ranking. However, this term is misleading. The truth is that it doesn't mean as long as people pay a lot of money they can stay on the front page. Other factors are also taken into consideration.

Besides all those misunderstandings mentioned above, Li Yanhong is also wronged by the pressure from managing Baidu, an extremely enormous company.

“It’s hard to insure everything stays on track for such a big company. Every time there is a crisis, we will learn from it.”

When asked about the Tieba incident, Li Yanhong said: “I didn’t know about the hemophilia forum before. I didn't do the assessment work. The truth is, Tieba is not the segment that senior executives will pay attention to everyday There are indeed many bad things happening on Tieba or have had happened. People will come after me anyway despite who actually did those things. For that we will make improvements.”

When asked about if Baidu’s senior executives share the same value with him, Li Yanhong replied:

Yes, most people do. However, some people, especially the new blood, they might hold some inaccurate interpretation of Baidu’s value. For instance, how important is KPI?

Who caused this?

It can be said that the two sufferings Li Yanhong is experiencing are caused by himself and Baidu.

In some way, it has become some kind of political correctness to make fun of Baidu in China. There are many reasons behind this phenomenon. For example, Baidu has been neglecting the power of media for a long time while giants such as Alibaba and Tencent etc. have invested in some media businesses. Wei Wuhui believes that in traditional PC era, Baidu’s business model was like data traffic relay and therefore it had the power of influencing the public’s perception.

But when it came to the mobile Internet era, especially the WeChat we-media era, articles like the Tieba incident could go viral through WeChat official accounts, free of Baidu’s interference. In the tragic incident of Wei Zexi, Baidu wasn't able to lead the perception of the public either. “At that time we also had some articles in which we expressed our opinions. And I told them that you can also read this, maybe repost them too,” Li Yanhong told Caijing.

Generally, when there are cases involving Baidu, the public opinion will always go against Baidu, especially when the media no longer need Baidu to distribute their content. The Tieba incident and Wei Zexi incident are only the beginning as similar incidents will keep on appearing.

Furthermore, Baidu’s internal structure and personnel management are confusing to the public. For instance, some journalist asked me: “Why the former PR head, Zhu Guang, would be in charge of finance instead? And why Zhang Yaqin, who’s in charge of technological innovation became in charge of PR?” On that matter Li Yanhong only gave out an ambiguous answer, saying that many of Baidu’s senior executives are competent.

I am not going to talk about if such personnel management is reasonable, but really think about how weak such structure will become when faced with a series of crisis. In reality, Baidu has been running under a singular management mechanism for a long time. In short, Li Yanhong is the core of the company. Such mechanism is common in startup companies, but it’s very rare to see it in an enormous company with thousands of staff. We-media author Lin Hua has made the following comments in a WeChat discussion:

Google is the perfect example in this case. If it wasn't for Lawrence Page and Sergey Brin, as well as the former CEO Eric Emerson Schmidt who laid the foundation of Google’s management and structure, Google wouldn't have today’s success.

Steve Jobs is the soul of Apple, but the design, software, and supply chain are empowered by Jonathan Paul Ive, Scott and Cook. Tencent doesn't only have a leader, Ma Huateng, but also Zhang Zhidong. Jack Ma is the face of Alibaba, but Alibaba also has heavyweight partners such as Peng Lei, Zhang Yong, and Cai Chongxin, a team insures the operation and development of Alibaba. Baidu is the only company that has a singular structure in BAT. It also happens that Baidu is the one that has been troubled by credibility crisis and developmental crisis.

In the interview, Li Yanhong stated that there are many things that he is not aware of, but he will take responsibility: “I am the founder, the CEO. If there’s anything has gone wrong here at Baidu, then it's my problem.”

What’s Baidu’s actual crisis?

Not long ago there has been an article titled Is Yang Yuanqing a qualified CEO? that questions Yang Yuanqing. Such question can also be asked here about Li Yanhong.

The following picture shows the revenue of Baidu from 2011 to 2015 in the annual fiscal report:

Although the growth rate has been declining, Baidu still maintains a fast growth in net margin:

Looking from the numbers, Baidu is seemingly doing well under Li Yanhong’s leadership. However, if you look at the other set of numbers, you will change your mind. By June 17th, the closing of the American stock market, Baidu’s stock price was at USD 163.71, which made Baidu valued at USD 56.3 billion, only one third of Alibaba (USD 192.7 billion) and Tencent’s market valuation (USD 204.8 billion).

Baidu, Alibaba, and Tencent are the first-gen Chinese Internet companies, and the industry calls them BAT. However, just in terms of the revenue, Baidu is now lacking far behind Alibaba and Tencent. And more importantly, Baidu doesn’t have diverse business lines.

Even Li Yanhong himself has to admit that Baidu is overly reliant on the search business especially search for PCs. “We always hold the belief that as long as we can provide the users with a quality search engine, then we are achieving success. But the reality is there are many things that we can improve. If we can pull those things off, even though Baidu makes a few mistakes, the users would be more tolerant compared with the present,” Li Yanhong said. However, the search business of Baidu hasn’t have any real innovation for a long time:

Baidu’s search service hasn't changed much throughout the decade, at least that’s how the users feel. From Baidu’s perspective, in recent years we hadn’t brought any innovative products to the tables. We fail to amaze the users.

In contrast to that, Alibaba has transformed from an e-commerce company to an innovative giant centering on big data and cloud computing while Tencent further develops on content and social media. Alibaba has become a big data empire and Tencent has grown into a social networking kingdom. But Baidu stays the same all these years.

The industry and media always compare Baidu to Google. On that Li Yanhong commented: “Here at Baidu we are pragmatists instead of idealists.” However, idealist as it is, Google also has had many innovative products for pragmatic usages: for example cloud computing; enterprise application; PC, tablet and appliance hardware; and the next-gen mobile communication network Google Fiber etc.

All these businesses have a clear goal, or let’s say, usage, which can enhance user experience and increase the user retention rate of Google’s products instead of Google search. This will form a stable ecosystem for Google.

Aside from those dead or dying projects, Baidu is currently working on the O2O industry and its financial products. Apart from that, the Internet giant is also positioning in the AI and driverless car sector. These are the efforts that Baidu is making to diversify its business structure.

But the problem of this is that the businesses above can’t give Baidu an edge in dominating the industry in a short time. Besides that, all these businesses cost a great amount of money for the long run. Under the spell of KPI, could these businesses become core businesses other than the search business? What’s more, Li Yanhong thinks that KPI is a promise, and a promise should be fulfilled.

As a popular saying goes, the worst time might also be the best time. Perhaps Baidu is also getting more opportunities as risks and crisis come along. Li Yanhong’s Baidu is indeed in trouble. As the founder, Li Yanhong sees Baidu differently than others. And such differences will have an impact on the developmental direction of Baidu in the future for a long time. Perhaps this is just the beginning regardless of whether it is good or bad.

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[The article is published and edited with authorization from the author @Zhao Saipo, please note source and hyperlink when reproduce.]

Translated by Garrett Lee (Senior Translator at PAGE TO PAGE), working for TMTpost.