How Baidu Was on Time With the Internet, Late to Mobile

How Baidu Was on Time With the Internet, Late to Mobile

By Marcus Chan and Emily Chang  Oct 30, 2013

If you listen to Robin Li tell his story about founding what would become China’s top desktop search engine, and the challenges his company now faces in a mobile world, we’re reminded of a recurring truth in tech: Timing is everything. The origins of Li’s company, Beijing-based Baidu, can be traced to his middle-school days when he spent much of his time at the library looking up information. One barrier? The library was only open to factory workers like his parents. That meant he had to borrow his dad’s ID and pretend to be him each time.“In the early days, I really felt the pain of not being able to find information easily,” Li said during an interview last week with Bloomberg West. “I guess that helped me to develop an urge to write things like a search engine.”

Fast forward to the late 1990s, when Li was an engineer at Infoseek, a search-engine company based in Silicon Valley. Itching to start his own company, he said it was difficult to find opportunities amid the dot-com bubble. So he decided to start Baidu back in China, even though the country only had about 9 million Internet users at the time, according to the China Internet Network Information Center.

Today, China has more than 590 million Internet users, a population that has helped turn Li into the third-richest person in the country. Baidu, which just reported net income that beat expectations, has an 81 percent share of search-engine queries in China, according to data compiled by Bloomberg.

But that success hasn’t been mirrored in mobile. When it came time to turn his attention to the growing number of handset users, Li acknowledges his company didn’t move fast enough, even though people tried to convince him to make the shift a decade ago.

“I refused to do a lot on mobile Internet until around 2009,” when the iPhone arrived in China and Android became available, he said. “But because we didn’t start early, it took us some time to figure out what’s the important thing, what’s the most relevant thing for Baidu.”

Li said he initially didn’t understand the big deal about mobile.

“In the beginning, I thought mobile search was not much different from Web search,” he said. “It’s just a smaller screen, a slower speed, it’s all the bad things. When I thought about mobile Internet, it’s all the disadvantages.”

But as he delved into it, he realized how different desktop and mobile search were. Smartphone users searching for McDonald’s weren’t expecting mcdonalds.com to show up as the top result, he said. They wanted a map showing the closest location.

“We were totally unprepared with this kind of consumer expectation,” Li said. “So we had to do a lot of work to play catch-up.”

As part of that effort to make up for lost time, Baidu agreed in August to buy location-based e-commerce site Nuomi for $160 million and said in July it would take over 91 Wireless, an app store. The $1.85 billion deal was Baidu’s biggest announced acquisition. The company said its investments in mobile helped its online marketing revenue grow 42 percent.

When asked which companies he worries about most, his rivals in China or those from the U.S., Li said he’s more concerned about the changing market.

“The market is fast-moving, fast-growing,” he said. “Things that are true today may not be true tomorrow.”

And as Li and the tech leaders before him have learned, time waits for no one.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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