Baidu CEO & Chairman Robin Li will be speaking today at the Web 2.0 Summit in San Francisco. I’m here and will be live blogging his remarks, when the session begins.
Li is set to speak at 5:15pm Pacific, and he’ll be interviewed on stage by John Battelle. Live blogging to start shortly. There’s also a live stream here.
Don’t know much about Baidu? China’s largest search engine. BusinessWeek just did a big profile about it, which you can read here or get the highlights from our How Google Could Have Bought Baidu And Other Fascinating Details About China’s Largest Search Engine post.
John: Baidu is largest search company and portal in China, welcomes Robin on. Says it’s his first talk at an industry conference in the US. Mentions Eric Schmidt’s comment in the BusinessWeek profile as a great gift to Baidu.
Robin: 5 years ago, people asked him what would you do to win China. Said he would stay 6 months to a year in China. Eric didn’t take his advice.
John: Your stock is double since January, market cap is pushing $40 billion.
Robin: Puts up roughtly to eBay.
John: Do you feel pressure to continue that rocketship ride?
Robin: When I founded this company 10 years ago, I never knew that search could be so profitable. I really liked to search and thought search could be useful. Used by 100s of millions of people, and I knew I could achieve that. Now, I don’t need more money, but I need to make our product better. That’s the driver behind my daily work. Not the stock price. Maybe some know 5 years ago when public, the Baidu price was $27 and closed at $22 (I think). That was more pressure. The stock has been up or down every year. I’m used to that. What’s important that the users keep growing, other things keep growing. We have plenty of room for growth. In US took about 10 years for internet market to mature. In China, started at roughly same time in 1995, but internet penetration is only about 1/3.
John: But that’s like 400 million people. How big can it get?
Robin: Lots of mobile phones, thinks can get to 800 million (think he said).
John: How many use Baidu?
Robin: about 99%. We have a lot of coverge (laughs from the audience). Answer more queries than any other search engine in their market.
John: Including Google in the US.
Robin: Yes [me: worldwide, Google reported by comScore last year as handling still far more than Baidu worldwide, I'll try to drop a link later).
John: Google got the sense with hacking and govt interference they weren't on a level playing field and China was a favored son.
Robin: That's a common misperceptions. People think there are no choices and Baidu is favored. But the reality is there are more choices in the US than in China. Here you have Google and Bing and what's the number three? In China, named one (didn't catch), and there's Sodu and there are a couple more. Many other Chinese companies are doing web search and places from outside China are offering it.
John: Why else do you think Google wasn't successful in China?
Robin: China is a very different market. It's a large and growing, meaning the market condidtions change every day, and you have to be close to it. Second, lots of VC money, lots of Silicon Valley VCs poured money into it. Third reason is that there are a lot of Chinese engineers here in the US that are very well trained, many of them are willing to go back to China and start their own company or join an existing one. If you're not prepared to compete in this type of market, you're not going to be successful. With Baidu, I think we did try harder. When I moved back to Beijing 10 years ago, I gave up all my stock options here (he was an Infoseek engineer).
John: You wrote a PageRank like algorithm before?
Robin: Before hired, Infoseek liked his research. Had the first patent on it in the US he believes. But he gave all that and focused on Chinese search. We were close to the market, came up with a lot of innovative ideas. For example in 2003, before Web 2.0 idea was coined, they started adding user generated content into their results. A query based online community, they have a bar or message board system where you can ask question, answer those from others or make comments. In early days, there wasn't enough Chinese information online. So we made this product [kind of like how YouTube created video content that in turn helped power a video search revolution]. Chinese users have already answerd 100 million questions on the system. We added a lot of social community so our users feel they really belong here. It’s very hard for them to leave.
John: So do you have Holy Grail of social and search that Google and Facebook seem to be looking at?
Robin: [Sorry, didn't catch first part]. System is designed to make people feel they belong, introduces high switching costs.
John: Would it make sense to have Facebook Connect in Baidu?
Robin: We don’t have a full blown social graph yet. But happy to add that.
John: Mark Zuckerberg will be here tomorrow, so I’m sure you’ll be happy to talk he jokes.
You’ve worked in both markets, what is it like to build a company with an entrepeneurial culture in China, with a very different environment and government. What can we learn?
Robin: China is an emerging market, not everything is developed, so you have to be patient. In US, company can be set up in 1 day, in China, it can take 20. He said it’s OK, hired a consultant, got office space while waiting for license. It doens’t hurt so much, as long as you keep open minded and control what you can. You can’t control censorship or slow internet connections.
John: There’s a perception in the US here that there’s no censorship versus China, that you search the whole web. Is that a frustration for you, along with low bandwidth.
Robin: My first reaction was also let’s move to Hong Kong (over censorship issue, when he first started). But I realized that wouldn’t work. If I were to move to Hong Kong, they’d call me some type of anti-government company, and my life would be ruined. If an American company moves, they’ll still call them “strategic partners.”
John: Found it interesting that the Chinese govt announced it might start a search engine, since Baidu has so much share.
Robin: It’s not a new thing. It’s OK. Providing more choices to the Chinese users is not a bad thing, but we are allowed to compete.
John: It would be unthinkable for the US to do such a thing.
Robin: China has a very strong govt.
John: I think you made an understatement.
Robin: I’m not worried.
John: Let’s talk about mobile. How is that developing in China, and if you ran a mobile app start up, what would be the things you should know.
Robin: There are about 800 million mobile phones but large portion of them aren’t internet enabled, maybe 150 million. But there’s a catch. Most of them use 2G phones to go on the internet, which means it’s slow and expensive, carriers charge by number of bytes. Most high-end people who use them don’t care about the cost. Vast majority of Chinese people are low income, can’t afford a PC, nannies or migrant workers, at night they lie back and go on the internet. It’ll change as the mobile network grows, user behavior will grow, and product will change, but we don’t know yet what the killer app will be. The status is not really stable. We don’t even know what the most poular device to go online.
John: Could Baidu provide it, like Google does with Android.
Robin: Our box idea is that something that boots up within one second and you get a box that lets you do whatever you want to do. It replaces the operating system. you can search, find apps, publish your tweets. The box is intelligent enough to understand.
John: How do you execute that vision?
Robin: One key part is to understand intention. People put all types of queries into their search box, so they know for certain user needs, like weather, there are probably 200 different needs to express the same meaning. So we can better understand intention, and once we have it, it’s easier to deliver it.
John: Lots of entrepeneurs here. One of the great stories is the moment when offered an ungodly amount of money to sell their company and they say no. That narrative is mythic in the valley. That’s happened to you a number of times. $1.5 to 2 billion offered by Google, Yahoo and Microsoft. Why say no?
Robin: Because I knew Baid u had more potential than 1-2 billion. At that time, China’s market was still knew. In 5 years, revs gone up 30 times. Don’t think Google Yahoo Microsoft knew that.
Q&A Time: Why doesn’t India have its own Baidu?
Robin: Most of India speaks English, writes in English, so Google already solved the problem. For China, it was very different. When I went back, people used to wait for 5 seconds to get answer. No space for words in Chinese language, you have to parse it differently. We had to help users create content and the speed of information growth was very high. In the first 3-5 year, we basically tripled our index size. Search engines here think overall growth 30-50 percent, then I’ll grow my index by that, and it’ll be good enough. But in China, we were able to keep up with the growth.
Question: What can the US learn from China?
Robin: Most of the ideas China learned from the US and its early start. But in recent years, there are innovations coming out for search, because we have the largest market. The addition of social layer makes search sticky and hard to switch. For social, Chinese company called 10 cents [I think] with hundreds of millions of users, started with instant messaging and added much to their platform. These kind of things, maybe US can pay more attention. Going forward, you should pay more attention to that market [the Chinese market] because it’s so large, and they’ll encounter new problems, and you’ll start to innovate.
John: Are you coming to the US?
Robin: We do have ambitions to expand outside of China. Been in Japan for two years. But US is probably not a high priority because it’s a large and mature market. We’d have to thnk carefully about it.
And that’s it.