Chapter 10 Chapter 9 The Dilemma of Big Companies

If Zhou Hongyi used to reflect more on his own mistakes and project flaws, now he can finally escape from the position of a "product manager" to reflect on some more grand issues, such as where are the dangers of large enterprises themselves? , can it be avoided, how can it be avoided.What a giant like Yahoo showed to Zhou Hongyi was definitely richer and more comprehensive than 3721, a platform built by itself. Wei Zhe, the former CEO of Alibaba, once said: Yahoo is a grandpa, and grandpa will always leave. These words are like a proverb, like a curse-Yahoo did separate from Ali later.But on April 13, 2004, when the founder of Yahoo, Jerry Yang, dressed in a Tang suit, toasted frequently at the Kerry Center Hotel, who knew that Yahoo looked so strong, when it would decline!

It was Jerry Yang's first visit to China, and he was accompanied by all the top executives, including CEO Terry Semel and COO Dan Rosensweig.The main purpose of such a high-profile visit is to open a new chapter in the development of Yahoo China. As for the strategy, it is to support the Yahoo search technology (YST) that they spent a lot of money to build. Although it was officially unveiled less than two months ago, Yahoo's search technology had become one of the two most used search engines in the world at the time.According to the latest data of the US Internet Survey in March 2004, the market share of Yahoo search has risen to 43%, which is close to the king status.

"The competition in the search market is a marathon. It is still too early to say who will be the leader. We are confident that we will win in the end." Jerry Yang said. Embarrassingly, that king is Google, a rival of Yahoo's own making. About 4 years ago, Yahoo decided to give a startup a small handout by using its search technology on Yahoo's website and paying a generous amount of cash for it.That little company is Google. In 2000, although Yahoo was only 6 years old, it was already an international giant. Looking back like an abyss.When Jerry Yang and David Filo founded Yahoo in 1994 and created the Internet business model of "traffic/advertising", the limelight was by no means weaker than that of Zuckerberg and Facebook later. .Only one year after its founding, the company went public with a market capitalization of $500 million.Although the turnover in the year of listing was only 1.3 million US dollars, and it still lost 630,000 US dollars, it turned around in 1996.

At that time, there were very few Internet companies that could make a profit. Even now, many Internet companies only make money by shouting. Comparing people to people makes people mad.During this period, Zhou Hongyi skipped class and wandered outside, was hit badly, had to go back to school to get a degree again, and then went to Fangzheng to work, and was sent to Xinjiang.And Yang Zhiyuan, who also dropped out of school to start a business, has become a legend and the most dazzling star in the Internet age. In the first 10 years of listing, Yahoo’s turnover soared from more than 20 million US dollars to more than 6 billion US dollars, but Yang Zhiyuan and Yahoo, shrouded in the halo of performance, were full of hidden worries.The biggest hidden worry is Google. This little-known confidant at that time will eventually become a big problem.

When the dot-com bubble burst in 2001, Yahoo replaced CEO Tim Koogle, whose name was eerily similar to Google's (Google). Lee Semel to reverse the disadvantage. Yahoo's original revenue came from advertising.After Semel joined Yahoo, he found that the search bidding ranking was hugely profitable, but at the same time, he also quickly discovered that Yahoo had neither its own search technology nor the technology to publish advertisements based on search results. Semel first struck a deal with search engine company Overture to use its advertising technology, then tried, but failed, to buy Google.Since then, he has had to spend $230 million to buy Internet search pioneer Inktomi and simply buy Overture for $1.6 billion.

Facts have proved that these two acquisitions are very wise.Relying on search advertising revenue, Yahoo's performance reached its peak between 2004 and 2005.The problem is that, even then, Yahoo is only tied with Google. Not being able to beat a guy half his age made me angry and anxious.Yahoo was very unconvinced, because it not only has search ads, but also displays banner ads, while Google only has search ads.The problem is that Yahoo is not the industry leader in search technology.Before acquiring Inktomi in 2003, Yahoo had never been a search engine.Although Semel later tried to reshape Yahoo into a technology company, the newly emerging Google seemed to be a high wall, stopping this struggling tiger.

And the reason why the wall was built so quickly was also because of this tiger. Some technological giants, such as Microsoft, Intel, and Oracle, are known for being cruel and ruthless to their competitors, but Yahoo is different. Perhaps because it is too smooth, it deeply feels that supporting the backward is part of its social responsibility. It is full of big brother style.Since you are the big brother, you have to be more generous to the younger brothers. In 2000, Yahoo not only helped Google promote its search technology on its own website, but also paid $7.2 million.With the support of the eldest brother, the younger brother made a profit in the first year.

But Yahoo is actually not that rich and powerful. Not only did it lose $93 million that year, but its stock price plummeted. The opposite is true for Google, whose revenue is growing rapidly, essentially doubling every quarter.When Google was a private company, it didn't report earnings, but its operating accounts were regularly sent to Yahoo on a quarterly basis.It is not that no one is aware of the crisis. Some Yahoo managers in Europe have expressed concerns about Google, but they have not attracted enough attention in the management. At that time, Yahoo's management didn't value money, they only saw that search could bring a lot of clicks.Their selfishness is limited to this, and they, like 3721 before the acquisition, did not realize that their own platform itself is the value, and it is a favor to pay people to use it, so why do they need to pay a lot of money for it.

But until 2002, Yahoo did not wake up, and the money paid to Google increased to 13.2 million US dollars, equivalent to more than 1/4 of its total annual profit.But at this time, Google is no longer Wuxia Amon. Its profit in 2002 has surpassed Yahoo's 43 million US dollars, reaching 100 million US dollars. The kind-hearted tiger has cultivated the biggest competitor for himself, and built a high wall out of thin air on his way forward. From then on, the sad story of overcoming the wall and overcoming the wall but being unable to overcome it began. In 2006, Google's turnover and profits exceeded Yahoo's.

But in 2004, Yahoo couldn't see this result. They only saw that the search business had become the most enviable golden bull in the Internet industry.In this regard, they are very pleased. Yahoo’s first quarter report of the year showed that the company had achieved remarkable results: the first-quarter profit reached US$101 million, a sharp increase of 115% from US$47 million in the same period of the previous year; the turnover reached US$758 million, a year-on-year increase of The $283 million of the total increased by 168%.The search business has become one of its fastest-growing main businesses, and 1/3 of the online business and all offline business revenues come from search.

Although "the one who wins the search wins the world" is not always the case, but Yahoo, which has its own search technology, has caught up with Google after all. Search is so important, of course, Yahoo hopes to take the lead in an emerging market like China and regain the initiative. It is best to use search to mobilize the whole body and open up Yahoo's two channels in China.What's more, they now have 3721 and Zhou Hongyi. 120 million US dollars is indeed tempting, but it is hot when you actually go to get it.As a prerequisite for cooperation, Zhou Hongyi must meet several conditions proposed by Yang Zhiyuan.The acquisition agreement reached by the two parties is planned to be completed within two years. Yahoo will pay 50% of the total acquisition amount in advance, and the rest will depend on the profits obtained by Zhou Hongyi leading Yahoo China. According to regulations, Yahoo China will create a net profit of US$10 million in the first year.If completed, Yahoo pays another 25%.In the second year, Yahoo China needs to complete a net profit of 25 million US dollars, and Yahoo will finally pay 25% of the transaction to complete the transaction. For Zhou Hongyi, who was in high spirits at the time, it didn't seem to be a difficult task. On March 22, 2004, he officially became the president of Yahoo China, ready to do a big job. Yahoo's development in China has never had a strategic direction, whether it wants long-term development or immediate profit, Yahoo headquarters did not give an answer for a while.Zhou Hongyi petitioned the headquarters: In view of the gap of 5 years behind, it is unrealistic to catch up at the current speed, and leapfrog development is needed, but leapfrog development requires a lot of investment from the headquarters.However, Yahoo headquarters is full of doubts. As a result, not to mention leapfrog development, Yahoo China has difficulty even catching up with the speed of external development.As a last resort, Zhou Hongyi implemented drastic reforms to Yahoo China at the beginning of his tenure.He threw out three major plans: promoting the internationalization of Chinese Internet access, realizing the localization of Yahoo's search technology, and promoting Yahoo's e-mail to obtain a matching dominant position in China.Since we want to reform, we must use people we trust. Naturally, 3721 of the original people have been placed in important positions in Yahoo China. Since then, Yahoo China has started to strike hard in the fields of e-commerce, instant messaging, search, and mailboxes. On June 8, 2004, Yahoo China launched a new version of instant messaging software "Yahoo Messenger 6.0 Chinese Version". On June 21, 2004, Yahoo China's independent specialized search site "Yisou" was launched. On July 26, 2004, Yahoo China took the lead in expanding the free mailbox to 1G capacity. Having experienced previous failures and reflections, Zhou Hongyi began to emphasize concentration.He cut off some channels that Yahoo was not good at in terms of content, and promoted real estate, cars, entertainment, sports and other content for urban white-collar workers.But Yahoo headquarters insisted on being a portal, and was very dissatisfied with his insistence on going his own way. Zhou Hongyi's nickname of "Yahoo Barbarian" spread like wildfire.The inconsistency of views on the direction of development has laid hidden dangers for the cooperation between the two parties. When dissatisfaction emerged among the top brass, rumors arose among lower-level employees.First, Yahoo China only had about 50 employees at that time, while the 3721 team brought by Zhou Hongyi had more than 200 people.Secondly, Yahoo China originally worked in China Resources Building, but was later moved to Heqiao Building where 3721 is located.At least on the surface, this is more like 3721's acquisition of Yahoo China. Zhou Hongyi also knows that the success or failure of international mergers and acquisitions often depends on whether the corporate cultures of the two parties are integrated, but because of too much performance pressure, he really can't care about these rumors.On the other hand, cultural disputes also ebb and flow. He hopes to use an entrepreneurial culture to wash away the original bureaucratic spirit of Yahoo China. As a result, the entrepreneurial culture of "forge ahead, run forward, and act quickly" began to be advocated.At the same time, Zhou Hongyi also spent huge sums of money to bring all the employees of both parties to Sanya, Hainan for a week of team activities.In order to be able to confide in the employees, Zhou Hongyi adopted the most "Chinese characteristic" method during the event - drinking with the former Yahoo China employees.This is not a gentle drink like a gentleman, but a drink that "doesn't get drunk and doesn't return".He also fell into the swimming pool drunk and knocked out two front teeth. Zhou Hongyi did solve the first big problem in his own way. In 2004, Yahoo China turned losses into profits, with an operating income of US$40 million and a profit of US$10 million.Zhou Hongyi's efforts have made people in the industry begin to re-examine Yahoo's power in China.Everything seems to indicate that Yahoo China is on the right track and has found its own direction. But the good times are temporary. The conflict between Zhou Hongyi and Yahoo headquarters gradually intensified in the second year after the merger. In the first year, although the Yahoo headquarters was somewhat dissatisfied, they still turned a blind eye to his "barbaric practices", such as replacing senior executives in finance, personnel, and legal affairs who did not support him. After impatiently waiting for the reply from the headquarters, he decided not to strengthen the search on Yahoo China's page, but launched a special search portal "Yisou".Since there was no financial support from the headquarters, he simply allocated funds from 3721 to carry out the preliminary construction of "Yisou". Yahoo later acquiesced and compensated. The reason why Yahoo supports its "barbaric approach" is that Yahoo China's performance in 2004 has met the requirements.In fact, at the end of 2004, Yahoo’s business in China reached the best level in history—Yahoo’s search surpassed Google China at the time, and if you add up “Yitou” it almost surpassed Baidu; Mailbox surpassed Sina and became second; Yahoo! The number of active users of Tongtong exceeds 10 million, and the momentum of growth is extremely fierce. In this case, Yahoo headquarters began to pay attention to the strategic position of Yahoo China.The problem is that in many cases, it is better not to pay attention to it than to pay attention to it.If the result of attention is not to increase investment, formulate longer-term plans, and bring greater benefits to those involved, who wants to receive this so-called "emphasis"? Yahoo headquarters doesn't think so.Jerry Yang put forward higher requirements for Yahoo China's goals in 2005: the search should surpass Baidu to become the number one in the market, and the number of mailbox users should also increase on a large scale.Moreover, Yahoo headquarters only looks at the results and does not invest. Yahoo China does not receive any financial support from the headquarters, which means that the completion of new business growth must be supported by Yahoo China's own profits. Zhou Hongyi certainly could not agree to such an arrangement, and he strongly demanded that Yahoo headquarters substantially increase the investment budget.However, Jerry Yang was still vacillating about Yahoo China's development strategy at this time and could not agree to his request. The conflict between the two sides began to slowly become public around Yahoo's annual budget.By December 2004, the budget did not appear to be changing. In early 2005, Zhou Hongyi began a series of negotiations with Yahoo headquarters.At this time, after a year of exploration and practice, his understanding of this Internet giant is no longer the ignorance he had when he first talked about the acquisition.He clearly saw that the success or failure of this acquisition depends on whether he dares to take the route of large investment and large output.He's come out of his $120 million vanity at this point, and he really wants to do something. During the negotiation process, he proposed two options: the acquisition amount remains unchanged, and an additional fee is allocated for the long-term mailbox and search business; or both parties take a step back, the agreement ends early, and the final payment amount is not as originally set. Instead, directly determine an amount lower than the original purchase price. But Yahoo headquarters disagreed with both options.They proposed a new plan to Zhou Hongyi: ask him and his team to stay, and pay the original price of the acquisition amount as the standard for his shareholding, but require him not to interfere with the payables of Yahoo’s acquisition of other shareholders’ shares.This time it was Zhou Hongyi's turn to disagree, because this was actually a plan to buy a team and sacrifice the interests of investors. When I was a graduate student because of the "Virus Gate", the lesson of being marginalized and ignored is vivid. How could Zhou Hongyi agree to such a condition that might make him bear a lifetime of infamy?Furthermore, even if the goal for 2005 cannot be achieved, his losses are limited and he will not be short of that little money. The final result of the debate was that Zhou Hongyi announced his resignation and the acquisition agreement ended early.Yahoo paid a total of US$90 million to 3721 shareholders before and after, and 3721 belonged to Yahoo China.Zhou Hongyi officially resigned from the post of president of Yahoo China on August 31, 2005. There is no end to learning, and no experience is superfluous. People need different platforms at different stages. Even a person like Zhou Hongyi who is not born to be a queen and can create a platform must find a platform at a certain stage of his life.His first platform was Founder of Peking University. What he gained in Founder was that he built up his confidence as a programmer and saw his own ability.The second platform is Yahoo. What I learned from Yahoo is that Yahoo has improved its comprehensive control capabilities including management, and at the same time started to practice various businesses such as search, portals, and mailboxes, and its opponents are all the best in China.This platform 3721 is incomparable. In addition, through the two platforms of Founder and Yahoo, he has clearly seen the bureaucratic disease of large Internet companies, so he is very vigilant against bureaucracy.Later, Qihoo 360 also gradually entered this stage, and the process became more and more complicated. Some people were superfluous, and they were no longer as fast and effective as before. This made Zhou Hongyi feel very angry and helpless.But self-knowledge is always better than no self-knowledge. Specifically, Zhou Hongyi achieved breakthroughs in three aspects. This is due to the all-round expansion of insight.After all, Yahoo was one of the most international multinational conglomerates at that time. As the helm of its China region, he not only deployed more resources, but also defeated his opponents more times, and even completed the competition for foreigners, foreign languages, and internationalization. "Desensitization" practice. Before that, he didn't want to take the college entrance examination because he didn't do well in subjects such as English.Because he didn't learn English well, he didn't drive out of the country, and he was also afraid of dealing with foreigners.More importantly, because he has never studied abroad, he consciously stays away from Silicon Valley and the real high-tech core. Freezing three feet is not a day's cold.These fears have been fermented for many years, which made him feel inferior when facing the group of "sea turtles", and only then did he feel fear in the face of an unprecedented difficulty as before.This kind of fear is difficult for the "sea turtles" to understand. Even if the "sea turtles" have fear, it is from other aspects. At least it will not be so difficult for them to find high-level figures in Google, and they will not be sad about losing money like Zhou Hongyi.For them, it may be a matter of making a few more calls and turning a few corners. It is almost impossible for a person who is always walking on the edge not to be red-eyed or crazy when encountering those mainstream competitors who are fighting hand-to-hand with bayonets.But now, the inferiority lead buried deep in his heart is gone. His English level may not have improved much now, but he has seen more, listened to more, and had more opportunities to deal with him. He found that they are not much better than himself, and he is even better in some aspects. Furthermore, he therefore ended his professional career perfectly. In the Founder stage, the so-called general manager of the business unit was essentially a department manager, and he was far from the president of the China region of a multinational giant in terms of contact, control, and social status. Moreover, for the first time as the president of the China region of a multinational giant, he has achieved outstanding results. If Zhou Hongyi used to reflect more on his own mistakes and project flaws, now he can finally break out of the perspective of a "product manager" to reflect on some more ambitious issues, such as where are the dangers of large enterprises themselves, and Can it be avoided, how can it be avoided. What a giant dancing at the top of the industry chain shows to Zhou Hongyi is definitely richer and more comprehensive than 3721, a platform built by himself.In particular, issues such as cultural conflicts arising from cross-border mergers and acquisitions provide fresh samples for Zhou Hongyi's practice and reflection.This kind of reflection covers almost all issues including corporate strategy, business model, team building, institutional culture and user experience. After all, in the less than two years of cooperation, he has hardly made any major mistakes in the specific business level under his jurisdiction. On the contrary, he has done a good job, and even if he was torn apart in the end, he did not lose much.It is worth mentioning that he is not following the path of others. His practice at this stage is the same as before, daring to challenge and innovate, and the challenge is not only for competitors, but also for Yahoo itself. He knows what he needs too well. Even the position of the China president of a multinational company like Yahoo is just another learning stage for him, and the form is the same as going to Founder.However, the content, level and final harvest of learning have greatly surpassed the past.What he gained was not only the huge sum of money after the realization of 3721, but also the qualitative improvement of practical experience, the fundamental rebuilding of self-confidence, and the all-round expansion of thinking content from the enterprise itself to the business world. In the 3721 period, no matter how well the Internet was done, it was just an upgrade of the product; no matter how well the company managed it, it was just an upgrade of the previous team management.How to make products, how to compete in the market, and how to balance company politics are all just improvements in degree.But running Yahoo China is a new practice and breakthrough. Compared with these, the little money lost by terminating the agreement is really nothing. Although Zhou Hongyi later saw that Baidu, which was not as good as 3721 at that time, had developed into a giant, he was indeed a little unbalanced in his heart, and he once said what would happen if he didn’t sell it at the beginning, but he was very clear in his heart: even if he didn’t sell it at the beginning , even if he persists, he may not be able to make Baidu what it is now. Why?The short board of the wooden barrel has not been filled.Lack of insight, not strong enough heart, mistakes will happen at some time, not at this time.Make up for what is lacking.Those who think that 3721 was wrongly sold and Yahoo bought wrongly may not understand Zhou Hongyi.Or, he himself may not have understood it that way at the time.This is also one of his "talents": a sharper intuition than many people. He didn't think clearly about the many hurdles he encountered before, but his intuition guided him in the direction.Intuition and subconsciousness firmly grasped those things that he valued most. Yahoo China achieved his self-transcendence, especially on the spiritual level.So when he was still in Yahoo China, he once said a word to the old Yahoo employees: I love Yahoo more than any of you! Regrettably, at the beginning of the merger and acquisition, he was less able to see Yahoo's past and future than Yang Zhiyuan. Later, through exploration and practice, he saw it clearly, but Yang Zhiyuan still hadn't seen it clearly.He is indeed a pioneering handsome talent who is most suitable for biting among wolves. He is full of wildness. What this kind of person needs is to let go instead of restraint, because he is a helmsman at heart, not just a sailor. Because of a bit of heroism, and because the wildness is still there, he hopes to achieve transcendence in his career.In the past, 3721 was more about pursuing commercial success, but now that he is no longer short of money, he puts more emphasis on the realization of social value.Only when an enterprise has outstanding achievements in social value can it be associated with words like "great". It is also because of self-confidence that not only did his original wildness not disappear, but it was also strengthened, and intertwined and merged with rationality in his subsequent investor career, forming his own unique business theory and style. This is a new starting point for him to start a new business empire.