Shen Ji became a brick inside Baidu, where it needed to be moved.
In April, after the news that Ren Geng, president of Alibaba Cloud China, was about to leave, it was rumored that he would join Baidu. Cai Yuming, an insider close to Baidu's Intelligent Cloud Business Group (ACG), said that "in the second half of last year, (Baidu) did try to dig (Ren Geng)", and many employees of Baidu ACG are speculating when Ren Geng will join and become the new head of Baidu Cloud. Unexpectedly, this position finally fell to Shen Shu's head.
On the morning of May 5, Robin Li, founder, chairman and CEO of Baidu, issued a new round of cadre rotation notice, announcing that Shen Ji, executive vice president of Baidu Group, was appointed as the head of ACG; He Junjie (Jackson) was promoted to senior vice president of the group and rotated as the head of Baidu's mobile ecological business group (MEG); Dr. Wang Haifeng continued to serve as the group's executive vice president and CTO, and no longer concurrently served as the head of ACG.
This cadre adjustment is Baidu's largest company business adjustment since 2019.
In March 2019, Baidu President Zhang Yaqin announced his retirement; in May, Liu Hui, senior vice president of Baidu human resources, retired, and Cui Shanshan, one of Baidu's "Seven Musketeers", returned to take full responsibility for Baidu's human resources work; during the same period, Baidu senior vice president Wang Haifeng was promoted to CTO of the company, and Xiang Hailong, president of Baidu Search Company, left his post and Shen Shu took over.
Shiver
Just as Xiang Hailong was announced three years ago, the notice of cadre rotation came particularly suddenly. Especially shen jitter's transfer, in the eyes of the outside world, being transferred away from MEG, Baidu's cash cow business, is tantamount to demotion for Shen Ji.
In the past year, baidu MEG business development growth rate has slowed down, "MEG failed to meet internal expectations", Cai Yuming said bluntly. In 2021, Baidu's core operating profit was 15.142 billion yuan, down 26% year-on-year; net profit attributable to Baidu core was 13.557 billion yuan, down 49% year-on-year; adjusted EBITDA profit margin was 29%, compared with 40% in the same period last year.
However, from another point of view, Shen Ji was transferred to take charge of ACG, possibly because he was one of the few usable and credible high-level talents in Robin Li's hands. Shen Ji's departure from MEG not only put an end to the possibility of a second Xiang Hailong for Li Yanhong, but also meant that shen Ji could be appointed more confidently and boldly.
Baidu ACG internal employee Zheng Gang told the alphabet list that after missing Ren Geng, Baidu's internal executives who can take over the cloud business may only be available to Shen Ji, if you consider whether Shen Ji is still from MEG, a heavy revenue, money-making business, for the current pursuit of growth benefits of the cloud business, Shen Ji may be the only candidate.
In the structural adjustment, the TGE (basic technology group) and network disk business in the TPG (technology middle office group) that were originally under Wang Haifeng's responsibility were assigned to the ACG that Shen Jixin was responsible for.
Zheng Gang explained that Baidu network disk is also known as personal cloud, and TGE provides basic database, data center, server and other support, which have a strong correlation with cloud business. However, after the adjustment, among the two major businesses directly responsible for Wang Haifeng, ACG was divested, and TPG's only security, research institute, map and CIO (such as flow) were left, and its authority was weakened.
Robin Li mentioned in the internal letter that he hopes that Shen Jitter can lead the ACG team to achieve quantitative change to qualitative change in scale and health, and establish new merits for the development of Baidu's second curve.
Zheng Gang told alphabet list that Baidu Cloud's internal revenue target this year is 12 billion yuan (of the 15.1 billion yuan of Baidu intelligent cloud revenue last year, the income directly from Baidu cloud business is more than 8 billion yuan, and the other is the income from project mergers and acquisitions), and from only looking at revenue growth to assessing gross profit, "the gross profit at the end of the year must be positive." ”
This time, can Shen Ji become Baidu's Yu Chengdong?
A
In 2012, Shen Ji was recruited by Xiang Hailong to Baidu, and was designated as the "successor", and was also one of the four most powerful generals of Xiang Hailong at that time, responsible for mobile Baidu and feed.
With the strategic transformation of Baidu Search into a mobile ecological business group (MEG) in May 2019, the last president of Search abdicated Xiang Hailong, and the new generation of meg head Shen Ji was in office.
As two heads in charge of Baidu's core business before and after, Xiang Hailong and Shen Ji have experienced cadre rotation.
In 2011, Baidu in the PC era was in the sky, and its market value ranked first in China's Internet, but it also began to breed mountainism internally, and the sales team managed by Xiang Hailong and the commercial operation team managed by Wang Zhan were the two departments with the heaviest internal discourse power of Baidu at that time, and business frictions and contradictions were also quite frequent.
As foreign enemies Google Search withdrew from the Chinese mainland market, Robin Li began to cut the domain, launched a job rotation system, and exchanged posts with Hailong and Wang Zhan.
Although the rotation has achieved a certain effect, it has not stopped Xiang Hailong from becoming bigger. By 2013, Baidu made a new organizational restructuring and established an SSG (search business group), which includes all business monetization-related services, all of which are responsible for Xiang Hailong, and Wang Zhan is in charge of CBG (user consumption business group) and withdraws from Baidu's business core.
Since then, Xiang Hailong has undergone a transformation of executives such as Wang Jin, Li Mingyuan, Zhu Guang, and Lu Qi, and his authority has become more and more powerful. By 2019, about 20,000 of Baidu's more than 30,000 employees will be responsible for Hailong, and the revenue contribution of the search company it manages will account for more than 70%.
Until May 2019, Baidu ushered in its first quarterly loss since its listing in 2005. Li Yanhong also released the news of Xiang Hailong's departure.
It is worth noting that in Li Yanhong's internal letter, he praised Shen Shu with "having a strategic vision, daring to fight a hard battle, and being able to win a battle", but only used a few 26 words to evaluate The Sea Dragon: "We thank the Sea Dragon for its companionship and contribution in the past 14 years, and wish him all the best in the future." You know, 2 months ago, when Zhang Yaqin left his post, Robin Li sent a long letter of special thanks, and focused on rendering the former's various contributions to Baidu.
A publicist told Caijing at the time that Xiang Hailong's departure "also broke the outside world's claim that Hailong could not move." ”
B
The Baidu search business that Shen Ji took over at that time is suffering from the traffic segmentation of the super APP, and more and more information does not need to rely on Baidu search to complete, although Baidu still has rich content, but users are constantly losing.
In order to avoid the search of the whole network from eventually becoming Baidu's on-site search and activate user growth, the first thing Shen Ji did when he took office was to continue to promote the "search + information flow dual engine ecology", create a "wind and cloud plan" that points to today's headlines, learn from ByteDance, and establish Baidu technology middle office to support mobile ecological sub-businesses such as Baidu APP, Baijia number, and Mini Program. By the end of 2019, Baidu Information Flow Monthly Active has finally achieved a level with today's headlines.
A year after taking over MEG, Shen Jio formally proposed the strategy of "servitization and personalization of mobile ecology", established a mobile content ecosystem with three pillars of search + information flow, and the three pillars of Baijia number + Mini Program + hosting page, and continued to split and refine into "X + Y" strategic layout in 2021, "horizontally wide and thick, vertical deep and refined".
Compared with less than 300 million monthly activities in 2019, at the end of 2021, Baidu APP monthly active activity reached 622 million, of which hosted page revenue accounted for more than 40% of Baidu's core business advertising revenue, Hundred Creators increased to nearly 5 million, and smart Mini Programs monthly active more than 460 million.
Shen Jitter helped Baidu gain a firm foothold in the field of graphics in the mobile Internet era, but failed to lead MEG to achieve a breakthrough in the video era.
When Baidu equaled today's headlines, the cumulative monthly monthly activity of Douyin and TikTok incubated by the latter has approached 2 billion. Baidu, which only launched video in 2018, in addition to launching good-looking videos and small videos for the whole people, even through the way of "buying, buying and buying", has invested in Pear Video, Zhihu, and acquired YY, etc., intending to exchange money for time, and play the banner of "pan-knowledge live broadcast" to distinguish it from the pan-entertainment labels of Douyin and Kuaishou.
After Baidu announced the acquisition of YY in November 2020, Robin Li gave two reasons: first, Baidu can harvest synergies from YY live broadcasting, and second, YY live broadcasting helps Baidu diversify its revenue sources.
But the hefty $3.6 billion merger didn't have the desired effect. Entering 2022, Baidu MEG was exposed to layoffs, Sina Technology reported that nearly 300 people in meg's game department were laid off, and there were also different proportions of layoffs in the live broadcast and education businesses, while Cao Xiaodong, who was sent by Baidu to be responsible for the YY business unit, no longer held the position of head of the department.
Baidu insiders close to YY's business told Alphabet That in 2021, YY had a wave of people going north to enter Baidu's headquarters, but there was constant friction in the integration of the two teams, and these people were withdrawn to Guangzhou. "This is also one of the places where MEG makes Robin (Robin Li's English name) less satisfied." Cai Yuming further said.
Although Baidu Information Flow is still contributing cash flow, "as far as the product itself is concerned, it is only a conversion of existing users rather than incremental users, lacking imagination, and subsequent growth is also weak (relatively competitive)," a former Baidu employee told alphabet list.
This is the three-level growth engine strategy of mobile ecology, intelligent cloud and intelligent driving disclosed by Baidu in the fourth quarter of 2020 financial report.
Considering that user growth is approaching the ceiling, Robin Li may no longer need to continue to spend on the slowing growth of MEG, and it is even more undesirable to grow a second Xiang Hailong within the MEG without growth drive.
C
Transferring to ACG is not only a new challenge for Shen Jiding, but also an opportunity to break through the bottleneck.
A typical example of this is Yu Chengdong. In 2002, Huawei's heavily invested 3G technology could not find the application market for a long time, and the domestic 3G license was released hopelessly, and during that time Ren Zhengfei was troubled to invest more than 10 hours of work a day, but he still couldn't figure it out.
Huawei had to seek overseas breakthroughs to open up the European market, and finally helped Huawei open up this new world, which was Yu Chengdong, then the head of the European business. Step by step, Yu Chengdong helped Huawei shape the "Holy Wireless".
After Huawei decided to make consumer-oriented high-end brand mobile phones in 2010, Yu Chengdong was ren Zhengfei again and took up the position of president of Huawei's European area as the ceo of new consumer BG. Rui Bin, who was in charge of Huawei's consumer BG strategy, recalled that in Ren Zhengfei's eyes, the "pit" of consumer BG should be yu Chengdong's "turnip".
After 8 years, consumer BG surpassed operator BG and became Huawei's new core and cash cow in 2018, Yu Chengdong led Huawei consumer BG to create a "god terminal" juxtaposed with "Sheng Wireless".
At present, Huawei's heavy responsibility for car manufacturing has once again been handed over to Yu Chengdong. Ren Zhengfei hoped that Yu Chengdong could replicate the next terminal miracle.
Shen Ji's role in Robin Li's eyes is quite similar to Yu Chengdong's role in Ren Zhengfei.
In Cai Yuming's view, leaving MEG to fight ACG is not only not that Shen Ji is marginalized, but it is precisely the performance of being reused.
As the second growth engine within Baidu, Baidu's intelligent cloud business has become the fastest growing business within Baidu. According to the 2021 financial report, baidu's intelligent cloud business revenue increased by 54% to 15.1 billion yuan, contributing 17% of baidu's core business revenue. Compared with the online marketing business, which grew by only 1% year-on-year in the fourth quarter of 2021, non-online marketing revenue, including Baidu cloud services, increased by 63% year-on-year.
Baidu Cloud's last general manager, Yin Shiming, who served as senior vice president of SAP, left in March 2020 and has been entrusted to Wang Haifeng ever since.
But the cloud business did not fall under Wang Haifeng's jurisdiction from the beginning. At the end of 2018, Baidu's Intelligent Cloud Division (ACU) was upgraded to an Intelligent Cloud Business Group (ACG) to report to Zhang Yaqin; in September 2019, Baidu ACG and CTO system were integrated, and Yin Shiming turned to CTO Wang Haifeng to report.
In January 2020, Baidu integrated ACG, AIG (AI technology platform system) and TG (basic technology system) into Baidu Artificial Intelligence System (AIG), which was all under the umbrella of CTO Wang Haifeng. Three months later, Yin Shiming left.
Li Yanhong's expectation for Shen Ji after taking office is to lead the ACG team to accelerate the implementation of the Cloud-Wisdom Integration strategy, realize the quantitative change of scale and health to qualitative change, and establish a new merit for the development of Baidu's second curve.
From ACG to Wang Haifeng and Shen Ji, who is independently responsible, this means that Baidu has further attached importance to intelligent cloud services and invested resources. With the sales system management experience accumulated in MEG in the past three years, Shen Jidun has undoubtedly become the best candidate to help Baidu Cloud develop enterprise customers.
Cai Yuming told the alphabet list that the main consideration of Baidu's recruitment of Ren Geng in the second half of last year was also to take a fancy to the other party's government and enterprise connections and sales management capabilities.
D
Shen Ji's challenges are only a lot more than when he took over MEG three years ago.
Baidu is the only Internet giant that sees cloud services as a new growth curve. Alibaba Cloud, which ranks first in the domestic cloud market share, has been profitable since the fourth quarter of 2020. In the fourth quarter of 2021, Alibaba Cloud officially surpassed the international business sector with 19.5 billion yuan in revenue, becoming the second largest growth engine after China's commercial sector, with a revenue contribution ratio of 8%.
Tencent To B's revenue has also begun to surpass games and become the largest sector. According to the fourth quarter of 2021 financial report, Tencent's financial technology and enterprise services segment revenue in the quarter was 47.958 billion yuan, exceeding the 42.8 billion yuan of the games sector for the first time.
The attitude of Internet giants to cloud services is also changing, and from the previous blind investment to both growth and profitability.
According to Leifeng Network, Alibaba Cloud and Tencent Cloud are tightening their internal budgets and beginning to require internal self-financing.
The appraisal mechanism around cloud business has also changed. Alibaba Cloud requires each product line to be self-responsible, and Tencent strives to increase the proportion of sales of self-developed products.
In order to achieve the above goals, Alibaba Cloud has undergone two unprecedented changes in the past two years: one is the first time to set up a slice-and-piece direct management model to implement the industry + regional expansion strategy; the other is the rare airborne landing of an M7-level executive, who recruited Cai Yinghua, the former president of Huawei Enterprise China.
Baidu is also internally adjusting the cloud business assessment standards. Zheng Gang said that this year Baidu Cloud set a revenue sprint target of 12 billion yuan, and required that the gross profit margin at the end of the year must be positive, and began to pursue extensive revenue one-way growth from the past to seek synchronous improvement of revenue and gross margin, "The first step is to achieve positive cash flow." Zheng Gang said.
It is an indisputable fact that the gross profit margin of domestic cloud manufacturers is lower than that of foreign counterparts. Some cloud vendor executives once explained to Leifeng network that the secret of Amazon's high gross profit is that the sales of its four basic components (servers, storage, CDN, and network bandwidth) account for more than 60%, and the cost effect of diluting hardware by scale is obvious. At the same time, these standardized services have a higher gross profit than customized projects.
Similar to Tencent's efforts to improve self-developed products, at the end of 2021, Baidu Cloud once conceived a self-developed server chip internally to reduce the cost of cloud services and reduce the pressure of supply tension.
Zheng Gang said that the Baidu cloud team even made a business plan, and reported to Robin Li once, which was initially affirmed by Robin Li, but the premise is that the group will not directly invest money, and the team needs to find the right CEO candidate, and the chip research and development team will be saved to form an independent company, and the company will invest resources.
After contacting Huawei, Ali and other executives, because they have not been able to find a suitable CEO candidate, Baidu's server chip self-development plan has no choice but to abort.
Now, with more than half a year to go until the end of 2022, will the three fires of Shen Ji's new official's appointment ignite a new target of 12 billion yuan? Not only is the outside world curious, Robin Li may be more curious.
(Cai Yuming and Zheng Gang are pseudonyms in the text)
Resources:
"Baidu's Hardest Night: The Inside Story of Five Executives' Lightning Resignation" is delayed by LastPost
"Alibaba Cloud has come a Huawei "fierce person", the cloud market is quietly changing the sky" Digital Intelligence Frontline
"The Darkest Moment of the Internet Giant "Cloud": Inner Volume, Power Reduction, and Loss of Big Customers" Leifeng Network
"All cloud vendors are digging huawei wall feet" box lunch finance
"Yu Chengdong drives Huawei" alphabet list