Baidu lost its top AI expert LU Qi before it could make a spectacular turnaround (Part 1/2)

He made Baidu leaner, then left.

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Baidu lost its top AI expert LU Qi before it could make a spectacular turnaround (Part 1/2)

After working at Baidu for 486 days, LU Qi is stepping down as the President and Chief Operating Officer of the company due to “personal and family reasons”, effective July 1, 2018. The news was announced by Robin LI, co-founder and CEO of Baidu, in an email to his employees on 18 May 2018.

This is Part 1 of a 2-part series. Read Part 2 here.


LU Qi, the star manager whom Robin LI flew to Silicon Valley to woo back himself to shepherd the transition of Baidu, will step down from all active management roles  midway through the company’s All in AI strategy, and while he is receiving rising recognition for both his work in and outside the company, his departure seems a little sudden and unexpected.

LU Qi will “stick around as the vice chairman of Baidu’s board of directors”, according to Robin LI, but this, to many, is only a lame coverup for his resignation.

LU Qi’s imminent departure has sparked a heated discussion among the company’s employees in their WeChat group. “Vice chairman is a position of no power. Obviously, the move is introduced only to cushion the impact. He will leave Baidu eventually.”

Their speculation is, actually, not at all groundless. One can easily tell by looking at the new appointments and new management structure.

According to the internal announcement, the department managers of Baidu’s core business, ZHANG Yaqin, XIANG Hailong, WANG Haifeng and ZHU Guang, will now report directly to Robin LI. In the email sent to all his employees on May 18, Robin LI also announced the following personnel changes: WANG Haifeng will be promoted to senior vice president and general manager of Baidu’s artificial intelligence group (AIG); LI Zhenyu, general manager of its intelligent driving group (IDG), will now report instead to ZHANG Yaqin; and JING Kun will be appointed as the general manager of its smart living group (SLG), who will report directly to Robin LI in some time to come.

All of the aforementioned managers previously reported directly to LU Qi. On top of that, the position of general manager of the two key AI business departments, i.e. SLG and IDG, which LU Qi had placed great emphasis on, was always managed by LU Qi himself. For this reason itself, LU is seen as the many few who levels with Robin LI in terms of power in Baidu.

The management reshuffle this time signifies that Robin LI, who had soured some of his employees as CEO for his vacillation about the company’s direction in this age of mobile internet, has regained his control over Baidu.

LU Qi’s departure brought down the triangle power structure, specifically “Robin LI- LU Qi – MA Dongmin”, formed following LU Qi’s induction, in which Robin LI oversaw mainly Baidu’s newsfeed advertising business, LU Qi took charge of almost every aspect of Baidu’s business, AI in particular, and MA Dongmin (Robin’s wife) was put in charge of investment.

In the 400-plus days since LU Qi joined Baidu, its stock price has spiked by nearly 60%, yet, Baidu’s market value now still trails far behind that of Alibaba and Tencent, and its fight with Toutiao, too, is far from over. Following LU Qi’s departure, the All in AI strategy, which Baidu has placed high stakes on, too has been left hanging.

 

1. LU Qi: trimming for a leaner Baidu

The news about LU Qi’s departure was first rumored by Momo at the end of April. While the rumors swirled, LU was attending an auto show in Shanghai in high spirit and had just arranged for the latest “New Trends Meeting”, a regular internal meeting set up by LU Qi to engage Baidu’s employees to discuss the company’s development and business.

With all that was going on, LU Qi’s resignation seemed unlikely to happen, even the company’s employees had brushed the news aside and thought it to be a malicious act by its rivals to bring down its stock price before it could publish its financial report the day after.

Needless to say, the internal email sent out by Robin LI that day jolted almost every one. “The company was just about to get back on its feet. Looks like it will slip back into a declining state,” an employee at Baidu told 36Kr.

LU Qi’s sudden tender of resignation was due to conflict with the senior managers of Baidu’s search business, a person close to the matter told 36kr. According to this person, LU Qi once suggested the search business department to shave off its real-time bidding ads for some vertical sectors in an effort to save Baidu’s reputation. Although he made it clear that the move would only cost a small proportion of Baidu’s profit, his proposition was still strongly rejected by the four senior managers at Baidu. The conflict of interests eventually led to the resignation of LU Qi.

As a matter of fact, Baidu had just experienced a big personnel change in March, which saw a bevy of its middle-level managers, including LI Jiaoshou, the youngest vice president of Baidu, HU Yue, general manager of Baidu Tieba, LI Dongmin, general manager of Baidu Maps, LU Pengjun, senior director of Baidu’s search ads, and TU Jing, general manager of Baidu’s content platform, leave.

Recently, rumors have been flying that several managers of Baidu’s core businesses, including XIANG Hailong, manager of Baidu’s search business, the main engine for Baidu’s cash flow for years, are also thinking about quitting from being sidelined.

When LU Qi inherited Baidu, the company was determined to fight for a place in the space of O2O with 20 billion yuan worth of investment and without the vaguest framework for its AI strategy. Its stock price, at that point, had once dove to $161, leaving it marginalized in the BAT camp.

As soon as LU Qi joined Baidu, he laid down the following strategy: All in AI; center on newsfeed advertising while regaining its foothold in the space of mobile search with Baidu Mobile and nabbing more market share in content generation; double down on Baidu’s competitive products, such as Baidu Baike, Baidu Maps and Baidu Knows.

What followed was a large-scale layoff, which saw job cuts not only in Baidu’s healthcare-oriented departments, but also in departments that were irrelevant to its AI strategy and had been failing to generate profits. This move of LU Qi was said to have coincided with MA Dongmei’s. Because of this, the media had described LU Qi’s approach to Baidu’s businesses as “Trimming”.

Today, LU Qi is leaving. Who would have expected that?

“He had driven others away, then leaves,” sighed a person close to the company.

This is Part 1 of a 2-part series. Read Part 2 here.

Writers: SUN Ran and YANG Lin

Editors: YANG Xuan and FANG Ting