Zhou Hongyi: The“Warlord”

Zhou Hongyi， founder of Qihoo 360 Technology Co.， Ltd.， is known by many as the “warlord” of the Chinese internet sector： His company battled China’s biggest search engine Baidu.com in a major lawsuit， he and Alibaba Chairman Jack Ma once “blocked” each other， and he even ticked off Yahoo co-founder Jerry Yang so much that Yang wrote to venture capitalists persuading them not to invest in Zhou’s company. Yet， in 2010， the fiercest fight in China’s internet industry broke out between Zhou’s company and Pony Ma’s Tencent Technology Co.， Ltd. Despite his controversial methods， Zhou has managed to make Qihoo 360 the country’s largest internet security service provider.

In 1995， after graduation from Xi’an Jiaotong University， Zhou arrived in Zhongguancun and joined Founder Group， then the country’s biggest software company. At that time， Zhongguancun， considered by most as China’s Silicon Valley， was the country’s internet capital. As an employee of Founder Group， Zhou became intimate with the internet for the first time. He and his colleagues eventually developed FYmail， the country’s first independently-developed email system. “I still treasure that first step I took in Zhongguancun， the Holy Land of China’s IT industry，” Zhou recalls. “That step changed my life.”

Zhou sensed immense opportunity in the internet boom in China and decided to start his own business. In October 1998， he founded 3721.com， a website offering Chinese keyword search services. To promote the 3721 Internet Assistant he developed， he programmed it to automatically install on a user’s computer if he or she opened certain webpages. Moreover， the plugin couldn’t be uninstalled. This move enabled 3721 Internet Assistant to spread quickly， and its daily usage soon reached 30 million， helping Zhou’s company earn 140 million yuan in 2002. However， this also earned Zhou notoriety as China’s “father of rogue software.” “I did fail Chinese internet users by promoting 3721 Internet Assistant this way，” Zhou once even admitted publicly.

In January 2004， Yahoo！ Inc. bought Zhou’s company for US$120 million， and 3721 Internet Assistant was renamed “Yahoo Assistant.” In March of the same year， Zhou was named president of Yahoo China. The next year， Zhou quit Yahoo to become an angel investor. He funded a number of successful startups including Thunder Networking Technologies， Kugou， and Discuz. At the same time， he lost a huge sum invested in a sheep milk project.

In March 2006， Zhou became chairman of Qihoo 360， heralding his return to the frontier of China’s internet industry. Four months later， the company released 360 Safe Guard， a free program aiming to help users remove malicious software from their PCs. Despite the fact that the software was welcomed by users， it made Zhou and his company “obtrusive challengers”in China’s internet security sector.

By that time， China’s internet security market had grown to more than 1 billion yuan. The free internet security software redefined the market and soon washed out away anti-virus software developers targeting individual users.

According to Zhou， new market rules should be applied in the internet era： “An internet service that everyone needs should be free of charge， and earn profits from value-added services when its user base grows big enough.”

Today， Qihoo 360 has become China’s largest internet security service provider and a major player in the country’s browser market. Total users of its products have surpassed 400 million. In March 2011， Qihoo 360 was listed in the U.S. stock market. The latest survey shows that it has grown into China’s fifth largest internet company in terms of market value， trailing only Tencent， Alibaba， Baidu， and NetEase.

Zhou hasn’t always been a winner. In the era of the mobile internet， his rivals have begun to catch up. Despite the fact that 360 Mobile Safe remains one of the most popular smartphone security apps in China， it faces a big challenge from Tencent’s Mobile Phone Guard. In the traditional internet era， Zhou and Qihoo 360 played the role of “challenger.” Whether or not they can continue this role is uncertain in a time when mobile internet prevails.