Baidu's $1.9 Billion Acquisition and The Future of Mobile in China

Wandoujia CEO Junyu Wang:

Baidu's $1.9 Billion Acquisition and The Future of Mobile in China

The news of Baidu's acquisition of 91 Wireless has set China's mobile industry afire. It isn't directly about Wandoujia, but we still received dozens of media interview requests, so I decided to reply here.

First of all, congratulations to NetDragon and 91 Wireless on a good piece of business, $1.9 billion is a big number.

But the nub is: Wandoujia has never defined itself as just an app store. Only about 15% of our team works on R&D for app distribution. Today's "app store" is just a very early-stage model, even weaker than directory-sites like Yahoo in the early days of the PC internet. After all, after the user installs an app for the first time, he can just open it from his home screen the next time, there's no need to return to the app store again. That's a big difference from a directory-site.

Today, users open Wandoujia to find content and enjoy a simple and delightful mobile experience. Our team excels at creating simple and useful products. It's no exaggeration to say that with our products--regardless of whether PC suite, Android app, or app store--Wandoujia almost always sets the standard for product design in China. In the mobile Internet era, users have more choice. Uninstalling an app is simple, and there are fewer dirty tricks to get new users. It's easier for good products to shine and it's easier to stay on the user's phone, which is the core fact of competition in the industry.

Many investors have sat in Wandoujia's largest conference room, many of them from big Internet companies. They want us to tell a story about "Wandoujia's future as an app store." And every time it's painful, because we don't want to be a simple gateway for traffic, we don't want to become a directory-site like hao123.com (also acquired by Baidu). Our hope is that in ten, twenty years when our parents and children want to play something, watch something, listen to something, know something, they just have to reach for their mobile, tablet, or PC, and Wandoujia is there for them. In Wandoujia's world, nothing is complicated and no one is afraid of technology, it's a simple and delightful experience.

Although app distribution in only the first step, Wandoujia is already doing extraordinarily well. Our stats show that our daily app distribution is over 30 million and we've accumulated over 200 million user installations.

But beyond distributing popular apps, Wandoujia also has significant influence with its outstanding developer program. For example, the app The Crazy Song Quiz achieved 160,000 downloads on Wandoujia in its first day of release, which was more than half of its total downloads that day.  On November 28, 2012, Wandoujia released the Android version of "One" by Han Han--the famous Chinese author, social critic, and race car driver--and reached 380,000 app downloads on the first day. By the end of January 2013, "One" already had 2x as many downloads on Android as on iOS, and Wandoujia accounted for 80% of that total.

Wandoujia was founded just as Android started to rise in China. As Android users quickly grew from one million to one-hundred million, we released a good product and benefited from positive word-of-mouth. In 2010, we started with a PC suite for mobile management. In 2011, we launched app search to enter into app distribution. In 2012, our focus was on our Android app product. Each step was closely linked. In 2012, when competition intensified, a PC suite and app store practically became the a prerequisite for Internet companies in China. But admidst the fierce competition, we were able to continue on a strong growth trajectory, which has given us confidence in our own ability.

Each day we have more than 500,000 new users of our Android app alone. It's no exaggeration to say that close to half of all new phones users in China will use Wandoujia. And from its inception until today, the vast majority of Wandoujia's new users come to us by choice--as organic traffic--which is definitely not the industry norm. From our SEO, we can see that "Wandoujia" and all of its misspellings, are our top search keywords. This shows that Wandoujia's "simple and delightful" culture has built a brand and won the support of its users.

To speak candidly, to see a company with a business that's very similar to ours at present be acquired for $1.9 billion, is exciting--even though this kind of valuation is clearly unsustainable. Our three co-founders are all first-time founders--none of us has bought a house, none of us has a nice car--so to take a big sum of money home to care for our loved ones, that'd be a lovely thing, right? But the truth is that aside from our cats, we really don't have any other hobbies--if we retired we wouldn't know what to do with ourselves. Aside from this, we want to have our own independent office, raise a whole litter of kittens, and when we spend 400,000 RMB on air purifiers, we don't want to seek anyone else's approval. This is at once the the irrational side of entrepreneurship and the delight of it too.

We wish to always stay independent. Aside from our personal reasons, I've also outlined our principled reasons for this decision. Almost every large Chinese Internet company has contacted us to see if we're interested in an acquisition or a strategic investment, but we've always refused.

So to our partners: please relax, Wandoujia will remain independent for a long time to come. After Baidu's acquisition, the competition will grow even stronger, which has us excited too. As China's Internet Giants enter in from all four corners (hello, Baidu, Alibaba, Tencent, and Qihoo), we hope to establish close partnerships with those companies that, like us, have a wholehearted focus on building great products for users. We want to let those good products grow and prosper, not stand idly by as China's mobile Internet slips into another era of 'daddy's boy', where the incumbents are the only option.

 

About the author
Junyu Wang is the 27-year-old co-founder and CEO of Wandoujia. He formerly worked in UX at Google.

About Wandoujia
Wandoujia is based in Beijing with 160 employees and three cats.

Wandoujia is currently the second-largest Android app store in China--and far ahead of other app stores like HiMarket by 91--according to MAU statistics from the third-party firm iResearch.

The original Chinese essay is available here: http://www.wandoujia.com/blog/thoughts-on-baidu-netdragon-deal Additional background on the market can be found here (in Chinese): www.cnmo.com/news/271729.html