Zhou Hongyi Knows the Fate but Doesn’t Accept It

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Text/Wei Zhou

Source: Good-looking business (ID: IGreatBI)

In 2022, when the Internet is bleak, Zhou Hongyi has harvested two IPOs in succession.

On December 12, Huafang Group (HK: 03611), the parent company of Huajiao Live, was listed on the Hong Kong stock market. Zhou Hongyi holds 38.21% of the shares, is the largest shareholder and the chairman of the company.

On November 29, 360 Digital, with Zhou Hongyi as the largest shareholder and chairman of the board of directors, just completed its secondary listing on the Hong Kong Stock Exchange. 360 Digital is also the first credit technology platform to be listed on both US and Hong Kong stocks.

So far, Zhou Hongyi actually controls four listed companies; in addition to Huafang Group and 360 Digital Technology, there are also A-share listed 360 (601360) and Hong Kong-listed Master Lu.

There are only a handful of people in the domestic Internet industry who can achieve the level of owning a number of listed companies, such as Lei Jun, Ding Lei, and Li Bin.

Although he harvested two IPOs in one go during the capital winter, Zhou Hongyi was extremely low-key—not only did he not have relevant publicity, he didn’t even go to the bell ringing scene.

Prior to this, Zhou Hongyi had not been the “leader” for many years. The gap between Qihoo 360 and the first-tier companies is also widening. At present, the market value of 360 (601360) is only equivalent to about 1/6 of Baidu’s market value; compared with Tencent, Xiaomi, etc., it is far behind.

In the first half of the Internet, Zhou Hongyi has been fighting to be the protagonist. Because of this, he has fought with many Internet giants such as Li Yanhong, Lei Jun, and Ma Huateng. He is also known as the “Internet fighter”, and he seems to have a lot of fun fighting against the sky, the earth, and people.

Now, it seems that Zhou Hongyi, who is so jealous, will never come back. Zhou Hongyi, 52 years old this year, said that in the past, he suffered a lot of character losses, but now he is trying to reflect on himself, be kind to others, and create a peaceful development environment for the company.

With the opening of the second half of the Internet, he believes that Internet companies should follow the general trend and be willing to play a supporting role, but they can only play a supporting role. “If you are still obsessed with obsession at this time, and always take yourself as the protagonist, and fight for the first brother in the world, this is all lack of vision.”

“Be a supporting role and live forever”

16 years ago, Zhou Hongyi took Qihu 360, which he founded, to tear a hole in the antivirus software market for free, and quickly rose to become the security software with the largest number of users in China.

In the process of 360’s growth, the “3Q War” between it and Tencent in 2010 was a milestone event, and 360 became famous through this battle.

In 2011, Qihu 360 landed on NASDAQ under the label of “China’s largest Internet security company”. During the roadshow to investors, Qihoo 360 called itself “China’s Facebook” and cited third-party statistics at the time saying that they had 339 million monthly active users, making them the third largest Internet company in China, second only to the social world on Tencent and Baidu.

In 2016, 360 was privatized and delisted from the US stock market; in 2018, it landed on the A-share market through a backdoor. 360’s market capitalization in the A-shares once reached the 500 billion yuan mark, but has since declined all the way, and now it is less than 50 billion yuan.

Behind this, 360 continues to fall behind in the mobile Internet era, and the core factor is the loss of growth imagination.

In the mobile Internet era in the past 10 years, Zhou Hongyi has tried to seize many outlets, but most of them ended in failure, and 360 failed to create new miracles.

When the Internet entered the second half, the wave of industrial digitalization swept across, and Internet giants such as BAT extended and transformed from the consumer Internet of ToC to the industrial Internet of ToB, looking for the second growth point. They humbly position themselves as “enablers”, and help B-end customers realize digitalization by rolling up their sleeves and working in the field.

In the second half of the Internet, what is the positioning of 360?

As a person who likes to catch the wind, Zhou Hongyi will obviously not let go of the opportunity of ToB.

As early as April 2019, 360 announced the launch of the government-enterprise security 3.0 strategy, formally entered the government-enterprise field, and carried out related commercialization business.

In January 2022, Zhou Hongyi announced in an internal letter to all employees that 360 has fully transformed into a digital security company. He mentioned, “China is setting off a wave of digital economy. For 360, this is a huge opportunity and an emerging market.”

“Go to the mountains and go to the sea to help small and micro enterprises” is the new corporate mission proposed by 360 this year. According to his explanation to the outside world, “going up the mountain” refers to going to the peak of science and technology, developing hard technology that escorts the national strategic security, and solving the “stuck neck” problem; .

“Helping small and micro enterprises” is a new mission that 360 has added to itself this year. In Zhou Hongyi’s view, there are many small, medium and micro enterprises in China, which have solved many employment problems and are also the supply chain of many large enterprises. Digitalization cannot leave them behind.

Throughout 2022, Zhou Hongyi has presented the new mission of Amway 360 on many important occasions and mainstream media.

In the second half of the Internet, Zhou Hongyi emphasized that 360 should play a more humble role – “supporting role”. In an exclusive interview with “Chinese Entrepreneur” this year, he bluntly said that in the real business world, the protagonist dies quickly, and the supporting role will always live. Recognizing and adapting to the general trend, Zhou Hongyi, who behaves in a low-key manner, still has ambitions to become a world-class digital security company.

However, the dream is big, and the reality is also very challenging.

Since the transition in 2019, the security business has grown significantly faster than the Internet business, and its share of total revenue has gradually increased, from 3.68% in 2019 to 21.5% in the first half of this year.

But the Internet business is still 360’s largest source of revenue so far. In the first half of 2022, the Internet business achieved revenue of 2.85 billion yuan, accounting for 59.1% of the company’s total business.

Internet business mainly includes Internet advertising and services, and Internet value-added services represented by games; the former accounts for a relatively large proportion, with revenue of 2.309 billion yuan in the first half of this year, accounting for about 47.9% of total revenue.

In other words, 360 is still an Internet advertising company with the core of selling traffic.

Unfortunately, Internet business revenue has been shrinking since 2019. Among them, Internet advertising and services have experienced a significant decline, with a year-on-year decrease of 24.52% in the first half of this year; it also dragged down the overall revenue of 360 to continue to decline.

The slumping stock price shows that the progress of the security business cannot support the growth story of 360.

Marching towards a world-class digital security company, 360’s trump card, in addition to the tens of billions of funds in its account, it also has a team that has accumulated many years in the security field.

As a 17-year-old company, how to maintain the enterprising spirit of the team is a realistic problem that 360 needs to face. According to media reports, in September this year, Zhou Hongyi warned the team in an internal letter to “stay hungry and maintain combat effectiveness” and “startup companies cannot become Jiuxianqiao Nursing Home”.

From “Cannon in Red” to “Uncle in Red”

In the past many years, Zhou Hongyi has been fighting against the sky and fighting against the ground, and he has been named “Red Clothes Cannon”. “Red Clothes” is a homophony of “Hong Yi”. In addition, wearing red clothes is also his consistent public image.

Now, he likes to call himself “Uncle Red”. On Douyin, his account name is “Uncle Hongyi Zhou Hongyi”.

From “Cannon in Red” to “Uncle in Red”, Zhou Hongyi’s temperament seems to have changed drastically. He is no longer rebellious and killing the Quartet. Now on online platforms, he gives career advice to young people, and also sends some funny videos, such as “You before school and you after school”; sometimes he calls himself “Xiao Zhou”; sometimes he puts down his figure Self-deprecating, saying that my English level is a little higher than “are you ok”.

In Zhou Hongyi’s discourse system, not only can’t feel the “smell of gunpowder”, but more “mainstream and correct”. He said in a video, “I must help the country solve the problem of being stuck”; “protecting the national network security is who I am”.

Zhou Hongyi, who used to love shooting, now spends more time practicing rock climbing. He also co-founded a rock climbing gym with Wang Shi. When Internet star founders either kept silent or retreated to the second line, Zhou Hongyi, 52, refused to retire. He said that he still had a lot to do, and he would work for the health of the motherland for 50 years.

Before Zhou Hongyi, the last public figure who changed his temperament and reconciled with himself was Han Han. He changed from a young man criticizing the current situation to a rational middle-aged businessman. Many people say that Han Han has matured.

Zhou Hongyi’s transformation from “cannon in red” to “uncle in red” makes people sigh, regret and miss. He was once a symbol of an era on the Internet, representing vitality and the sound of gunfire.

Fortunately, at the age of 50, he has not yet accepted his fate and is still tossing.

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