The Hotel Room 'Conspiracy': The $1.2M Founding Pact of Robin Li and Eric Xu
What you'll learn:
- • A perfect founding team requires not just complementary skills, but also a deep alignment of values and vision.
- • When pitching to investors, you're not just selling a business plan; you're selling your own credibility as a founder and your dream.
- • Daring to abandon present comfort in the face of a massive historical opportunity is an extremely rare entrepreneurial quality.
Prologue: All Was Ready Except the East Wind
In the summer of 1999, a storm was raging in Robin Li's heart.
His desire to return to China and start a company was uncontrollable. His RankDex patent was his ace in the hole, and the massive opportunity on the eve of China's internet explosion was a clearly visible future.
But he knew he couldn't fight such a colossal battle alone. He needed a partner, a co-founder who could fight alongside him and compensate for his weaknesses.
He also needed money. Not a small amount, but enough seed funding to establish a foothold in the Chinese market and build a technological barrier to entry.
At this point, Robin Li was a classic tech geek. He was a master of technology, but he knew next to nothing about management, fundraising, or market operations. He needed to find the person who could give his technological dream its commercial wings.
His gaze fell upon his best friend—Eric Xu.
Act I: From Biochemistry to the Internet
Eric Xu was Robin Li's alumnus from Peking University and his close friend from their time studying in the US. Unlike Robin, Eric was a Ph.D. in biochemistry and already a successful executive at a major American biotech firm, with a great career and a happy family.
Asking a biochemist, accomplished in his own field and a complete novice to the internet, to give up everything and return to China for a high-risk venture in search engines sounded like a fantasy.
Robin Li prepared for a long time. He didn't start by talking about the startup. Instead, he first sent Eric the manuscript for his book, "Business Wars in Silicon Valley." In it, he analyzed the successes and failures of major tech companies, his passion for technology changing the world evident in every line.
Eric was captivated. Next, Robin invited him to the campus of a California university for a conversation that lasted several hours.
"Eric," Robin said, looking him straight in the eye with unwavering conviction, "the opportunity in the Chinese internet is unprecedented. We have world-class technology right now. If we don't go back, we will miss an entire era."
He painted a grand vision of a Chinese-language search engine, analyzing the potential market and business models. He didn't exaggerate; with the rigor and logic of an engineer, he broke down a colossal dream into executable steps.
Eric was moved. He didn't understand search technology, but he understood the fire in Robin Li's eyes and the enormous historical opportunity behind it. More importantly, he trusted Robin.
After just one night of consideration, Eric made his decision: he would give up everything in the United States and return to China with Robin Li to start a business.
Act II: A $1.2 Million Vote of Confidence
With a co-founder on board, the next challenge was money.
Robin Li and Eric Xu pitched to nearly every top venture capital firm in Silicon Valley. At first, they had little success. Many investors were skeptical of two "tech guys" with no business background wanting to start a company in the distant Chinese market.
The turning point came when they met with investors from Draper Fisher Jurvetson (DFJ) and IDG Capital.
During the roadshow, Robin didn't dwell on the market's size. Instead, he spent most of his time explaining his deep understanding of search engine technology and the disruptive power of his RankDex patent.
One investor later recalled, "Robin didn't sound like an entrepreneur asking for money; he sounded like a top scientist giving a sermon. His passion and confidence in the technology were incredibly infectious."
It was this absolute professional confidence that ultimately won over the investors. They realized that this slightly shy engineer in front of them could be the one to replicate the "miracle of Google" in the Chinese market.
After several tough rounds of negotiations, they successfully secured $1.2 million in angel investment from DFJ and IDG.
In China's internet startup scene at the time, this was a "huge sum." It not only solved Baidu's initial funding problem but, more importantly, it represented a massive vote of confidence from top American VCs in the Robin Li and Eric Xu partnership.
Epilogue: The Lights of the Resource Hotel
On December 24, 1999, Christmas Eve, Robin Li and Eric Xu boarded a flight from the US to Beijing.
On January 1, 2000, in two small rented rooms at the Peking University Resource Hotel, "Baidu Online Network Technology (Beijing) Co., Ltd." was officially registered. The founding team had eight people, seven of whom were engineers who had followed Robin back from the United States.
At the celebratory dinner for Baidu's founding, they drank one-yuan bottles of Yanjing Beer. Robin Li stood up, raised his glass to the partners who had given up comfortable lives abroad to join him on this adventure, and said just one thing:
"From this day forward, we will fight together for the dream of a technologist."
At that moment, outside the window was the winter night sky of Beijing. Inside, a few passionate, shining ambitions burned brightly. A new era had quietly begun in an unassuming hotel room.