Known as the father of rogue software in China, Zhou Hongyi, Chairman and CEO of community website Qihoo.com, has now realized his dream of becoming a free network security service provider. 

THE IDEALIST: Zhou Hongyi, Chairman and CEO of Qihoo.com, says truly successful Internet startups require idealists who persistently pursue their business dreams (Courtesy of Qihoo.com)

The controversial 39-year-old entrepreneur founded Beijing 3721 Technology Co. Ltd. in November 1998, which made a fortune offering Chinese real-name website services. Such services make it easier for novice Internet users in China to access websites by typing keywords in the websites' Chinese names in the address bar of a Web browser.

"Your personality decides your destiny," Zhou, once a choleric, but fearless and aggressive figure, told Beijing Review in an exclusive interview. "I used to be too earnest to prevail over my rivals, and this [situation] was like a double-edged sword-it hurt me and my rivals alike."

Zhou said he has been driven by his compelling urge to win and attain personal fulfillment for the many losses and mistakes he had made in the past 10 years. Most of all, he regretted selling 3721 technology to U.S.-based Yahoo! Inc., calling it his biggest mistake.

Still, Zhou said he felt lucky to have the virtues of an idealist: perseverance and integrity. He said he would never surrender himself to setbacks, and that instead, they would foster more courage and passion in him.

"Customer satisfaction will decide the future of a company-that is one lesson I have learned from my past experience," Zhou said.

Only the paranoid survive

Calling himself an idealist and a worshipper of Apple Computer's "Think Different" slogan in 1997, Zhou said he has dreamed of doing something that nobody else has ever done and that could have an influence on millions of people.

He has cultivated that dream since his college years when he registered two small companies to sell software he developed, although they both ended in failure.

Zhou established his fame through 3721.com, which was sold to Yahoo! for $120 million in November 2003 and he became President of Yahoo! China in March 2004. Thanks to the 3721 money machine, which yielded nearly 200 million yuan ($29 million) in annual revenue at its peak, Yahoo! China turned its first profit in 2004.

Zhou then made inroads into a variety of Internet services such as the Web searching and instant messaging. After several fruitless exchanges with Yahoo! headquarters about more innovations, Zhou realized he did not fit in with a corporate culture that he said was "typical of an aging company."

After he left the company on August 31, 2004, he became a partner in IDGVC Partners, a U.S. venture capital firm founded by International Data Group (IDG), in September 2005. Later, he became an angel investor in several Internet companies in various niches. This experience offered him a new angle to reflect on China's environment for Internet business startups.

In March 2006, Zhou became Chairman of Qihoo.com, a community website devoted to user generated content search and aggregation, and soon developed the 360 Safeguard, a security tool for free download, to combat rogue software.

Now, Zhou has under his wing the 360 Safe Center, a free Internet security platform, which won over a huge customer base of 200 million users by the end of last year, Qihoo.com, focusing on question-and-answer interactions among netizens and Qikoo.com, which inherited from Qihoo.com the content aggregation business.

With this colorful experience, Zhou had been a witness to the first 10 years of the Internet development in China. While reminiscing about the golden days of the Internet, Zhou said he was lucky to start his business in a frontier industry. The Internet, a business where one hardly met competitors or regulations 10 years ago, was open to all kinds of exploration for a successful business model, he said.

Over the decade, local companies figured out ways to do businesses online, and many managed to strike their first gold, he said. But Zhongguancun hi-tech area in Beijing, where many IT businesses are located, was not a counterpart of Silicon Valley, because "entrepreneurs here are under great pressure to make money, which could make idealists to give up their creativity and independent thinking and come to terms with the profit-seeking nature of entrepreneurship."

Only the paranoid survive, and a truly successful business startup requires idealists with persistent efforts to pursue their dreams through concrete plans and executions, he said. One must be prepared for numerous failures, verify the feasibility of every idea, pay attention to details, keep the cash flow healthy, and focus on core products and build upon their advantages before diversifying products and services, he said.

Zhou vs. Zhou

After Zhou invented the 3721 Internet Assistant, a plug-in tool for Microsoft's web browser, Internet Explorer, he hooked a great number of users in early 2001. The lucrative market compelled other Internet companies to follow suit. That practice later gave rise to the proliferation of rogue software on the Internet in China in 2005 and 2006.

Known as the father of rogue software, or malware, Zhou became the center of criticism in 2006 when all kinds of malware, including pop-up ads, ad-ware, spyware and Trojan horses programs (Trojans) launched more attacks on computers than viruses for the first time in China.

"Compared with today's rampant rogue software, 3721 technology's software is high quality, barely harassing the user or launching sneaky attacks, except for the fact that it can be installed on a computer without the user's permission and cannot be uninstalled easily, " wrote Hong Bo, an IT industry analyst, in his personal blog.

As the one who opened a Pandora's Box, Zhou said he was responsible for eradicating the malware and restoring a clean Internet, customer confidence and a healthy business environment.

Qihoo launched the anti-malware campaign in July 2006 through 360 Safeguard, its Internet security tool that was made available as a free download. At the same time, Qihoo was able to offer Kaspersky Antivirus software for six-months for free through a partnership with Russian anti-virus software developer Kaspersky Lab Inc.

Zhou's anti-malware move met vehement criticism from many parties involved, including Alibaba.com, which inherited 3721's legacy from Yahoo! At its peak, about 90 percent of Chinese netizens used the two major 3721 services, Zhou said.

"We can make money without being evil," Zhou said. "It's the right thing to do if it benefits users, promotes technological advances and product upgrades or does some good for the industry."

The tool, initially designed to gain some positive publicity for Qihoo.com and repair Zhou's tainted image in China, later became Qihoo's core business, Zhou said. Last March, company investors injected a total of 360 million yuan ($53 million) to facilitate his dream goal of spinning off the 360 Safeguard and shaping it into a free Internet security platform. It will remain his top priority in the years to come, he said.

I have a dream

Zhou pledged to permanently offer all his products for free at the 360 Safe Center, because he thought Internet security services are the same as free basic Internet services such as e-mail accounts, web searches, and instant messaging.

Zhou's free security campaign has had a great impact on traditional anti-virus software developers who have made millions selling products and charging member fees.

"Traditional anti-virus software companies have had to adapt, find other profit models, and transform themselves from software companies to Internet companies," Zhou said. "They may thank me for giving them a push towards this trend when they survive the painful transition."

Zhou said his company wants to cooperate with more future-oriented anti-virus software companies to promote this trend. After Kaspersky, U.S.-based ESET LLC partnered with the 360 Safe platform. Zhou's company offers its NOD32 Antivirus software to users free of charge for six months. By the end of last year, more than 200 million users had downloaded and installed the 360 Safeguard.

During the same period, Zhou and his software engineers developed their own anti-Trojan engine, the core component of their anti-Trojan tool. They also enhanced their security product portfolio, including the 360 Safeguard, a web browser with security features, a virtual safe for online banking and gaming accounts and other personal information, and a firewall, at the 360 Safe Center.

Zhou said he would not consider making money until 80-90 percent of Chinese netizens install the 360 Safeguard. As a profit model, he plans to charge value-added services that not everyone needs such as identity authentication, virtual property protection and data protection.

Qihoo 360 became profitable last year by marketing the antivirus products of Kaspersky and ESET LLC and through its advertising sales, Zhou said.

He added that his three goals for Qihoo now are to deliver better performance than 3721.com in terms of customer satisfaction and experience, make some breakthroughs in search technologies within community websites, and list the company on a stock exchange for higher investment returns for both investors and employees.