Microsoft's Lu on Bing: 'A First Step'

During a decade as head of development for Yahoo's Internet search division, Qi Lu almost never granted press interviews. But as head of Microsoft's Online Services Group, a job he took in December, the 47-year-old Lu has accepted one of the highest-profile challenges in all of business: trying to keep Google (GOOG) from increasing its dominance of Internet search.

On May 11, BusinessWeek senior writer Peter Burrows sat down with Lu in the first interview he's given since starting at Microsoft (MSFT) in January.

Recruited directly by Microsoft CEO Steve Ballmer, Lu certainly has the technical chops for the job. He helped Yahoo (YHOO) launch its search effort. He was instrumental in bringing to market Yahoo's oft-delayed Panama advertising platform. His legendary work habits include 20-hour days that start with a five-mile run at 4 a.m. Yahoo colleague Dave Karstadt says that during business travel from the Bay Area to Los Angeles, Lu routinely found a couple of empty seats and curled up to grab an hour of shut-eye. "He'd wake up and be ready to rock," Karstadt says.

In the interview, Lu was polite and professorial, often taking refuge from probing industry questions by moving to a whiteboard to explain the inner workings of the Web or the thinking behind Microsoft's new search offering, Bing. Through it all, he stressed that Bing was only the first step of an arduous journey. Edited excerpts follow:

Had you planned on going to Microsoft when you left Yahoo in August?When I left my previous company, the [possibility] of working for Microsoft was completely unexpected. I was thinking of either joining an early-stage company, or potentially going back to China. But I had an opportunity to speak to Steve [Ballmer], and the opportunity of doing this job came up. And the more I thought about it, the harder it became for me to resist. That's because of Microsoft's commitment [to the search market]—not only in terms of the size and the longevity of the investment it plans to make, but also because of Steve's commitment to do it the right way.

Most consumers say they're happy with Google. What's missing?When you have a large degree of [market-share] concentration, the pace of innovation can slow down. As a result, we won't be able to move at the pace that we ought to. And search occupies a special place in terms of its importance. On the consumer side, it pretty much [determines] how traffic flows on the Web, to a large extent. And on the business side, the amount of economic wealth that's being created is very, very substantial. So it's very important that we have credible competition, as this will create opportunities for many startups.

You've had a hand in the development of the search industry from the start. How has the industry changed, and where is it heading?If you look backwards at the last 10 years, search engine technology has evolved and improved by and large, but collectively we haven't gone much beyond finding sites easily for the users. But if you try to go beyond finding Web sites to finding people, products, organizations, relationships—all the common day-to-day tasks a user has—then today's search does not offer a compelling experience.

That sounds like a much broader thing than most people think of as search today. Is search the right name for what you're trying to accomplish?When you see a query box, you type in it. [The assumption is that] it will give you what you want. But [consumers'] expectations have increased. They are using that search box for all kinds of things: to purchase product, to plan a vacation, to research a particular organization, to study a particular concept.

Why didn't you do this at Yahoo?The [key] practitioners in this space share a similar vision. But two critical components are required. One is a set of vastly scalable computing infrastructure. You need to have the capability and the financial resources to invest. And you require a world-class R&D team that has top-notch experts in all the critical disciplines, whether it's in information retrieval, machine learning, language processing, or statistical modeling. That's what makes Microsoft's opportunity so compelling, because here we have a company that has the heritage of being a technology company. And we have the financial resources and the commitment.

Why will Microsoft be able to better compete with Google now, compared with the past?Increasingly we're able to model the user's intent with a higher and higher degree of confidence. That's one. Second, the Web as a [medium] has become richer. In the early days the Web was full of text documents. Now you have images. Now you have videos. Now you have audio. So if you can build a search engine that really understands the user's intent, you can build an experience that's very compelling and rich. Search engine B can do the same thing, but using a slightly different mix of the rich content out on the Web. They both may be compelling, but they're different. … We believe there are opportunities for multiple players to compete and to do well. And the beneficiaries are the consumers.

Does the culture of Microsoft's Internet unit need to change?As we move through our journey, we have to…innovate at a faster rate… Ultimately, you win in the marketplace by out-innovating your competitors. But all these things will take time to build. It takes time to set strategies, set up the foundations, to [improve] all of the processes. The most important thing today is working together as one team. You always want world-class people, but with world-class people working together as a team, you can unleash much, much bigger, greater creativity.

I understand from everyone that you are a very hard worker. Some of your colleagues call it "Qi time."One of my key values is work ethic. I always tell my teams that I absolutely respect every individual's choice of their work/life balance. Ultimately, without a happy family, you don't have a happy employee. But for me, the work is so compelling that I want to devote all my energies to it. So, I would say I'm usually all in, with every ounce of my energy. I feel personally blessed to be working on things that will truly have enduring impact on the world.

Is it true you get up at 3 o'clock every day?Sometimes earlier, sometimes—it doesn't matter what hour. I just tend to get going (laughter). Each day I run for four or five miles. That's the best way to recharge the battery.

Where do you think you got this work ethic?I grew up in a harsh environment. It was several generations back in terms of physical conditions. You don't have water. You don't have electricity. You don't have soap. You don't have toothpaste. And the [village where I lived] had about 400 families, one school and one teacher. I feel very blessed because I'm probably one of the few who ended up getting to college in China, and ended up having the opportunity to go to the United States.

How did you choose technology?I wanted to go to a college that specialized in building ships, because working in a shipbuilding factory was considered one of the best jobs. But it required certain physical fitness. You had to weigh 50 kilograms, so I was too thin. And I'm near-sighted, so I [couldn't] go to study physics, which was considered attractive because there was a chance you [could] go to the United States to get your PhD if you did really well. So the only thing left was mathematics and computer science. With computer science, at least you may have a chance to work in a radio factory if you graduate. If you do math, the best you can do is be a middle school teacher.

Can Microsoft regain a lot of market share with Bing?We believe we will be able to build a compelling and a differentiated search experience for our users. But there's one important caveat. This is a first step in a long journey. There's a lot more that needs to be done.

Before it's here, it's on the Bloomberg Terminal.