Can Charles Zhang Conquer His Demons and Make Sogou a Serious Search Challenger in China?

Sogou, the search subsidiary of Sohu, has been a player in China’s search engine market for a long time, but it has never achieved any kind of dominance. Right now, according to Bloomberg, it has about 5.4 percent of China’s search engine market, compared to Qihoo’s 8.2 percent and Baidu’s 82.3 percent. Sohu’s web portal sites and its video platform also can’t match the dominance of their competitors, and the only area where the company really does well is in the difficult-to-monetize area of Chinese language input method software.

But among other things, the company seems to be troubled by the apparent personal problems of its CEO. Sohu head honcho Charles Zhang only this year returned from a yearlong sabbatical taken for personal reasons. In an interview published by Bloomberg last week, Zhang said of the sabbatical:

I missed out on some things, but that’s life. My goals in life have changed, and work is very important now.

But investors could be forgiven for wondering how focused Zhang really is on work when just a couple months ago (well after he returned from his sabbatical) he told an interviewer:

I think there’s something wrong with me. I truly have everything, and yet I am so miserable. Happiness is totally unrelated to how much money you have.

He also spoke about how success had changed him into a perfectionist and maybe even made him a little crazy — he says he thought he could live to age 150. One has to wonder, then, what exactly happened between March, when he gave that interview, and this month when he talked to Bloomberg. Has he really gone from being totally miserable and worried about success to being focused completely on the business and success again? It seems hard to believe, and it also makes you wonder what Zhang will be saying a couple months from now.

You also have to wonder where Sohu and Sogou are going to be in a couple of months, if the latter even still exists. Bloomberg’s report suggests that Sogou is looking for strategic investment to challenge Baidu more strongly in the search and advertising markets, but the Chinese press has been full of rumors that the company is on the verge of being bought out by Baidu or Qihoo (something that no one seems willing to directly deny).

So is Sogou about to use the $500 million it has in cash to take a shot at grabbing a larger slice of the search market, or is it about to get absorbed by competitors? Is Charles Zhang back and ready for action again or is he still fighting whatever personal demons led to his sabbatical and his more recent admission to being “so miserable”? I have no idea.

I do know, however, that it would be foolish to write off the company given that it came up with what’s probably the most unique search product I’ve seen in the past year. Unfortunately, it seems search input hasn’t yet caught on the way I think it could — and perhaps should — but nevertheless it’s a revolutionary idea and a company that can produce this kind of innovation may have a good shot at grabbing a bigger slice of the search engine market over the long run. I’m not sure what the heck is going on behind closed doors at Sohu, but even so, I wouldn’t bet against it.