Death of AI Pioneer Tang Xiao'ou, Founder of $40 Billion SenseTime: What's Next for the Company?
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SenseTime and the funeral working group of Professor Tang Xiao'ou issued an obituary yesterday, announcing with profound sorrow the passing of the founder, artificial intelligence scientist, director of Pujiang Laboratory, director of Shanghai AI Laboratory, and professor at The Chinese University of Hong Kong, Tang Xiao'ou, who passed away at 23:45 on December 15, 2023, after ineffective medical treatment.
The obituary stated that Professor Tang Xiao'ou was an outstanding representative in China's artificial intelligence field. He was erudite, rigorous in scholarship, pragmatic and truth-seeking, innovative, and possessed a strong sense of national responsibility and strategic vision. He selflessly mentored younger scholars, was committed to innovation, and courageously shouldered heavy responsibilities, dedicating all his energy to computer science research and actively promoting the development of original technologies, making outstanding contributions to the advancement of China's AI field. For over two decades, he meticulously nurtured students, leaving a legacy of disciples worldwide. They will carry forward Professor Tang Xiao'ou's spirit and philosophy, forging ahead courageously on the path of AI development.
The obituary states that during this sorrowful moment, we extend our deepest condolences to Professor Xiaoou Tang's family! Professor Tang's wisdom, passion, and endless exploration of science will forever inspire us to remain true to our original aspirations and forge ahead. The company mission he established - "Uphold originality, let artificial intelligence lead human progress" - will motivate all SenseTime employees to scale new heights and complete his unfinished work. May Professor Xiaoou Tang rest in peace!
Global "Pioneer" and "Trailblazer" of Facial Recognition Technology
Records show that Xiaoou Tang was born in 1968 in Anshan, Liaoning Province. He was an artificial intelligence scientist, Professor of the Department of Information Engineering at The Chinese University of Hong Kong, Distinguished Fellow of the Faculty of Engineering, and co-founder and former chairman of SenseTime.
Tang Xiao'ou graduated from the University of Science and Technology of China in 1990. He obtained his master's degree from the University of Rochester in 1991 and his Ph.D. from the Massachusetts Institute of Technology in 1996. After completing his studies, he joined the Chinese University of Hong Kong. In 2001, he founded the Multimedia Laboratory at the Chinese University of Hong Kong. From 2005 to 2007, he worked at Microsoft Research Asia as the director of the Visual Computing Group. In 2008, he served as the director and researcher at the Multimedia Integration Technology Laboratory of the Shenzhen Institutes of Advanced Technology.
Tang Xiao'ou is widely recognized in the industry as a "pioneer" and "trailblazer" in global facial recognition technology.
His research areas include multimedia, computer vision, pattern recognition, and video processing, with over 200 published papers in these fields.
In March 2014, Tang Xiao'ou's team published research results based on their original face recognition algorithm, achieving an accuracy rate of 98.52%, which for the first time surpassed human eye recognition capability (97.53%).
Starting from June 2014, the DeepID series algorithms developed by Tang Xiao'ou's laboratory gradually improved the face recognition accuracy to 99.55%, ushering in the era of technological implementation in the entire face recognition industry.
Tang Xiao'ou founded the artificial intelligence company SenseTime in 2014. Xu Li, who completed his three-year Ph.D. at The Chinese University of Hong Kong and subsequently spent three years as a postdoctoral researcher, joined SenseTime in early 2015 and later became its CEO.
Tang Xiao'ou always retained the purity of an academic, being very gentle. Unlike the 'wolf culture' advocated by many large companies, Tang Xiao'ou consistently emphasized that SenseTime was a company promoting a culture of love and empathy—the 'black sheep' culture—to do things no one else had done or even thought of.
In July 2023, Tang Xiao'ou spoke at the opening ceremony of the World Artificial Intelligence Conference, saying that every night before bed, he would listen to Yu Qian's crosstalk while thinking, 'How could a machine surpass such an interesting soul? I don't believe it.' He also quoted a line from Yu Qian, whom he considered an 'interesting soul' that AI could hardly surpass, from the movie Teacher Hao: 'It’s not that I met you in the best time of my life, but because I met you, I had the best time of my life.'
Passed Away Due to Sleep Apnea
According to sources close to Tang Xiao'ou, he had long suffered from poor sleep quality.
An industry insider pointed out that Professor Tang Xiao'ou passed away due to sleep apnea on December 15, 2023. "Shocked and heartbroken, Xiao'ou was a meritorious figure in the AI field and also our dear friend and family member."
Xu Li, CEO of SenseTime, commemorated Professor Tang Xiao'ou, saying: "Meeting you gave us the best times of our lives."
A senior SenseTime executive said, "After 17 years of acquaintance, I never imagined bidding farewell in this manner. While writing the obituary, tears blurred my vision—there were so many words yet I didn't know where to begin. If you see this in heaven, would you still meticulously weigh each word with a scientist's precision as usual, then say 'Stay humble, shine without dazzling'?... Today I received many calls. One entrepreneur said they'd assumed you were a pedantic scholar, only to discover upon meeting how incredibly funny you were! Yes, only a soul as vibrant as yours could create infinite possibilities. Professor Tang, may you find peace in heaven, keeping that joyful and fascinating spirit! We'll forever cherish you and your witty anecdotes."
Another SenseTime executive remarked: "You truly never know whether tomorrow or the unexpected comes first. A star has fallen, heaven envies genius—we mourn deeply."
An investor profoundly memorialized Tang Xiao'ou: "At the dawn of the AGI era, Professor Tang founded SenseTime. At CUHK, he nurtured generations of outstanding AI scientists, propelling China's AI research forward by leaps. The ancients spoke of achieving merit, virtue, and wisdom—all brilliantly embodied in Professor Tang. May our professor rest peacefully, filling heaven with more intelligence and laughter."
Fu Sheng, Chairman and CEO of Cheetah Mobile and Chairman of OrionStar, expressed his condolences: "It's really so sudden! I had some exchanges with Professor Xiao Ou before, and he struck me as an entrepreneur with a strong scholarly demeanor! My deepest condolences. Fellow entrepreneurs, please take care of your health! Health comes first!" Fu Sheng also added, "Everyone should check their myocardial enzymes, an easily overlooked indicator, as COVID-19 could potentially cause myocardial damage."
As of now, SenseTime has yet to achieve profitability. From 2018 to 2022, SenseTime's revenues were 1.853 billion yuan, 3.026 billion yuan, 3.446 billion yuan, 4.7 billion yuan, and 3.809 billion yuan, respectively. However, net profits attributable to the parent company were all losses, recording net losses of 3.428 billion yuan, 4.963 billion yuan, 12.158 billion yuan, 17.14 billion yuan, and 6.045 billion yuan, respectively. In the first half of 2023, the net loss reached 3.14 billion yuan. The total losses over five and a half years amounted to 40.829 billion yuan.
Image source: wind
Moreover, the well-known short-selling firm Grizzly Research released a short report on November 28 this year, alleging that SenseTime artificially inflated revenue through highly suspicious circular revenue practices and had a large and growing amount of accounts receivable that might be unrecoverable.
SenseTime quickly denied the allegations through a Hong Kong Stock Exchange announcement, stating that the report contained pieced-together old information, including numerous false statements and misinterpretations of the company's business.
However, it still had a certain impact on the secondary market. Among the 13 trading days from November 28 to December 17, SenseTime's stock fell in 10 of them. As of December 17, SenseTime closed at HK$1.26 per share, with a total market capitalization of HK$42.171 billion (approximately RMB 38.4 billion), representing an 80% drop from its peak period.
The prospectus and financial reports show that SenseTime's business spans four major areas: smart city, smart business, smart living, and smart automotive. Among these, the smart business and smart city segments account for over 80% of the company's revenue.
This trend continues. The 2023 semi-annual report shows that among the four major business segments, the Smart Business segment generated revenue of 854 million yuan, a year-on-year increase of 50.2%. The second-largest revenue source, the Smart Living segment, achieved revenue of 312 million yuan, up 6.7% year-on-year. Meanwhile, the Smart City and Smart Automotive businesses saw declines of 57.7% and 30.5%, respectively.
To this end, SenseTime invested heavily in large-scale infrastructure and high-performance computing in 2022. In April this year, SenseTime launched the large model system 'SenseNova'. This includes the natural language processing model 'SenseChat', the text-to-image model 'Miaohua', and the digital human video generation platform 'Ruying'. Similar to ChatGPT.
Xu Li, co-founder of SenseTime, stated, "This half-year marks an exceptionally critical development period for SenseTime. Our 'Rixin' large model system and AI infrastructure SenseCore have delivered outstanding performance. Seizing new opportunities brought by technological breakthroughs, we released China's first large language model with comprehensive capabilities surpassing GPT-3.5-turbo, enabling our generative AI-related revenue to achieve a 670.4% year-on-year growth. We aim to provide the industry with stronger large model capabilities, helping our users create disruptive products in the era of generative AI."
Image source: SenseTime official website
In addition, SenseTime has made numerous external investments covering servers, vehicle networking, data centers, automotive cameras, AR glasses, and more. Among these, the unmanned retail distributor Youbao Online (2429.HK) successfully listed on the Hong Kong Stock Exchange on October 24.
SenseTime participated as a cornerstone investor in Youbao's current issuance, subscribing to HKD 27.22 million. However, just one month after Youbao's listing, its stock began intermittent declines. As of December 17, it closed at HKD 15.06 per share, with a total market capitalization of HKD 11.744 billion (approximately RMB 10.6 billion). Moreover, Youbao is deeply mired in losses, accumulating a total loss of RMB 1.794 billion from 2020 to 2022 and the first half of 2023.
Amid this difficult transition, the passing of Tang Xiao'ou has further exacerbated the challenges for SenseTime.
"As the soul of SenseTime, Tang Xiao'ou's passing will inevitably affect the company's daily operations and future development. He not only possessed extensive experience and profound expertise in corporate management but also had a wide network and resources in the AI field. His absence may influence certain aspects of the company's decision-making and progress." said Wang Peng, Associate Researcher at the Beijing Academy of Social Sciences.
However, Guo Tao, an angel investor and AI expert, also noted, "Considering SenseTime is a company with strong technological capabilities and innovation potential, as long as it properly addresses the challenges arising from Tang's passing, the company still has the potential to maintain a positive growth trajectory."
Additionally, the latest annual report reveals that Tang Xiao'ou holds a 20.63% stake in SenseTime, serving as the founder, actual controller, and largest shareholder.
Following Tang Xiao'ou's passing, the future disposition of his equity stake has become a topic of public interest.
"According to the Civil Code, the order of legal heirs is as follows: first-order heirs include spouses, children, and parents; second-order heirs include siblings, grandparents, and maternal grandparents. When inheritance begins, first-order heirs inherit first, and second-order heirs do not inherit unless there are no first-order heirs," explained lawyer Zhao Lu from Beijing Jingshi (Shanghai) Law Firm.
In 2003, Tang Xiaoou's son Tang Zhiming was born. Due to frequent travels between Beijing and Hong Kong, Tang Xiaoou took numerous photos of his son. As computer vision research required a large number of images, Tang Xiaoou used his son's photos as research materials.
"Mingming's photos were frequently used in various experimental data of the visual computing group, making him the most popular image model in the team," Tang Xiao'ou once wrote in his autobiographical story The World's Best Mingming. Today, information about Tang Zhiming can still be found on the MMLab official website.
However, Tang Xiaou also mentioned in his autobiographical article, "Mingming's life aspirations are quite different from those of his peers. Instead of aspiring to be a doctor, police officer, or astronaut, his goals are 'eating, sleeping, and being Garfield.' And he lives up to it—Mingming's only favorite subject is cooking class."
Public information shows that Tang Zhiming does not hold a position at SenseTime.
"Tang Xiao'ou held 20.63% shares in SenseTime, and his passing will indeed affect the company's control structure. According to corporate bylaws and relevant regulations, the shares of a deceased shareholder will be inherited by their legal heirs or designated successors. This means SenseTime's control structure may undergo changes, though the specific impact depends on the intentions and capabilities of the inheritors or designated successors," stated He Jiyong, Dean of Zhangru Research Institute.
However, Zhang Xiaorong, Dean of DeepTech Research Institute, also mentioned, "The founder's death may impact the company's control, as other shareholders might compete for his shares. But Tang Xiaoou and other founders had voluntarily extended the share lock-up period for two years until December 30, 2024, during which the company's control should comply with the lock-up requirements."