It is known that Taotie was once Master Shifu's friend and a student at the Jade Palace in his younger days. Unlike Shifu, however, he was not a good fighter and had a hard time trying to learn Kung Fu. To help him improve, he and Shifu constructed the Training Hall, making use of Taotie's skill in mechanics. But while the Training Hall was impressive, Taotie's Kung Fu skills still were not, and he remained a poor, clumsy student.
Jealous of Shifu's growing abilities, Taotie decided he would use his mechanical mind to compensate for his failures in Kung Fu. Taking the sacred Jade Orb of Infinite Power, he made a giant weapon in the shape of a wooden warrior, fueled by the Orb, devised to make up for all of his weaknesses. He was proud of his creation, but Oogway and Shifu were instead appalled by it. They told him that his machines sullied the purity of Kung Fu. They took back the Orb and presumably destroyed Taotie's creation, and he was dismissed from the Jade Palace. Taotie left, abandoning Kung Fu, feeling resentful of it and of Shifu, and wanting to prove himself superior to both.