Volume 3: Taking Roots 2016 Chapter 761 It's that simple
Shanghai, the headquarters of Wenxue Network.
Although the company's business is growing rapidly and its traffic base is increasing day by day, there is still no very effective way to monetize traffic so far, and it can only rely on the industry's common advertising business to generate revenue.
It can be said that whether it is a platform or an individual, as long as they have a certain amount of traffic, they can monetize it through this channel.
This is also a lifeline for many platforms to survive, and it is also the most basic supply and demand relationship in the entire traffic market.
The success story of Papi Jiang is that she opened up a channel for advertising monetization in the online celebrity industry. With the first precedent, there will naturally be a second, a third...
After all, this case opened up the thinking of the entire industry, and the market's reaction is always belated. Before this, most sponsors had not noticed the huge audience group hidden behind the label of "Internet celebrity".
Their potential is not even inferior to that of so-called "celebrity". Especially compared with "celebrity", the cost-effectiveness of using "Internet celebrities" is extremely high, and they can exchange for more substantial returns with less investment.
Even brand sponsors will not choose to go against money. On the contrary, the richer a person is, the more sensitive they tend to be about money.
I won't waste any of my money, but I will also not be stingy about investing in the right things.
This may also be the reason why the Matthew effect is difficult to reverse once it is formed. After all, once the snowball starts rolling, before major variables occur, it will inevitably lead to a large amount of resources being controlled by a few people.
Even if major variables intervene, it will only lead to a major reshuffle of the industry, which is essentially difficult to change.
Let's get back to the topic. Yang Luyu is certainly not a pushover. With such a good card as Papi Jiang in his hand, he will naturally make the best use of it to maximize his benefits.
As a platform owner, Yang Luyu took the lead in establishing a third-party platform affiliated with the platform, which is dedicated to serving brand sponsors and creators. The platform will act as a matchmaker to fully protect the interests of both parties, thereby promoting mutually beneficial cooperation between the two parties.
The platform can naturally charge service fees from it. Once a virtuous cycle system of mutual benefit for all three parties is successfully formed, it can also feed back to the ecology of the platform itself.
At the same time, it can also tie creators and platforms together on a boat of common interests, which can be said to kill two birds with one stone.
In fact, such a profit-sharing system has various forms on any platform. The names may be different, but the essence is exactly the same.
In the final analysis, in order to consolidate its basic content base, the platform distributes the platform's revenue to the creators. Even the users can benefit from it and "take advantage of it" and have fun.
But the wool ultimately comes from the sheep. Once a stable platform ecosystem is formed, the platform will naturally find a way to recover the expenditure with interest.
Therefore, although Yang Luyu has successfully built this system, in order to support platform creators and encourage their enthusiasm, the platform currently does not charge a penny for service fees.
Yang Luyu originally thought that he was generous enough, but he didn't expect that Toutiao was even more ruthless than him. It directly paid out a full 1 billion in cash from its own pocket to subsidize creators, making it the industry's top spender.
It is precisely because of this that Wenxue Network, which had already entered a healthy development stage, had to launch a financing plan again and seek external funds to fight this money-burning war.
Wenxue Network alone is no longer able to resolve such a crisis. If it chooses to sit back and do nothing, it would be tantamount to allowing its opponents to develop at will. If it is not careful, it will easily put itself in a state of chronic death.
Especially Ame, which is owned by Toutiao, is a direct competitor that is highly similar to Douyin. The moral high ground it occupies is not enough to turn the tide.
After all, whether creators or users, naturally, they cannot have the confidence to adopt strategies like playing the long game to catch big fish like the platforms. They can only fight guerrilla warfare and go wherever there is profit.
This also means that users are inevitably "short-sighted". The word "short-sighted" here naturally does not have any positive or negative meaning, but is simply an objective description.
After all, the so-called long-term vision of the platform is only to be able to recover more profits in the future. There is no essential difference between the two.
Therefore, after Toutiao paid real money and sincerity, Wenxue Network’s attempt to restrain users by simply using "moral kidnapping" would naturally not work.
From a cost perspective, "moral kidnapping" is undoubtedly a low-cost, high-income measure. Now that it no longer works, we naturally have to increase investment.
After a few days of fermentation, the investment institutions that were interested in Wenxue Network's financing have naturally expressed their sincerity.
So today, everyone gathered together to prepare for formal consultations on this matter, and this open and honest choice is undoubtedly the one that maximizes benefits for Yang Luyu.
Although he is asking for help from others, in the current short video industry, he is also a person who holds scarce chips. In a situation where there are more wolves than meat, he is also a rare commodity.
Especially with Zhou Dongsheng, a strategic investor, in charge, this is his greatest psychological support.
At this time, the conference room of Wenxue Network was a little crowded. The heads of several major investment institutions were sitting here. One of them looked at the scene in front of him and said with a little dissatisfaction.
"Boss Yang has used a good trick to gather us all together. Is he planning to reap the benefits? Boss Yang thinks we are too simple, right?"
Facing this person's first attack, Yang Luyu said calmly: "Mr. Zhang, you are too serious. This is just a way to show our sincerity to investors. We treat all investors equally."
"In that case, why don't we start yet?" After expressing his attitude, Mr. Zhang stopped there and asked.
"Wait a little longer, we're on the way and will be here soon!" Yang Luyu said with a smile.
"Since we are treated equally, why should we wait... Could it be that the other party is more important than us?" As soon as these words came out, Mr. Zhang was unhappy on the spot and almost lost his temper on the spot.
Before Yang Luyu could answer, a group of people pushed open the door of the conference room and walked in talking and laughing.
Mr. Zhang glanced at the leading young man and was about to take the opportunity to speak, but when he saw the person standing next to him, he decisively swallowed back the words that were about to come out of his throat, as if nothing had happened before.
He even forced out a brilliant smile and took the initiative to say, "I didn't expect you to be here, Mr. Li? Didn't Tengda strategically give up its deployment in the short video track?"
This statement is like bringing up something irrelevant. After all, the short video track is indeed a major strategic oversight of Tenda. Otherwise, it would not have resorted to this "roundabout way" to make up for its loss.
Li Chaohui's smile froze upon hearing this, and he said indifferently, "There's no need to explain Tengda's strategic affairs to an outsider, right?"
Being able to hit other people's sore spots with just the sound of your mouth is a skill.
When Zhou Dongsheng first heard this, he thought that the other party was an old investment institution that could be compared with Tengda, or even better, otherwise it would not be so arrogant.
Unexpectedly, Mr. Zhang backed down immediately. After being rejected, he shut up angrily and said nothing more.
I thought you were pretending, but I didn't expect you were really a fool!
Zhou Dongsheng couldn't help but sigh, but didn't say much. He followed Li Chaohui and walked straight to the two seats at the front of the conference table and sat down.
This time, naturally, no one like Mr. Zhang would come out and say something like “Why does this young man have the right to sit so far forward?”
After all, Zhou Dongsheng is no longer an unknown figure, and if he wants to invest in Wenxue Network, he naturally cannot bypass this strategic investor and second largest shareholder.
At this time, as the founder of the company, Yang Luyu naturally had to personally entertain all the sponsors and act as the person in charge. "Now that everyone is here, let's officially start."
"In order to seek better development of the company and further improve the content system of the two major short video platforms of the company, Douyin and musical.ly, we have set a goal for round B financing and are ready to take out 9% of the shares to raise funds from investors so that the company can complete the next stage of development goals..."
"As for the current size and development status of the company, I believe there is no need for me to elaborate here. Everyone here should have done detailed homework and may know more about this company than I do."
Yang Luyu made a harmless joke, but it is true. For investment institutions, understanding the details of investment projects is the most basic skill.
If necessary, they don't mind tracing back the family tree for three generations. After all, when it comes to money, even old investment institutions have suffered a lot of losses in this regard.
As the saying goes, every failure makes you wiser. Investment institutions would rather spend more money to train their own background check teams than to lose their real money for no reason.
Although not making money is more painful than losing money, it does not mean that losing money will not be painful for them.
So far, Wenxue Network has achieved quite dazzling results in its exploration of business models, and has been able to rush to the forefront of the industry as a dark horse latecomer.
It also has unique overseas market advantages in the industry. The competitive advantage formed by the combination of the two is by no means fragile.
To a certain extent, this unique attribute even gives it advantages that the other two industry leaders that have deeply cultivated the local market do not have.
This is undoubtedly the point that investors value most, and it is also the reason why Yang Luyu chose to sell only 9% of his shares in this round of financing.
In the process of corporate financing, only the Angel Round and A Round, which have the highest risks, have the opportunity to get the most chips, and when the company finds a mature business model.
The positions of enterprises and investors have been reversed. What's worse, even the sincerity of investors begging for money may not impress enterprises.
At this stage, the resources needed by companies are no longer limited to cash. They do not need to choose investors indiscriminately, but rather make their selections purposefully.
Companies like Xunmeng Technology at that time and Wenxue Network at present are undoubtedly companies above this stage.
Yang Luyu was like a dealer at the card table. He threw the chips on the table and then looked calm and composed.
The other investment institutions looked at each other in bewilderment, with different thoughts. A mere 9% of the shares was obviously not enough to satisfy the appetite of everyone present, especially with the presence of such a ferocious beast as Tengda.
If Tengda takes a big bite, the share left for them to share will naturally be smaller.
To this end, the best way is naturally to take the initiative!
After sorting out the pros and cons, Mr. Zhang took the lead and said: "We, Jinxin Capital, are willing to invest 1% of the shares with a sincere investment of 30 million US dollars."
Mr. Zhang was the first to break the silence at the table and gave a very high valuation right away, bringing the valuation of Wenxue Network directly to the US$3 billion range.
And this is obviously just a beginning, just like a drop in the ocean to attract jade. There is only a 9% market share in total. Others will naturally not sit idly by and watch Mr. Zhang take away one-ninth of the share so easily.
And this valuation of 3 billion US dollars was completely within their expectations.
After all, as early as half a year ago, Kuaishou, which sat at the top of the industry, had a valuation of US$2 billion.
As for Toutiao, which has entered the short video market, its valuation exceeds 10 billion US dollars, not to mention Meitu Technology, which has already entered the IPO stage. Meipai is just one of the company's main businesses.
Therefore, the market's valuation of Meitu Technology is very fair, exceeding US$5 billion. After all, it has other core businesses with outstanding performance, such as mobile phones and Meitu software, and has great potential.
For Wenxue Network, which currently ranks among the top three in the industry and is even expected to compete for the top two positions in the industry with its unique overseas market advantages, its valuation naturally cannot be lower than US$2 billion.
Of course, it is impossible to exceed Meitu Technology’s valuation of US$5 billion with just one main business. This is the approximate valuation range in the minds of investors.
"30 million US dollars is not enough, Mr. Zhang. I can only make a fool of myself and add a little icing on the cake. How about 32 million US dollars?"
"You are being honest. If you say a little bit, then it's just a little bit. I'll make it a round number, 35 million US dollars."
The atmosphere in the conference room was particularly harmonious as representatives of investment institutions chatted and laughed. If you didn't know better, you would think they were bargaining in a vegetable market.
However, what is involved in these few words is a business worth hundreds of millions of dollars.
Zhou Dongsheng sat at the upper right, calmly estimating in his mind how much his net worth would increase after this wave of financing.
No wonder people always talk about “paper wealth”. This so-called net worth is really fake. After all, in just a few words, the valuation of Wenxue Network has increased by 500 million US dollars.
However, Zhou Dongsheng was not in a hurry. After all, the person who could make the final decision had not spoken yet. Zhou Dongsheng could not help but look at Li Chaohui standing aside.
As if sensing Zhou Dongsheng's gaze, Li Chaohui coughed. The other investors immediately fell silent and all turned their eyes to Li Chaohui.
Rather than saying that it is giving face to Li Chaohui, it is better to say that the word "Tengda" is really valuable.
With Tengda's participation and support, the value of the investment projects will undoubtedly be greatly increased and investors will feel more confident.
This is the well-deserved “giant effect”.
"We at Tengda intend to acquire half of the shares and are willing to lead the investment with a sincere investment of US$180 million. If you think it's okay, then let's do it."
Li Chaohui said this calmly, while stating Tengda's position and attitude.
The other investors looked at each other, but after a moment they all nodded, "Okay, let's do as Mr. Li said!"
"For the remaining 4.5% of the shares, in order to make things easier for everyone, Jinxin Capital will be a little bit unwilling and take 0.5%."
At this time, Mr. Zhang suddenly compromised and said with a smile that as long as he could get an admission ticket, the task would be accomplished.
Who wouldn't be an old fox if he could sit in this position? He had been at the front and back before, and now he chose to take a step back, which was definitely enough for him to secure this ticket.
As expected, no one spoke out against it, and everyone agreed. Then they divided up the remaining 4% of the shares. Everyone was a decent person, and everything went on in an orderly manner.
Yang Luyu, who was sitting in the first seat, couldn't help but feel a little dazed. How could his company's valuation reach 4 billion US dollars?
And this is the valuation before financing. It may increase a little more after financing. After rounding off, it seems that I have got a ticket to the billionaire club?
