2003: Starting with Foreign Trade

Chapter 786 The Significance of Having a Backer

P.S.: It's mid-month, has everyone bought their tickets yet? If you don't mind, please vote for some!

2013 3 Month 1 Day.

As planned, Weilai Group completed its capital increase and shareholding reform on schedule and re-registered with the industry and commerce authorities.

The company name was changed from Weilai Group to Weilai Co., Ltd., and the registered capital was increased to 20 billion yuan.

In this capital increase and share expansion, the group allocated a total of 8% of its shares for the employee stock ownership plan. In addition to the shares allocated to Zhang Yong, Yu Liguo, Hu Zhengnan and others, employees can also purchase them themselves.

With a valuation of 350 billion yuan and a total allocation of 20 billion shares, the cost per share is 17.5 yuan. Company employees can subscribe to shares at a price of 15 yuan each; of course, not everyone is eligible.

At present, it is impossible for all employees of Weilai to hold shares, nor is it necessary for them to do so. Providing 1.6 million shares is sufficient to cover most of the technical staff and management personnel.

With the experience gained from Orange Technology and Flash Technology, the internal share distribution plan of Weilai was implemented quickly, and there was no recurrence of the situation where shares could not be sold and ended up benefiting certain individuals.

Most people are still terrified of stocks.

In fact, similar things happened before Ali went public. Chen Wei's boss, Wang Gang, who left with him to found Didi, was a bold person. Before Ali went public, many people were busy selling their shares to make money.

He sat at home buying these stocks, and eventually stopped because he bought so many that he alerted Old Ma.

This situation also occurred when Orange Technology and Flash Technology distributed shares. There were always people who didn't understand stocks and dared not touch them, while there were always some who were bold.

The shareholding reform of Weilai Group has brought considerable vitality to the A-share auto market. Great Wall Motors, which is most similar to Weilai Auto and has many best-selling models, saw its stock price frequently reach new highs in the first two months of the first quarter of 2013, with a cumulative increase of 27.13%.

As of February 28, Great Wall Motors' market value had approached 92 billion yuan.

Owning such a stock in 2012 was truly a testament to weathering both bull and bear markets. However, auto stocks performed well throughout 2012, with even BYD ending the year with an annual gain.

The automotive industry is currently a major trend, and Boss Tan, having been reborn, has some understanding of speculation in the secondary market. His strategy is to identify high-quality companies within a trending environment, choose the right time to invest, and then simply wait.

Companies like automobiles, liquor, electricity, and new energy vehicles are all relatively stable businesses.

Actually, the most stable sector in the A-share market should be liquor stocks. Unfortunately, the institutional investors pushed it up too aggressively, and in just one or two years, they almost wiped out all the gains of the liquor sector over the past decade, leaving only a mess.

After the shareholding reform was completed in March, Tan Jincheng was relieved. The path to listing for Weilai had been cleared, and all that remained was to choose the right time to go through the IPO process.

According to Tan Jincheng's idea, it would be more appropriate to go public next year, that is, in 2014, and the funds raised would be used for the expansion of the new energy vehicle project.

It just so happens that it caught up with the bull market of 2015, and the soaring market value can also bring some publicity opportunities to the company.

March is the annual Two Sessions. Since becoming a national representative, Tan Jincheng has to go to the capital every year around this time to attend the meetings and meet some friends. This year, Lei Jun was also selected as a representative.

Tan Jincheng is the representative from Zhejiang Province, and Lei Jun is the representative from Beijing. This means that Mr. Lei has come into the view of the higher-ups.

However, Xiaomi has indeed created a remarkable miracle. A mobile phone company that was only established two or three years ago has managed to carve out its own path in the fiercely competitive mobile phone industry. In just a few years, it has sold millions of mobile phones, and the company's valuation has soared to several billion US dollars.

"Is your company undergoing shareholding reform because you're planning to go public?"

Lei Jun wasn't the only one asking this question. It's true that share reform is usually a prelude to an IPO. Even Beicang District has tried it several times. It's a star-studded IPO, and who wouldn't want to hitch a ride?

Although Tan Jincheng had previously stated that Weilai Motors had no plans to go public within the next few years, what if he changes his mind?

"No, there are no plans to go public for the time being. We just plan to increase investment this year and carry out shareholding reform along the way."

After getting rid of MiTalk, Lei Jun, the CEO of Xiaomi, who is now fully committed to the mobile phone business, looks very confident and in high spirits.

In the last few months of last year and the first two months of this year, Xiaomi made a series of moves, including the Xiaomi 1S Youth Edition and co-branded phones with brands such as Weibo and Baofeng Video, frantically reaping users' money.

In addition, on the 1st of this month, Xiaomi also launched the MIUI V5 version, and the Xiaomi 2 was also officially launched. At the same time, the 'Weilai' phone was also officially sold on the Weilai APP.

This Android smartphone, designed and manufactured by Xiaomi under contract with Weilai, is derived from the Xiaomi 2 and incorporates elements from both Xiaomi and Weilai, but the main elements are predominantly from Weilai.

It is more refined in terms of production than the normal version of Xiaomi 2, and the materials used are also better, making it look quite high-quality.

Unlike Xiaomi, Weilai didn't promote this phone much. After all, only 5000 units were produced, and only 3000 were actually sold on the app. If they promoted it heavily, Xiaomi fans might have snapped them all up.

In addition, the Weilai APP already has nearly 50,000 real users, so there shouldn't be any problem in absorbing this batch of 3000 phones. Although, according to the survey, more than 51% of the users who drive the Weilai ES6 and use the Weilai APP are using Apple phones.

But there's still 49% left. Besides, people with business acumen are never bad. The Xiaomi 2 is hard to buy, and the quantity on the Weilai APP is also very small, with only three to five hundred units released every week. But once you manage to snag one, you can resell it at a higher price.

Xiaomi's continued hot sales have spawned a large number of scalpers. Even co-branded products are in high demand. The Weibo co-branded product, which only includes a so-called Weibo badge, also sold out instantly.

At 1999 yuan, it's such a great deal. In an era where decent smartphones cost three or four thousand yuan, Xiaomi's price advantage is really obvious.

The phone from Weilai is also priced at 1999 yuan, just like the batch from the last Double Eleven Orange Products Fair. They have also prepared different packages, which include ES6 models, peripheral products such as umbrellas, T-shirts, and phone cases.

I lose money on my phone, but these gadgets are quite profitable, and they can more or less make up for some of the losses.

"I thought you were going to go public. I was even planning to buy some of your shares from Sequoia Capital and make a small profit."

After the share reform, shareholders such as Sequoia Capital and Beicang City Investment can trade their shares. For example, the Institute of Physics' shares were diluted to 5.52%, of which 0.52% were traded away.

Zhang Xupeng bought the 0.52% stake for 180 million yuan, becoming a minor shareholder of Weilai.

It's normal for shareholders to cash out; they don't necessarily have to wait until the company goes public. Tan Jincheng can't stop them from selling to whomever they want. This is why many companies are intertwined.

For example, Great Wall Motors and WILK Motors have very similar models, and the two have been competing fiercely this year, but that does not prevent ByteDance from holding shares in Great Wall Motors.

Since the start of offline IPO subscriptions, several RMB funds under ByteDance's advertising platform have held a large number of shares in Great Wall Motors, as well as shares in other well-known car companies.

"Why would you buy our company's shares? The valuation is already quite high, and the growth rate of the automotive industry is not as fast as that of the internet industry."

If Lei Jun's life in business is somewhat traceable, then his investment career is truly like having a cheat code. He has genuinely invested in many listed companies, unlike Tan Jincheng, who seems to have a cheat code and knows the outcome in advance.

The growth of physical enterprises is limited. Even if we estimate the market value at 100 billion, the current valuation would only be about three times that amount, and it is unknown how many years it would take to reach that level.

For Shunwei Capital, this is not a very good deal.

Lei Jun shrugged: "Haha, just hold a little bit as a token. If you don't object, I'll go talk to President Shen."

To be honest, he doesn't have any shares in FlashDrive yet. Unlike ByteDance, Lei Jun only invests in the primary market and rarely gets involved in the secondary market. When he acquired MiTalk, Tencent's shares were held through a negotiated transfer.

"Haha, do as you please. I definitely won't react unless President Shen objects."

Shen Nanpeng is unlikely to object. After the share reform, they hold 9.2% of Weilai Shares, with a market value of more than 30 billion yuan. Given that there are no plans to go public for the time being, he has no need to hold such a stake.

Lei Jun nodded: "Okay, if you have no objections, I'll contact President Shen and ask him to transfer some of it."

Holding shares in Dianweilai Auto was something he had been thinking about for a long time. First of all, he and the others were now allies in a circle of friends, and secondly, he himself was very interested in cars.

There was no such opportunity before, but now the opportunity is right in front of us.

"Alright, Mr. Shen still has 9.2% of the shares. It's highly likely that transferring some to you won't be a problem. You can talk to him yourself. I have no objections."

After the shares were distributed to senior executives and employees under the stock ownership plan, ByteDance's shareholding in Weilai was diluted to 62.56%. Zhang Xupeng's 0.52% stake was partly due to his personal investment considerations, but it was also at the behest of Tan Jincheng.

After acquiring the shares, Zhang Xupeng signed a concerted action agreement with Tan Jincheng.

In addition, the 8% held by executives and employees is consistent with Tan Jincheng's shareholding plan, giving Tan Jincheng an even stronger control over Weilai Auto with an actual 71.08% voting right.

"By the way, I'm going to ByteDance in a bit, do you want to come?"

Since its official release last August, the number of users on this platform has increased rapidly, now approaching 5000 million. This rapid increase in users also means that a new round of financing is about to begin.

Zhang Yiming is indeed very frugal, but this frugality has also brought him enormous wealth. If starting a business is a process of using shares to create a pie in the sky, his frugal approach has allowed him to retain a large number of shares, leaving him considerable room for negotiation in future financing deals.

As expected of someone starting a business for the fifth time, they already have a wealth of experience.

Lei Jun's eyes lit up: "ByteDance is raising funds?"

Tan Jincheng smiled and nodded. Lei Jun had mentioned before that when ByteDance was about to launch a new round of financing, Tan Jincheng remembered this.

During the Two Sessions, Tan Jincheng met with Lei Jun, mainly to discuss this matter. He also told Shen Nanpeng about it.

In his previous life, Tan Jincheng had seen ByteDance's shareholder list. Most of the big profits from their previous rounds of financing were taken by DST. This capital firm is quite complex and seems to have a deep relationship with Ali.

That is, the capital firm Sequoia Capital got involved with ByteDance in 2016. At that time, Sequoia and CCB International spent 10 billion US dollars to acquire less than 10% of the equity.

Sequoia Capital, Qiming Venture Partners, Tencent Capital, Shunwei Capital, and ByteDance are now all considered leaders of a group. Tan Jincheng certainly can't handle such a large project alone. Bringing all his allies on board is the most advantageous approach.

"Yes, but the amount of funding this time is not high, only 1000 million US dollars. If you invest, you can only participate in the follow-on investment. Do you have any objections?"

It can only be said that Zhang Yiming is a really frugal person. He only asked for 1000 million US dollars in Series B funding. You should know that he released multiple apps at once, including Neihan Duanzi, not just one app.

Don't know how he did it.

"No problem, as long as there's an opportunity, that's fine. Our investment institutions aren't exactly rolling in money."

It's common practice for venture capitalists to introduce new investors to entrepreneurs. ByteDance approached a large number of investors in its early stages, but none of them were interested in him. He's not without temper.

Before planning to launch the second round of financing, Zhang Yiming had already discussed it with Tan Jincheng, who promised to find him several well-known investment institutions and guaranteed that the lead investor would definitely be an internationally renowned investment institution.

This refers to Shen Nanpeng. Shen Nanpeng has already gone to talk to Zhang Yiming about this matter, and they may have already reached an agreement.

"Let's go then. What are we waiting for? Let's go talk to Mr. Zhang. ByteDance's algorithm is very interesting. Their Toutiao, how should I put it, looks a bit rustic, but it's really addictive."

"Haha, isn't it mesmerizing? Almost all of their company's products are like this, thanks to their unique algorithm."

Can ByteDance's apps be considered excellent? Tan Jincheng believes they can't, and some might even be considered vulgar. Furthermore, Douyin couldn't even compete with Kuaishou in its early stages, but it was precisely because of their unique algorithm that they have such great potential.

The international version of Douyin has almost dominated the short video social media field in the US, making Zuckerberg suffer greatly and even resorting to administrative power to crack down on it. That's what makes him so powerful.

Tan Jincheng's schedule in the capital was quite full. In addition to meeting with Zhang Yiming, he also had to meet with Director Ma.

Tesla's first store, owned by CEO Jack Ma, is located in the Fufangcaodi area near the Dijing Bridge, in the heart of Beijing's business center. Spanning 500 square meters, it's quite luxurious. CEO Ma seems to care a lot about Tesla's first store in China, and even made a special trip over there.

The first store is scheduled to open in April. Director Ma came to inspect the store's preparations and also to meet with Tan Jincheng.

After the ES6 was launched, Ma, the factory manager, also took two to the United States. After experiencing and disassembling the ES6, he was very impressed with it, especially the battery. Currently, Tesla uses batteries from LG and Panasonic.

Maodou S uses Panasonic 18650 batteries. Compared to Panasonic batteries, Weilai's Xuanwu batteries are of comparable quality but are much cheaper. He came here mainly to discuss the battery supply issue with Tan Jincheng.

Previously, when Tan Jincheng was in the United States, he boasted to Factory Director Ma about their battery technology and even said that they were a supplier for BMW. At that time, Factory Director Ma did not quite believe it, but he was somewhat surprised after actually disassembling it.

When did China's auto parts industry become so advanced?

The Maodou S was introduced to China as an imported model, and its price was almost double that of the Weilai ES6. This put increased pressure on Factory Manager Ma, who never thought that there would be a car in China that could directly compete with the Maodou S.

China is already the world's largest automobile market, and no car company can ignore its market share. Before actually seeing the ES6, Mr. Ma had no plans to invest in building a factory in China.

With the ES6, he first had this idea, and also because he saw the potential of China's supply chain in Xuanwu Battery.

The reason the ES6 can be sold so cheaply is because it benefits from China's supply chain system.

Meeting with Zhang Yiming was simple. Lei Jun was also very familiar with him. This old guy often came here to hang around in order to invest in ByteDance. If the two of them hadn't come together this time and seen how familiar he was with Zhang Yiming, Tan Jincheng would still be in the dark.

"Goodness, Mr. Lei, you're so familiar with Zhang, do you really need me to introduce you?"

"Haha, you're the major shareholder, so I'm just respecting your opinion. I can't very well come here secretly looking for investment opportunities."

Lei Jun couldn't keep up the act any longer and was a little embarrassed. Ever since he had witnessed ByteDance's algorithm, he had been keeping a close eye on it, but unfortunately, they couldn't get their hands on the core technology.

Tan Jincheng curled his lip, thinking to himself, "You went to Meizu to look for investment opportunities, and when you saw there were no opportunities, you took all their engineers with you. Everyone knows that."

It's one thing that Lao Huang lacks vision, but it's also unfair of you to turn around and do this.

Ignoring him, Tan Jincheng turned to Zhang Yiming and asked, "How did the talk with President Shen go?"

Zhang Yiming smiled and said, "President Shen is very easy to talk to. He agreed to invest in us, and the amount is up to us. However, I have decided to only ask for 1000 million US dollars for now. Since President Lei is also interested, how about we give you 200 million US dollars?"

Having investors makes all the difference. He doesn't even need to personally look for people to raise funds. Mr. Tan said he would find a well-known international investment institution to lead the investment, and people really did come to him on their own.

"I'm fine with anything. We won't interfere with your specific company affairs. Just go ahead and do it."

Although Zhang's various apps have been controversial, with one even embroiled in lawsuits and criticized by various parties, they are the ones who have truly succeeded in going global, and that alone is something to be proud of.

Oh, by the way; the handsome CEO in charge of Douyin's international version was Xiaomi's CFO before joining ByteDance. After helping Xiaomi go public, he switched to Douyin, and Lei Jun couldn't keep him even if he wanted to.

"Haha, thank you so much, Mr. Tan."

Zhang's words of thanks were sincere. Tan Jincheng's help to their company was truly significant. Since a certain news outlet doesn't have its own editorial department, it can be essentially understood as a news aggregator, which more or less involves some copyright infringement.

When it first launched, nobody cared about you, but now you have almost 5000 million users, which has attracted the attention of some major portal websites. Some of them have even started sending lawyer's letters. Tan Jincheng helped mediate all of this.

For companies like Tencent and NetEase, Tan Jincheng had already spoken to their bosses, and they would give them some face. In addition, if anyone did sue them, Tan Jincheng's company's legal department would handle it for them.

ByteDance, in its early stages, can be said to have grown up under the care of Tan Jincheng. Now, he has introduced them to new investors, including internationally renowned investment institutions and hardware manufacturers, providing ByteDance with more funding and protection.

After five entrepreneurial ventures, Zhang Yiming seems to have come to understand a principle: a good project is a prerequisite, and a founder with ideas is also a prerequisite, but finding a strong investor seems to be the most important thing.

Is this the significance of having a powerful backer?

Lei Jun was also very happy to receive the investment. In fact, he doesn't quite understand the significance of ByteDance yet, but he is very interested in their algorithm from the perspective of a senior programmer and is very optimistic about it.

Unlike someone with extraordinary insight like Tan Jincheng, a certain piece of information is just a small appetizer for ByteDance. When their algorithms truly unleash their power, things will be extraordinary.

The algorithm patent of a certain line is also somewhat useful to Wei Lai, as there are application scenarios in the intelligent driving and cloud computing projects he is currently working on.

"Haha, then I won't bother with the formalities; Mr. Tan and Mr. Lei, are you done with your meeting? How about I treat you to dinner tonight?"

Zhang Yiming is supposed to be a seasoned entrepreneur, but he doesn't seem to have that slickness about him. With his baby face and unkempt appearance, he really looks harmless.

However, he himself has said that his baby-faced appearance has caused him a lot of trouble in attracting investment.

"There's one more meeting, a few more interviews, and then it'll be all over. Just let me know in advance when it's time for the formal fundraising. I'll be in Beijing for the time being."

Although there are no major industries in the capital, the capital has become the most important strategic location for Weilai, apart from Beicang and Luzhou. Horizon is located here.

Tan Jincheng was also counting on him to develop automotive-grade chips to fill another gap in Weilai Motors' capabilities.

"Don't envy him, you can do it too in the future. I have high hopes for ByteDance."

Zhang Yiming looked at Tan Jincheng with envy. Lei Jun naturally noticed this and, while offering encouragement, couldn't help but sigh that this kid was really popular now, having become a national representative even earlier than him.

The title of the first post-80s entrepreneur is truly well-deserved.

(End of this chapter)