I can become stronger by paying salaries. I have one billion employees!

Chapter 324 Over 60 times return on investment! Chen Yansen: I just made that up!
In 2012, Spotify had just completed its Pre-E round of financing, with a post-investment valuation of $15 billion.

After eight months of rapid expansion, the valuation is estimated at around US$25 billion to US$30 billion, based on the current market share and number of paying users.

Compared to the $260 billion valuation at the time of its IPO six years later, there is an eight- to nine-fold growth potential, and a more than sixty-fold profit opportunity to reach the peak market capitalization of $1490 billion.

For Chen Yansen, investing in Spotify would bring two benefits: firstly, a substantial return on investment, and secondly, it would complement the application ecosystem of the Alexa smart speaker.

Moreover, Daniel Eker's fees are not high. If it were Apple's iTunes, Cook might charge him 30% of the music copyright fees.

Therefore, Spotify clearly has investment value at this time!
Chen Yansen looked at Daniel, deliberately showing a hesitant expression. After pondering for more than ten seconds, he slowly spoke:

“Senlian Capital has not yet ventured into overseas investment. I am personally optimistic about Spotify’s future development, but the prerequisite is to solve a series of problems such as high copyright costs, unclear profit direction, weak user growth and low paid conversion rate.”

For a music software, the difficulty in generating profits is enough to deter 99% of potential investors.

After all, investors' core demand is to make a profit, not to pay for the dreams of entrepreneurs out of their own pockets.

The copyright crisis is like a quagmire, tightly binding Spotify.

Daniel nodded slightly and sat up straight, replying, "Mr. Chen, I admit that copyright fees are indeed Spotify's biggest obstacle to profitability."

To this end, I have communicated with record companies such as Universal, Sony, and Warner to prepare for optimizing the royalty payment model, charging based on actual play count, thereby reducing the copyright costs of less popular songs.

"Will Universal, Sony, and Warner agree?"

Chen Yansen asked back with a smile.

Who would spit out the fat meat that's already in their mouth?
The more users Spotify has, the higher the royalties for record labels. It would be a miracle if Universal, Sony, and Warner agreed!
The other party used the word 'prepared' and there was no signed contract, so this was just a temporary wording they came up with for the purpose of raising funds.

When Daniel saw that Chen Yansen wasn't falling for the trap, he couldn't help but sigh slightly. Most Asian investors are shrewd and rational.

Three years ago, Li Ka-shing's Horizons Capital participated in Spotify's Series B funding round. During the negotiations, Li's financial analysts presented a remarkable valuation algorithm model, which managed to reduce the offer price by $2000 million.

In his view, even though Chen Yansen did not have professional financial and legal personnel with him, the other party was obviously a shrewd businessman and would be difficult to fool.

After a moment's thought, Daniel looked at Chen Yansen and said, "If Spotify is dragged down by copyright fees, Universal, Sony and Warner will lose $20 million a year. As Spotify's market share continues to increase, this number will continue to grow, even to $50 billion or $5 billion. They will not sit idly by and watch Spotify decline."

The three major record labels may make concessions, but how much room there is for them to compromise remains to be seen.

His business acumen and operational skills are excellent, but due to the high copyright fees in Europe and the United States, the founding team's share of Spotify has been decreasing after several rounds of financing.

Prior to this, he had contacted investors from Goldman Sachs, Fidelity Capital, and Coca-Cola, but after some conversations, he found that the highest offer was only $28 billion, which was far from his bottom line.

Therefore, he tentatively inquired about Chen Yansen's investment intentions, hoping to introduce non-European and American investors to diversify the shareholding ratio of investors and ensure his own controlling stake.

Chen Yansen smiled and said noncommittally, "Perhaps."

“Spotify is preparing for its Series E funding round…” Daniel stated bluntly.

"You want me to invest in Spotify?" Chen Yansen asked in surprise before he could finish speaking.

“That’s right! Of course, whether a cooperation can be reached depends on Mr. Chen’s wishes,” Daniel replied.

"What are your expectations?" Chen Yansen leaned back, picked up the hot coffee on the table, took a sip, and asked.

“34 billion US dollars. If Mr. Chen is interested in investing, I am willing to give up 5% of the equity.”

Upon hearing this, a look of joy involuntarily appeared on Daniel's face, and he quickly replied.

"That's too high. Do you know what the valuation of a music app with 2000 million daily active users and 500 million paying users is usually in China? At most, it's three to five hundred million US dollars."

Chen Yansen shook his head slightly and answered his own question.

"But Spotify faces a global market with different potential. Once it successfully goes public, its future market value will not be less than 100 billion US dollars."

Upon hearing the words "three to five hundred million US dollars," Daniel immediately became anxious, leaned forward, and responded.

"I've heard that Universal Music is in secret talks with Apple about an exclusive licensing deal. If Spotify is unable to pay the copyright fees, the three major record labels might just sit back and wait for Spotify's cash flow to dry up, and then take the opportunity to acquire it at a low price."

Chen Yansen put down his coffee cup and said with a light laugh.

"No, impossible!" Daniel exclaimed, his face pale with disbelief.

"Maybe it's fake news, don't take it seriously." Chen Yansen hummed in agreement, appearing nonchalant.

Daniel's mindset was in turmoil. He was afraid that Universal, Sony, and Warner would betray him. Coupled with the unreasonable price-cutting behavior of investors, for a moment, he actually believed them to some extent.

“A 5% equity stake is fine, but I can’t accept a valuation of $34 billion. There’s still a possibility of cooperation if it’s below $30 billion.”

Chen Yansen continued.

“A $30 billion offer is too low; Goldman Sachs’ offers are all above $30 billion,” Daniel immediately refused.

"Then forget it. Let's put the investment on hold for now and talk about the collaboration between Alexa smart speakers and Spotify." Chen Yansen changed the subject succinctly and decisively, without the slightest hesitation.

He wouldn't believe their nonsense!
Since Goldman Sachs was willing to offer a valuation of over $30 billion, why would Daniel still shamelessly seek investment from them?
Picture what?
This kind of rhetoric might fool novice investors, but in Chen Yansen's eyes, it's nothing but a lie full of holes.

Daniel paused, surprised that Chen Yansen was not following the expected script at all.

So he gave a dry laugh and could only follow the other person's lead, talking about the application ecosystem of smart speakers and the mobile phone market in Eastern Europe. He also offered to explain that he had access to some carrier channel resources in Germany, the UK, and France, which could help Orange Mobile open up the Western European market.

"Thank you," Chen Yansen said calmly.

Daniel hesitated for a long time, but finally couldn't hold back and lowered his offer to $32 billion.

“One person takes a step back, and it's 28 billion US dollars!” Chen Yansen said calmly.

Daniel was taken aback. Shouldn't it be 30 billion US dollars if each of them took a step back? Spotify clearly took two steps back!
He thought for a moment and said, "At least 30 billion US dollars."

"Let's talk next time," Chen Yansen waved his hand, decisively refusing.

He wasn't particularly keen on investing in Spotify; he'd invest if the price was low, but wouldn't mind giving up if the price was too high.

A valuation of $28 billion is on par with Fidelity Capital and $100 million higher than Coca-Cola, so it's not exactly a high price.

Seeing this, Daniel had no choice but to give up.

Next, he stopped dwelling on investment and cooperation matters and instead introduced Chen Yansen and Song Yuncheng to the scenery of Stockholm, ski resorts, hunting activities, music festivals, beer festivals, and so on.

The autumn breeze on the terrace was slightly cool, and the group chatted until noon.

Around midnight, Daniel invited Chen Yansen to a restaurant in the city to try the local specialties.

In the afternoon, Chen Yansen said goodbye to Daniel and drove to the Gotstop hunting grounds in Gotland Province.

Logically, neither he nor Song Yuncheng had hunting licenses, but as long as they were willing to pay, there were loopholes to exploit. Under the auspices of a hunting club and led by a professional hunter, Chen Yansen easily experienced the feeling of hunting.

Carrying a hunting rifle, Song Yuncheng shot three rabbits in just two hours. Then, looking excited, he said to Chen Yansen, "Shall we eat rabbit tonight?"

The little girl's eyes lit up and her cheeks flushed.

These past few days have been an unforgettable experience for her, including crabbing, skiing, hunting, and sea fishing, all of which were things she had never experienced before.

"Okay," Chen Yansen nodded in agreement.

"Oh, right, I forgot to ask you, are Universal Music and Apple really negotiating an exclusive licensing agreement?" Song Yuncheng asked curiously, holding the rabbit.

"I don't know, I was just making things up," Chen Yansen shrugged and told the truth.

"I knew it would be like this." Song Yuncheng smiled faintly, with an expression that said, 'I knew it.'

Her English was quite good, but Chen Yansen and Daniel's conversation contained too many industry terms, so although she didn't understand them very well, she could still grasp the general meaning.

the other side.

After Chen Yansen left Stockholm, Daniel immediately began his investigation and soon learned from an Apple marketing staff member that Universal Music employees had indeed visited Apple's headquarters in September.

Whether it was related to copyright cooperation is unclear.

Daniel thought for a moment, his eyes narrowed, a cold glint flashing in them, and he concluded that Universal Music was up to no good in the dark.

After careful consideration, he decided to accept the investment from Senlian Capital and Fidelity Capital to get the money first and get through the current difficulties.

Chen Yansen had no idea that his casual remark, coupled with Daniel's own imagination, would actually lead to this investment deal.

Just as he was preparing to return home, Daniel called: "Mr. Chen, I am willing to accept the investment from Senlian Capital, and I also agree to the offer of 28 billion US dollars."

Chen Yansen was taken aback for a moment, but he quickly composed himself and replied with a smile, "Then let's meet this afternoon to sign the investment intention contract first, and then formally sign the equity transfer agreement after the company's finance and legal departments have completed the audit."

“OK, I have no objection,” Daniel readily agreed.

Chen Yansen gave a few perfunctory replies and then hung up the phone.

Investing in overseas projects with funds exceeding 1 million US dollars requires reporting and approval from higher authorities.

Therefore, the process of investing in Spotify is very long, from reviewing core data to making payments in stages, and it can take at least three to five months to complete.

On the last afternoon, Chen Yansen signed a letter of intent for equity transfer with Daniel at Spotify headquarters.

Exchange $1.4 million for a 5% stake in Spotify!

If he continues to invest before the IPO, this equity stake could generate over $70 billion in revenue for him in the future.

Chen Yansen did not return to Xucheng until October 9th.

The group-buying, food delivery, and ride-hailing markets are now fiercely competitive after the National Day holiday, to the point where everyone is practically fighting tooth and nail.

Chen Yansen first went back to room 0418, then drove a Bentley Mulsanne and sped towards the science park.

As soon as I entered the company building, Cheng Weixing called.

"Boss, the daily subsidy expenditure is currently around 4000 million. Should we temporarily stop it?"

Cheng Weixing sat in his office, his eyes bloodshot, and asked under immense pressure.

Starting October 1st, Kuaidi and Didi have intensified their subsidy campaigns. Now, regardless of whether you are a new or old customer, each platform offers three first-order discounts per day. Depending on the starting fare for taxis in different regions, the subsidy amount fluctuates between 10 and 14 yuan.

At the current rate of loss, even with its strong financial backing, Kuaidi Dache probably won't survive until December.

The price war in the home appliance market between JD.com, Suning, and Gome has been all talk and no action, leaving consumers completely unaware.

Meanwhile, Kuaidi and Didi are genuinely offering free rides to tens of millions of people in five provinces in North China and seven provinces and one municipality in East China.

Weibo, WeChat, forums, Renren, and Tieba are all full of user guides for free ride-hailing apps.

Li Yanhong was at his wits' end. He knew that continuing to expand would benefit Didi Chuxing, but he dared not make any rash moves.

Therefore, for every expansion of Didi Chuxing's service area, the subsidy costs would increase by several million.

"How much money is left in the account?" Chen Yansen asked.

“19.4 billion,” Cheng Weixing replied immediately.

“Let’s spend this money first. I don’t think Li Yanhong can last much longer,” Chen Yansen said confidently.

"Okay, boss, I understand." Cheng Weixing gritted his teeth and agreed.

"Promotions like recharge cards can be relaunched with greater力度. Right now, the most important thing for Kuaidi Dache is to seize the market, and profitability is not a concern for the time being."

Chen Yansen stepped into the elevator and added another sentence.

He brought together companies like Tencent, Ali, Huaxin, Huake, DST, and Goldman Sachs to join the Kuaidi Dache ride-hailing business, all in order to reduce competition and maintain sufficient funding.

In terms of the audacity and potential for spending money to acquire land, Li Yanhong is no match for him.

Cheng Weixing responded and reminded Chen Yansen that there were two e-contracts from Kuaidi Dache that needed his approval in his email.

"I understand," Chen Yansen said, then clicked the hang-up button.

With a ding sound!
The elevator doors slowly opened!

Chen Yansen walked out, then pushed open the office door and went straight in.

The money tree on the table is growing very lushly, with each leaf round and full.

Not long after they sat down, Zhang Yinjia and Zhou Mingxuan from Orange Payment came looking for them.

"Boss, the Yu'ebao project is ready. Customer service training and marketing are basically complete. Users are waiting for the release of Orange Pay version 2.1."

Zhang Yinjia reported with bright eyes, his voice steady and powerful.

"What is the annualized rate of return for the past seven days?" Chen Yansen asked.

"Around 5.4% to 5.7%. As originally planned, we will only show users the actual annualized rate of return of 4.9% to 5.2%, of which 0.5% will be the project profit," Zhang Yinjia replied.

This 0.5% interest rate spread is actually a management fee charged to the fund company.

(End of this chapter)