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Chapter 284 0281 [The Boss is Truly Skilled]

Chen Guiliang was very busy in October, busy establishing the VIE structure.

The general idea is to use a company registered in the Cayman Islands as the main entity for listing in the US. Then, a shell company is used to control the actual company in China through a VIE (Variable Interest Entity) agreement.

This is to circumvent policy restrictions in China; otherwise, it would be impossible to go public.

The state tacitly approves of this, neither encouraging nor hindering it.

Chen Guiliang's main job was to discuss structural details with venture capital firms and company executives, and sign WFOE establishment documents and VIE agreements, etc.

The equity allocation needs to be reconfirmed, including stock options for senior executives and long-term employees.

Furthermore, during the A and B rounds of financing, Chen Guiliang signed domineering terms with venture capitalists in order to maintain control of the company. If these terms violated US regulations, they must all be voided.

The entire process will take a month.

This is because ByteDance's equity structure is simple and clear. In contrast, companies with complex equity structures might have to go through two or three months of complicated processes.

The next step is to formally register in the Cayman Islands.

Chen Guiliang signed the documents in the country; the rest was left to the listing executives and the law firm.

Financial compliance rectification can begin around December. It generally takes 3-6 months.

Given ByteDance's situation, it will likely take at least four months. This is mainly because it involves Bailian Technology and Tudou.com.

Bailian Technology possesses the cash cow "The Emperor's Reign," which has a positive impact on ByteDance's IPO and can even be considered one of the core cornerstones of its IPO valuation.

However, Tudou.com is a double-edged sword.

Tudou.com has plenty of room for growth and a high venture capital valuation, which it can boast about during roadshows. However, it's actually a money-losing company that relies on burning cash for development, which negatively impacts its chances of facing SEC scrutiny.

Furthermore, Tudou.com, Xiaonei.com, and HaiNei.com had promoted and advertised with each other. This would be considered related-party transactions, and a detailed audit was conducted on this matter.

In addition, there are many other details, including making up for the social security contributions owed to employees.

Fortunately, Chen Guiliang had already purchased social insurance for his employees, so this back payment step could be skipped. In contrast, most companies in China currently have to go through the hassle of making back social insurance payments before going public.

Once all this is done, Chen Guiliang will likely begin IPO financing negotiations in early summer next year.

"Hey, Brother Gang, I need to talk to you about something." Chen Guiliang called Tao Chenggang.

Tao Chenggang was busy on his end: "Go ahead."

Chen Guiliang said, "I'm preparing for an IPO, and I'll be doing financial compliance rectification next year. A team will be coming to your company to do an audit, so you'll need to prepare accordingly."

"Great! We're going public soon!" Tao Chenggang exclaimed with delight. "Don't worry, I recently hired a finance manager at a high salary. My makeshift team is becoming more professional. Just call me a month or two in advance so I can have the finance department prepare."

Chen Guiliang said, "OK, thanks."

"What's our relationship? Don't be so formal," Tao Chenggang said.

Chen Guiliang asked, "How is the development of 'The Emperor's Reign' going lately?"

Tao Chenggang said, "The peak concurrent users have been rising, but the recent growth rate has slowed down significantly. Damn it, 'Zhengtu' and 'Eudemons Online' are constantly vying for market share. However, their growth rate doesn't seem to be fast either, after all, the existing market is only so big. I'm now like Shi Yuzhu, both of us are expanding into the market in small cities and counties."

Last month's 17173 online game monthly rankings showed that World of Warcraft and Fantasy Westward Journey remained the undisputed first and second place winners.

The third is "The Journey", and the fourth is "The Emperor's Reign".

However, after the period of intense public discussion, "Three Kingdoms Kill" has dropped from third to fifth place.

Next up are "A Chinese Odyssey Part Two: Cinderella", "Audition Online", "Legend of Mir 2", and "KartRider".

Tencent's QQ Fantasy continues to decline and is about to fall out of the top ten.

The increasingly good performance of "The Emperor's Reign" and the ever-increasing revenue each month will make it easier for ByteDance to raise funds and go public.

Even if ByteDance hasn't received cash dividends yet, the profits due from its shareholding can be directly included in ByteDance's consolidated financial statements or treated as investment income. This would improve ByteDance's overall net profit and earnings per share.

Compared to other websites, Tudou.com is rather disappointing.

Chen Guiliang called Wang Wei again to ask about the current situation of Tudou.com.

What could be going on?
With more and more registered users and increasing viewership, they're still quietly accumulating copyrights, huh?

With the money raised at the beginning of this year, Tudou.com can last for another four or five months, and Wang Wei plans to launch the next round of financing in a while.

Tudou.com's biggest enemy has already emerged.

Youku is currently in its trial operation phase and will officially launch by the end of the year at the latest. Moreover, the founder has an impressive background, attracting numerous venture capitalists eager to invest in Youku.

Oh, and there's also ZBJ.com.

ByteDance has made an angel investment, acquiring a 25% stake in ZBJ.com!
Chen Guiliang had almost forgotten about it. After he contacted Zhu Mingyao, he sent people to discuss the rest.

Chen Guiliang immediately called Zhu Mingyao to ask about the situation.

Zhu Mingyao laughed and said, "President Chen, I thought you had stopped managing ZBJ.com." "How's the website doing lately?" Chen Guiliang asked.

Zhu Mingyao said, "Including myself, there are only six people in the whole company. We work from dawn till dusk every day, and last month's net profit is estimated to be several thousand yuan. I am currently working on a big order worth 30 yuan, which is a project for an education group."

“I had almost finished talking with the person in charge, but the leader who was going to sign off on it didn’t trust ZBJ.com. He said the name of the website was not respectable. Luckily, I used to be the chief reporter of the evening newspaper, so I still had a respectable position. I had a drink with that leader, and he said that as long as there was a significant media coverage of ZBJ.com, he would sign the contract.”

“What does it mean to be influential? This time I contacted CCTV, specifically the ‘News Broadcast’! CCTV reporters have already come to record and are willing to promote us because this is a new internet model proposed by the Chinese. Once the ‘News Broadcast’ airs, we’ll definitely get that 30 yuan order, and our website will become famous nationwide.”

Chen Guiliang said sincerely, "President Zhu is awesome."

Zhubajie.com has been making a profit since its launch, and its revenue is expected to surge after the news program on CCTV-6 reports on it.

This could also have a positive effect on ByteDance's IPO.

……

We're busy with the IPO, but we also need to focus on company development.

Chen Guiliang called Xie Yang and others who were in charge of product and promotion to discuss how to adjust and improve the functions of the campus network groups.

Cai Yifei, the second programmer the company recruited externally, has transitioned from a simple programmer to a key member and technical staff member in the product department.

This guy has a very active mind. He hasn't improved much in terms of technical skills since joining the company, but he's become increasingly good at expanding and improving product content.

Chen Guiliang said, "The group function on Renren (the school's intranet) was initially just a bonus. Now that more and more content is being generated, what are your thoughts?"

Xie Yang said, "The situation with the campus network groups is a bit awkward; it's somewhere between Douban and Baidu Tieba, but leans more towards Douban. I don't think it's necessary to change it, nor can it be changed. As for improvement, we can just enhance our site's search capabilities."

Cai Yifei said:
"Once our internal search engine capabilities are more powerful, we can still make some changes. Currently, the Renren.com groups mainly originate among classmates, schoolmates, and friends. The Renren.com social ecosystem is already closed, and this will make the groups even more closed."

"We need to break down the barriers between students from the same school and friends, and get all student users on the site to communicate. We can start by expanding from students from the same school to students from the same city, step by step. Don't try to imitate Douban or Tieba. Renren groups are Renren groups, and we are different from those two."

The others also spoke one after another.

After careful consideration, Chen Guiliang felt that Cai Yifei's words made a lot of sense.

Trying to align yourself with Douban or Tieba will likely provoke resentment from Renren users.

After further discussion, Chen Guiliang supported Cai Yifei's proposal.

Then, Chen Guiliang said, "Since the campus network group has been changed like that, I plan to launch another new product. This product will not belong to campus network or overseas network, but will be a separate website."

"Users of Renren.com and HaiNei.com do not need to register again. They can log in to the new website directly with their original accounts. However, they can change their nicknames on the new website."

"Users ask questions on the new website, and other users provide answers. A points system is used, which can be obtained by recharging or by answering questions."

An employee named Qi Tao said, "Isn't this just Baidu Knows?"

Chen Guiliang shook his head: "Baidu Knows is a practical question-and-answer tool derived from Baidu Search. Questions and answers are short and quick. What I want to do is an elite community knowledge content platform, focusing on in-depth knowledge sharing and discussion, with answers that are more structured long articles and professional analysis."

"Where can we find so many elites to answer questions?" said an employee named Weng Fanyu.

Xie Yang laughed and said, "Peking University. When I don't understand something, I often pretend to be a student and go to ask those Peking University professors."

Chen Guiliang said, "University professors are one aspect, but there are other successful people in society as well. Those successful people also have a desire to express themselves, especially in their professional fields. I will personally invite them then."

Cai Yifei asked, "What should we call the new website?"

Someone exclaimed, "We can ask the Lantai. The Lantai is an old name, and people today are asking about it. The Lantai was the library in the Han Dynasty, and the Secretariat in the Tang Dynasty was also called the Lantai. Modern related institutions are also elegantly referred to as the Lantai."

Everyone objected to this statement.

"Brother, yours is too formal. It's not that being formal is bad, but the problem is that it's not easy to remember."

"You Chinese literature majors, stop spouting so many academic jargon."

"What's the point of asking questions at the Imperial Academy? It's not even as good as the Jixia Academy."

"..."

Chen Guiliang raised his hand and said, "Alright, let's stop arguing. I've already thought of a name for the website: Zhihu."

It's equally bookish, but the boss is definitely right.

"Zhihu? That's a great name. First, it's easy to remember, as it's a homophone for 'zhi hu zhe ye'; second, it's meaningful, as Zhihu means 'do you know?' It perfectly matches the website's positioning."

"The boss is really good at naming things. Whether it's ByteDance, Game Science, or the upcoming Zhihu, they all contain a romantic sentiment of literature and science."

"Don't you guys think about it? Back when the boss got into Peking University, he was specially admitted through the New Concept Writing Competition."

"..."

A bunch of sycophants.

But Chen Guiliang looked quite comfortable in the photos.

(End of this chapter)