Tech startup: I really do make mobile phones!

Chapter 111 New Developments and New Problems
Chen Mo sat in the general manager's office, staring blankly at the soft light from the hidden LED lights on the ceiling, lost in thought.

The company's over-reliance on strong distribution channels in North China has caused Orange Mobile to become mired in a pricing dilemma in its efforts to promote technological equality.

This prevents it from leveraging its technological advantages to outmaneuver competitors, making it difficult to quickly penetrate rural markets and enhance brand awareness.

This matter weighed heavily on Chen Mo's heart like a stone, making him feel somewhat anxious.

Suddenly, he sat up straight, a look of determination and resolve flashing in his eyes.

Chen Mo quickly reached for the company's internal landline on the table, pressed the number 2 key, and dialed Gong Yun's office directly.

"Sister Gong, please prepare the company's financial documents from last month and come to my office later."

At this moment, Nietzsche's channel system of 1200 directly operated stores was right in front of him, and he could not miss this opportunity.

The good things in this world are never something you wait for; you have to go and get them yourself.

A moment later, Gong Yun pushed open the door and entered.

Chen Mo stood up impatiently and took two steps forward.

"Sister Gong! How much funding can we allocate right now without affecting the company's daily operations?"

The two walked to the reception area and sat down.

Gong Yun had already made preparations. While quickly flipping through her notebook, she organized her thoughts and began to give her report.

"Mr. Chen, let me first talk about our current situation regarding the capital tied up in inventory: For our self-operated business, based on a 7-day production cycle, 50% prepaid costs, and a 75-day payment period, the capital tied up is 9240 million. However, the OEM 'X' machine business has now been cancelled, and this part of the capital has been released."

She paused, then pulled out a report from the documents: "Last month, operating cash inflow was 7.608 million, outflow was 5.544 million, and net cash flow on the books was 2.064 million. After deducting taxes, marketing fluctuations, labor costs, etc., the conservatively available funds are about 1.7 million."

This means that after half a month of fund accumulation, Orange Technology's corporate account has accumulated approximately 2.064 million yuan.

At first glance, this pool of around 2 million yuan is not much different from the amount of funds that Orange Mobile had accumulated in the first week after its launch. However, in reality, Orange Technology has been reinvesting its profits into production to expand its capacity, and its overall business scale has continued to grow like a snowball.

After more than a month of hard work, its revenue has grown from 200 million in the first week to 1 billion in the first month, and the company's business scale has increased fivefold.

"So, for the company to operate normally next month, we need to reserve at least 3000 million in cash reserves for operating costs, right?"

In fact, the operating costs next month will definitely be more than 3000 million, but some profit growth can cover some of the operating costs, considering Chen Mo's understanding of finance as a science and engineering guy.
“That’s right, Mr. Chen!” Gong Yun smiled and nodded in response.

Chen listened attentively, nodded, and said, "Sister Gong, I understand. You can go ahead and get back to work!"

After Gong Yun left, Chen Mo returned to his desk, slowly sat back in his executive chair, and stared blankly at a package on the table.

This is either a blessing or a curse; if it's going to be a curse, you can't escape it. I just hope it's not too expensive!

Chen Mo tapped his fingertips on the desk, then used a letter opener to open the valuation report for the Nietzsche store that Lin Junfeng had sent that morning.

1200家门店年总利润2.16亿，PE估值17.28-25.92亿，固定资产估值1.8-2.4亿，综合估值19-28亿。

He stared at the astronomical figure and smiled bitterly. The 1.7 million yuan that Orange Technology could come up with now was not even enough for a fraction of the acquisition!

This is more than 10 times less than the lowest valuation of 19 billion. What can we do?

Chen Mo thought for a moment, then took out his phone and dialed Xu Mingyuan's number at Yuancheng New Energy, hoping to borrow some funds from Yuancheng.

The other party sounded somewhat embarrassed: "Mr. Chen, our Yuancheng has just received an order for 5 sets of outdoor oxygen pump batteries, and we are currently in trial production of 5V/2000mAh gaseous lithium batteries."

Recently, Xu Mingyuan received an order from SOPO, an aquarium equipment manufacturer in Zhongshan, through the introduction of an old classmate.

The other party is seeking a battery solution for its newly developed next-generation portable outdoor oxygen pump and has decided to place an initial order for 5 sets of Far Orange's gaseous lithium batteries.

Far Orange is using its first medium-sized production line, which has been debugged by BTD, to trial-produce the 5V/2000mAh gaseous lithium batteries required by the other party.

However, the cost of debugging the production line is very high now, and Yuancheng is short of funds and may not be able to lend funds to Orange.

"Mr. Chen! SOPO may increase its order volume later, and we are currently facing a serious cash crunch. What do you think about this?"

Xu Mingyuan's meaning was clear: the funds in Yuancheng's account were now to be used for its own development and could not be used to support Orange.

Chen Mo was not disappointed after hearing this.

After all, although Yuancheng is like an "adopted son" that Orange adopted halfway through its life, it is now considered a "child" that Orange has put a lot of effort into raising.

Seeing it get on the right track for development, Chen Mo was naturally happy.

He laughed and raised his voice, saying, "Mr. Xu, well done! Whether gaseous lithium batteries can become the future of new energy remains to be seen and will be tested by the market. SOPO's innovative order is our first step in opening up the market."

"As the saying goes, a journey of a thousand miles begins with a single step. Congratulations on leading Far Orange to take this crucial first step!"

Chen Mo was initially slightly dissatisfied with Xu Mingyuan's lack of subordinate self-awareness, but the autonomy that the other party showed at this moment brought him a huge surprise.

Under Chen Mo's ingrained thinking, for Far Orange to get on the right track and start making large-scale profits, it will have to wait until the Orange 2 uses a new generation of MOF-honeycomb batteries and opens up the previous generation of batteries to competitors.
Expanding his business outside the mobile phone sector was a path he had never considered.

Chen Mo overlooked the fact that Yuancheng was not just a factory that supplied gaseous lithium batteries for mobile phones, but Yuancheng New Energy Technology Company.

Gaseous lithium batteries – with unlimited potential for market expansion!
In the field of portable outdoor devices, the super-fast charging speed of gaseous lithium batteries is a significant advantage, enough to make most users willing to pay for their higher cost.

The new generation SOPO outdoor air pump is equipped with a 5V/2000mAh gaseous lithium battery, which can theoretically be fully charged in 67 seconds. This is undoubtedly good news for many fishing enthusiasts and aquarium lovers.

If SOPO's new generation of outdoor oxygen pumps can be accepted by users, Far Orange will be able to successfully expand into a second business line besides mobile phone batteries, achieving multi-business development.

It seems that after securing the Nietzsche store channels, he needs to have a serious discussion with Xu Mingyuan about the future plans for Yuancheng.

A faint humming sound came from the production line on the other end of the receiver. Chen Mo seemed to see the materials in the Far Orange workshop spraying out of the injection port in a mist-like form, condensing into a pale golden fluid in the vacuum chamber.
"Mr. Xu! The high debugging costs are temporary. As long as we can maintain stability, mass production will be a new growth point for our Yuancheng business. This battery specification can provide more battery solutions for outdoor portable devices."

After hanging up the phone, Chen Mo's black orange phone was still warm.

It's normal for a phone to get warm during use.

Referring to Lao Wang's "Orange 4" from his previous life, the Orange 1 and "X" have similar configurations and are relatively balanced in performance on the market.

To give an example, if you imagine using 100 parts to make a 60-point phone, then the Orange 1 uses 80 parts to make an 80-point phone, perfectly balancing the performance of the components.

While rural consumers may not be tech-savvy, they are not stupid; they will not buy substandard phones.

The development of Orange 2 can't rely on me and someone like Zhao Tiezhu, who's only half-baked, to try our luck.

Old Wang had already referenced Orange 4 from his previous life, leaving Chen Mo with no one to pay homage to.

After all, he mainly worked on batteries in his previous life, not on making mobile phones. It was already a miracle that he could remember "Orange 4".

It seems that Orange Technology is missing a knowledgeable R&D director!
Orange Technology has developed rapidly, but it also has many problems.
Chen Mo's gaze returned to the valuation report for Nietzsche's stores. Instinctively, he took out a leather notebook from his drawer and added two things to his notes: discussing the Yuancheng plan with Xu Mingyuan after resolving the channel issues, and finding a research and development director for Orange Technology. He reminded himself not to forget these two things. Just as he finished writing and was about to put the leather notebook away, a gold-embossed business card fell onto his desk.
"Lei Jun!!!" His eyes lit up, and he thought: Once you've been there, you'll get used to it. Maybe it'll work if I get Lei Jun to form an acquisition team.

Although in his previous life, Xiaomai used online channels, Lei Jun might not have refused if he had used some offline channels as well.

Opportunity knocks but once, so let's get started!

So, Chen Mo took out his phone and called Lei Jun.

"Mr. Lei, I'd like to invite you to form an acquisition team to take over Nietzsche's offline channels. How about we share them?" Chen Mo tried to keep his tone light and not make himself seem too utilitarian.

"Mr. Chen!" Lei Jun pondered for a moment, "In the initial stage of the new machine, I plan to adopt a light asset model, and there are no plans for offline channels at the moment."

Chen Mo was a little disappointed that the only wealthy person he knew had rejected him.

That's right! Wheat adopts a light-asset model. In its previous life, online channels were booming with orders, and people couldn't even keep up with the production capacity. Why would it need offline channels? That would just make things worse.

Online sales channels for wheat bring a happy kind of trouble!
Chen Mo's oranges were almost crying with envy.

Of course, out of consideration for their past relationship, Lei Jun added a comment.

"However, I can introduce you to Mr. Liu from Fantasy. He's always been interested in projects that young talents value!"

Indeed, Mr. Liu, whose reputation was not good in later generations, was seen by many people in China at this time as a business tycoon who was eager to help others in times of crisis.

When the Xinshan Pangu project failed in 98 and was facing bankruptcy, he provided $450 million in cash to help Lei Jun make a comeback.

Before the millennium, the Giant Building project failed, and he provided Shi Dazhu with initial funding to help him turn his fortunes around with Brain Gold.

In 08, during the Sanqing Milk incident, Mengniu faced a hostile takeover attempt by foreign capital, and he raised hundreds of millions of yuan to provide assistance within 48 hours.

At this time, Mr. Liu was always happy to invest in "young talents" who had proven themselves.

The "Internet entrepreneurship fairy tale" of Qiu Bojun stepping down to hand over the CEO position and Lei Jun working tirelessly to help Xinshan go public was all thanks to President Liu's help.

Otherwise, it would be like the senile Qiu Bojun appointing the blindly arrogant Lei Jun, who gambled 2000 million yuan to try to carry the banner of domestic software and PCs, ultimately leading to Xinshan's bankruptcy.

The fairy tale of internet entrepreneurship has turned into a joke.

Mr. Liu helped Lei Jun achieve his goals, which is why Lei Jun later referred to himself as a mentor.

If President Liu had retired from the business world at this point and hadn't made two comebacks, he would have become a spiritual icon who never fell from grace. Given the Chinese tendency to overlook the mistakes of predecessors, his reputation in later generations would have been much better, and his successors would have taken the blame for his errors.

More importantly, retired celebrities have no traffic. Which self-media outlet would be foolish enough to associate themselves with them?

At that moment, a certain bigwig, who was also a symbol of corporate spirit and lived in seclusion in New York, was playing golf with his disciples at the Baskey Golf Course on Long Island.

"Master! Brother Cheng is using the channels of Bubu Gao to make smartphones. I also want to go back to China to make phones!" The young man absentmindedly held the golf club and looked at the gentle and refined middle-aged man beside him.

"Hahaha!" The laugh of the rich: "Ah Wei, don't rush, let me finish this bunker shot."

The middle-aged man patiently swung his club, the ball flew over the green, and he sank the hole in one stroke.

He handed the club to the caddie, took off his glove, and said to the young man with a smile, "Awei, you can go back if you want. I'll tell Ajin that the distribution channels for the Bubu Ointment will be open to both of you fairly."

Blue Factory Launch
In the general manager's office of Orange Technology, Chen Mo was listening to Lei Jun's phone call.

"Mr. Chen! Don't worry! Mr. Liu will definitely be willing to help you!"

Chen Mo shook his head and politely declined.

"It's alright, Mr. Lei. I wish you a smooth development of your new device!"

As he hung up the phone, Chen Mo gave a self-deprecating laugh.

Ultimately, Orange is still a "grassroots" brand. If it had the backing of a major brand like Green Factory and Blue Factory, would it need to worry about distribution channels?

Should we give up?

Nietzsche's direct sales channels are important, but not essential, because Orange also has a less controlled strong distribution channel in North China.

Based on the financial information provided by Sister Gong, Chen Mo summarized the current development status of Orange Technology into three points:
1. Healthy cash flow: After establishing a financial management framework, Orange Technology's capital turnover efficiency has significantly improved.

2. The compound interest capacity expansion strategy I implemented during this period was very effective, but we need to be careful about supply chain management risks, after all, there was a precedent—the Orange Weekly cash flow crisis.

3. Potential future challenges: Rapid expansion may bring financial pressure. To counterattack the urban market from the rural market, Orange Mobile needs more unique technological advantages to establish its brand image.

Currently, Orange Technology's revenue accounts for as high as 20.6%, a financial situation that stands out among mobile phone companies.

It's worth noting that the Chrysanthemum Factory, which is often criticized for "profiteering" in later generations, only had a revenue ratio of 10.25% in its previous years.

However, Chrysanthemum Factory's R&D investment accounts for as much as 20.8% of its revenue, which is almost equal to "One Orange". This means that if Orange Technology wants to reach this level of R&D investment, it must use all its profits for R&D and not earn a penny.

After all, not everyone has the courage to pay such a high price for research and development.

If the chrysanthemum factory doesn't invest heavily in research and development, its revenue ratio can reach 31.05%. Putting aside everything else, its profit margin is definitely far ahead of its peers.

Of course, that's just hypothetical. In reality, the Chrysanthemum Factory's high investment in research and development is the real reason for its exorbitant profits.

Orange Technology's outstanding revenue ratio (20.8%) is mainly due to the near-zero cost of system development.

Such an outstanding company will naturally attract the attention of investors.

Just like Ms. Lu, the Executive Director (ED) of Morgan Stanley's Asia Pacific MTM Group (Smartphone and New Energy Technology Group), she is mainly responsible for leading early-stage technology IPOs, strategic investments, and cross-border technology mergers and acquisitions.

At this moment, under the guise of investigating the domestic smartphone market in Shenzhen, she and her intern assistant Xiaomin have been playing around in Shenzhen for almost three days, but they haven't done a single serious task.

Currently, Chen Mo's work focus at Orange Technology is mainly on two aspects: capacity utilization and customer concentration.

Although efforts are being made to improve capacity utilization, significant results are unlikely to be achieved in the short term.

Regarding customer concentration, Chen Mo's primary goal is to seize the market share in rural towns left behind by Nietzsche's withdrawal.

Orange Mobile's future strategic plan is to first increase sales based on its large number of rural users, thereby generating R&D funds to research cutting-edge technologies, and then counterattack the urban user group with higher net value, thereby increasing overall profits and expanding the company.

Just then, Chen Mo's phone rang. He looked at the contact name on the screen and saw that it was his cousin, Xiao Min.

He wondered to himself: Wasn't she supposed to be back in Shanghai for an internship at Morgan Stanley? Why would she suddenly call now?
Could it be that he was fired and wants to come and seek refuge with me?
Chen Mo raised an eyebrow and answered, "Xiao Min! Aren't you interning at Morgan Stanley? Why did you suddenly think of calling me?"

Background noise came from the other end of the phone; there was a slightly noisy female voice speaking English.
(End of this chapter)