If everyone is reborn, who will work for capital?

Chapter 173: Investing in Dami Technology, Making a Key Strategic Move (6k)

Beijing, Yingu Building, Dami Technology Company.

Lei Jun, who had just hung up on Liu Qin of Morningside Capital, returned to his workstation from the conference room, feeling somewhat depressed.

Liu Qin is from Hubei Province, the same province as Lei Jun. The two have known each other for 7 years and have also collaborated on projects such as UCWeb, YY, and Xunlei.

When Dami Technology was first established, Lei Jun personally visited Liu Qin and talked about his entrepreneurial ideas and his triathlon strategy of [software + hardware + Internet].

However, the strategy for triathlon at that time was still relatively vague.

At that time, the MIUI software was just a concept, high-spec, low-price smartphones had not yet been launched, and the ecosystem monetization of internet services was nowhere to be seen.

Although Liu Qin, a venture capitalist, did not explicitly refuse, he politely said to wait and see.

Liu Qin is the only investor who is still hesitating, and this hesitation has lasted for three months, which is making Lei Jun a little anxious.

Liu Qin is optimistic about Lei Jun, a successful professional manager and angel investor, but still has doubts about Lei Jun's triathlon model of [software + hardware + Internet].

Moreover, he also had doubts about billionaire Lei Jun's entrepreneurial attitude.

When Dami Technology was founded, the company's registered capital was only 100 million RMB, of which Lei Jun personally contributed 90 RMB.

In this angel round: Dami Technology wants to raise $1000 million: Lei Jun and his team are only willing to contribute $500 million: the other $500 million will be provided by Morningside Venture Capital.

The astute Liu Qin worried that Lei Jun himself wasn't very optimistic about Da Mi's triathlon model, fearing that he was just chasing trends and wouldn't be fully committed.

It wasn't just Liu Qin; several other investment institutions that Lei Jun was familiar with, who were also not optimistic about his project, all rejected him without hesitation, including IDG and Qiming Venture Partners.

The logic behind these investment firms' refusal is simple:

First, the Android smartphone industry seems to be saturated, with giants such as Nokia, Samsung, and HTC dominating the market. As a new brand, Dami Technology has neither hardware experience nor supply chain resources, making its chances of success slim.

They believe that Lei Jun's triathlon concept is not disruptive innovation, but pseudo-innovation.

Secondly, Lei Jun's proposed model of "high cost-performance + internet service profit" was not understood at the time. After all, making mobile phones is not like making software; it requires a real investment of a large amount of money and has a long return cycle.

Can internet users make good mobile phones?

Can selling mobile phones at cost price achieve sustainable profitability?

Will the future user base be able to support ecosystem monetization?

This long-term strategy of "sacrificing first to gain later" is extremely challenging given that VCs generally pursue short-term returns.

Rather than investing in companies with high certainty but extremely high cash burn, most VCs believe it's better to invest in internet companies with high and fast returns.

As the development of the MIUI project progressed smoothly, Lei Jun gained a deeper understanding of the triathlon strategy. He then excitedly called Liu Qin again to discuss his enhanced [software + hardware + internet] strategy.

Unfortunately, Liu Qin's reply this time was, "[Still busy, let's talk again tonight]", and then he quickly hung up the phone.

In Lei Jun's view, this was yet another polite refusal from Lao Liu.

So he was depressed, very depressed.

Lin Bin noticed that Lei Jun wasn't in high spirits and guessed that he had failed to persuade Liu Qin again. He looked around, worried that it would affect the team's morale, and said, "Mr. Lei, shall we go to the restroom together?"

Lei Jun was taken aback at first, then realized what he meant and nodded: "Okay, let's go."

Lin Bin holds a bachelor's degree from Sun Yat-sen University and a master's degree from Drexel University in the United States. He previously served as the Engineering Director of Microsoft Asia Engineering Institute and the Vice President of Google (China) Engineering Research Institute.

Initially, Lei Jun was very optimistic about Meizu phones and spoke highly of the Meizu M8. At the time, Lei Jun intended to price the Meizu M8 at 3...

He invested 100 million yuan to acquire a 30% stake in Meizu and personally assumed the role of chairman of Meizu.

However, Meizu founder Huang Xiaoming wanted to keep the shares firmly in his own mobile phone business and was only willing to give Lei Jun the position of CEO.

Later, Lei Jun wanted to introduce Lin Bin to Boss Huang and suggested that Boss Huang give Lin Bin 5% of the shares, but Huang Zhang still refused.

Subsequently, Lei Jun pulled Lin Bin into starting a business together, forming his own team to create rice technology.

Lin Bin became the co-founder and president of Dami Technology, taking full responsibility for the company's daily operations and team building. He will also be responsible for the supply chain in the future.

Lei Jun and Lin Bin walked out of the office and strolled all the way to the rooftop.

"Mr. Lei, is the communication with Morningside Capital still not going smoothly?" Lin Bin asked.

Lei Jun glanced at Lin Bin and didn't hide anything: "I hadn't even exchanged a few words when Liu Qin said he had something to do and hung up the phone, and we made an appointment for the evening."

Lin Bin also guessed that Liu Qin was politely declining, and quickly comforted him, "President Lei, didn't you have an appointment with Arctic Capital today? Maybe there's a chance."

Lei Jun sighed: "Let's talk some more."

Although Arctic Capital is also an international capital firm, it was only recently established, and Lei Jun had no hope for it at all.

At this time, Dami Technology was still focusing on MIUI and doing deep customization of the operating system. It was also a trial run and had not yet really started developing mobile phone hardware.

Therefore, the fact that Dami Technology is going to manufacture mobile phones is basically kept secret from the outside world, and not many people know about it.

At this time, Lei Jun was contacting investors who were relatively familiar with him. He didn't want to deal with unfamiliar investors like Arctic Capital, and he didn't want to reveal too much about Dami Technology's strategic plans.

If it weren't for Li Dongping's persistent and persistent nagging, he wouldn't have even given Arctic Capital the opportunity to meet.

Moreover, Lei Jun is not looking for financial investors who will simply provide money, but rather strategic partners who truly understand his triathlon model and are willing to commit long-term.

At 1:30 pm, in a coffee shop next to Yingu Building.

When Lei Jun, founder, chairman and CEO of Dami Technology, and co-founder Lin Bin walked in, Li Dongping and Lin Zhaohui were already sitting inside waiting.

This was the first contact between the two parties, and neither side brought their legal or financial teams.

"Mr. Lei, it's a pleasure to meet you! I'm so glad to finally meet you in person!" Li Dongping said with a smile as he entered the room.

"Mr. Li, I'm so sorry, the recent business trips have all had scheduling conflicts. Please forgive me." Lei Jun—

He expressed his apologies for the previous refusals.

While Li Dongping and Lei Jun were exchanging pleasantries, Li Zhaohui and Lin Bin also embraced warmly.

The two were colleagues at Google and had known each other since 2006. As senior executives, they had a lot of interaction at work. However, they lost contact after Li Zhaohui joined Bertelsmann.

After exchanging a few simple pleasantries, the four sat down opposite each other and then got down to business.

"Mr. Lei, you and Mr. Lin are both busy, so let's get straight to the point."

Li Dongping looked intently at Lei Jun and continued, "We, Arctic Capital, are willing to invest $600 million in Dami Technology in exchange for a 20% stake, to support you in creating a revolutionary mobile phone."

Lei Jun and Lin Bin were both taken aback. They exchanged a glance and frowned simultaneously.

They've seen capital that's straightforward before, but this is the first time they've seen it so straightforward.

The valuation of $3000 million is even higher than what Lei Jun and Morningside Venture Capital asked for.

Asking to invest without knowing anything? Even if someone is incredibly naive and has too much money, it's still a bit much, isn't it?

Lei Jun, who is also an investor, was very puzzled.

This happiness came too suddenly, so suddenly that they doubted whether it was really happiness.

More importantly, in his previous communications with Li Dongping, Lei Jun had only talked about starting up MIUI and had never discussed mobile phones.

"Mr. Li is very humorous!" Lei Jun quickly recovered from his shock and said with a smile, "Why did you think we were making mobile phones?"

He neither confirmed nor denied that Dami Technology was making mobile phones; he simply raised his own questions.

Li Dongping laughed confidently: "President Lei, Arctic Capital is an international capital. We dare not say that our information sources are the most comprehensive in the world, but among investment institutions entering China, if we claim to be second, I doubt anyone would dare to claim to be first."

Lei Jun and Lin Bin exchanged another glance, both frowning.

This was the second time the two of them had been stunned by Li Dongping.

If Lei Jun hadn't known that Arctic Capital had recently invested in Weiju, and if Lin Bin hadn't known Li Zhaohui, he would have even thought Li Dongping was a fraud.

Lei Jun, having seen the world, pondered for a moment before smiling again and asking, "So, Mr. Li, why do you think Dami Technology is going to make mobile phones?"

Li Dongping finally regained his serious demeanor and replied, "To be honest, we originally wanted to invest in a mobile phone manufacturer in Guangdong Province, but after communicating with them, we found that the founder's vision was a bit narrow and that he was sticking to a closed concept of 'small but beautiful,' so we gave up."

"During the communication process, we heard that Mr. Lei was very interested in making mobile phones, so we learned more about him through official channels and found that he founded Dami Technology and personally started his own business."

Upon hearing this, Lei Jun was 100% certain that the mobile phone manufacturer Li Dongping was referring to was Meizu.

Although he learned a great deal about making mobile phones from Meizu's owner, Mr. Huang, under the guise of wanting to invest, he never mentioned that he wanted to make mobile phones himself.

Moreover, Dami Technology hasn't even started manufacturing mobile phones yet. Even if Li Dongping could learn about Dami Technology through so-called "official channels," it's unlikely he would know that Dami plans to manufacture mobile phones in the future.

Unless someone with inside information leaks the information.

Liu Qin? But he's very familiar with Liu Qin, so theoretically it's unlikely.

Lin Bin? His own partner, he probably wouldn't.

Therefore, he suspected that Li Dongping was just guessing and had no real evidence, or even that he was trying to trick him.

Just as Lei Jun was about to deny it, Li Zhaohui, who hadn't said much, spoke up: "Mr. Lei, before I joined Arctic Capital, I was in charge of investments at Bertelsmann Asia Investments, which is an LP investor in Morningside Capital. I've dealt with Liu Qin before."

Leibusi was taken aback when he heard this. He didn't know this information, but he didn't doubt it.

At this moment, Lei Jun had already concluded that the person who leaked the information was most likely Liu Qin of Morningside Capital, and couldn't help but curse Liu Qin in his heart.

Li Dongping continued to get straight to the point: "Mr. Lei, Mr. Lin, we at Arctic Capital have been paying close attention to the domestic smartphone manufacturing industry. The recently released iPhone 4 has proven that smartphones are the core entry point to the mobile internet and the biggest trend of the next decade."

"But such a large global market cannot be dominated by Apple, especially in China."

"HTC's success has proven that brands based on the Android system and deeply rooted in the domestic market have huge opportunities."

Li Dongping paused for a moment, then continued, "Traditional mobile phone manufacturers are in the hardware business, selling phones as hardware. But what Dami Technology wants to do is not traditional mobile phones, but a [software + hardware + internet] model. We are convinced that this is the future of smartphones."

Upon hearing this, Lei Jun's eyebrows twitched slightly, a kind of emotion that came after a long period of not receiving recognition.

Arctic Capital is a kindred spirit!

At least the emotional value was provided!

Equally excited was Lin Bin, who was sitting next to him; his lips twitched as well.

Li Zhaohui, who was sitting opposite watching the commotion, swallowed hard as he watched the scene unfold between the two people, feeling a pang of guilt.

Li Zhaohui was not optimistic about this model, but he had no choice but to do so because of Arctic Capital's position and the instructions of the behind-the-scenes boss.

He couldn't bear to watch these two poor entrepreneurs step by step fall into the abyss.

Initially excited, Lei Jun quickly regained his composure. Wanting to test Li Dongping's abilities, he seized the opportunity to ask, "Mr. Li, what are your thoughts on the [software + hardware + internet] model?"

Li Dongping glanced around the room and, finding no place to write, took a pen from his pocket, grabbed a napkin, and began to draw and explain, following the framework diagram given by Mr. Charles Lin: "First, hardware. Mobile phones, and perhaps ecosystem products in the future, are the entry point, the carrier. They can be sold at near-cost prices to quickly acquire a massive user base; they are the stepping stone. Just like 360 ​​antivirus software and Costco."

Lei Jun and Lin Bin remained silent, which was taken as tacit agreement.

"Secondly, software is the key to creating an ultimate experience and gaining user loyalty. Mr. Lei is the CEO of Kingsoft, so he must have a deep understanding of user experience. We believe in Mr. Lei's knowledge in this area."

"Third, internet services, this is the real profit center. In the future, monetization can be achieved through services, Google Play, games, and other methods. As long as the first two are done well, the business model for the third will be worry-free."

"A three-in-one strategic synergy."

Li Dongping stared at Lei Jun: "Mr. Lei, I wonder if my understanding differs from your strategy?"

"Hmm, more or less." Rebus nodded slightly, but didn't get too excited.

After all, he had said this to Liu Qin before. Since Li Dongping and Li Zhaohui had talked to Liu Qin about it, it wasn't too difficult for Li Dongping to repeat it now.

Just as he was about to probe further, Li Dongping made a sudden turn: "However, Mr. Lei, your team is too conservative."

"Mr. Li, what do you mean?" Lei Busi was startled and hurriedly asked.

"You're only focusing on MIUI right now, wanting to wait for the software to succeed before starting the hardware. That's too slow." Li Dongping shook his head repeatedly. "Mobile internet is developing very quickly. Look at the development of Momo, and then look at the domestic smartphone shipments."

Li Dongping paused for a moment, then continued, "The window of opportunity for smartphones is not long. You need to enter the market quickly; there's no need to wait."

Lin Bin, who was standing next to him, opened his mouth, wanting to say, "We haven't secured funding yet, and Mr. Lei, a billionaire, is unwilling to spend more of his own money!" But in the end, he held back and didn't say anything.

"Mr. Li, we are actually waiting for—" Lei Jun started to say a few words, but then he couldn't finish.

Although MIUI has not yet been launched, its development is progressing well, which has given him some confidence.

He originally planned to start developing the mobile phone hardware once he persuaded Liu Qin and secured an investment commitment from Morningside Venture Capital.

"Mr. Lei, Mr. Lin, funding is not a problem at all. We at Arctic Capital understand you. Arctic Capital is an investment institution that is willing to accompany companies in their long-term growth, and we provide comprehensive support."

"Whether it's Ele.me, which we've invested in, or Weju, which is currently very popular, or Kik, the Canadian instant messaging tool, the same applies."

After Li Dongping finished speaking, he smiled and looked at Li Zhaohui: "Zhaohui, why don't you introduce yourself to President Lei again?"

Li Zhaohui nodded slightly and said humbly, "Mr. Lei, before joining Google, I worked at Nokia and have some understanding of wireless communication and the mobile ecosystem."

As he spoke, he shared his insights on the past and future of the smartphone industry.

Many of the insights into the future came from Mr. Charles Lin.

"Mr. Lei, I believe that since Dami Technology has decided to make mobile phones, it will definitely use the top-of-the-line chips and memory components. I have some connections at Qualcomm and Samsung, and I may be able to lend a hand in the supply chain," Li Zhaohui continued.

Upon hearing this, Lei Jun and Lin Bin were simultaneously moved, experiencing a sudden, overwhelming feeling.

For rice to be used in mobile phones, besides money, the most crucial factor is supply chain resources.

As for supply chain resources, Lei Jun's strategy is to not use suppliers other than Apple and Samsung, forcing himself to meet the highest standards from the very beginning.

This coincides with Li Zhaohui's viewpoint.

However, as a startup, Dami Technology has no bargaining power when it comes to negotiating with Qualcomm and Samsung. Even if it wants to buy at a high price, they might not be able to supply it.

The "connections" that Li Zhaohui mentioned might actually help Dami Technology in the supply chain.

Lei Jun tentatively asked Li Zhaohui a few questions about which accessories should be used for the top-of-the-line model.

Li Zhaohui then began to speak eloquently: "President Lei, if the production of the rice-themed mobile phone starts as soon as possible, it can use Qualcomm's currently developing 1.5GHz dual-core processor, which is the world's fastest."

Xiaolong MSM8260————

"1GB of LPDDR2 RAM is recommended."

"For storage ROM, consider Samsung or Micron's 4GB eMMC flash memory."

"The camera can be a Sony one —"

"Manufacturing can be done by Inventec or Foxconn —"

Before Li Zhaohui arrived, he did his homework under the guidance of Mr. Charles Lin.

He then showed off his professionalism in front of Lei Jun and Lin Bin, leaving them stunned and filled with admiration.

But when Li Zhaohui asked the two men a question, Lei Jun and Lin Bin became somewhat hesitant.

At this moment, although the two of them had some understanding of the hardware configuration, they were not yet professional enough.

Seeing this, Li Dongping shook his head repeatedly: "President Lei, President Lin, your Dami Technology needs to hurry! You need to equip it with a team of experts who understand hardware!"

"If you're short of money, Arctic Capital can transfer the funds as soon as possible. You absolutely must seize this window of opportunity!"

Lei Jun blinked and muttered, "Mr. Li, is this always been Arctic Capital's investment style?"

"That's always been the case!" Li Dongping laughed. "Our decisions to invest in Ele.me, Weiju, and Kik were all made in less than a day."

"But before we make a move, we conduct a comprehensive investigation of the candidates, rather than just listening to the entrepreneurs themselves," Li Dongping added.

Seeing Lei Jun's expression, which held both admiration and a hint of doubt, Lin Bin stepped forward and tentatively asked, "So, what information did President Li gather about our Dami Technology?"

Li Dongping smiled calmly: "I won't talk about MIUI. I'll just talk about the other members of your co-founder team besides Lei Jun and Lin Yu."

He cleared his throat and began to introduce them one by one, counting on his fingers: "Li Wanqiang, Design Director of Kingsoft Software, General Manager of Kingsoft PowerWord, currently in charge of the overall R&D of MIUI —"

"Huang Jiangji, a graduate of Purdue University, is the Development Director at Microsoft Engineering Institute, responsible for—"

"Liu De, Master of Science from Beijing Institute of Technology, Art Center College of Design —"

"Hong Feng, a bachelor's degree holder from Shanghai Jiao Tong University, a master's degree holder from Purdue University, and a senior product manager at Google, previously..."

Li Dongping recounted the stories of each of the founding members of Dami Technology in great detail, causing Lei Jun and Lin Bin to break out in a light sweat.

"Mr. Lei, your team is top-notch in software, internet, and business models, but what you lack most right now is a top-notch hardware expert. Zhaohui has already found someone for you, and we can introduce you if needed. Regardless of whether you ultimately accept our investment or not, we can still introduce you."

Lei Jun and Lin Bin felt a warmth in their hearts.

Lei Jun has been an investor for so long and has met so many investors.

But this is the first time I've seen something like Arctic Capital, which is more nanny-like than a nanny and more decisive than instant noodles.

After a long silence, he finally couldn't help but ask, "Mr. Li, if Arctic Capital invests in rice, are there any additional conditions for its daily operations?"

Li Dongping was secretly delighted, but said casually, "Our investment logic at Arctic Capital is [long-term companionship, never causing trouble]."

"We need a board seat, but we won't be involved in product, personnel, or operational decisions; we'll only be involved in financing and mergers and acquisitions."

Voting on strategic matters such as major asset disposals. These can be written into the agreement; Mr. Lei, you're a professional in this area.

Lei Jun was tempted, and Lin Bin next to him was tempted too.

The conditions offered by Arctic Capital were far better than they had expected.

Just as Lei Jun and Lin Bin were deep in thought, Li Dongping suddenly seemed to remember something and added, "We at Arctic Capital promise that the shares we invested in this round will not be transferred before Dami Technology's IPO unless Dami actively requests us to transfer them."

"If rice needs bridge loans or follow-up financing, we can give priority to co-investing under the same conditions."

Li Dongping's promise perfectly embodies the guarantee of "long-term companionship," and this contractual commitment is far more powerful than empty promises.

Beneath Lei Jun's calm exterior, his heart was already surging with excitement.

He had contacted so many VCs, but none of them could understand the rice model. Arctic Capital was the first institution to fully recreate the Ironman Triathlon and provide in-depth insights.

Arctic Capital was the first to recommend hardware experts; they were the first to take the initiative.

Arctic Capital has created too many firsts and overturned his understanding of investors.

He even no longer wanted to communicate with Liu Qin of Morningside Capital.