Reborn in 08, Public Enemy of Competitors

The atmosphere in the meeting room was tense.

Shen Mo and Liu Qiangdong sat facing each other across a long table.

The two had been arguing for almost an hour over commission rates for different product categories, their arguments sharp and their bargaining intense.

Liu Qiangdong sighed: "Alright, we'll do it your way, with a 5% commission for large appliances."

"Mr. Liu!"

Shen Mo said unhurriedly, "Once Jingdong integrates with YiTaoGO's traffic, when you look back at today's numbers, you'll feel like you've made a profit."

"Then I'll wait and see what YiTaoGO can do."

Liu Qiangdong's tone carried a hint of weariness.

Shen Mo smiled. "Now that we have reached a preliminary agreement on cooperation, there are some things I can say frankly now."

"What does Mr. Shen want to say?"

Liu Qiangdong and Xu Xin exchanged a glance.

With his arms crossed, Shen Mo said, "We're planning a promotional campaign related to large home appliances. I wonder if Jingdong would be interested?"

"Is Mr. Shen perhaps planning a special sale on home appliances?"

Liu Qiangdong squinted his eyes into slits.

Shen Mo didn't answer directly. "Mr. Liu, as you probably know, the government has launched the 'Home Appliances to the Countryside' policy to address the foreign trade difficulties caused by the financial crisis, right?"

"Of course I know."

Liu Qiangdong nodded and said, "But Jingdong can't get involved in this area. The infrastructure conditions in rural areas, such as the network and logistics, are not yet able to meet the requirements for e-commerce to go to the countryside. For example, in my hometown of Suqian, the villagers don't know how to shop online at all."

"The 'Home Appliances to the Countryside' program takes an offline approach to stimulate rural consumption and boost domestic sales."

Shen Mo said, "So, Mr. Liu, do you think the government will only focus on the rural market and ignore the vast urban market?"

Xu Xin suddenly spoke up: "Does President Shen mean that the government will also introduce similar consumption stimulus policies for urban areas?"

"This is just my judgment."

"Regardless of whether such a policy exists, YiTaoGO plans to collaborate with home appliance manufacturers to launch a 'trade-in' program."

Shen Mo gave him a knowing look.

"Trade-in program?"

Liu Qiangdong was taken aback: "Mr. Shen probably doesn't know how high the cost of recycling old appliances is, does he? Logistics, warehousing, refurbishment—all of these cost money. Without subsidies, how can this business be done?"

"Even without subsidies, this deal wouldn't be a loss."

Shen Mo took a sip of water.

That's certainly true.

Xu Xin couldn't help but understand, saying, "YiTao GO uses a portion of its commission as coupons or discount vouchers to stimulate user spending. The 'trade-in' program is essentially a way to offset part of the price of old appliances, which functions as a 'discount voucher'."

"Brilliant!"

Shen Mo said, "Most urban households definitely have old appliances and definitely need to replace them, but the problem is how to make them feel that the replacement is worthwhile and how to help them get rid of the old appliances they are replacing."

"President Shen's event really hits the nail on the head."

Liu Qiangdong pondered for a while, his expression softening slightly.

Shen Mo said, "Originally, our YiTaoGO was planning to cooperate with Gome and Suning. Users would place orders for new home appliances on YiTaoGO, and offline stores would be responsible for removing the old appliances and installing the new ones. This 'online traffic generation + offline recycling' model was used to promote the 'trade-in' program."

"The cost of recycling old appliances can be completely covered by the profit from new appliances, and the recycled old appliances are not worthless."

What are your plans for disposing of the old, obsolete appliances?

Liu Qiangdong cast an inquiring glance his way.

"Old home appliances can be refurbished at stores and then sold on platforms like Paipai.com."

Shen Mo said, "According to my research, there are currently a large number of college students and working people across the country who mainly rent houses and have a need to buy large appliances. However, buying new appliances is not cost-effective, so they prefer second-hand, inexpensive appliances. This is a huge market in lower-tier cities."

"This approach is indeed feasible."

Xu Xin's eyes lit up immediately.

Liu Qiangdong was equally intrigued. "It sounds like President Shen isn't just here for YiTao GO, but also for Paipai.com?"

"Jingdong is currently positioned as a mid-to-high-end e-commerce platform and has not opened its POP platform. Selling second-hand goods can easily damage the brand and reputation."

Shen Mo waved his hand, "So we can only cooperate with third parties."

Liu Qiangdong said, "Mr. Shen is right. I definitely won't agree to selling it on Taobao."

Xu Xin couldn't help but sigh. This guy was clearly trying to benefit himself and the penguin, yet they found it hard to refuse! This was a classic case of cunning!

"Paipai.com won't get away with this for nothing."

Shen Mo spread his hands, "YiTaoGO and Tencent provide traffic, while Jingdong provides the home appliance supply chain and logistics. The three parties share the costs and risks. If the government really introduces a subsidy policy similar to the trade-in program, we will be the first to benefit from it."

"Could you give me some time to think about it?"

Liu Qiangdong tapped his fingers on the table a few times.

Shen Mo shrugged. "Of course, no problem."

"Speaking of trade-in programs, YiTaoGO must need a large amount of capital to run such an event."

Xu Xin asked, "President Shen, does YiTao GO have any plans to raise funds recently?"

Shen Mo looked at her seriously: "I'm preparing to release 10% of my shares. Is President Xu perhaps interested?"

Xu Xin pressed further, "How much does President Shen want to raise?"

"Vancl just completed a new round of financing in August this year, with a valuation of 900 million US dollars."

"Although YiTao GO and Vancl have different business models, based on price-to-sales ratio, its valuation is at least $1.8 million."

Shen Mo said, "Even if the various data rise further by the end of the year, this valuation will only go up. Does Mr. Xu agree?"

"Today Capital's portfolio isn't very large; its main focus is currently on Jingdong."

Xu Xin did not deny it: "Whether it's $1.8 million or $2 million, Capital Today alone could never come up with that amount."

Shen Mo said, "I understand."

"However, I can't take 10%, but I can still get 2.5% to 3% by co-investing."

Xu Xin changed the subject: "I wonder if President Shen could give Today Capital a chance?"

Shen Mo did not immediately agree: "I can't guarantee that; it depends on the willingness of other investment institutions."

"I'm familiar with the venture capital circles in Beijing."

Xu Xin smiled and said, "If Mr. Shen doesn't mind, I can introduce you to a few companies."

"Then I'll have to trouble you, Mr. Xu."

That's exactly what Shen Mo wanted to hear.

Since the subprime crisis, venture capital firms have become much more cautious, and joint investment by multiple institutions is now the mainstream approach.

No single company would dare to take over a project of YiTao GO's size, especially given its valuation of $2 million.

………………

The news that YiTao GO was about to launch its Series A financing spread like wildfire through the venture capital circles of Yanjing.

Like a piece of fatty meat thrown into a pack of wolves, the partners from IDG, Sequoia Capital, and Matrix Partners picked up their phones almost simultaneously.

Chen Nian had just received the news when she immediately informed Lei Jun: "Old Lei, YiTao GO is raising funds. Do you want to arrange a meeting with Shen Mo?"

"A valuation of $1.8 million is beyond the reach of Shunwei Capital."

Lei Jun smiled wryly. Although some people had spread rumors that he only had 40 billion yuan in his account, unfortunately, that was just a rumor.

Perhaps he has hundreds of millions, but part of it is used to invest in his acquaintances, and the other part is reserved for his second business venture.

These days, even capitalists are out of money!

"You don't need to invest the full amount; you can co-invest!"

Chen Nian kindly reminded him, "EasyGo is a fantastic project, don't miss out again."

A meaningful glint flashed in Lei Jun's eyes. "More than investing, I'd like to meet this young man, Shen Mo."