Chapter 182 Kuaishou Takes Off 10 Times

ByteDance’s valuation has grown to US$6 million, and Taihe’s 15% stake is worth US$9000 million, with a book return on investment of 7.5 times.

There is no doubt that this is a successful investment, but behind the 7.5-fold growth in just half a year is the shift of initiative between investors and founders.

It is impossible for Xie Jingxing to be as strong as before, but fortunately Zhang Yiming is not a strong founder and has good intentions.

He remembered the favor and was willing to give Taihe as much return as possible. He tried to make PUGC-type video products, purchased all the film and television drama copyrights held by Xiaoma Pentium to enrich the copyright library, and carried out in-depth cooperation.

Otherwise, the PUGC video product named "Toutiao Video" is more inclined to rely on headline news within ByteDance, encouraging professional KOL bloggers to produce professional news interviews and personal vlog content for ordinary users.

It is expected that the overall product will not be involved in the film and television business within two to three years. After all, the market share of the three platforms of Tencent, iQiyi and Youku Tudou is solid, and Sohu and LeTV are in the second tier.

It is difficult to enter the market and the rate of return may not be better than the segmented news, entertainment and video businesses.

Therefore, although Xie Jingxing really wants to try to push ByteDance to split out the "Toutiao Video" business and run it independently, he can directly enter the film and television entertainment business through cross-investment and shareholding with Pony.

But when Zhang Yiming clearly refused, he had no reason to force it and could only adopt Plan B.

Shift the focus of Pony.com's film, television and variety show distribution channels to Bilibili. Although the latter's performance in this regard is very poor, it is better than nothing.

ByteDance + Bilibili + Pony.com + Principal Wang’s Panda Live + Pei Fei’s personal studio which operates a large number of entertainment IPs and artist brokerage businesses.

Putting the pieces together, Xie Jingxing's pan-entertainment layout has begun to take shape, involving every link from content production to distribution channels.

It's a pity that except for Xiaoma Pentium and Pei Fei's "Crying" personal studio, the others are financial investments. Sooner or later, Bilibili and Kuaishou will inevitably become like ByteDance, and the actual control will be completely owned by the company itself.

Therefore, the larger the entire ecosystem is and the more stakeholders are involved, the more room there is for pulling strings behind the scenes.

Xie Jingxing sorted out his thoughts, gently put down the hand warmer and asked: "How is the progress of Kuaishou's B round of financing?"

"Cao Xi talked to me again, and Mr. Lei also talked to me for a few words. They both have intentions. I think Old Cheng is quite hesitant." Zhang Yiming curled his lips when he mentioned this.

Xie Jingxing shook his head and joked: "Are all of you founders who started out as product developers socially anxious?"

"I'm afraid that you investors are too smart and it's too easy to suffer losses when communicating with you," Zhang Yiming retorted.

Apart from their working relationship, the two have a pretty good personal relationship. Xie Jingxing grew up according to the standard template of a rich second generation, and he came from a middle-class family that made products.

Neither of them has the slick and rough temperament of Mr. Ma and Liu Chuanzhi. Their interactions and exchanges are quite warm and peaceful, with a tone of gentlemanly friendship.

Previously, Xie Jingxing introduced his fellow Northeasterner Cheng Yixiao to Zhang Yiming. The offices of ByteDance and Kuaishou were not far from each other, and the two of them often visited each other's companies and had meals together.

A few people naturally formed a small social circle and created a small group to chat when they had nothing to do.

So Sequoia China partner Cao Xi decided to lead the financing of ByteDance, and then asked Zhang Yiming whether he could invest in Kuaishou. The same was true for Lei Jun's Shunwei Capital.

Sequoia was determined to invest in Kuaishou, while Shunwei Capital was wavering. Cheng Yixiao and Su Hua were so annoyed that they decided to come to Shanghai tomorrow to consult Xie Jingxing.

"Their product ideas are great. I think if you have ideas, you can invest in them," Zhang Yiming recommended from the bottom of his heart.

Before joining Kuaishou, Su Hua worked as a technical consultant for ByteDance, and they had different views on the "intelligent recommendation algorithm."

He believes that the "intelligent recommendation algorithm" should occupy the user's mind. The user is the center of the world, and everything he likes is the headline.

Su Hua and Cheng Yixiao believe that if we recommend whatever users like, it will create an information cocoon.

The application of 'intelligent recommendation algorithm' should be decentralized, recommending relevant content to users so that they can discover a bigger world and all kinds of new things.

It is hard to say which of the two concepts is right or wrong, but Kuaishou has extremely strong expansion properties and a very high ceiling.

"You didn't let me follow up with the investment and instead offered advice to Kuaishou. You're amazing." Xie Jingxing laughed and scolded without commenting.

Zhang Yiming understands technology and venture capital. Kuaishou’s current round of financing is much more complicated than ByteDance’s and is not that easy to get in.

…………

It's late at night in Beijing.

A young man with a round face and small eyes who looks like Li Dan when he smiles walked through the dark corridor with a happy face and knocked on the door of a residential building: "Mr. Cheng, the project has passed the investment decision meeting!"

"Yes, Mr. Hu, come in and chat." Cheng Yixiao turned around and said to Su Hua who was sitting in front of the computer.

"I have secured a valuation of up to $5 million for you, and we at DCM can invest $5000 million."

Hu Boyu keenly sensed the subtle atmosphere of apologetics in the calmness, and tentatively said with a smile on his face: "After the financial due diligence is completed, the funds will be in the account immediately!"

"Thank you so much, Mr. Hu. Please have some water." Su Hua brought him a bottle of mineral water.

Hu Boyu's heart skipped a beat, and he forced a smile and said, "Working with outstanding companies has always been our DCM's purpose. We held the investment decision meeting in three days. This speed shows our sincerity."

In fact, Kuaishou is just one of the projects he has been looking at recently. When he met with Su Hua a few days ago, he was still worried that the science and engineering guy might not be able to make a good product. He also heard that Peng Zhijian, the strategic investor from Tencent, had also come to see this project.

The general manager of Tencent's strategic investment has personally seen the abandoned projects. As a small VP of a first-tier venture capital institution, it is unlikely that he can pick up a bargain.

It was entirely based on the fact that Kuaishou's data growth curve was impressive enough, and with the idea of ​​using it as work performance, I submitted the project for an investment decision-making meeting to give it a try.

Unexpectedly, the investment decision-making meeting was passed in three days. The company's partner called and asked him to come to the company overnight to finalize the financial due diligence contract, and it would be best if it could be signed and the payment was made that night.

Now the US financial team has coordinated everything and the funds can be transferred to the account at any time.

"Mr. Hu, you are the venture capital firm that took the initiative to contact me as soon as we announced our financing intention."

Su Hua squeezed his palms to relieve his tenosynovitis: "We are very grateful for your recognition, but things have changed a bit now."

"It's understandable. Good projects are always sought after. Could you please tell me the details?" Hu Boyu quickly adjusted his attitude.

Cheng Yixiao took the initiative to take over the conversation: "Several other investment institutions have contacted us, so we want to communicate with them again."

"This is normal. I can understand it very well. Mr. Lin, a partner of our agency, will be returning to Beijing tomorrow. It's a good opportunity for us to have breakfast and chat."

Hu Boyu settled for the second best and tried to stabilize the situation first.

Cheng Yixiao looked embarrassed: "Su Hua and I are going to Shanghai on a business trip tomorrow, so we may not be able to make it in time. How about we make another appointment the day after tomorrow when we come back?"

"Going on a business trip to Shanghai, is it Taihe that has any idea?" Hu Boyu tested with a smile.

Su Hua frowned slightly: "Taihe is our early investor, we respect their opinions."

"So where does the main change come from, brothers? It should give us some preparation." Hu Boyu asked shamelessly.

"Valuation, and some strategic issues."

Cheng Yixiao said tactfully: "These two aspects are not directed at Mr. Hu and your DCM. No matter what, we will definitely give you an explanation in the end."

Hu Boyu blinked his confused eyes and was speechless for a while. The valuation of 5 million US dollars was still low. This was a rare large project for DCM, which mainly did AB round investments.

Three days later, just after he had held the investment decision-making meeting, a peer gave a higher valuation.

This means that the other party's initial due diligence and the investment decision-making process took less than three days, and the project was valued at more than 5 million yuan. There are only peers in the market who can do this. - Excluding Taihe, Xiyou, Tencent, and early investor Y Capital, they don't have the money to invest in such a large project.

Then there is only Sequoia left, or Today Capital will have to be invested by Xu Xin himself, or it will be DST from Russia.

Counting on his fingers, Hu Boyu found that DCM was no match for any other company. He could only agree to postpone the communication time and left with a staring look in his eyes.

While walking out of the community, he sent a message to the company partners to report the situation.

"Is that the VP of DCM?"

A car drove into the community, and a handsome man sitting in the passenger seat, who looked like a high-quality elite man, asked.

The colleague who was driving glanced at the rearview mirror and said, "It's too dark to see clearly. This shouldn't happen. Redwood Cao Xi is here, why doesn't Lin Xinhe come out and let the kid push forward?"

"They may not know that Sequoia is coming. They will have to act accordingly."

The handsome man held on to his phone and looked at the time. It was one o'clock in the morning and it was not appropriate to make decisions late at night.

At the same time, in the residential building.

Cheng Yixiao stood by the window looking at the car driving downstairs. Su Hua pressed his hands hard, and the atmosphere was a little depressing and restless.

A week ago, they publicly announced that they were seeking financing. Zhang Fei and Xie Jingxing introduced them to several investment institutions respectively. Subsequently, DCM, Tencent Strategic Investment, and Shunwei Capital came to them one after another.

The situation was progressing slowly and neither good nor bad. Three days ago, DCM completed its due diligence, and then the situation suddenly changed and passion struck.

Zhou Shouzi from DST and Cao Xi from Sequoia came to visit only two hours apart, and the two almost met each other. Sequoia completed the initial due diligence in just one day and passed the investment decision meeting.

Cao Xi directly stated that no matter what valuation DCM gave, Sequoia would add 50%.

DST is a little slower, but Zhou Shouzi has the connection with ByteDance's Zhang Yiming, so please wait for half a day and we will discuss the investment details tonight.

This caught them off guard, but anyway, there are now many more options, and it is difficult to make the right decision among so many options.

"Wow."

The door that was not closed was easily pushed open, and Zhou Shouzi, who was thin and handsome, strode in and said with a hearty laugh, "Good evening, everyone."

"It's already early morning." Cheng Yixiao said helplessly to himself.

Zhou Shouzi pulled a chair and sat down familiarly. His colleague opened a few bags of McDonald's takeout and said, "Did you guys eat dinner? Let's have some midnight snack. There's iced Coke."

Cheng Yixiao and Su Hua looked at each other and everything was self-explanatory. This trick had been played out by Su He, and they had resistance.

But we can also see the level and sincerity of venture capital institutions. The VP of DCM is not quite up to par.

"Are you going on a business trip?"

Zhou Shouzi's eyes seemed to accidentally fall on the two suitcases piled in the corner of the living room. Without waiting for a response, he said, "Oh, I'm so sorry to bother you so late."

"Boss Cheng, Boss Su, let's go through this quickly while we eat."

He paused for a moment and said seriously: "First of all, let me express our attitude. DST's investment philosophy has always been not to bargain, to give a high price, and not to join the board of directors."

"Since I'm meeting you so late today, I have this attitude and principle."

"In terms of valuation, let's not talk about other peers, let's just talk about ourselves. We will lead the investment with a post-investment valuation of US$9.5 million."

Zhou Shouzi put all his chips in one go: "At the strategic level, we have invested in ByteDance, Xiaomi, Alibaba, JD.com, and Didi. We will provide open support for all the resources you need in the entire Internet industry."

DCM was valued at US$5 million, Sequoia increased it to US$7.5 million, and now another US$9.5 million has popped up.

Cheng Yixiao and Su Hua were dizzy from the blow. They gradually couldn't understand the difference between the valuation models of various institutions and why the gap was so big.

“I know that Sequoia and DCM are both optimistic about you, but I think my reasons are different from theirs.”

Zhou Shouzi's tone became more and more confident: "More than 20 institutions have looked at ByteDance before and none of them invested. Only Mr. Xie from Taihe Capital and I were very determined."

"I think Zhang Yiming is very capable. Their intelligent recommendation algorithm is very new, the technical level is basically on par with Silicon Valley, and the data growth curve is very beautiful."

"You are the same. The technical algorithm is very new, and the decentralized product logic is rare in the global Internet industry. In addition, the data of daily active users growing by 800 million in half a year is available."

He said sincerely: "I must say that I came into contact with you late. Maybe your valuation is not worth $9.5 million now, but it will be worth tens of billions of dollars in the future. I cannot accept to wait until then to invest in you."

The meaning is clear: the company wants to compete with its peers for projects by paying a premium.

Cheng Yixiao was speechless. Su Hua's hand didn't hurt anymore and he felt like he could still code a few more lines of code.

…………

At three o'clock in the morning, Shen Nanpeng was awakened by a phone call. It was from the company's partner Cao Xi.

"DCM has passed the investment decision meeting. Cheng Yixiao and Su Hua will go to Shanghai to meet Xie Jingxing tomorrow. I will go to the airport to block them tomorrow morning. If the negotiation fails, I will need you to step in."

Cao Xi said this to him right away.

Shen Nanpeng took a sip of water and said, "The meeting in Beijing will end the day after tomorrow."

"Mr. Shen, we must invest in this project!" Cao Xi emphasized.

Shen Nanpeng was powerless to refute. Which project that called in the middle of the night must be invested in? What else could he do? Should he ask Xie Jingxing to help buy two days, or put guns to Cheng Yixiao and Su Hua's heads to force and bribe them?

He has attached enough importance to the Kuaishou project.

"Do you know how Cheng Yixiao talked to DCM? DCM's due diligence found that Kuaishou's user base is concentrated in the 13-17 age range. DCM people think that the value of such a user base is too low, and even if it becomes the market leader, it will not make money."

Cao Xi on the other end of the phone slowly said: "Cheng Yixiao told the people at DCM that children use QQ and adults use WeChat. If you want to do community social networking, you must grasp the breakthrough point, and teenagers especially need to express themselves and be seen."

"Shamatte?" Shen Nanpeng commented.

“Yes, Shamatte, a trendy culture with low threshold and unique characteristics!”

Cao Xi agreed without hesitation: "I looked at the user geographical distribution of Kuaishou's backend data again tonight, and they actually achieved the same proportion of user geographical distribution as the national population distribution."

"That is to say, the market concept that conventional Internet companies use to divide cities into first-tier and second-tier cities, third-tier and fourth-tier cities has been dismantled by them. Their user data is fucking based on the percentage of the regional population!"

Shen Nanpeng opened his mouth but no sound came out. He was silent for a few seconds and said, "This is outrageous."

"So we must invest in Kuaishou!" Cao Xi emphasized again.

"I'll call Xie Jingxing."

Shen Nanpeng was completely sober and started brainstorming frantically.

(End of this chapter)