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Chapter 421 0411 [The Domineering CEO Dongzi]

Gradually, many online celebrities started accepting advertising orders.

Everyone followed Yang Bingyang's advertising article sample, which is to first talk about what they are good at and what their fans like to read, and then naturally put out product advertisements in related fields.

Some online celebrities have a very smooth transition, and their advertisements are not offensive.

However, many online celebrities also advertise in a very awkward way, which has drawn ridicule and sarcasm from their fans.

Advertising prices also fluctuate wildly, depending entirely on how the parties involved negotiate.

For example, IT blogger Keso received a whopping 5 yuan in advertising fees for a digital camera. He only needed to post one ad each on Sina Blog, Haiwainet, and ByteDance Weibo.

You think you can take over Keso with just a few thousand dollars in advertising fees? They won't even give it a second glance.

Chen Guiliang was able to get e-commerce companies to sign exclusive cooperation agreements with ByteDance's Weibo because of ByteDance's overwhelming user monopoly.

He couldn't do this on other types of platforms.

For example, it's impossible to require e-commerce platforms to sign exclusive agreements with domestic websites, so Sina Blog (note, not Sina Weibo) is now thriving.

The media quickly took notice of this business model, with a few newspapers reporting positively, most reporting neutrally, and a small group reporting negatively.

Is the proliferation of soft ads on ByteDance's Weibo a marketing revolution or a breach of trust?

This is a news headline from Southern Metropolis Daily.

Chen Guiliang was furious after reading the report. The Southern Media Group was up to its disgusting tricks again, and it was deliberately targeting ByteDance's Weibo account.

The entire report targets ByteDance's Weibo account relentlessly, completely omitting any mention of Sina Blog, which did the same thing. This is clearly retaliation for Chen Guiliang's conflict with them last year, and Sina might even be pulling the strings behind the scenes!
Because the incident was so outrageous, the Southern Media Group has been under investigation by higher authorities from last year to the beginning of this year.

The editor-in-chief of *Southern Weekly* was dismissed and reassigned. The deputy editor-in-chief of *Southern Metropolis Weekly* was dismissed. The editor-in-chief of *Southern Metropolis Daily* was promoted in name only but demoted in reality. The deputy editor-in-chief of *Southern Metropolis Daily* was dismissed and reassigned.

Now they dare to jump again.

In the first half of last year, the Southern Media Group was universally condemned, and its reputation plummeted. In the second half of the year, it reversed its image and regained credibility by reporting on the Sanlu milk scandal. Taking advantage of the economic crisis, it instigated various social conflicts and vigorously promoted so-called "universal values."

The term "universal values" was coined by the Southern Media Group last year.

They also used the large number of migrant workers riding motorcycles (home for the Spring Festival) to create a stir, claiming that monopolies prevent ordinary people from affording train tickets. They demanded open competition, like in the aviation industry, allowing private enterprises to participate in operations.

They also criticized the existing railway transportation as inadequate and demanded that high-speed rail be built as soon as possible. Later, when the high-speed rail was actually built, they said that it was a waste of money and that it should be stopped to "wait for the people".

The Southern Media Group is using the economic crisis to spread the message that "China is doomed."

This year is particularly interesting.

American mainstream media praised China's economic performance, while the Southern Media Group spared no effort in badmouthing China.

Since 2009, the domestic public opinion situation has become extremely severe.

The rampant behavior of the next few years will begin this year!
At this time, their main platform for online promotion is blogs, and then they will gradually shift to microblogs. Fortunately, they do not realize the importance of microblogs now, otherwise they would never sit idly by and watch ByteDance's microblog grow bigger, but would do everything they can to support Sina Weibo.

……

No matter how some newspapers attack them, and no matter how strict ByteDance's Weibo censorship is, bloggers always vote with their feet.

Because it's a way to make money!

Even Luo Taijun registered accounts on Haiwainet and ByteDance Weibo. He simultaneously published articles on three major platforms: Sina Blog, ByteDance Weibo, and Haiwainet, diligently managing his accounts and accepting various advertisements.

Differences in ideology can be set aside; let's focus on making money first.

By early August, HaiNei.com had finally surpassed 1 million registered users, and ByteDance's Weibo had surpassed 2000 million registered users.

ByteDance has created a dedicated platform for advertising orders, where online stores or brands can post advertising tasks, and influencers can find and accept these orders on the platform. Once the two parties reach an agreement, ByteDance takes a certain fee as a guarantee.

Meanwhile, ByteDance's e-commerce platform also collaborates with major e-commerce platforms to track advertising effectiveness through technical means—this technology is still immature and needs to be gradually improved.

Bloggers and advertisers can, of course, bypass ByteDance and negotiate their collaborations privately, thus saving on the platform's commission.

But you will bear all the consequences, such as defaulting on the payment and not paying the balance.

This is highly likely to happen, especially when advertising is ineffective; it's quite normal for small online stores and brands to default on payments.

……

“We couldn’t reach an agreement. $2000 million would only buy 4.21% of AutoNavi’s existing shares,” said Lü Zhihui.

Chen Guiliang asked, "Isn't it said that Walden's LPs are very short of money?"

Lu Zhihui said, "More investors have entered the market and are also eyeing Gaode's old shares, so they are now acting with impunity."

"Then we'll withdraw."

"quit?"

"Yes. I'd rather spend all that money on JD.com than buy 4.21% of AutoNavi's existing shares for $2000 million."

"But Gaode is very likely to succeed in its IPO next year, and once it goes public, we will make a fortune."

“There is certainly potential to make money, but it’s not necessary. Whether it’s Gaode Maps or JD.com, I want to hold shares long-term, rather than profiting through an IPO. As things stand, investing in JD.com is clearly more cost-effective.”

"I don't see any cost-effectiveness. Investing in Gaode Maps will yield profits next year. Investing in JD.com has too many uncertainties. JD.com burns money too fast, and venture capitalists are afraid to touch it now."

"Other venture capital firms dare not touch it, so investing in JD.com yields greater returns!"

"The risks are also greater."

"listen to me."

"Sigh... alright, you're the boss."

Lu Zhihui sighed inwardly, realizing that he was still just a working-class person after all.

Moreover, his boss's investments have never failed so far, so there's no way to persuade him.

In mid-August, Liu Qiangdong contacted Chen Guiliang, who then brought Lü Zhihui along.

“$5000 million for 18% of the shares. What do you think, Mr. Chen?” Liu Qiangdong asked.

This situation is equivalent to JD.com's valuation increasing 2.7 times in six months.

Before Lü Zhihui could speak, Chen Guiliang asked, "Are the shareholders in Series A and B willing to let me take so many shares? Aren't they worried about it affecting the Series C funding round?"

Liu Qiangdong said, "I tried my best to persuade them."

"So, you haven't discussed your financing plan with the A and B round shareholders yet?" Chen Guiliang asked.

Liu Qiangdong said, "They will agree."

Chen Guiliang laughed and said, "I can raise 5000 million US dollars."

Dongzi is becoming more and more assertive.

Back then, he knew nothing, not even what venture capital was, and only thought about getting a 500 million RMB loan from the bank to keep the business running.

Then Xu Xin arrived and asked him how much investment he wanted. Liu Qiangdong cautiously quoted $200 million, afraid of scaring her away. In the end, Xu Xin invested $1000 million, acquiring a 40% stake in JD.com.

This investment is outrageous. Such a distorted equity structure will seriously affect JD.com's subsequent financing. Normal venture capital firms wouldn't do this.

So they also signed a five-year performance-based agreement.

Liu Qiangdong achieved the goals of the five-year performance-based agreement in just one and a half years. He successfully regained 18% of the shares, of which 10% went to Liu Qiangdong personally and the other 8% was put into JD.com's option pool.

Dongzi has become more shrewd now. He promised Chen Guiliang 18% of the shares, but he doesn't want his own shares to be diluted too much. So he wants to persuade the A and B round shareholders to sell some of their existing shares!

Liu Qiangdong is really capable of doing something like this.

In another timeline, that's exactly what he did.

During JD.com's third and fourth rounds of financing, he was constantly arguing with shareholders from both the A and B rounds. In the end, the existing shareholders were forced to sell some of their shares.

Liu Qiangdong is very confident about this because he is running an "asset-heavy" e-commerce business, which requires continuous financing to survive. Moreover, he has firm control over the company, and the venture capital shareholders have no say.

In this situation, the venture capitalists are essentially tied to him. If they want to profit and exit, they have to listen to him.

Liu Qiangdong added, "But I have one request."

Chen Guiliang said, "Please speak."

Liu Qiangdong said, "If President Chen gets 18% of the shares, he should not send directors to JD.com, nor should he interfere with JD.com's daily operations."

“Sure,” Chen Guiliang introduced, “This is Mr. Lü Zhihui, the person in charge of ByteDance’s IPO. He is now the general manager of Xiyi Investment, and he will be in charge of all matters with JD.com from now on.”

"Hello, Mr. Lü!"

"Hello, Mr. Liu."

At noon, the three of them had lunch, and then Chen Guiliang left.

Liu Qiangdong chatted with Lü Zhihui for another afternoon, and the next day he went to discuss (arguing) with Xu Xin, Liang Baitao and others.

"You want us to sell our old shares?" Xu Xin looked at Liu Qiangdong in disbelief.

Liu Qiangdong said, "Only a small portion was sold; the majority is still from normal financing. I'm also thinking about future financing; the founding team can't lose too much equity."

Liang Baitao was so angry he almost laughed. He had been an investor for many years and had never seen such a domineering investee.

Of course, following Liu Qiangdong's advice, Liang Baitao also made a profit. His investment in JD.com in January, and the portion of old shares he is now selling, has appreciated 2.7 times in just six months.

Xu Xin earns more!

The next "victim" will definitely be Chen Guiliang.

If JD.com runs out of money again, and another venture capital firm steps in, Chen Guiliang will be forced to sell some of his existing shares. Unless, of course, Chen Guiliang continues to pour money in.

At this moment, it's not a negotiation at all; it's just an argument.

They argued fiercely and parted on bad terms right there.

Over the next few days, Liu Qiangdong continued to call the old shareholders. The calls often escalated into arguments.

Ultimately, the existing shareholders were forced to compromise.

There's no way around it; JD.com is burning through cash too fast, and now with the economic crisis, it's hard to attract investment.

They each sold a portion of their old shares to Chen Guiliang, earning profits ranging from 2.7 to 8 times their initial investment, albeit with tears in their eyes.

JD.com's current shareholding structure is as follows:

Dongzi and his team accounted for 58.2%.

Chen Guiliang 18%.

Capital Today: 15.5%.

Xiongniu Capital and Liang Baitao: 8.3%.

After signing the financing agreement, Lü Zhihui approached Chen Guiliang and said, "This Mr. Liu is so domineering. Next time he burns through all the money and then gets another large amount of financing, we will definitely be forced to sell our old shares."

"We'll see when the time comes," Chen Guiliang said. "I'm not afraid of his threats. At worst, we'll both lose everything. If he, as the founder, isn't afraid, why should I, an investor, be afraid?"

Lü Zhihui chuckled and said, "Indeed."

Xu Xin and Lü Zhihui were both pure investors, and their funds were not particularly abundant, so they were naturally taken advantage of by Liu Qiangdong.

Chen Guiliang has nothing to be afraid of!

(End of this chapter)