Entertainment mogul: Starting his business with the internet

Chapter 504 The Richest Man's Attitude is Crucial

The atmosphere in the meeting room suddenly became heavy and focused the moment Liu Xiangdong began his report.

On the electronic screen, clear lines and vibrant numbers outline JD.com's amazing growth trajectory over the past few years.

"Fellow shareholders, please take a look!" Liu Xiangdong said in a loud and confident voice, "Let's first review JD.com's growth history."

The PPT slides transition, and a stunning chart depicting development trends comes into view:
“从2010年到2012年，GMV从102亿跃升至600亿，年复合增长率超过140%。预计今年将突破1000亿大关。”

A murmur of admiration immediately filled the room.

Zhang, the CEO of Tiger Global Management, nodded slightly and exchanged a satisfied glance with Zhou, the CEO of DST, beside him. Xu Xin of Capital Today was quickly taking notes in her notebook, a smile playing on her lips.

Liu Xiangdong spoke with pride, “In terms of revenue, we achieved a net revenue of 600 billion yuan last year, a year-on-year increase of 96%.”

Although the company is not yet fully profitable, its gross profit margin has increased from 5.5% in 2011 to 8.4% last year, and its core self-operated e-commerce business has achieved profitability for three consecutive quarters.

Xu Xin couldn't help but interject: "This growth trajectory is quite impressive, especially considering that the gross profit margin has continued to improve during the period of large-scale investment."

As an early investor in JD.com, her praise was tinged with genuine satisfaction.

Liu Xiangdong nodded in acknowledgment, then switched to the logistics section: "I believe what everyone is most concerned about is the construction of JD Logistics."

To date, JD.com has established modern logistics centers in six major regions: North China, East China, South China, Southwest China, Central China, and Northeast China.

With a total area exceeding 1 million square meters, its own delivery network covers more than 300 cities nationwide, and it employs over 100 delivery personnel.

I zoomed in on a map, and countless logistics nodes flashed across the screen:
"The '211 Express Delivery' service has become deeply ingrained in people's minds, which means that JD.com has built a barrier in user experience that is difficult for other competitors to match."

Over the past three years, we have invested more than 50 billion yuan in logistics, but this investment is yielding substantial returns.

Hearing these solid and continuously improving data, the shareholder representatives all showed satisfied smiles.

Tiger Fund's CEO Zhang whispered to DST's CEO Zhou with a smile, "This investment seems to be even more successful than expected."

While listening to the report, Song Ci looked down and flipped through the documents.

The "Proposal Regarding the Company's Application for an Initial Public Offering and Listing on a U.S. Stock Exchange" details key information such as the offering size and the use of proceeds.

The "Proposal on Revising the Company's Articles of Association (Draft)" clearly stipulates the terms regarding the A and B class equity structures.

His gaze occasionally lingered briefly on a few key operating data points, but his expression remained calm.

The discussion then moved into the substantive phase.

Liu Xiangdong surveyed the room, his tone grave: "Regarding the offering price range, the underwriters recommend setting it between $19 and $21."

Based on this calculation, the IPO will raise approximately $15 billion to $17 billion.

"Is this range too conservative?" DST's CEO Zhou adjusted his glasses. "Considering JD.com's growth rate and market position, I think we can be more aggressive."

Tiger Fund's Mr. Zhang chimed in, "I agree with Mr. Zhou's view. Currently, the capital market is quite enthusiastic about e-commerce concepts, and Alibaba is also preparing for its IPO. We should seize this window of opportunity."

After some discussion, everyone reached a consensus: the initial offering price range would be set at $19 to $21, with adjustments to be made based on the results of the roadshow.

When discussing the issuance structure, Xu Xin of Capital Today asked with concern: "How is the ratio of new to old shares arranged in this issuance?"

Liu Xiangdong had already made preparations: "The initial plan is to focus on new issuances, with an estimated 80% being newly issued shares and 20% being shares sold by existing shareholders."

This ensures the company has sufficient development funds while also providing adequate liquidity for early investors.

When it came to the most crucial issue of equity structure, Liu Xiangdong stated firmly: "To ensure the company's long-term stable development, the proposal puts forward an A-share and B-share structure. Each B-share will have 20 times the voting rights."

He paused, his gaze sweeping across the room: "This is to ensure that after the listing, we can continue to implement our established strategy and not be disturbed by short-term market fluctuations."

Tiger Global Management's CEO, Mr. Zhang, immediately stated: "We fully support this. Investing in JD.com is investing in Mr. Liu, and maintaining stable control is in the best interests of all shareholders."

DST's CEO Zhou added, "This equity structure is very common in the US stock market. From Google to Facebook, it has proven its value for the long-term development of technology companies."

Xu Xin smiled and nodded: "Capital Today has always believed in Mr. Liu's abilities from day one. We hold Class B shares, and this decision has never changed."

After that, everyone's attention turned to Song Ci, because Tengda Group held 18.81% of the shares, making it the second largest shareholder of JD.com, and it held Class B shares with 20 times the voting rights.

More importantly, Tenda is not only a financial investor, but also an important part of JD.com's strategic ecosystem. The traffic entrances of WeChat and Weibo are crucial to JD.com's growth.

After a moment of silence, Xu Xin cautiously spoke: "President Song, as the most important strategic shareholder, what are Tengda's considerations regarding shareholding arrangements after the listing?"

Mr. Zhou added, "Mr. Song, this is directly related to the issuance structure design."

Mr. Zhang from Tiger Fund looked on with anticipation: "Especially the lock-up period arrangement. If Tenda can promise a 180-day lock-up period, it will play an important role in stabilizing the stock price."

Liu Xiangdong appeared calm on the surface, but he was understandably nervous inside. Although he had communicated with Song Ci beforehand, a formal statement would be the final word.

Under everyone's watchful eyes, Song Ci slowly put down the documents, leaned forward, and placed her hands clasped on the table. Her movements were composed, yet they exuded an air of authority that held everyone's breath away.

"Everyone, please rest assured." The voice was calm yet firm. "Tengda's investment in JD.com has never been a purely financial investment."

He first looked at Xu Xin and President Zhou: "Regarding shareholding, Tengda has no plans to reduce its holdings. On the contrary, we have decided that, as cornerstone investors, we will subscribe to $1 million worth of new shares during the offering."

A commotion broke out in the conference room as several fund representatives exchanged surprised glances.

Song Ci turned to Liu Xiangdong: "Regarding the voting rights, there's no need to worry. We already have a concerted action agreement with Mr. Liu."

Tenda's voting rights will continue to be exercised by Mr. Liu. I believe that under Mr. Liu's leadership, JD.com will maintain its competitive advantage in the e-commerce sector.

Finally, we solemnly promise: "Regarding the lock-up period, Tenda promises not to reduce its holdings of any shares within 180 days, as we are optimistic about JD.com's long-term value rather than short-term stock price fluctuations."

In fact, I believe JD.com's value is still underestimated, especially after the synergistic effects with Tenda's ecosystem are fully realized.

"That's great!" Liu Xiangdong's voice rose slightly with excitement. "President Song, JD.com will always remember Tengda's support!"

With such a strategic partner, I have absolute confidence that we can deliver better returns to all investors after the IPO.

The atmosphere in the meeting room instantly became lively.

Xu Xin's face lit up with joy: "With President Song's words, we are completely at ease. Tengda's participation will send an extremely positive signal to the market."

Tiger Fund's CEO, Mr. Zhang, laughed heartily: "It seems the offering price range can indeed be adjusted upwards a bit." As each item was discussed and approved, the hustle and bustle of the shareholders' meeting gradually dissipated with the setting sun.

The cocktail party hosted by Liu Xiangdong for shareholders and key partners is about to begin.

Song Ci originally wanted to find some peace and quiet and was about to leave quietly when Liu Xiangdong and Lei Jun stopped her from the left and right.

Liu Xiangdong's face was filled with an irresistible enthusiasm, and Lei Jun chimed in with a smile.

"President Song, how can you, the biggest contributor, be absent from this celebration party? Even if you don't give President Liu face, you should at least give me face and have a drink with me, okay?"

Looking at these two influential figures in the internet world, Song Ci smiled helplessly, knowing that she couldn't avoid the excitement tonight.

At the cocktail party, elegantly dressed women mingled under the crystal chandeliers, glasses clinked, and the air was filled with an atmosphere of success and capital intertwined.

Song Ci found a relatively quiet corner and gazed absently at the night view of Beiping outside the window, as well as the surging crowds inside the hall.

JD.com's current success is the result of a crucial investment he made years ago, which has now grown into a towering tree and is about to reap abundant fruit.

As my thoughts drifted away, Liu Xiangdong walked over with a glass of red wine, having clearly already toasted everyone, and his whole body reeked of alcohol.

However, his eyes remained bright and burning, and he was radiant with pride, at the peak of his success.

"Mr. Song, why are you hiding here all alone, enjoying yourself?"

Song Ci snapped out of her reverie, raised her glass to clink glasses lightly, and smiled, "Brother Dong, you're the star of the show today, you should be entertaining everyone. I just want to quietly savor the joy of JD.com's success."

Upon hearing this, Liu Xiangdong couldn't help but recall the hardships he faced when he first started his business at a stall in Zhongguancun many years ago.

With a serious expression, he said sincerely, "President Song, there's no need for empty talk between us. Without your support and trust back then, JD.com wouldn't be where it is today. I must drink this glass to the last drop. Thank you!"

Before he finished speaking, he raised his glass, tilted his head back, and drank it all in one gulp, showing his straightforwardness and gratitude.

Song Ci also took a sip, then waved his hand and said, "Brother Dong, you flatter me. Investing in JD.com is one of the best decisions I've ever made."

What I value most is you as a person, your decisiveness and vision in getting things done and building logistics. This is the success you deserve.

The two chatted for a while about interesting things from back then and the current situation.

Song Ci changed the subject casually and asked, "The current domestic e-commerce landscape seems to be dominated by Alibaba and JD.com, but in reality, there are undercurrents."

Alibaba dominates its platform ecosystem, while JD.com focuses on its self-operated and logistics businesses. What are your next moves, Mr. Liu Qiangdong? Where will future growth points lie?

Liu Xiangdong's smile faded, his expression turned serious, and after a moment's thought, his gaze swept over the lively party.

He lowered his voice, but with unwavering determination: "Finance! My next step is to fully develop JD Finance."

He paused for a moment, as if recalling a key moment: "On New Year's Eve this year, WeChat red envelopes achieved legendary status."

This has made everyone realize just how deep and vast the internet finance market is! Payment, wealth management, credit... each of these represents a trillion-dollar market.

JD.com cannot simply be a seller of goods; it must become a comprehensive service platform connecting users, suppliers, and partners. And finance is the key to connecting all these links.

Song Ci nodded thoughtfully: "It's a direction, and an inevitable one. The final form of the ecosystem will inevitably include a financial closed loop."

"Yes!" Liu Xiangdong found a kindred spirit, his tone filled with regret and urgency. "President Song, to be honest, JD.com started late."

In the early years, with limited funds, all resources were invested in logistics, warehousing, and the supply chain. This is our foundation, and I have no regrets.

By the time JD.com acquired Netbank Online and obtained a payment license in 2012, and then launched JD Pay, the market had already changed dramatically.

WeChat Pay and Alipay dominate the online payment market; the landscape is largely set, making it difficult for newcomers to gain a foothold.

He gripped the wine glass tightly, his expression revealing his helplessness: "In the payment war, JD.com missed the best opportunity."

But JD.com absolutely cannot afford to miss out on the wave of internet finance again! This isn't a choice; it's a matter of survival.

Liu Xiangdong organized his thoughts, leaned slightly forward, and began to explain his ideas to Song Ci:

"My idea is to provide supply chain financial services such as small-amount credit loans, cash flow loans, and bill cashing to suppliers and sellers on the platform, based on transaction volume, credit, and inventory."

Their growth is essential for the prosperity of JD.com's platform ecosystem. The second, and crucial, step is to focus on end users.

With a focused gaze and a firm voice, he said, "In order to lower the threshold for consumption, especially to stimulate the desire to purchase high-priced items such as home appliances and digital products, I plan to launch a consumer credit service."

It allows users to pay in installments or to consume now and pay later. Simply put, it's giving valued users a 'virtual credit card.'

Song Ci understood perfectly that this was the prototype of the future "JD Baitiao" (JD Pay Later), and its strategic significance was to strongly support the core e-commerce business.

This can strengthen JD.com's competitive advantage, directly stimulate GMV growth, and significantly improve user stickiness. Users who use "JD Pay Later" for installment payments will naturally prioritize JD.com for their next purchase.

"A very good idea," Song Ci praised. "This is not only a financial business, but also an extension and reinforcement of e-commerce. It can greatly enhance users' payment experience and spending power."

Upon hearing the affirmation, Liu Xiangdong showed a relieved expression of "great minds think alike," but then smiled wryly: "To be honest, I was forced into it. Alibaba launched 'Huabei,' and it's gaining momentum."

Without equivalent financial tools, JD.com will put users at a disadvantage in the payment and consumption experience, especially in large-value payment scenarios, leaving them in a very passive position. This is a battle they have to fight.

He then briefly elaborated on more ideas, stating that he plans to venture into areas such as wealth management and insurance in the future, with the goal of building a financial technology ecosystem.

Towards the end of the conversation, perhaps due to the effects of the alcohol, Liu Xiangdong asked half-jokingly, "Chairman Song, in today's major internet sectors, the portal era has come to an end."

As for the remaining areas, Tenda has perfected social networking to an unshakeable degree; it dominates the payment market; and gaming is a cash cow.

You control several major traffic sources; have you ever thought about personally entering the e-commerce market someday?

This was a rather sensitive question, almost like probing a potential future rival. The noise of the banquet hall seemed to fade away as Lei Jun happened to walk in. Hearing the question, he stopped and waited with interest for an answer.

Song Ci did not respond immediately, but gently swirled the wine glass, and the deep red liquid dripped down the glass.

His gaze swept over Liu Xiangdong's inquisitive eyes, then over Lei Jun's curious face, and finally looked out at the dazzling city lights, as if he were examining the entire internet landscape.

After a long pause, amidst the noisy background, he slowly uttered a single word, crystal clear: "Yes."

The sound wasn't loud, but it was like a pebble thrown into a lake, creating ripples in the hearts of Liu Xiangdong and Lei Jun. A single word, crisp and decisive, yet containing boundless possibilities.

(End of this chapter)