Entertainment mogul: Starting his business with the internet

Chapter 512 Cutting the cake

Early morning sunlight streamed into the top-floor office of the technology building.

Song Ci leaned back lazily in his chair, his phone resting on a tabletop stand, the screen reflecting his wife's delicate face.

The background was slightly noisy, with the faint sound of airport announcements indicating boarding.

"I heard the premiere of 'Partners' was quite a big event, with half of the entertainment industry in attendance?" Song Ci said with a gentle smile.

Liu Shishi chuckled on the other end of the line, her eyes sparkling with a hint of playfulness: "Yes, but compared to the richest man's fans, it's nothing."

She leaned closer to the camera and suggested with great interest, "Honey, how about we make a movie based on you in a few years?"
It focuses on internet entrepreneurship, and I've even thought of a name: "The Rise and Fall of the Internet Giants," how about it?

"The Rise and Fall of the Internet Giants?" Song Ci smiled and shook her head. "That's too flamboyant."

He paused, looked up at the screen, a sharp glint in his eyes: "But if we were to actually make it, a single movie wouldn't be enough."

Once the thought arose, it grew wildly in Liu Shishi's mind.

She secretly decided that she must create an epic entrepreneurial inspirational film based on her husband, to record the magnificent Internet era.

Seeing his wife suddenly freeze, Song Ci softened his tone: "What are you thinking about so intently?"

"Huh? It's nothing." Liu Shishi snapped back to reality, gathering her thoughts. "I'm boarding the plane, honey. Don't forget our plans for tonight."

Today is Mother's Day, and the couple made a reservation at a Michelin-starred restaurant in the suburbs of Beijing to treat their two mothers to a meal as a way of showing their filial piety.

"Yes, I remember." Song Ci nodded, her gaze gentle. "Take care on the road, see you later."

About fifteen minutes after the call ended, Zhang Yong and Wang Jing arrived together and went straight to sit down in the guest chairs after entering the office.

Song Ci got straight to the point: "Sun Tongyu and Chen Dejun from Shentong will be here in a little while to finalize the details of the cooperation with the new e-commerce platform. You two can attend."

Upon hearing this, Zhang Yong and Wang Jing exchanged a quick glance, their eyes flashing with unexpected joy.

Previously, there were many voices within the group advocating for entering the e-commerce sector, but the chairman remained hesitant. Now, he has finally given his approval, and although it will be operated independently, it is ultimately a crucial step forward.

Song Ci pushed two documents on the table toward them: "The new platform will be named 'Pinduoduo,' and this is the initial equity structure design plan."

Wang Jing took the document and opened it almost simultaneously with Zhang Yong, their eyes quickly scanning the contents.

The new company's power structure is clearly laid out in black and white:
Tenda Technology (strategic resource provider): 35%
Sun Tongyu (founder and CEO) and core management team: 25% (of which Sun Tongyu personally accounts for 20%, and other core executives account for 5%).

Huiwen Asset Management Company (External Venture Capital): 20%
STO Express (Strategic Partner): 10%
Employee Stock Option Pool (ESOP): 10%
The subtle sound of pages turning was particularly clear in the quiet office.

Song Ci aptly explained: "Pinduoduo will adopt an A/B share structure. Tengda, Huiwen, and Shentong hold Class A shares, each corresponding to one vote."

Sun Tongyu and his core team hold Class B shares, each with 10 times the voting rights.

Upon hearing this, Zhang Yong's mind raced, understanding flashed in his eyes, and his tone was one of admiration:
"Although Sun Tongyu's team only holds 25% of the shares, they have more than 50% of the voting rights due to the super voting rights of Class B shares, giving them absolute say in daily operations."

"Chairman Song, are you trying to ensure Sun Tongyu's control over the operation of Pinduoduo?"

Wang Jing then read the protective clauses more carefully.

The document states that Tengda Technology, as a strategic investor, has veto power over fundamental matters such as amending the company's articles of association, major asset sales and acquisitions, and issuing new shares.

He nodded slightly, a sudden realization dawning on him: "Focus on the big picture and let go of the small details; grasp the essentials and everything else will fall into place."

The chairman does not interfere in daily operations, but firmly holds the "brake" power at strategic junctures to avoid potential major decision-making risks in the future.

Her gaze shifted downwards, sweeping over the terms of Shentong Express and the employee stock option pool, which seemed reasonable. However, when she saw the 20% stake held by "Huiwen Asset Management Company," her brows furrowed.

This little-known venture capital firm was able to secure such a large share in such an important project, which made her suspicious.

Wang Jing glanced at Zhang Yong, who remained impassive beside her, hesitated for a moment, and then cautiously probed, "Chairman Song, this Huiwen Asset Management...?"

Song Ci's expression remained unchanged, and his tone was flat: "Huiwen is an investment company under Shishi's name."

Though brief, the message is packed with information.

Wang Jing instantly understood, and all her doubts vanished.

Liu Shishi and Song Ci were husband and wife, and their interests were intertwined. To put it bluntly, this 20% equity stake was an investment made by the big boss in his personal capacity.

Pinduoduo's future is uncertain but its potential is huge. As the creator of this situation, it is perfectly reasonable for Song Ci to take a slice of the pie.

He immediately said nothing more, only nodding slightly to show his understanding.

Song Ci took in the reactions of the two men and further elaborated on the equity design concept: "The core objective is to achieve the separation and checks and balances of ownership, management rights and profit rights, and to balance the interests of all parties."

Zhang Yong skimmed through the document, closed it, and showed genuine approval: "Chairman Song, your design is well thought out and can be considered a model."

This equity structure can both motivate Sun Tongyu and the management team and ensure Tengda's strategic security through veto clauses.

I believe that within this framework, Pinduoduo will undoubtedly be full of vitality and achieve great things.

Wang Jing echoed this, but the woman's mind was more meticulous, and she immediately thought of the key to the execution: "The plan is very comprehensive. How do you plan to arrange the board seats?"

The board of directors is the real arena for power struggles and major decisions, and the allocation of seats is of paramount importance. Song Ci, clearly confident, answered without hesitation:
"The board of directors is tentatively set at five. Sun Tongyu will serve as chairman and CEO, holding one seat; the nominated CTO or COO will hold one seat."

Then, Sun Tongyu will nominate an independent director acceptable to both parties; Shishi will represent Huiwen for one seat; and Tengda will appoint one director.

Zhang Yong quickly weighed the composition and smiled, "Sun Tongyu's team occupies two seats, plus his nominated independent director, which gives them a solid majority in the five-person board of directors."

With the added advantage of super voting power, he's like a tiger with wings, able to confidently expand his territory. Chairman Song, you truly have immense trust in Sun Tongyu.”

"If you doubt someone, don't use them; if you use someone, don't doubt them. Everyone has their own expertise, and when it's time to delegate authority, you should delegate it completely." Song Ci smiled and nodded.

His gaze shifted between Zhang Yong and Wang Jing before finally settling on one of them. "Regarding this board seat at Tengda, which of you two will take the plunge?"

Zhang Yong spoke first: "President Wang, you should go. There are countless things to do at the group, especially with the international business in a critical period of expansion. I really can't handle it all." Wang Jing knew full well how busy the CEO was, and after a moment's thought, she readily agreed: "Alright. Since President Zhang is so busy, I'll do it."

Turning to Song Ci, his expression solemn, he said, "Chairman Song, I will fulfill my duties as a director, both to safeguard the interests of the group and to respect the decisions of the management team."

"Okay, it's settled then." Song Ci made the final decision, quite satisfied with the arrangement.

With Pinduoduo's equity structure and board of directors just finalized, the atmosphere in the office has eased somewhat.

Wang Jing suddenly frowned, a look of worry crossing her face, and carefully considered her words: "Chairman Song, there's a problem."

Will the group's strong support and resource allocation for the new e-commerce platform have a substantial impact on JD.com?

After all, JD.com is an important strategic partner and is in a critical period of its IPO. If Pinduoduo's rise affects its market valuation and expectations, it could indirectly impact the group's investment returns.

Hearing this, Zhang Yong looked up, his gaze shifting from the documents to the Song Dynasty poetry. What Wang Jing said was indeed a very important issue.

Tenda is not only a shareholder of JD.com, but the two companies also cooperate deeply in areas such as traffic and payment. Maintaining a good partnership is crucial.

Song Ci remained calm, as if he had already taken this issue into consideration, and gently comforted her: "There's no need to worry too much."

First, Pinduoduo is currently just a blueprint; it takes time to go from zero to one, and it cannot threaten a behemoth like JD.com in the short term. That's one point.

He paused, glanced at the two of them, and patiently explained, "Secondly, and more importantly, when Sun Tongyu arrives, you will understand once he fully explains the Pinduoduo model."

Pinduoduo's path is completely different from that of JD.com and Taobao, with significant differences in target market, user group, value proposition, and operating model.

Seeing that the chairman was confident and had clearly considered the effects of synergy and competition, Zhang Yong and Wang Jing said no more and felt somewhat relieved.

But a strong sense of curiosity also arises: what kind of "new model" can make Song Ci value it so much and be so sure that it can coexist with the existing giants?
Half an hour later, Sun Tongyu stood in front of the demonstration screen, his suit jacket open and tie slightly loose, exuding energy. His eyes shone brightly as he passionately recounted Pinduoduo's grand vision.

Below the stage, the three giants of Tengda – Song Ci, Zhang Yong, and Wang Jing – along with Chen Dejun, chairman of Shentong Express, and Zhang Tong, CEO of Huiwen Asset Management, listened attentively.

"...Therefore, Pinduoduo's core strategy in the first phase is: focus on penetrating lower-tier markets, achieve breakthroughs in single areas, and launch a saturation attack!"

Sun Tongyu's voice was loud and clear, with a strong appeal. He tapped the page-turning pen forcefully, and a simplified mobile app interface appeared on the screen.

"Please take a look, everyone. This is the initial interface of the app that I designed." Pointing to the screen, "It's extremely simplified, with only two main entry points: 'Homepage Group Buying' and 'Personal Center'."

Why is it so simple?
This is to minimize the barrier to entry for new users in lower-tier markets, especially middle-aged and elderly users who are not familiar with operating smartphones!
We must make it clear and easy to order with a single click, so that they don't feel intimidated!

Then, turning the page, the core operational strategy is revealed: "In terms of product strategy, Pinduoduo initially only launched a small number of SKUs each day, but each one was a carefully selected 'super bestseller'!"
For example, daily necessities such as tissues, snacks, and small accessories are available for 9.9 yuan with free shipping.

By concentrating all platform traffic on these few products, we can create a huge scale effect and then negotiate the best possible prices with upstream factories.

We need to instill in users the strong belief that "you can buy incredibly low-priced, high-quality goods on Pinduoduo!"

When it came to the crucial point, Sun Tongyu declared confidently: "To achieve rapid growth, we cannot do without the strong support of our colleagues at Tenda!"

We need to fully utilize the massive traffic pools of national-level applications such as WeChat, Weibo, and Toutiao to conduct precise or even saturated traffic redirection!
The target users are primarily people who have time, love to share, and are highly price-sensitive, such as housewives, college students, and retirees, making them the initial 'seed users' for social media viral marketing!
By using a "group buying" model, they spontaneously invited friends and family to participate due to the low prices, achieving viral growth from one person to ten, and from ten to a hundred!

Sun Tongyu picked up a laser pointer, and the red dot moved across the supply chain diagram: "In terms of the supply chain, we prioritize direct cooperation with low-cost white-label factories."

He paused deliberately, turned his gaze to Song Ci, and said respectfully, "According to Chairman Song's foresight, the platform will also select two or three local specialty agricultural products and launch group purchases directly from the place of origin, taking 'helping farmers with love' as the starting point."

This not only helps farmers solve the problem of unsold products and quickly establishes a positive image for the platform, but also accumulates experience in operating fresh produce categories—a win-win situation!

Sun Tongyu spoke eloquently, flipping through the PowerPoint presentation he had spent eight hours preparing, and began to summarize:

"In summary, by the end of 2014, Pinduoduo's first-stage goal is: to exceed 1 million platform users! And to catch up with JD.com in daily order volume!"

Upon hearing this incredibly impactful goal, Zhang Yong and Wang Jing instinctively exchanged glances, their eyes filled with shock and realization.

Now I understand why Songci values ​​Sun Tongyu so much and gives him a great deal of operational autonomy.

This "father of Taobao" has a profound understanding of the e-commerce ecosystem, and his insights into the market in non-first-tier cities are particularly accurate.

Pinduoduo, based on social sharing, focuses on extremely low prices and basic consumption models, and its main target may be Taobao, which has a low average order value and a wide variety of products.

For JD.com, which focuses on genuine products, logistics experience, and high-end 3C home appliances, this poses no direct threat, at least for a considerable period of time, as the two companies have distinct positioning and value propositions.

Sun Tongyu's mouth was dry from talking, so he grabbed a bottle of mineral water and drank it down in large gulps to ease his rapid breathing.

Then, his piercing gaze swept over each decision-maker, and his voice became even more steady and powerful: "The next phase is the second phase, which is planned for the entire year of 2015."

Quickly switch between PowerPoint presentations to display your product category expansion blueprint on the screen.

"The core objective at this stage is to comprehensively expand product categories."

From daily necessities and snacks, it has expanded to home furnishings, digital appliances, fresh fruits and vegetables, and other fields.

The platform will gradually introduce more brand distributors and authorized stores, but strategically…

It also specifically emphasized that "the products mainly consist of brand overstock, inventory, or specific models customized for Pinduoduo's channels."

The core principle remains unchanged: avoid direct competition with JD.com's core product categories and full-price items, and continue to solidify our cost-performance advantage.

After a brief pause, Sun Tongyu's eyes swept across the crowd like a hawk's, finally revealing a target that sent shockwaves through everyone except Song Ci:

"If everything goes according to plan, I am full of confidence in Pinduoduo's development in 2015!"

His voice wasn't loud, but every word carried immense weight: "I have the ability and the determination to achieve a total GMV exceeding 100 billion in 2015!"

"One hundred billion?"

Even Zhang Yong, Wang Jing, Chen Dejun, and Zhang Tong, who were used to seeing storms, couldn't help but change color at this moment, their hearts filled with shock.

(End of this chapter)