booktalesy Chapter 128 Duan Yongping and Tencent Investment
Chapter 128 Duan Yongping and Tencent Investment
Chapter 128 Duan Yongping and Tencent Investment
A golf course in Beijing.
A middle-aged man in his forties, dressed casually, is playing golf. His opponent is a shrewd-looking middle-aged man dressed in professional golf attire.
These two individuals are Duan Yongping and Peng Zhijian, the vice president of Tencent's investment department.
Lin Mu muttered to himself: He had long heard that Duan Yongping loved playing ball. Since achieving financial freedom, he had been playing ball all over the world. Moreover, although he played ball every day, his skills were not very good.
Peng Zhijian's skills are about the same, so the two are like two noobs pecking at each other.
Speaking of which, Mr. Peng is a legend in the investment world. He has invested in Didi, JD.com, and Xiaohongshu, and was also in charge of the merger of Didi and Kuaidi. With his vision, he may be able to see the potential of Pinduoduo.
At this moment, Duan Yongping was about to hit the golf ball into the hole, but he passed by his home three times without going in, and his face turned red with anxiety.
Just then, Mr. Peng also hit a shot, which landed perfectly within one shot's reach of the hole, and the two were about to decide the winner in one shot.
Duan Yongping is genuinely getting anxious: he bet with Peng Zhijian on three matches and has lost all three. This complete defeat isn't due to a technical gap, but purely a matter of being outmaneuvered and having bad luck.
He had finally managed to fly back from Australia, and he certainly didn't want to lose again this time.
He glanced at Lin Mu, who was watching from the sidelines, and a thought struck him. He asked, "Little Lin, do you know how to play golf? I can win this last shot no matter how I hit it. You can practice on it."
Peng Zhijian smiled but remained silent.
Lin Mu stepped forward and gripped the golf club with an overlapping grip. In his previous life, as a senior executive at Alibaba, he spent a lot of time practicing his golf technique on the golf course to facilitate negotiations, and his skill level was considered that of an amateur expert in the industry.
Seeing Lin Mu's grip on the cue stick, both of them exchanged glances.
Generally speaking, there are three ways to grip a golf club. Lin Mu's overlapping grip is used by experts. Beginners would never choose this grip. This guy is quite skilled.
Lin Mu gently pushed the ball, and it landed precisely in the hole. "Ha, a hole-in-one, not bad luck!" Peng Zhijian teased. "Old Duan, is that cheating?"
Duan Yongping retorted, "What kind of cheating is this? Did you really think I couldn't score that last shot? I was just letting you win."
After their playful banter on the court, the three went to the locker room to discuss serious matters. Duan Yongping cut to the chase: "I've looked into your Pinduoduo, but I don't quite understand it. Could you briefly explain how your software makes money?"
Lin Mu spoke eloquently: "Attract users with the cheapest products, then use the huge user base to reduce costs, and then sell even cheaper products, forming a virtuous cycle; the profit lies in the transaction fees and GG fees, the simplest way is the best."
Pinduoduo, in its later years, relied on this strategy of subsidizing low prices, charging handling fees and GG fees to create a net profit of 1000 billion yuan in 2025.
This strategy seems simple and efficient, but it is not easy to implement in practice.
Duan Yongping nodded and said, "Logically, that makes sense. I remember a famous American saying that the 'cheap' label alone is worth 500 billion. But I have two questions: First, how do you find so many cheap products? Second, user acquisition costs are very high now, and will likely continue to rise in the future. What makes you think you can compete with Alibaba?"
This time, Lin Mu explained in detail: "In the PC era, I definitely couldn't beat Taobao, but with the arrival of the mobile era, I had the opportunity to overtake them. Right now, there are still a large number of people in China's second- and third-tier cities and towns who have never used online shopping."
"As affordable and user-friendly smartphones become more widespread, this user segment will be activated. At the same time, Pinduoduo can seize the opportunity to capture mindshare, ensuring their first online purchase happens on Pinduoduo, and establishing the perception that Pinduoduo offers the cheapest products online."
"To achieve this, we first need algorithmic support, and secondly, we need social media platforms to drive traffic. Moreover, this has a completely new meaning for society. I want to support rural e-commerce and connect with the small family workshops that Taobao is going to abandon."
"At this moment, there are still many low-income groups in China who rely on farming for a living. For them, as long as a family workshop can make more money than farming, they are willing to do it, and Pinduoduo can give them such an opportunity."
After listening to Lin Mu's words, Duan Yongping pondered for a moment and then said, "I'm willing to invest in an angel round. You've already invested 3000 million, right? I can personally invest 1000 million, taking a 5% stake."
Peng Zhijian, who was standing nearby, immediately said, "I can also invest 10 million in you. I can decide on this amount, but I want 1000% of the shares. The value I lack will be made up for with Tencent's traffic."
"I can't get Tencent to drive massive traffic to you. Paipai.com is still around, and Jack Ma still doesn't want to give up. He's planning to change leadership to see if he can save it. But I can persuade the QQ product department not to block your sharing links and to support logging into your Pinduoduo account with QQ and paying with Tenpay."
Lin Mu was reasonably satisfied with the result. Actually, compared to QQ, he coveted WeChat's traffic even more; that was the real killer app.
However, in April 2010, WeChat was still in the testing phase and had not even officially started internal testing; WeChat's official launch would not be until 2011, and its real explosion would not occur until 2013.
However, aligning with Tencent in advance was the right move. When Paipai.com collapses and Pinduoduo rises, his negotiating power will naturally increase. At that time, he'll have a good showdown with Zhang Xiaolong and teach him how to run WeChat.
Meanwhile, in a teahouse, Director Mao gathered all the factory owners who were struggling, on the verge of bankruptcy, or whose factories were small in scale. He set up two large tables in the teahouse, with a total of more than twenty people.
Lin Mu sat in the head seat in the center, with Boss Gu and Wang Zaixing sitting on his left and right sides. Since Lin Mu left Alibaba, his core team members, including Factory Director Mao, Boss Gu, and Li Zhi, have been wholeheartedly committed to opening up new channels on Pinduoduo.
For these factory owners with tens of millions in turnover over the years, as long as there is a profit, even if the profit margin is as thin as a razor blade, they can still make money because a large part of their cash flow comes from suppliers and banks, and their own capital is very small, so the operational risk is very low.
Sometimes, even if a deal doesn't earn a single cent, the government's tax rebate can still generate a few percent profit.
Lin Mu instructed Wang Zaixing to distribute the contracts drafted by the legal department to the factory owners present. He then said, "I know that these past few years have been tough for all of you business owners. Offline businesses are facing ever-increasing rents and labor costs."
"We small factory owners can't raise the prices of our goods, and we have no bargaining power."
"Go to Taobao. Taobao's rules are dazzling, and there are all sorts of paid tools that make people confused. Moreover, with the size of our factory, selling a few hundred orders on Taobao a month is like filling a tooth gap; it won't make much of a difference."
"I have an opportunity here: as long as everyone gives me the lowest price on the entire internet, and I make a tiny profit on Pinduoduo, I can help everyone clear out all the unsold goods in their warehouses, get some cash flow, and continue to maintain their businesses."
"Of course, everyone in the world is driven by profit. In this world, as long as a product is sold cheaply enough, it will sell. Therefore, based on the scale of your factories and the quality of your products, I have customized a signing fee for you. This amount will definitely satisfy you."
The factory owners picked up the contracts and began to read them. The signing fees offered by Lin Mu ranged from 1 to 5 yuan, which was just enough to solve the immediate problems of these small factory owners; if the goods in the warehouse could be completely cleared out as Lin Mu said, their factories would be able to be completely revitalized.
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