booktalesy Chapter 94 Subduing Da Dongzi
Chapter 94 Subduing Da Dongzi
Kyoto, Kyoto West Headquarters.
Liu Qiangdong sat in the simple conference room, looking somewhat dejected, with his 37th business plan piled up in front of him.
Over the past three months, he has met with 37 investment institutions, ranging from IDG, Redhill, and SoftBank to various unknown funds.
The result was the same: rejection.
The reasons are all similar: the economic crisis is not over yet, and in order to survive, the company has reduced its investment; the B2C model is too cumbersome; building its own logistics is suicidal.
To put it even more bluntly: you're still losing money... and you can't see a future.
What's most infuriating is that an investor from Silicon Valley looked at the report, threw it aside, and said with a hint of disdain, "Mr. Liu, the Jingxi model has long been proven to be unworkable in America."
Amazon's success is due to America's advanced logistics system. China? Try building your own logistics network? You wouldn't even recoup your costs in 10 years.
After seeing the other party off, Liu Qiangdong sat in his office feeling depressed for a long time.
He started his business in 2004, selling CDs at a counter in Zhongguancun, and achieved an annual revenue of 40 billion yuan in just 5 years.
During its last funding round, the company was valued at a staggering $1.5 million. If it weren't for the economic crisis, it would be worth at least $5 million now!
It sounds impressive, but only he knows that it's all an illusion. It may look glamorous on the surface, but Jingxi has been losing money all along.
The company has never been profitable because it has been building warehouses, expanding product categories, engaging in price wars, and identifying problems.
Until this year, he finally found the most serious problem: the logistics time was too slow, and many users dared not place an order!
Therefore, he plans to build his own logistics network!
The idea is grand, but the reality is cruel. There's only 8000 million left in the account, enough to last for at most three more months.
If Jingxi can't raise more funds, it will collapse.
As for building logistics channels, that's utter nonsense.
Just as he was feeling down, his secretary pushed open the door and walked in, her voice carrying a hint of expectation.
"Mr. Liu, people from Huaxin Investment have arrived. And it seems that their boss, Huang Tianya, is leading the team."
They invested in Huawei's retail outlets.
Liu Qiangdong's spirits instantly lifted, and his previous sense of defeat vanished...
Huaxin Investment! That investment bank that has invested in Huawei, Transsion, and even has a lot of business in the United States!
How could they possibly be interested in western Beijing?
He quickly straightened his clothes and headed to the conference room.
…………
"Mr. Huang, it's an honor to meet you." Liu Qiangdong deliberately lowered his head slightly when shaking hands, indicating his attitude.
"We have been looking forward to cooperating with Huaxin Investment and were originally planning to visit them, but we didn't expect Mr. Huang to come ahead of time."
Huawei, a company your company invests in, released the Mate 1, which is a best-selling product on our platform.
Huang Tianya smiled. Although he knew it was just polite talk, it did make people feel happy. After all, who doesn't want to hear nice things?
"Mr. Liu, you're too kind. It's a miracle that the Jingxi platform could achieve 40 billion in revenue in such a short time."
Liu Qiangdong's face lit up instantly; Huaxin Investment seemed to be different from other investment banks.
Those people don't have that kind of attitude; perhaps today there really will be a good outcome.
After quickly finishing the polite pleasantries, Huang Tianya got straight to the point: "President Liu, I have reviewed all the information about Jingxi."
从2004年开始创业、2007年拿到今日资本的1000万美刀的投资、2008年营收突破13亿 ，今年的总营收更是定在了40亿。
The transaction volume is indeed good, but our platform has one unresolved problem: losses.
Liu Qiangdong's initial joy instantly turned into tension.
Here we go again, it's the issue of losses.
"Yes, we are losing money," he readily admitted. "But the losses are because we are building warehouses, logistics, and expanding our product categories."
Once the scale increases and costs decrease, profitability is only a matter of time.
"I know." Huang Tianya nodded, then waved his hand, signaling him to relax. "So I'm here today not to question the losses, but to resolve the issue."
Huang Tianya opened the laptop on the desktop, then opened a document and placed it in front of Liu Qiangdong:
"Currently, the Jingxi platform has three major advantages. The first is the guarantee of genuine products. This is the issue that most users are most worried about when buying electronic products."
Another point is that, Mr. Liu, what you most want to do is build your own logistics network. Although it's very expensive, the user experience will be better, which will be an advantage going forward.
The third step is full-category expansion, from digital 3C products to the entire industry chain; this is the most important step for the future.
Liu Qiangdong was completely stunned when he looked at what was in front of him.
In the past, investors would first mention his three major problems (losses, heavy assets, and intense competition). This time, for the first time, someone mentioned his three major advantages, which immediately struck a chord with him.
At that moment, he felt as if he had known him for a long time and wanted to immediately raise his glass to toast him as a kindred spirit, but he also knew that now was not the time, so he forcibly suppressed his excitement.
"But the problem is also obvious." Seeing that things were almost settled, Huang Tianya added fuel to the fire.
"Tight funding, slow logistics development, and the urgent pursuit of competitors, such as Dangdang, Amazon China, and Taobao."
So you need money, lots of money.
Liu Qiangdong finally realized what was happening, so he slowly asked, "Mr. Huang, how much do you think Jingxi needs?"
He wanted to know how much money this kind older brother was willing to invest, since small amounts of money couldn't solve the core problems of the Jingxi platform at all.
"At least two hundred million US dollars." Huang Tianya held up two fingers, particularly casually, as if it wasn't two hundred million US dollars, but as simple as an ordinary person taking out two dollars from their pocket.
Huang Tianya: We're not that poor.
"One hundred million will be used to build five major logistics centers, another 5000 million for technology upgrades, and another 5000 million for market promotion."
Looking at the detailed plan, Liu Qiangdong was so surprised that he didn't know what to say.
This design is even more detailed than his, and it even has the core nodes planned out. As long as he follows the instructions, he will achieve great results in a short period of time.
"Two hundred million... US dollars."
It's no wonder he was so surprised. He had only planned to raise a few hundred million and then forcefully launch a logistics channel. He never expected that... not only did the man have money, but he also had a plan.
"Yes, in US dollars." Huang Tianya looked at him. "However, we want 40% of the shares."
The meeting room was quiet for a moment.
A 40% stake means Huaxin Investment will become the largest shareholder and the true controlling shareholder. Liu Qiangdong, on the other hand, will become an employee…
Although he knew this was the fate of most founders, releasing so many at once...
"40%..." Liu Qiangdong said with difficulty. "Mr. Huang, isn't this percentage... a bit too high?"
In addition, the current valuation of the Jingxi platform is…”
"Five hundred million dollars," Huang Tianya interrupted him.
"This is the post-investment valuation."
Two hundred million US dollars, offering 40%, a premium of nearly 20%, this is the best offer I can make.