After Cai Congxin announced Facebook's financing conditions, the representatives of the major VCs present had mixed reactions.

Facebook is not the sun, so it is naturally impossible for everyone to revolve around it, and it is impossible for all VCs to trust it without question.

Temasek's representative asked, "Mr. Cai, although the valuation of 5 billion yuan on Facebook seems to me to have a valuation basis, it is already very risky for us investors." At present, the three Internet companies that have been listed in your country have the highest market capitalization, Sina has a market value of 3.6 billion US dollars, Sohu has a market value of 2.5 billion US dollars, and NetEase has a market value of only 2.1 billion US dollars. In fact, it can be said that the $4 billion raised by Facebook in the last financing is already a ceiling for the valuation of mainland Internet companies. It is still unknown whether Facebook will be able to exceed $4 billion after it is listed. In this financing, your company has put forward an asking price of 5 billion US dollars, and it is the starting price, is this ......"

Although it is not explicitly stated, the meaning of distrust is unmistakable.

This is also understandable, financing, it is like this. Investors want to keep valuations as low as possible, because they can get more shares for less. As for the investee company, it hopes that the higher the valuation, the better!

This is the process of a game, until the game is a number that is acceptable to both parties, then the cooperation is happy.

Temasek's views also represent the meaning of some VCs, and many people agreed.

Sequoia Capital has raised a new question, which is more acute.

"Mr. Cai, the scale of Facebook has indeed become the leader of social networking sites in mainland China, and the number of registered users and daily active users is unparalleled, which is worthy of praise. But what I want to know more is that Facebook has not seen a clear profit model so far. No...... The three portals cited by Temasek's Mr. Li have all shown good profitability, and according to their financial reports, their revenue in the first quarter is on the rise. Among them, Sina recorded a record revenue of $31.9 million, with a net profit of $11.7 million, Sohu with a revenue of $22.1 million, and NetEase with a revenue of $17.7 million, a profit of $10.2 million, and a net profit of $0.33 per share. How does your company think about this question? ”

For this problem, perhaps in the entire conference room, only Mr. Liu of Modu International Trust Investment doesn't care, because their investment in Facebook is of greater political significance than investment significance, so it doesn't matter to him whether Facebook is profitable or not, as long as he can have a certain right to speak on Facebook and maintain Facebook's "political correctness", this is enough.

To achieve this, it is not unreasonable to spend a little more.

But all the other VCs are very concerned about this problem.

Everyone says that VCs are too lenient with Internet companies, allowing these companies to lose money for many years, and even some Internet companies have been listed for more than ten years and are still maintaining continuous losses, such as Amazon......

On the contrary, those who can be VCs are obviously the elite of the elite, the real smart people.

Everything has to be measured, and the reason why VCs can tolerate the Internet companies they invest in keeps losing money is because they believe that this company can make a lot of money in the future.

In other words, it's okay to lose money for a while, but you need to come up with a clear and convincing profit model!

For example, when raising funds, you can tell the VC that the development plan of my company is like this, three or five years, it is to maintain a continuous investment and no revenue. However, the company's profit point is in this place, as soon as the number of users reaches a certain level, the company will turn a profit.

As long as your plan is indeed executable and the profit growth point is visible, then the VC will trust you and do not hesitate to invest heavily.

The current Facebook network has not given a clear and convincing profit model.

If you were to ask why Son didn't ask these things when SoftBank Capital first took a stake?

Perhaps it can only be explained by Son Masayoshi's more vicious vision and unique style of doing things, around 2000, he had many large investments, all of which were made when the target company did not see any future at all, and he made a lot of money as soon as he made a move.

It is also in this way that SoftBank Capital has the glory of its later years.

When investing in Facebook, Son Zhengyi said that he was investing in Yu Wenfei!

Of course, he can do this, but the rest of the VCs are not like this, like Temasek, Sequoia Capital, etc., they are very cautious in their investments, and they would rather not invest than take too many risks.

............

Cai Congxin and Yu Wenfei ignored and smiled, they had already considered this problem and were prepared.

How to make a profit on Facebook and what to rely on to convert traffic in the future is a question that must always be faced.

Even if this investment does not answer this question, when the company goes public, it will still be clear to investors, otherwise, who will sell the stock to.

If Facebook Games hadn't been spun off, maybe the VCs present wouldn't have raised this issue at all, because Internet companies have obviously become a trend in the past two years by operating game businesses to monetize traffic, especially in the domestic Internet circle.

NetEase is working on games, Tencent is also preparing a game department with great fanfare, and even Sohu and Sina are also ready to move.

But Facebook spun off the game department and cut this business directly, so what will you rely on to monetize traffic in the future?

Facebook really wants to make a profit, in fact, it is very simple, you only need to advertise on the website, which is also the most direct means for Sina to make money.

With Facebook's current traffic, if you receive advertising, you will definitely earn more than Sina, in fact, I don't know how many advertising companies have come to the door to negotiate advertising on the Facebook platform.

But Yu Wenfei refused.

He has long said that what Facebook shows to users must be the most concise interface, without those messy ads, and there must be nothing that destroys the user experience.

Then this most direct and effective traffic monetization method is equivalent to being cut off.

As a result of the discussion between Cai Congxin and Yu Wenfei, it was decided to come up with something real, otherwise, it would be difficult to fool VCs and investors, after all, Facebook will soon be preparing to go public, and if you have been relying on "dreams", it will be easy to go far.

So, the two projects that had been hidden for a long time were taken out.

Facebook Music & Facebook Videos!

Originally, when Facebook carried out a business spin-off last time, these two projects were to be taken out separately to establish a company, but due to various reasons, it was not officially launched. So, the project was also hidden in the snow.

Now, it has finally come in handy, that is, these two projects are once again divided under Facebook.com to be Facebook's traffic monetization channel.

And after Facebook's financing this time, it will also have a huge amount of funds to promote the official launch of Facebook music and Facebook video, which couldn't be better.

The two market segments represented by these two software are also very imaginative, and they are perfect for "telling stories" to VCs and investors.

Although Yu Wenfei feels a bit of a pity, it's a pity that these two projects should have been unicorn-level, and now they can only be used as "additions" to Facebook. But he didn't care too much, after all, you can't be too greedy, you can't take advantage of all the advantages alone, and when the time is right, you also have to give the partners a little "sweetness".

There are many businesses that make money, but when it comes to strategic significance, whether it's music or video, it's far less important than Facebook.

So for the sake of Facebook's success, both music and video projects can be appropriately "sacrificed".

Besides, if one person earns and others lose, the business will not last long, and only a win-win will be a real win.

............

Cai Congxin cleared his throat and explained: "Very good, this question, just take this opportunity to talk to you." As for the question of how Facebook can make a profit, our company is not without consideration, in fact, the channel for traffic monetization has been prepared, and when the funds for this financing are in place, the new project can be launched immediately!"

This sentence once again caused a commotion in the conference room, and if Facebook could be profitable before going public, the concept would be different.

Originally, relying on the huge number of users, Facebook's valuation has been rising all the way, and the reason why everyone is still cautious is because it does not yet have a clear traffic monetization model.

If Cai Congxin can really come up with a convincing plan next, there will be absolutely no problem with the valuation of five billion US dollars.

We will also make corresponding adjustments to our respective quotation plans.

After all, they are all VC giants, and they have money in their hands, not to mention that Facebook is valued at $5 billion, even if it is $50 billion, as long as there are interests to be made, everyone will do everything possible to raise money to invest, the key is to see if the project is worth investing.

"Facebook has been preparing two new projects before, but it has not been launched due to hardware conditions and insufficient funds. Now that Facebook's major data centers in the country have been built, there are no hardware restrictions, and funding is no longer a problem after this financing, so the time is ripe. These two projects are Facebook Music Software and Facebook Video!" Cai Congxin said confidently.

Music?

Video?

Everyone looks at each other, are these two projects reliable?

Nowadays, there are so many free music and videos on the Internet, just listen to and watch them casually, how can users pay for it?