No. 086: Why go for more for the sake of more

Baidu's shares, that's it. The search field is a step that Wei Dongsheng insists on stepping into. Rather than being wordy with Baidu's founding team, Wei Dongsheng simply launched the Spring and Autumn Period to take a look at the search engine to support Baidu, and savagely snatched the market that originally belonged to Baidu. When Baidu is seen by the Spring and Autumn Period, the shares of Baidu owned by IDG are worthless, and it is useless for Wei Dongsheng to come.

Tencent's stake is different.

As mentioned earlier, Wei Dongsheng does not worship Tencent, nor does he envy Tencent, and he is too lazy to spend energy fighting with Tencent to seize the instant messaging market. However, the instant messaging market is an instant messaging market after all, and Wei Dongsheng has no intention of operating the instant messaging market, but he will not ignore its existence. In this case, holding a certain stake in Tencent may be a good way to cooperate.

At that time, IDG still held a 7.2% stake in Tencent.

Taking advantage of IDG's depreciation of Tencent's value, Wei Dongsheng acquired its 7.2% stake at a low price, which must have been a successful investment. In all this, when Yang Fei expressed his willingness to invest in Spring and Autumn Network in August last year, Wei Dongsheng replied in the affirmative: "IDG wants to invest in Spring and Autumn Network, you can, you can exchange it for Tencent's shares." ”

Wei Dongsheng shouted the time, and the card was very ingenious.

In August 2003, Tencent adjusted its shareholding structure and proposed to IDG to buy back 7.2% DG for about $4.579 million to see Tencent's profitability down.

It is human nature to chase up and down.

Just as "World of Warcraft" sells agency rights to make money, venture capital transfers shares to make a profit. With Wei Dongsheng's outcry, DG asked Spring and Autumn Network for an offer, and Wei Dongsheng gave two plans: "The first plan, Spring and Autumn Network has a premium of 31% and $6 million to buy 7.2% of Tencent's equity; In the second plan, IDG will exchange a 7.2% stake in Tencent for the equity of Spring Network or Spring Software. ”

IDG was very satisfied with the $6 million estimate, but it did not agree to the cash transfer and opted for the second option. However, the two sides have different attitudes towards the value of Spring Network and Spring Software, and IDG is shocked to ask for a 30% stake in Spring Network or a 25% stake in Spring Software for a 7.2% stake in Tencent and US$4 million.

Wei Dongsheng vetoed it on the spot.

Just kidding, just 10 million dollars want to ask for 30% of the equity of the Spring and Autumn Network, what is this to think of "Spring and Autumn of the Ten Kingdoms"!

The second month after the launch of "Spring and Autumn of the Ten Kingdoms", the sales in July were 32.91 million yuan, which is equivalent to about 4 million US dollars. Subsequently, when Spring and Autumn Network held a press conference to sue 3721 and Baidu, it also slapped IDG in the face by the way, announcing that the total sales of "Spring and Autumn of the Ten Kingdoms" in August were 44.78 million yuan. From its launch on June 16 to the end of August, in just two months, "Spring and Autumn of the Ten Kingdoms" sold $10 million, and a fool would sell 30% of its shares for $10 million.

IDG resumed negotiations and lowered the asking price from 30% to 20%.

Spring and Autumn Network monitors the constantly refreshing sales records in real time, how could it agree to such an unreasonable request, and naturally refuse it again.

From September to October and from November to December, Lei Jiafei, Chang Mingxia, Wei Dongsheng, and Jing Minqiang successively led teams to carry out several rounds of negotiations with IDG, but the two sides could not reach a consensus on the valuation of Spring and Autumn Network. Because Wei Dongsheng was not eager to take a stake in Tencent, he only regarded the investment as an ordinary strategic level negotiation, and he was happy to delay with IDG. At the beginning of 2004, statistics showed that the operating data of "Spring and Autumn of the Ten Kingdoms" once again set a new record, reaching an unprecedented 133 million in the Chinese market.

The situation is becoming clearer and clearer, and "Spring and Autumn of the Ten Kingdoms" has become a cash cow.

Even if Spring & Autumn Network gave up its 7.2% stake in Tencent, it would never be possible to transfer 20% of its shares cheaply.

It is the requirement of 10% equity, and it is also a pipe dream of IDG.

At the same time, Tencent is also urging IDG to give a clear attitude, asking IDG to continue to hold 7.2% of the shares, DG felt that it could not continue to delay time, so Yang Fei came forward to invite Jing Minqiang and Wei Dongsheng to negotiate for the last time, and try to completely solve the matter before the Spring Festival.

The final negotiations, which decided the outcome, were not held on a solemn occasion. In the Spring and Autumn Period, Wei Dongsheng, Jing Minqiang, Lei Jiafei; On the IDG side, Yang Fei, Zhou Quan, Xiong Xiaoge, and the six of them hid in a hall to chat and exchange their attitudes.

The lights were slightly dim, and the cups were occasionally reflected and refracted between the cups, Xiong Xiaoge, the top leader of IDG's team in China, asked the bottom line of Spring and Autumn simply and bluntly: "If IDG invests 10 million US dollars, how much shares will Spring and Autumn Network give us?" ”

Wei Dongsheng openly and honestly stated his bottom line: "In December 2003, the monthly sales of "Spring and Autumn of the Ten Kingdoms" were 133 million yuan, and the lowest sales in the coming year were 1.596 billion yuan in December, and in three years, my valuation of Spring and Autumn Network was 4.788 billion yuan. At the current price of 8.2768 converted into United States dollars, that is $578 million. If IDG is only willing to contribute $10 million, Spring and Autumn Network can only give you a maximum of 1.73% equity. ”

Xiong Xiaoge immediately shook his head: "This is impossible. ”

IDG decision-making model, each investment must have the opportunity to achieve a return of more than 10 times. Wei Dongsheng valued Chunqiu at $578 million, which means that Chunqiu would have to soar to $5.78 billion for IDG to get enough compensation.

However, will Spring & Autumn Network be able to grow to $5.78 billion?

Xiong Xiaoge didn't think there was such a possibility.

Although Xiong Xiaoge was shocked by the miracle of the monthly sales of 133 million yuan in "Spring and Autumn of the Ten Kingdoms", he did not think that it could be popular for three years: "The online game market is changing rapidly, there is "Legend of Blood" in 2001, "Miracle MU" in 2002, and "Spring and Autumn of the Ten Kingdoms" in 2003, no one is sure that there will be no new challengers in 2004. ”

Wei Dongsheng disagreed: ""Legend of Blood" was tested on September 28, 2001, and even if it encounters the severe challenge of flooding private servers, even if it encounters the impact of "Miracle MU" and "Spring and Autumn of the Ten Kingdoms", and even if it encounters the devastating blow of the copyright incident, its sales are still on an upward trend. I don't think that "Spring and Autumn of the Ten Kingdoms" is worse than "Legend of Blood", "Legend of Blood" can live for three years, and "Spring and Autumn of Ten Kingdoms" will definitely live for three years. ”

Xiong Xiaoge did not directly attack the quality of "Spring and Autumn of the Ten Kingdoms", and talked about the growth rate euphemistically: "The sales of "Spring and Autumn of the Ten Kingdoms" in November were 107 million, and the sales in December were 133 million, an increase of 30 million at first glance, and the prospects are very, very brilliant. However, as far as I know, the month-on-month growth rate in December relative to November is more dependent on the daily growth rate delay in November. At the end of November, the daily sales were about 4.2 million yuan; At the end of December, daily sales were about 4.3 million, which is a very different growth rate than before December. ”

Xiong Xiaoge deliberately belittled the value of the Spring and Autumn Network, and concluded in a tone: "The Spring and Autumn of the Ten Kingdoms has reached its limit. ”

Wei Dongsheng did not deny it.

After half a year of crazy growth, "Spring and Autumn of the Ten Kingdoms" has indeed touched the ceiling. Due to the delayed effect of the growth rate, a simple comparison of monthly sales figures may not be obvious at a glance, but if you break down to a daily basis, you can significantly find that the growth rate is becoming more and more flat.

However, Wei Dongsheng doesn't think it's a game quality issue.

The premise of each online game user is one Internet user, and the total number of Internet users should be directly proportional to the number of online game users. According to the 12th Statistical Report on the Development of the Internet in China, as of July 21, 2003, the total number of Internet users in China was 68 million. Public opinion predicts that the soon-to-be-released 13th statistical report on the development of the Internet in China reveals that as of January 2004, the total number of Internet users in China was close to 80 million. Online game users can only be born from these 80 million netizens, and the freemium model of "Spring and Autumn of the Ten Kingdoms" is kryptonite, and there is a certain upper limit on consumption. The current limit of "Spring and Autumn of the Ten Kingdoms" is the limit of the total number of online game players, the limitation of the telecommunications base, the limit of the total number of Internet Internet users, and the limit of the times.

Wei Dong's life and mentality elaborated his views: "The slowdown in the growth of "Spring and Autumn of the Ten Kingdoms" is the result of the limited development of the Internet, which is the hardware foundation, and we can only wait for the number of netizens to increase from 68 million to 80 million, from 80 million to 180 million. Of course, the Spring and Autumn Network will not face the stagnation of growth mechanically, and the Spring and Autumn team of the Ten Kingdoms is actually preparing to launch a new version of the 'Shang Yang Method' during the Spring Festival holiday. The 'Shang Martingale Reform' version is based on the old events of the Qin State Shang Martingale Reform, and adds a military merit title mechanism to moderately increase the intensity of confrontation between players step by step and stabilize the adhesion of players. ”

Xiong Xiaoge understood.

Xiong Xiaoge disagreed with the military merit title mechanism of the "Shang Yang Reform", but he could understand the confidence between Wei Dongsheng's words and understood that he could not use it to suppress the offer of the Spring and Autumn Network. Forcibly criticizing the military merit title mechanism is useless and will only affect the relationship between the two parties, so Xiong Xiaoge directly asked the second question: "Spring and Autumn Network only operates a game called "Spring and Autumn of the Ten Kingdoms", and the financial structure is too dangerous. And 830 million signing a contract with "World of Warcraft" is also a very risky investment, and the income of "Spring and Autumn of the Ten Kingdoms" is very likely to be lost in the "World of Warcraft" project. I'm very curious, why doesn't Spring and Autumn Network operate a few more games like Shanda Network, Ninth City, and Guangtong Communication? ”

Wei Dongsheng rejected Xiong Xiaoge's suggestion with a smile: "The human resources of the Spring and Autumn Network are limited, so why waste everyone's limited energy for the sake of more." ”

Xiong Xiaoge disagreed with Wei Dongsheng's point of view and continued: "You can't say that. The operation of online games is extremely risky, and relying on an online game is like putting all your eggs in one basket, and it is irretrievable in the event of a crisis. It is like NetEase, although it focuses on the operation of the Westward Journey series, but at the end of 2003, on the basis of the Westward Journey series, it launched "Fantasy Westward Journey" with ingenuity. It is said that the market response has been very good. Compared with the launch of the new version of "The Spring and Autumn of the Ten Kingdoms" "Shang Ying's Change", I am more optimistic about NetEase's "Westward Journey 2" to "Fantasy Westward Journey" risk diversification model. ”