All parties basically agree on Pinduoduo’s valuation.
Whether e-commerce can make money? Pioneers such as Amazon and Ali have already found a successful path. Zhang Yida doesn't need to explain too much.
Short video is different. This is an emerging industry. Currently, no company whose main business is short video has successfully gone public.
Can you make money? The answer depends on the size of the users and how long they have been using it.
Simply put, it is traffic.
If there is traffic, advertising monetization is an easy path.
You can barely take Facebook as an example. The company's main revenue comes from advertising.
Facebook owns FaessesApp and Instagram, the four major social applications, with active users ranging from hundreds of millions to more than a billion.
The huge user base and relationship chain form the unbreakable cornerstone of the Facebook empire.
However, Zhonghe Group’s Musical.ly has only been popular overseas for a short period of time and its foundation is not deep.
Investors are also afraid. If the software suddenly becomes unpopular, won’t their investment funds be locked up?
And Zhang Yida’s appetite is quite big, 20 billion US dollars.
With such a large investment, one has to be cautious.
"Mr. Zhang, we came all the way to invest in Zhonghe Group with great sincerity. I think you should also show your sincerity!"
Looking at Bao Zheyu, Zhang Yida smiled and said: "I am also very sincere. I informed Mr. Bao of all the operating data of Zhonghe Group."
Bao Zheyu shook his head, "Disclosing these operating data to investors is only the most basic for financing negotiations.
What I mean by sincerity is that Mr. Zhang should look at the company's valuation rationally and give it a fair and reasonable price."
Zhang Liping also responded: "Yes, the valuation of US$20 billion is too high for a company that has not yet made a profit and has not proven its commercial value!"
Dongfang Yu and Ma Dongmin seldom spoke, so they just took a ride and followed suit.
Since he is not the main force, he naturally does not have much motivation to bargain with Zhang Yida.
Blackstone and BlackRock are both top investment institutions, and the valuation they both recognize should be very reasonable.
So the two of them drank tea quietly and watched Zhang Yida giving various examples and arguments to the two major investment institutions.
Penguin is the largest investor in this round of financing, but Liu Zhiping doesn’t seem to be worried at all.
He just watched the few people talking silently, only listening but not speaking, with an extremely calm tone.
"Good things are naturally expensive. The same goes for companies."
Zhang Yida smiled and said: "I know what you are worried about. You are worried that Musical.ly will suddenly not be popular, or that the commercialization will not be as expected.
I can tell you very seriously: Musical.ly is addictive, and the more users play it, the more they like it.
The retention rate is very high, as long as a user has used Musical.ly, they basically cannot get rid of it.
In addition, user usage time has also been increasing, from the initial three to five minutes to the current forty or fifty minutes.
All this is thanks to our algorithm recommendation mechanism, which knows what the user likes and recommends short videos of interest to him.
In addition, Musical.ly’s user group is very young, all teenagers.
How did Facebook rise? It didn’t spread from campus to the whole society.
What Zuckerberg is most worried about right now is that Facebook is getting old and young people won’t like it.
I guess he has also been a little anxious in the past two years, worried about whether Facebook will be abandoned when the post-90s and post-00s grow up.
Sarabu, I believe you both know this company, right?"
Bao and Zhang nodded. How could Mingxing Internet Company not know this?
"Then do you know how many daily active users they have? 158 million.
And what about the market value? Nearly 30 billion U.S. dollars. After conversion, one daily active user is almost 200 U.S. dollars!
Musical.ly plus DouShi has 245 million daily active users, and based on a user costing US$200, the valuation should be US$49 billion.”
"No, no, no," Bao Zheyu interrupted, "Mr. Zhang, I think you may have some misunderstandings.
Snap was founded in 2011 and has been accompanying users for six years.
And what about Musical.ly? It’s only been two years, and later countries such as South Korea have only been entering for a few months.
It took Salabu six years to prove its user retention rate and user stickiness.
In this regard, Musical.ly is still far behind, and no one can guarantee whether it will be a flash in the pan?
In addition, I personally am not very optimistic about salad cloth.
This company is very topical, and the founder is also good at operation, throwing out some gimmicks such as "photo-taking sunglasses".
Under the suppression of Facebook's four major products and Twitter, I don't think Salabu has much development potential.
Its advertising monetization capabilities are also mediocre, with a total loss of nearly US$900 million in the past two years.
Can a company that only knows how to burn money and play with concepts but cannot make profits become the darling of the capital market in the long term? The answer is no.
Even though their current market value is as high as US$30 billion, it’s hard to say what they will be like in one or two years.”
Zhang Liping took over and said, "When it comes to Facebook and Sarabu, I also think of a question.
Musical.ly’s unlimited expansion is bound to have an impact on the businesses of these two companies.
Whether it is the loss of users or the decline in user usage time, both companies will attach great importance to it.
If Facebook and Sarab also launch short video platforms, how will Musical.ly respond? What are your advantages or moats?"
This question was asked very skillfully, but it was still difficult for Zhang Yida.
He smiled and replied: "Zuckerberg wanted to chase down Sarabu, did he succeed?
Facebook is flawed in terms of product originality, and both Instagram and Wazepu were acquired from others.
As for Sarab, I don't deny that Spiegel is a very creative person.
But Salabu also has flaws, and its operational capabilities need to be further verified. Half of its users are from North America, and the remaining half are in Europe.
What about other areas? Probably none.
If they want to compete with Musical.ly in the short video field, I am confident enough to defeat them.
First of all, Musical.ly has gained the first-mover advantage and has basically completed its global layout. The rest is just a matter of time and effort.
Secondly, Toutiao Video and DouShi are on the same track, but were defeated by DouShi and went overseas.
Don’t underestimate the company Toutiao. They are very good at algorithm recommendation.
Toutiao, a news aggregation APP, is basically unique in China.”
"Despite this, I still think Douyin's valuation is too high. It's US$20 billion, which is worth eight Kuaishou."
Since Zhang Liping wants to blame Kuaishou, Zhang Yida also followed suit and said: "Kuaishou's daily active users are only one-third of those of DouYu in China. Counting overseas Musical.ly, it is even lower, only one-fifth.
If compared with monthly active users, the gap is more than 5 times."
"But Kuaishou has found the right path to commercialization. I heard that the monthly revenue of Kuaishou's live broadcast has reached 250 million yuan."
Zhang Yida nodded, "Live streaming is indeed a good way, and DouShi and Digua Video have also been making plans.
But when it comes to advertising, Kuaishou is far behind us.
After several months of exploration, DouYu’s “Black Hole Engine” has also been launched. We have established advertising sales teams or authorized agents in major cities across the country.
DouShi’s current advertising dividends are huge, and advertisers are queuing up to top up their money.
If I hadn't asked the sales team to set the threshold for cooperation, it is estimated that our monthly advertising revenue would have exceeded 1 billion yuan.
In addition, Douyin still has a lot of room for growth. It must at least reach 500 million daily active users in China before entering a period of slow growth.
When the growth dividend has not yet peaked, advertising without restraint is like killing the goose to retrieve the egg.
As for Kuaishou’s valuation of US$2.5 billion, I believe Mr. Liu has the most say.”
Zhang Yida looked at Liu Zhiping, who was standing beside him, and motioned for him to say a few words.
“Last month’s Kuaishou D round of financing was invested by Penguin, and the post-money valuation at that time was US$2.5 billion.
As for now, some investment institutions have offered a valuation of US$5 billion and want to invest in it.”
Liu Zhiping's words made Bao and Zhang a little surprised and confused.
His eyes were full of disbelief. Is it true? The valuation doubled in one month.
"It's true. Kuaishou's Series C investment last year was led by Qiandu."
Ma Dongmin glanced at Liu Zhiping and said: "I can only say that Penguin is too smart. A year ago, our investment in Kuaishou was valued at US$2 billion.
In just one year, the valuation increased by US$500 million.”
Liu Zhiping heard the resentment in Ma Dongmin's tone and raised his hands in a gesture of surrender, "Mr. Ma, this is really not our fault. We just finished voting and Kuaishou's live broadcast business started.
And last year, Kuaishou was trading sideways for more than half a year when it had 20 million daily active users.
Who would have known that after the launch of the live broadcast business, it not only brought in hundreds of millions of revenue in a single month, but also led to an increase in users."
Zhang Yida looked at Bao and Zhang, "A small Kuaishou has a valuation of US$5 billion. We are five times bigger than them. Shouldn't the valuation be US$20 billion?"
Bao Zheyu looked at Ma Dongmin for a while, and then looked at Liu Zhiping. Don't you two want to play double act with me?
"Mr. Bao, don't believe it. Kuaishou's valuation is not a secret at all as long as you inquire carefully in the investment circle."
Bao Zheyu shook his head, "I just think it's a bit hard to understand that Penguin and Qiandu are both shareholders of Kuaishou and also shareholders of Zhonghe Group."
Ma Dongmin smiled and said: "What's so hard to understand? This is called "hedging" on Wall Street and hedging in China.
Of course, investing in Zhonghe Group is our Robin Li Family Office and has nothing to do with Qiandu Company."
Liu Zhiping didn't bother to explain, why did I just hedge my bets? This is Penguin's right as the two poles of the Internet.
As a Chinese, Zhang Liping understands the polarization of domestic Internet camps better than Bao Zheyu.
To be honest, there have been too many big dramas in China in recent years, from Didi to Magnesium Group, to Zhonghe Group, and Kuaishou. It is like you are in me, and I am in you. It is a mess that makes people dizzy.
If you don't understand the "integration of vertical and horizontal" in traditional Chinese culture, you really can't understand it.
Zhang Liping considered his words before speaking slowly: "Kuaishou Live has a revenue of 250 million in a single month. If Doushi can make a bet with a monthly revenue of 1.25 billion and an annual revenue of 25 billion.
Blackstone Group can give Douyin a valuation of US$20 billion.”
"Monthly revenue is 1.25 billion, and annual revenue should be 15 billion, right? Also, if we bet against each other, DouShi's valuation must be US$25 billion."
Zhang Liping shook his head and frowned: "Mr. Zhang, with 1.25 billion in a single month, it's impossible for DouShi not to maintain a certain growth rate, right?
When investing in a company, we must value its growth rate and prospects. For a company with a fixed revenue of 1.25 billion yuan every month, what is the use of investing in it?
We have taken a lot of risk with a valuation of US$20 billion, let alone US$25 billion.”
“It is okay to sign a gambling agreement, but a corresponding valuation must be given.
If the valuation is US$20 billion, the revenue bet will be RMB 15 billion; if the valuation of US$25 billion is agreed, the revenue bet can be set at RMB 20 billion.”
Dongfang Yu watched Zhang Yida "uttering arrogant words" from the side, and he admired this junior brother very much.
DouShi only started commercialization at the end of last year, and its current monthly revenue is only 340 million yuan.
Under such circumstances, daring to make a bet of 10 to 20 billion in revenue with others is really bold for a skilled person!
Liu Zhiping was drinking tea aside, and he knew that Zhang Yida had started setting up a trap again.
None of the investment institutions that bet with him took advantage.
Penguin has suffered losses, Blackshirt Capital, Zhenke Fund, SoftBank... there are a lot of investment institutions that have lost.
Zhang Liping was a little hesitant. He really wanted to choose the 20 billion revenue betting plan.
But if you lose, the losses will be heavy.
Bao Zheyu is ready to make a move. He does not believe that DouShi can increase advertising revenue by 10 times within a year.
Just a rough estimate shows that we want to increase the monthly revenue from 300 to 400 million yuan to the annual revenue of 20 billion yuan.
A monthly compound growth rate of more than 20% must be maintained every month.
That is to say, taking 400 million monthly revenue as an example, it must reach 480 million next month, and the next month will be 480 million times 1.2 times...
There can be no mistakes in the middle, otherwise it will be over.
You can also grow faster in the first few months, much higher than 20%, and the growth pressure in the later months will be smaller.
"We at BlackRock made a bet, giving you a valuation of US$25 billion and betting on annual revenue of US$20 billion!"