2003: Starting with Foreign Trade

Chapter 754 The Miraculous Road to Spring
Zhichun Road is a magical place.

How dynamic is this road? Let's put it this way: if you knock on any door, the person sitting inside might be a future giant. Xiaomi also moved to this road after relocating.

It's just a short distance for Tan Jincheng to get here.

Jinqiu Home.

Tan Jinyue's decision to come to the capital to study was obviously a ploy to fool Lei Jun. How could Tan Jincheng possibly feel comfortable leaving her out in the city at such a young age?

However, he did appear at Jinqiu Garden as a landlord.

That's right, this sixth brother pulled another stunt. He bought the house that Zhang had rented as an office, and he also bought all of Zhang's neighboring houses, both upstairs and downstairs.

Jinqiu Jiayuan is located on Zhichun Road, a well-known entrepreneurial street, and is also in the Hai D District. The property prices are extremely high, and there is no shortage of tenants. You can make a good living as a landlord. Generally, no one would think about selling.

But few people could resist the offer from Boss Tan to buy it at twice the market price.

However, if the landlord knew that the young man renting their house now would be a future big shot, they probably wouldn't be able to get three or four times the price.

It's said that people in the internet industry believe in feng shui, and that Zhichun Road has good feng shui, so Zhang's company seems to have never left this area.

This directly led to the fact that when venture capitalists heard that a company was from Zhichun Road, they would listen to it several times, no matter how bad it was. The main reason was that Zhang had approached countless investors in the early stages, but no one paid any attention to him.

Tan Jincheng, who has been following his Weibo account, summarized his Weibo posts from 2009 to the present. In 09, he was quite casual and posted whatever he wanted.

When we started our business in 2010, the topics we talked about most were recruiting people and building a team.

The topic of conversation since 2011 boils down to just two words: "lack of money!"

Even when complaining that his iPhone 1 was no longer working properly and that the iPhone 4 was too expensive, this somewhat shy young man kept saying he was short of money, both in his personal life and at work.

Zhang started four businesses and failed four times. None of these four ventures were particularly noteworthy, and many people couldn't understand his fifth attempt either.

Apart from the initial several hundred thousand yuan given to him by Wang Qiong, the leader of 99fang, and the several hundred thousand yuan he raised himself, he has not yet secured any investment. Living in a cramped residential area is a last resort.

For Zhang at this moment, survival was the most important thing; resources were secondary, and money was the most important thing.

Tan Jincheng was there to throw money away. He had to secure the full investment in ByteDance's angel round and even its Series A round. The valuation kept increasing as the round went on. As far as I remember, by 2016, when Shen Nanpeng wanted to invest, the valuation had reached over 100 billion US dollars.

If you invest now, a few million will suffice, but in a year or two, you'll need hundreds of millions.

"You guys wait downstairs, I'll go in by myself."

When they arrived at Jinqiu Garden, it was already 2 p.m. Tan Jincheng gave Zeng Jixiang and Li Yaohui some instructions.

Lai Yiu-fai was still a little worried: "Will it work?"

"No problem at all, it's just a few programmers, don't worry."

This is the Hai D District of the capital, what could possibly happen? Besides, with Lai Yiu-fai by his side, Tan Kam-ching would inevitably get some exercise from him, so his physical condition wasn't bad.

At this time, the buildings in Jinqiu Garden were all small high-rise buildings, with apartment buildings generally ranging from six to nine floors. Zhang rented an apartment on the sixth floor, and the apartment above him was owned by 36Kr, which was also bought by Tan Jincheng.

The door was opened by a girl whom Tan Jincheng did not recognize.

"Hello, I'm looking for Mr. Zhang Yiming."

The girl felt that the young man in front of her, who looked about the same age as the boss, looked somewhat familiar, but she couldn't quite place him. She simply assumed he was there for a job interview.

"Boss, someone is looking for you."

The unkempt Zhang Yiming walked out from the inner room, and when he reached the entrance area, he was a little stunned: "President Tan, what are you doing here?"

At first, he thought they were there for a job interview. In fact, over the past year, while working on projects, they had been building a team. The advantage of working in a residential area is that the rent is cheap, but the disadvantages are also obvious.

Many programmers, upon seeing the on-site environment, assumed it was a scam company and gave up.

"Mr. Zhang, I apologize for bothering you, but may we come in and have a chat?"

Tan Jincheng smiled at Zhang Yiming, dressed in the classic programmer outfit, the only difference being that he had a lot of hair. He wore glasses and looked blank, completely unlike a boss.

"Oh, sure, please come in."

He certainly knew Tan Jincheng. He had seen so many investors fail and many investors recommended that he try his luck at ByteDance, which had gained a reputation in recent years. His friend Wang Xin had also recommended it.

He had originally planned to try his luck in Ningbo, but after hearing that Tan Jincheng was currently active in the capital, he put the plan on hold for the time being.

Facing Tan Jincheng, 28-year-old Zhang Yiming was somewhat apprehensive. The difference in their social status was too great, and Zhang Yiming was not a particularly eloquent person.

"Why would President Tan come to a small place like mine?"

Looking at the messy room and the curious employees, Tan Jincheng smiled and said, "Let's find a quiet place to talk."

Zhang Yiming then realized what was happening and quickly replied, "I'm sorry for the delay. Let me get two bottles of water, and then we'll go to the conference room."

Actually, this house is quite large, otherwise it wouldn't be able to accommodate twenty or thirty people to work. They converted the living room into an office area, but the so-called meeting room is incredibly small, probably only five or six square meters.

Tan Jincheng spent a considerable amount of money to acquire this house. The current house price in this area is around 4.6 yuan per square meter, but Tan Jincheng bought it at a price of 10 yuan per square meter, which almost used up the premium that would have been generated more than 10 years later.

It has no other use besides renting it out.

"Let's show Mr. Zhang something before we start talking."

Tan Jincheng smiled and took the property ownership certificate out of his handbag, handing it to Zhang Yiming.

The internet mentions ByteDance's founding year as 2012, but ByteDance's history can actually be traced back to 2010, when Zhang Yiming was already preparing for his fifth entrepreneurial venture.

The reason for starting from March 2012 is that their company didn't have any decent products before that.

One of them is still under development and the product has not been officially released.

The moment Zhang Yiming saw the red booklet, his heart pounded; he almost knew what it was.

A few days ago, the landlord told him that the house had been sold and the new landlord would continue to rent it to them. Someone would then come and sign a new rental agreement with them.

He didn't take it to heart at the time. He couldn't control whether the landlord sold the house or not, as long as he continued to rent it to him.

Upon taking the property certificate and looking at it, he was certain: "Why would President Tan think of buying our office?"

"I'd like to ask Mr. Zhang for an investment opportunity. I'm very interested in your information distribution technology and would like to invest in your company."

When discussing investment with someone who is shy and not good at expressing themselves, it's best to be direct.

"Mr. Tan is so busy with work, how did you find out about our company?"

"Haha, I have my own channels. I've invested in quite a few companies in Zhongguancun. I heard from them that Mr. Zhang also works at 36Kr upstairs, so I thought I'd come and take a look."

Zhang Yiming nodded, realizing he had asked a pointless question.

"Okay, actually it was Mr. Wang from Wandoujia who mentioned you, Mr. Zhang."

In January of this year, ByteDance invested $300 million in Wandoujia, acquiring a 30% stake. The "CEO of Wandoujia" mentioned by Tan Jincheng is their co-founder and product manager.

This top scorer in Guangdong Province's 2003 college entrance examination is the same age as Tan Jincheng. He founded Wandou Labs in early 2010 and started his entrepreneurial journey. Before the new year, he began contacting ByteDance for financing.

ByteDance's advertising platform has been keeping an eye on mobile management software like Wandoujia since 2009, especially the few that Tan Jincheng can remember by name. Apart from those developed by the giants themselves, they would never miss them.

Such as Wandoujia, 91 Assistant, etc.

Independently developed mobile management software, especially Android products, ultimately end up being sold to giants at extremely high premiums within just a few years. This is the best way to cash out in the primary market.

PeaPod left the deepest impression on Tan Jincheng. Besides having used it himself, the biggest shock was that the founder achieved financial freedom before the age of 30.

In addition to receiving a $1.2 million investment from SoftBank, Wandoujia was eventually sold to Ali for $2 million, all of which was completed before 2016.

"No wonder, it seems I should thank President Wang."

In Zhongguan Village, these small business owners often get together, especially those born in the 80s. They are full of passion but also anxious about the future, and they are all thinking about where to attract investment.

"Getting back to the main point, does ByteDance need investment? If so, I can provide it."

Do we need ByteDance? Absolutely!

A few million yuan is simply not enough to support the development of the app he envisions, especially since he wants to pursue multiple app development to achieve data distribution. However, the boss didn't ask any questions at all and went straight to asking if he needed money, which made him feel somewhat uncomfortable.

In the past, he would talk to investors for most of the day without any results. The polite ones would tell you to go home and wait for a notification, while the less polite ones would refuse you outright.

“ByteDance definitely needs investment. To be honest, I was originally thinking of submitting a financing proposal to your company. Would you like to take a look, Mr. Tan?”

"Haha, no need to look, I'm voting for you as a person. I also know your good friend Wang Xin."

Even if I showed it to him, I wouldn't understand it. If Huang Ming and others were to look at it with a professional eye, Tan Jincheng would probably think the same thing as other institutions.

Venture capital firms can easily raise money, often in the millions, but when they decide it's not going to work, it's very difficult to get it back; it's all a matter of a single decision.

"Um, this is the first time I've encountered someone like you, Mr. Tan. In that case, how much would you like to invest?"

"How much do you want?"

Venture capital rounds typically involve equity stakes between 10% and 30%, with 20% being the most common. There are exceptions, but it generally doesn't exceed 30%, otherwise, it would be impossible to participate in later rounds.

The amount is usually between 100 million and 500 million, and if it is in US dollars, it will also be in the unit of 50.

Smaller companies tend to cherish their shares more. There are countless examples of founders being ousted if too many shares are given up during the angel round.

By 2011, the capital market had matured considerably, and the chances of securing a 30% stake in the angel round were extremely slim; 20% was considered the limit. Tan Jincheng, with his deep pockets, asked how much he wanted, leaving Zhang Yiming unsure how to answer. He wanted as much as possible, but more shares meant more to be distributed. Wang Qiong, his former boss, had given him 50 yuan, which wasn't considered part of the angel round.

However, Zhang Yiming still gave her 5% of the shares. Currently, ByteDance is 95% owned by him and 5% owned by Wang Qiong.

Zhang Yiming, who has lofty ideals, does not want to give up too many shares in the angel round. In his plan, giving up 15% of the shares in the angel round and keeping himself holding 80% of the shares is the most ideal, which is conducive to the future development of the company.

Since he didn't know how to answer, Zhang Yiming thought for a moment and then said straightforwardly, "I plan to sell 15% of the shares. What do you think it's worth, Mr. Tan?"

He then explained, "It's like this: my sister Wang gave me 50 yuan before, and now I only hold 95% of the shares. For the sake of the company's development, I don't want to give up too many shares in the venture capital round."

"I also want to mention that if the company needs to bring in new VCs in subsequent rounds, ByteDance Engine can only participate in the investment and maintain its shareholding."

If the price is right, then we'll take it. Among purely domestic investment institutions, ByteDance's Big Data Engine is already among the top 10. Having such an institution with cash and resources participate in venture capital is a good thing for ByteDance.

Especially Xiaomi, which the other party invested in, if it becomes incredibly popular, it will be more successful than any of the BAT companies.

"So I'll understand that ByteDance's seed round valuation was 1000 million yuan, right?"

Wow, no wonder he's a talent on his fifth trip. His understanding of equity relationships and thinking is quite clear. What he means is that before the IPO, ByteDance's shares can only remain at a maximum of 15%, and whether or not dilution is needed afterward depends on him.

"That's true, but that's all because my sister Wang gave me face."

Zhang Yiming scratched his head somewhat embarrassedly. At the time, he didn't even have any other thoughts. Wang Qiong gave him 50 yuan, which really showed his faith in him.

However, in Tan Jincheng's view, the 50 yuan was well worth it. A person who can maintain his passion despite four failed startups, coupled with his superb skills, is indeed worth 1000 million yuan.

Zhang Yiming's words likely mean that he will continue to involve Wang Qiong in this round and does not intend to directly dilute her shareholding.

"I've come here with good intentions. How about this, I'll give you $450 million, that should be enough to last until your app launches. What do you think?"

He vaguely remembered ByteDance's financing history: it raised $4 million in its angel round with A Capital, followed by a $10 million round and a $100 million round of financing.

By 2016, the financing scale had soared to over 10 billion US dollars.

The largest single deal was Shen Nanpeng's $10 billion investment, which acquired a 10% stake in one go.

Tan Jincheng's idea was to secure both the angel round and the Series A funding, thus eliminating one competitor by securing funding all at once.

The extra $50 wasn't for Zhang Yiming's sake, but rather to leave a good reputation in Zhongguancun. The entrepreneurial wave of the post-80s generation was in full swing, and he himself couldn't possibly remember all the well-known companies from his previous life.

Once the reputation of supporting small startups and providing generous funding spreads, it will attract more entrepreneurs to submit their funding proposals to ByteDance's advertising platform.

$50 is equivalent to an advertising fee, which is definitely worthwhile for ByteDance's advertising platform.

"US dollars?"

"That's right, it's US dollars. People in the internet industry all like to use US dollars as a unit of measurement, right? Of course, what I'm giving you is RMB."

Zhang Yiming was at a loss for words. The valuation of 1000 million for a name was due to his former boss's generosity, but this boss, who was two years younger than him, was even more generous, directly raising the valuation to 3000 million, in US dollars.

"Mr. Tan hasn't even seen our product yet, and you're already investing so much? Aren't you worried about the risks?"

I've not only read them, I've used them all. Neihan Duanzi (a popular Chinese humor app) is a memory for a generation.

Oh, right, there's also Qiubai. This thing was developed in the spare time by the product manager of QQ Mail, which is owned by Pony Ma. It started running as early as 2005, initially using an invitation code system.

This is also a memory of a generation.

"No, I didn't even look at Wandoujia's products when our company applied for them, but we still succeeded."

"Also, I'm not in charge of investing in ByteDance's advertising platform. I only invest in projects that interest me. Mr. Zhang, do you understand what I mean?"

Generally speaking, Huang Ming is responsible for finding investors all over the world. Even Wandoujia was found by Huang Ming, while Tan Jincheng only provides an investment direction.

Since 2009, only a handful of companies have truly prompted Tan Jincheng to actively seek investment opportunities, including Xiaomi and ByteDance.

That said, Lei Jun's Shunwei Capital also invested in ByteDance, and even Tencent invested, but it's unclear which round they participated in.

"Another point I want to make is that before ByteDance's IPO, our shareholding must be at least 10%. Mr. Zhang, is there any problem with that?"

As a venture capitalist, the shares will inevitably be diluted in the future, there's no way around it. Zhang Yiming's request was based on this point, but Tan Jincheng did not want the dilution to continue indefinitely.

Before raising at least $1 million, it is essential to ensure that shareholding is not diluted in order to guarantee future control.

"No problem, we can put that in the contract."

As long as it doesn't exceed 15%, he can be the second largest shareholder if he wants. Zhang Yiming is very satisfied with the $450 million financing amount. He didn't expect this unexpected financing to go so smoothly.

It went so smoothly that he felt it was almost unreal.

Zhang Yiming was still somewhat dazed at this moment, but he was very happy inside. There was no need for someone like Tan Jincheng to joke about him, and he even bought the house.

Oh, right, the house.

"In that case, you should discuss it with the company and General Manager Wang, and we can prepare the contract and sign it as soon as possible, okay?"

"No problem, I'll arrange it right away. I'll call my sister Wang first."

There shouldn't be any problems internally at the company. They'll definitely be happy to have secured funding, but we need to let Sister Wang know first.

Since the beginning of this year, Zhang Yiming has been seeking investment, which Wang Qiong knew, and she encouraged her younger brother to actively look for investment opportunities.

But when she received the call, she was still somewhat surprised: "You mean it was Mr. Tan from Juliang who took the initiative to talk to you?"

"Yes, Mr. Tan just came to our door suddenly; oh, by the way, he also bought the apartment we were renting."

"Buy a house? What kind of logic is that?"

"Haha, I don't know either. I was stunned when I saw the property certificate. But anyway, it's a good thing. Mr. Tan agreed to give us 450 million US dollars, so my apps can last until they are officially launched."

"Haha, this young boss Tan is quite interesting, but he's also very generous; alright, I understand, I'll transfer the money over later, you can decide the rest yourself."

According to anti-dilution regulations, she needs to pay the amount that should be diluted based on the valuation.

"Okay, thank you for your support, Sister Wang."

"Why thank me? If you want to thank someone, thank President Tan. By the way, you can ask him for his opinion on future investments. As far as I know, among all the companies on ByteDance, the only one President Tan has proactively sought investment from without any prior notice is Xiaomi. You understand what I mean?"

To be honest, just the fact that Tan Jincheng took the initiative to approach her made Wang Qiong somewhat interested in ByteDance's future. If it weren't for the previous agreement, she would have really wanted to increase her stake.

As Zhang Yiming left, Tan Jincheng also notified the company's legal department, as he still attached great importance to ByteDance's investment.

Like Xiaomi, it has extraordinary strategic significance.

In the mobile internet era, marketing is crucial for automobiles and even for components like batteries. As the next generation of traffic portal, Douyin (TikTok) holds a vital position, even though it has no plans yet.

Shareholders certainly cannot influence ByteDance's normal operations and key strategies, but they can obtain better resources and guarantee ByteDance's publicity channels.

Another one actually has a lot of energy.

In the BAT era, the main channels for car manufacturers to promote their products and services were car magazines, professional car forums, and professional car websites such as Yiche. Although Weilai has not been established for long, it has also grasped these channels.

In the mobile internet era, we cannot fall behind.

The combination of physical stores and the internet, using traffic to support the industry, is a path that traditional manufacturers have been exploring for several years. Tan Jincheng hopes that Weilai, with its external support, can establish this advantage from the very beginning.

About half an hour later, Tan Jincheng heard cheers from the men and women in the outer room of the conference room, and couldn't help but laugh.

It seems that Zhang Yiming shared the news of ByteDance's intention to invest with the employees.

Having started four businesses, Zhang Yiming was very familiar with the financing process and contract templates. He personally prepared all the contracts, and for a while, no one paid any attention to Tan Jincheng in the meeting room.

After a while, Tan Jincheng was getting impatient. After playing Fruit Ninja countless times, Zhang Yiming hurriedly took the contract and entered the conference room.

"I'm sorry, Mr. Tan, the company's resources are limited right now, and we can't even afford to provide proper hospitality. Here is the contract, please take a look."

"It's alright, just need to borrow your company's fax machine for a moment, I'll send it to our legal department."

"Alright, Mr. Tan, please follow me."

While waiting for legal confirmation, Zhang Yiming finally remembered to chat with Tan Jincheng: "It seems that President Tan is more focused on investment business this year?"

"I guess so. The car market has been relatively calm this year, and we don't have any more products to launch this year, so we're using the freed-up energy to make investments."

The period from 2010 to 2012 was a transitional period from the PC era to the mobile internet era. Some companies fell behind during this process, while others rose to prominence. Those who seized the opportunity were able to reach a new level of success in their business empires.

"Xiaomi became an instant hit. When will Mr. Tan send me a Xiaomi 1? My Apple is too old and I can't use it anymore."

"Sure thing, I'll have Mr. Lei send you a few over later so Mr. Zhang can try them out."

There were no problems with the contract. ByteDance's advertising platform acquired a 15% stake in ByteDance for $450 million, retaining the right to co-invest while guaranteeing to hold no less than 10% of the shares before the IPO. The $450 million was to be transferred to ByteDance's account in three installments within one year of the contract signing date.

The moment the two parties officially signed the contract, Zhang Yiming smiled like a child.

"Oh, right, we also need to sign a rental agreement with President Tan."

"Forget it, you can keep using it. Just settle the contract with the original landlord. I paid a lot of money to get this house. Once your company succeeds, you'll have to buy it back for double the price I paid."

"Oh, by the way, I've bought both your upstairs and downstairs apartments. Want to come with me to 36Kr for a look around?"

Damn! Is this how rich people play? A house here isn't cheap, and he certainly can't afford one right now.

(End of this chapter)