The specific process of Amazon's acquisition of Zhuoyue is as follows:

In February p>24, Zhuoyue started its fourth round of financing since its establishment. Amazon, the global ally of B2C, is one of the intentions, because it has abundant financial resources and experience, and is also interested in China. Amazon visited China twice in February and March. The first time, it called on Zhuoyue and Dangdang respectively, and the second time, it only looked for Zhuoyue.

there are three modes in the initial discussion. First, Amazon holds small shares, like Google's capital injection into Baidu. Second, Amazon holds large stocks, like IAC holding E-Dragon. Third, wholly-owned acquisitions, such as Yahoo buying 3721 and eBay buying eBay.

first, Amazon can't pass; They have a good eye on the China market, and they must intervene forcefully, leaving no room. The second kind, Zhuo Yue can't pass. The capital strength of the two sides is too different. If Amazon wants to increase its capital and invest another 1 million US dollars, will Jinshan and Lenovo follow or not? If you can't keep up, you can only be kicked out. And even if Amazon doesn't take more actions, how can Kingsoft Lenovo cash out? Amazon has no plans to go public again.

since sooner or later, we will be thrown out or locked in, so it is better to give up now, which is the third mode, wholly-owned merger and acquisition.

actually, it's ok to raise funds from VC. Jinshan and Lenovo have an initial investment of 16 million yuan, and the shares are roughly 7% to 3%. Later, VC invested 9.2 million dollars successively, and diluted Jinshan shares to below 5%. In order to achieve steady profit, Excellence will have to invest at least tens of millions of dollars. In the end, there is no escape from a result: the shares are diluted, the dominance is lost, and the company is out.

if we go back to five or six years ago, money will not be a problem. Groups of VCS chase entrepreneurs to invest, and tens of millions of dollars only require a small amount of shares. Ding Lei and Zhang Chaoyang started their businesses by financing at that time, and now they are still major shareholders in charge of their own businesses. In 2, when the bubble burst, VC turned conservative. Jinshan and Lenovo pay their own money to do Excellence. After they reach the scale, VC is willing to pay, but the higher the price, the more easily they will hold shares.

As the usual financing channel, bank loans never help the poor, and in reality, they have little contact with the Internet. Xie Wen, CEO of Hexun, said that Internet companies in China all succeeded in playing China's game with foreign money. When starting a business, it relies on international VC financing, and then goes public on NASDAQ when it is large, and the money earned is distributed to foreign investors. It has little to do with China's capital market.

so, there are not many choices. Lei Jun said.

in April, we entered into substantive discussions and received letters of intent for cooperation between Amazon and several VCS. In May, the excellent board of directors began a heated debate, including Kingsoft, Lenovo, VC and some mysterious individual investors.

It is said that Lei Jun owns 1% of the shares of Zhuoyue, but it is denied. In fact, 1% doesn't matter. Jinshan and Lenovo are purely in the position of capital. How to cash out and whether it will be trapped is the first criterion of capital decision.

as the chairman, he represents the cold capital will; It is also the founder, from putting forward ideas and starting a business when the internet bubble burst, to going through several desperate moments, and now. To what extent is the pain, Lei Jun himself knows.

at the end of may, I made up my mind. On August 9, the contract was officially signed.

Doing business is hard

A VC once advised Lei Jun not to give up, because online retailing is a long-term business. Retail has existed for thousands of years, and software is only a few decades. As long as there are no major problems, Wal-Mart will definitely outlive Microsoft. Gates' 4 billion became the richest man, and Walton's five children each had 2 billion. If the old people don't leave home, there are 1 billion, and the two Gates are not the richest men.

Lei Jun said that it's only been 3 years since Gates started his business, but the Walton family has gone through two generations. Let's take a look at Amazon, which was founded in 1994 and didn't start making profits until 22. At that time, it had already spent billions of dollars.

compared with the United States, it is more difficult to do B2C in China, and the complexity is increasing with the scale.

when Excellence started, it was easy to handle 1 orders a day. From 1 orders to 5 orders, it was found that the warehouse was not enough and things could not be sent out. All employees were rushed to the warehouse for packaging. 1 to 1 is a qualitative change, and 1 to 1 is another qualitative change. Excellence has passed 1 thousand, but it is extremely painful to reach 1 thousand

to make a hundred thousand bills, the warehouse in Beijing alone needs 3, square meters, which is equivalent to six standard football fields. Fill up the shelves, a shelf is 15 pieces, and it needs 3 million yuan. Fill the warehouse with shelves, load the goods and equip the assembly line, at least 1 million US dollars.

China, Beijing, Shanghai and Guangzhou generally need five logistics and distribution centers. The United States has a history of mail order, which has produced DHL and UPS, but not in China. Many distribution companies have been tried, and some bosses are too utilitarian to stop as soon as they find that they have less money. Some had an accident and the warehouse caught fire; Some are poorly managed, and the delivery staff absconded with the payment. The risks are different, but in the end, the independent distribution system is extremely immature.

So in the end, Zhuoyue can only do its own logistics and distribution, otherwise the service quality of 4-2 hours delivery cannot be guaranteed, which is the key to the attractiveness of online ordering. But it will take 3-5 years to build a national logistics center, at least 3 million US dollars.

in addition to logistics, there is also an information system, including the analysis of customers, the tracking of each book, and accurate recommendation. Amazon's technology investment is more than $1 billion, and at the lowest point of the Internet, it also maintains research and development by one or two hundred people. Moreover, Amazon's suppliers have a complete database. In China, it is difficult for private capital to get involved in the supply of books and periodicals due to policy restrictions, and the degree of informatization of state capital is low.

For these two points, Excellence is either short of money or in a hurry.

to say the least, even if it reaches the scale of several tens of billions, do you have the corresponding control power and can you find the corresponding managers? While Amazon was doing it, it went to Wal-Mart to dig people up. As a result, Wal-Mart took Amazon to court. China's retail enterprises are small in scale, especially lacking in talents. It will take another ten or twenty years for the local business environment to produce hundreds of billions of retail companies. Where can we find talents for Excellence?

China also enjoys universal local protection. The wider the goods are sold, the more local obstacles it faces. Yu Yu, the president of Dangdang, is always calling for "setting up stalls to get together". The strength of one family is too thin, so several families can unite together. But this is not the way. Can four or five manufacturers outside the system with the label of new economy beat the forces inside the system with traditional confidence?

Lei Jun said that there are too many variables in doing B2C in China.

It's very different from the online business of the Internet, such as short messages and online games. B2C needs to land and go forward with the traditional offline industries, which requires a little spirit of "foolish men moving mountains".

There is a one-point growth online, and five-point efforts have been made offline.

Lei Jun said that this unique barrel effect is particularly obvious in the business environment of China. There are too many traditional short boards, and it is difficult for the network board to grow up.

Compared with other Internet services, B2C is too difficult and the input cost is too high, which is not a good project from the perspective of capital gains. It seems that Lei Jun made a mistake in choosing B2C.

Lei Jun didn't quite agree, saying that we can't look at the problem from the objective situation. Jinshan missed the peak of Internet development in the late 199s because the software industry still made money. An old frontiersman loses his horse—a blessing in disguise.

Since p>1995, Lei Jun has been eyeing the Internet and is almost fascinated by BBS. In 1998, I tried to buy FoxMail, but it didn't work. Ding Lei refused to buy Netease. At that time, I didn't care too much, because as the general manager of Jinshan Software, I had to direct WPS and Microsoft to compete head-on. That was the main battlefield of Jinshan, fighting for the national software.

in p>1997, the profit of RichWin in Wang Zhidong dropped sharply, and it was changed into a portal at the request of the management, thus making Sina a success. Lei Jun smiled slyly: It's a pity that Jinshan's software sold well at that time, otherwise I thought of switching to the Internet! Later, Wang Zhidong sighed at China Entrepreneur, "People are not as good as heaven, and many things may be arranged by God."

This is actually not convincing enough. Ding Lei and Zhang Chaoyang all set their sights on the portal from the beginning. Lei Jun said that there is still the problem of baggage. Look at the internet with traditional thinking and only use it as a tool; The simplest thing is to sell things on the Internet, which happens to be B2C. Zhuoyue was born in 2, when the idea of cement and mouse was popular, and few people foresaw these revolutionary modes of wireless and online games.

Even on the Internet, large enterprises that have reached scale are slow to grasp new opportunities.

Google, like Microsoft, developed under the noses of Yahoo and IBM. When Whitman wanted to sell eBay to a giant, AOL ignored it and merged with time warner Inc. instead. Yahoo asked Whitman to report to its COO, and only regarded C2C as a small application on the Yahoo platform. At that time, few people saw the value of C2C clearly, but now eBay's market value ranks first in the Internet.

Whether it's the cooperation between time warner Inc. and AOL, Lenovo's FM365, or Founder's Yahoo China, the fate is bumpy. Only Microsoft has made MSN, but its internet business is self-contained and distinct from traditional software business. The new economy needs new thinking, and old things can easily become obstacles.

Therefore, historical opportunities always favor people without burdens. In 1997, when the Internet was in its first wave, Ding Lei, a net worm, Ma Huateng, a technical youth, Zhang Chaoyang, a doctor studying abroad, and other "proletarians" acted the fastest and most thoroughly. Although most entrepreneurs have failed to survive the fierce competition, the most successful are the most sensitive and extreme young people.

that was the first wave, and the so-called "proletarians" won the first prize. But up to now, the competitive situation has gradually changed. Excellence is made by old manufacturers such as Jinshan and Lenovo, surpassing a series of upstarts such as Dangdang, Lao8848 and Sohu Mall. Lei Jun said that Excellence is far ahead in scale.

If Excellence is only an indirect victory of Jinshan, and B2C has a lot of cement and traditional genes, then turning over in online games can make up for the shortcomings.

In p>24, Jinshan came from behind, and Sword Net became the most successful domestic online game after Netease's A Chinese Odyssey. In Taiwan Province, Sword Net has entered the top five, and the general agent Zhiguan is ready to expand publicity for the follow-up products of Jinshan. In Southeast Asia, Japan, and South Korea, the front has also been rapidly opened.

As CEO of Jinshan, Lei Jun got excited. Traditional IT enterprises qualify on the Internet, but also make a bow, and Jinshan is the first one. "Our thinking has begun to adapt to the Internet, and the Internet has gradually matured, and our space will become larger and larger," Lei Jun said. "Excellence is recognized by Amazon, and Jinshan has become an online game, which is nothing more meaningful than this."

Therefore, Lei Jun has room for comparison and choice. Compared with the hardships of B2C and the dullness of retail, online games are much easier and more interesting. Amazon didn't stop losing money until the eighth year, and Shanda made a lot of money in the first year. "To sell Excellence is to give up an opportunity; If you continue to work hard, you may lose more opportunities. "

Throw B2C to Amazon, which is more powerful, and Jinshan is all on online games. Make quick money, make quick money, and put the money earned from online games into capital operation in the future. It is not impossible to buy back Excellence. Isn't it?

to sell Excellence is to break one's arm, with painful feelings and clear thinking.

Lei Jun said, "There are more exciting things in the future."

the internet has just begun.

Buying and selling Internet

Text/Cheng Lingfeng

Business is actually buying and selling, and businessmen are buyers and sellers. At present, the internet is alive and well, because business is booming. And they are all big deals, called mergers and acquisitions.

in the past two years, there have been no fewer than 3 mergers and acquisitions on the internet, mainly among domestic companies. Professor Lv Benfu of Chinese Academy of Sciences bluntly said that this is a good thing. The Internet is fast and innovative, forcing large enterprises to buy and then digest. As long as innovation continues, acquisitions will continue. Xie Wen, CEO of Hexun, thinks that this marks the maturity of the Internet in China, and the Silicon Valley miracle is based on a high degree of resource integration characterized by mergers and acquisitions, such as Cisco.

Although the overall situation is optimistic, there are great differences in specific cases.

Sohu's acquisition of 17173 and Goodfeel, and Sina's acquisition of Xunlong and Wangxing are almost purely for scale. Using cash to buy income, Xie Wen said it didn't mean much. Sina's acquisition of Shanghai Fortune Tour, Longma UC, Netease's acquisition of Tianxia, China's search acquisition of Colorful Shopping, Sohu's acquisition of Focus, ChinaRen, etc. are to supplement the business line. The motivation is good, but it is hard to say whether 1 plus 1 is greater than 2 through integration.

although there are many businesses, there are too few good ones. In 21, Netease entered the world and entered online games, which was the only classic. The world was not profitable then, but after the merger, the online game market suddenly turned to sturm und drang, and now it accounts for 7% of Netease's total revenue. A potential business point is integrated into a big platform, releasing huge energy, which is the true meaning of mergers and acquisitions.

Sohu is very special. After the merger, it is not integrated, and it is lined up with a name: matrix. Some people say that this is a horse race. Buy potential network assets and put them away, just waiting for appreciation. Xie Wen asked, a brand is not ready, want to be a group? The appreciation has not happened, and the market value has dropped a lot.

Shanda is a tough player, and the idea of M&A is clear: complete industrial chain. R&D engines, operating platforms, mobile games, and even novel originality are zoned from upstream to downstream, and all those related to online games are bought. It is said that this is a gamble, but the time is still short and it is difficult to see the effect. But shaping new industries really requires great courage.

What is happening at present is eating too much and eating too little, and there is no merger between the top two. The reason is obvious: eating big and eating small is easy to integrate; Strong alliances inevitably lead to infighting. Xie Wen said that the Internet in China is not mature enough to achieve strong integration. From Chen Tianqiao to Ding Lei, from Ma Huateng to Zhang Chaoyang, no one will obey anyone. Without introducing a large number of professional managers, it is difficult to have high-grade mergers and acquisitions.

before local manufacturers have had enough fun, foreign giants have come. EBay, Yahoo, Amazon and Google, either acquiring or injecting capital, are all grabbing positions.

Lv Benfu said that foreign giants will inevitably go to China to buy several internationally mature businesses such as e-commerce, portal and search, which is called global distribution. This is a good thing. Foreigners have sufficient financial resources and rich experience, which can promote the development of Internet in China, especially the bitter and tiring e-commerce. Moreover, the Internet has no borders, and platforms in various countries have an inherent need for connectivity.

and wireless value-added and online games, which are quite China's national conditions, have not been sold by foreign giants so far. They don't know much about it, so they can't bring added value. Moreover, these two models are profiteering and do not need foreign capital to help. On the contrary, if these models are fully mature, they can still go out, which is another story.

Aside from the domestic and international differences, M&A has an eternal theme: cashing out. Internet innovation is too fast, and the old and new are frequently replaced. Gates has been the richest man for many years, but the number one Internet is changing every year. How long will the current model last? Entrepreneurs have no idea. So cash out when you have the opportunity, preferably go public, and buy if you can't. The cash can also be used to invest in the next wave of innovation.

Therefore, how to be a century-old shop on the Internet is an extremely urgent topic. Cisco has lived for twenty years. China Entrepreneur asked Chambers what to do in the next ten years, and replied, "M&A, M&A!"

an analysis of the gains and losses of Amazon's acquisition excellence.