HLnovel Chapter 205 Star Technology Board of Directors
Chapter 205 Star Technology Board of Directors
The meeting room curtains were drawn tightly, and eight people sat on either side of the long table.
Ling Yun sat in the main seat, with Michael Thomson, a board representative of Dell, to his left and Mike Moritz of Sequoia Capital to his right. Each person had a document in front of them, with a blue cover and the title: "Proposal Regarding the Spin-off and Independent Operation of Xingyu Business."
"Let's begin," Ling Yun said.
Thomson opened the document and went straight to the third page, the equity structure diagram. He looked at it for about thirty seconds, then looked up: "After the spin-off, Xingchen Technology will hold 70% of the shares, the employee stock ownership plan will hold 15%, and 15% will be reserved for financing?"
"Yes," Ling Yun said.
"What about the valuation?"
"Based on the latest round of StarCraft's financing valuation, it's $8 million. Our internal estimate for the Star Language business is approximately $2.5 million."
Moritz adjusted his glasses: "2.5 million? What's the basis for that?"
"User numbers." Ling Yun gestured to his assistant to turn on the projector. The screen lowered, displaying a chart: Xingyu's user growth curve. The horizontal axis was time, from August to November 1997; the vertical axis was the number of users, from 0 to 2.5 million.
"Four months, 2.5 million users." The red dot on the laser pointer stopped at the end of the chart. "Monthly growth rate of 55%. According to the internet company valuation model, the value per user is $100, and the total value is $250 million. Yahoo and AOL are using this model."
Thomson tapped a few times on his calculator: "2.5 million users, a valuation of 250 million, that's indeed $100 per user. But does Xingyu currently have any revenue?"
"No," Ling Yun said frankly, "It's completely free right now."
"Then the valuation basis..."
"This represents future revenue potential." Lingyun switched to the next chart. "Users spend an average of 58 minutes per day on the platform, and send an average of 300 million messages per day. This level of activity can be monetized in the future through Google Play, value-added services, and enterprise version subscriptions."
The meeting room fell silent for a moment.
Thomson and Moritz exchanged a glance.
"What is the purpose of the split?" Moritz asked.
"Three objectives," Ling Yun said, holding up a finger. "First, independent operation allows for greater flexibility and faster decision-making. Second, it facilitates separate financing without diluting the shares of Xingchen Technology's other businesses. Third, it prepares for an IPO."
"Going public?" Thomson sat up straight. "Isn't it too early to talk about going public?"
"Not too early," Ling Yun said. "If everything goes smoothly, Xingyu can be listed on NASDAQ independently by the end of 1999 or the beginning of 2000."
Moritz jotted down a few notes in his notebook: "How will the management be arranged after the split?"
"Carly will serve as CEO, and the existing team will be transferred in. Star Technology will provide technical support, share data center and server resources, and settle accounts at cost," Ling Yun said. "Back-office functions such as finance, legal affairs, and human resources will initially be managed by Star Technology, and will gradually become independent within a year."
What are your financing plans?
"Once the spin-off is complete, we'll immediately launch our Series A funding round. We plan to raise $60 million, issuing 20% new shares, valuing the company at $300 million post-money. I'll cover the initial investment; you subscribe to the remaining shares, and I'll cover the rest." Ling Yun looked at Moritz. "Is Sequoia interested in leading the round?"
Moritz did not answer directly: "We need to do due diligence."
"Sure. All the data is available to you."
Thomson turned to the last page of the document, where the board vote was. He picked up a pen, checked the "agree" box, and looked at the others.
"I need to call Dell headquarters," he said. "Give me ten minutes."
"Please go ahead."
Thomson walked out of the conference room with his phone in his hand.
The remaining directors began to discuss in hushed tones. One independent director asked, "Will the share price of Star Technology be affected after the spin-off?"
"There may be short-term fluctuations, but it's a positive development in the long run," Ling Yun said. "The spin-off will allow Xingyu's value to be fully realized, which in turn will increase the value of Xingchen Technology's equity stake. This is the model Yahoo used when it spun off GeoCities."
"What about the risks?"
"The main risk is execution," Ling Yun admitted. "After operating independently, we face challenges such as whether we can maintain our growth rate, secure financing, and achieve timely listing. But these risks also exist even without the spin-off."
Ten minutes later, Thomson returned and sat down.
"Dell agrees," he said, "but on one condition: Dell has the right to participate in Xingyu's Series A funding round and co-invest proportionally."
"Sure," Ling Yun said. "Sequoia Capital will lead the investment, with Dell participating."
Moritz readily agreed, "$6000 million, for a 20% stake. Post-investment valuation of $3 million."
"make a deal."
Next came the formal vote. Of the eight directors, seven voted in favor and one abstained. The resolution passed.
"Meeting adjourned," Ling Yun said. "The detailed implementation plan will be sent to everyone within a week."
The board members left one after another. Before leaving, Thomson patted Ling Yun on the shoulder: "Young man, you're quick."
"We have to be quick," Ling Yun said. "The market waits for no one."
Moritz was the last to leave. He reached the door, turned back, and said, "Ling Yun, you're racing against time."
"Yes," Ling Yun admitted, "You have to seize the market as early as possible!"
The meeting room was empty.
Ling Yun sat in the main seat without moving.
Five minutes later, Carly came in. She was wearing a dark gray suit skirt and her hair was tied in a neat ponytail.
"President Ling." She sat down opposite her.
"The board has approved it." Ling Yun pushed the voting results document over. "Xingyu will operate independently, and you will be the CEO. The Series A funding round will be led by Sequoia Capital, with Dell participating, raising $6000 million. The post-investment valuation is $3 million."
Carly took the document and examined it carefully. When she saw the valuation figure, her eyebrows rose slightly.
"3 million? That only gets you 250 million users."
"The capital market looks at the future," Ling Yun said. "Your task is to build that future."
"Are there any specific strategic plans?"
"Three sentences," Ling Yun said, holding up three fingers. "First, don't focus on profit. For at least two years, don't think about making money; put all your energy into user growth."
Carly takes notes: "Okay!"
"Second, rapid fundraising." Ling Yun lowered his second finger. "After Series A, we'll complete Series B and C rounds by the end of next year, raising $2 million. We'll then aim for an IPO the year after."
"And the third one?"
"Conquer the market." Ling Yun lowered his last finger. "China, the United States, Europe, Southeast Asia—all major markets must be in the top three. At all costs."
Carly stopped writing: "At any cost? You mean... even at a loss?"
"Sure," Ling Yun said. "As long as user growth keeps up, it doesn't matter how much we lose. The logic of internet companies is: users first, then revenue. Once you have enough users, revenue will naturally follow."
"What about the profit model...?"
"Don't think about that for now," Ling Yun said. "GG, value-added services, games, e-commerce—these are all possible paths. But right now, we're focusing on one thing: getting more people to use Xingyu, to use it for longer, and to make it indispensable."
Carly closed her notebook: "I understand. And the organizational structure...?"
"You're fully in charge," Ling Yun said. "The team, the budget, the decisions—that's all your responsibility. I'll only handle three things: strategic direction, the pace of fundraising, and key personnel appointments. The rest is up to you."
What if I disagree with the team?
"You're the CEO, so you make the decisions," Ling Yun said. "But major decisions, such as entering new markets, acquiring other companies, or major product redesigns, need to be reported to me."
"Weekly written briefings, monthly video conferences, and quarterly face-to-face reports." Ling Yun glanced at the calendar. "The first face-to-face report is scheduled for the end of January next year."
"it is good."
"There's one more thing." Ling Yun took out a piece of paper from his briefcase—a handwritten list. "These five people are the ones you need to focus on developing. Two will work in technology, two in product development, and one in operations. In three years, at least one of them should be able to take over your position."
Carly took the list. It contained names, current positions, and brief comments written by Ling Yun.
"Taking over from me?" She looked up. "President Ling, I've only just taken office..."
"You need to be prepared for this," Ling Yun said. "If Xingyu goes public, you may have to work on a larger platform. In any case, cultivating a successor is the CEO's responsibility."
Carly paused for a few seconds, then folded the list and put it in her pocket.
"I will."
"Finally," Ling Yun stood up, walked to the window, and drew back the curtains, "after Xingyu becomes independent, it will directly compete with ICQ, which is supported by Microsoft. Microsoft has resources, channels, and operating system bundling. What do we have?"
Carly thought for a moment: "We have better products, faster iteration speeds, and a better understanding of users."
"That's not enough." Ling Yun turned around. "We need a more resolute determination, more flexible tactics, and a more courageous and determined team. This battle will be difficult, but we must win."
"I see."
"Go ahead," Ling Yun said. "Starting tomorrow, you'll be the CEO of Xingyu Technology. Your office is on the fourth floor; it's all ready for you."
Carly picked up the documents and walked to the door. She stopped when her hand touched the doorknob.
"Mr. Ling," she said, "thank you for giving me this opportunity."
"It wasn't something I gave you," Ling Yun said. "You earned it yourself. In these four months, Xingyu went from zero to 250 million users, and you and your team did it. You deserve it."
Carly nodded, pushed open the door, and left.