Li Yanhong, an American returnee, used to work for SouXin, the largest search engine company in the US at that time. He invented the Hyperlink Analysis, a basic patented search engine technology, and had applied for a patent in the US.
He had always wanted to start his own search engine company in Hua Xia, instead of working for others. Therefore, he had returned to China every year for inspection.
Last year, he felt the time was ripe. He could tell from the fact that Sina and other companies were listed on NASDAQ that Hua Xia's internet business was about to explode, and it was a good opportunity for him to start his own business.
Therefore, he returned to China and recruited several graduate students from Peking University and Tsinghua University with his partner, Xu Yong. What excited them most was that an associate professor from Peking University also joined them and became the technical director of their company.
Oh, the company he founded was called Baidu.
However, they had too little money. Li Yanhong and Xu Yong only had enough money to buy computers and rent a hotel, and they still had to pay the salaries and living expenses of their employees. That professor from Beijing University was even poorer. If it were not for the lack of funding, he might not even join them.
Therefore, they decided to get a partner.
Xu Yong had wanted one of the three major web portals, including Sina, NetEase, and Sohu. They had just been listed and were rich, and they were suitable for Baidu's company.
When Baidu's search engine was launched, they could use it to make profits.
But Li Yanhong objected, because they would be easily acquired by those web portals. They had seen many such companies in Silicon Valley. They were acquired as soon as they started to make progress, which was far from their dream of starting a business.
Moreover, he had the patent of the Hyperlink Analysis technology. With this patent, he was qualified to negotiate with many venture capitalists.
At this time, Feng Yu noticed Tai Hua Consultancy advertising all over the internet. He heard this company had invested in the three major internet portals and had a good reputation.
…
"Is this your proposal? Is your name Li Yanhong? "Sun Lijie asked while looking at the proposal.
"Yes."
"In this proposal, you don't expect to make money within three years. Did you write it wrong?" Sun Lijie asked curiously. When other companies pulled in venture capital, they could not wait to tell him that they would be able to make a profit the next day after getting the venture capital.
Why was this one different? It was estimated that it wouldn't make a profit for three years? Moreover, he was familiar with Li Yanhong's name. General Manager Feng had told him to keep an eye on him.
Li Yanhong replied cautiously, "I didn't write it wrong. According to our plan, it will be difficult to make a profit in the first three years. We need to invest too much. Not only in terms of research and development, but also in terms of advertising. But after three years, I guarantee that we will be able to recoup our losses with just the competitive ranking search alone. We will also be able to make some profits with some advertising and so on. "
"You wrote here that you need 100 million RMB investment, and you are only willing to give us 49% of the shares?" Sun Lijie sneered.
If you do not include your patented technology, your company is only worth 2 million RMB now. Why is your patent worth so much?
"Manager Sun, my invention is a basic invention for search engines. I'm not sure if you have heard of a company called Google in the US. They provide search engine services to Asian Tiger and other web portals. Now, they are starting to set up their own search engine website. Many investors are looking forward to this company getting listed. They even claim that after this company is listed, its share prices will exceed 100 billion USD!"
"You are saying that your Baidu company can compete with Google?" Sun Lijie asked.
"Not yet. But I am confident that Google is no match for us in the Chinese market. Because only Hua Xia people can understand our Hua language better! "
"How many people are in your company now?"
"Ten. Including me." Li Yanhong replied shyly.
"Only ten people including you. The scale is too small. I heard Google is thinking of entering Hua Xia's market. How are you going to compete with them if all the websites use Google's search engine? "
"Most of Google's engineers are Americans, and they are not familiar with Chinese. There will be lots of mistakes. Also, we have hired Hua Xia's engineers, and they will speak in Chinese. That's why we have an advantage. Most importantly, we are Hua Xia's company, and we should be protected, right? "
"I can decide on the 100 million RMB investment, but your shares are too little. I am sure other than our company, no one else will give you this much investment. We want 70% of the company's shares with voting rights. I think this is reasonable, and you can discuss with your partners. "
"Manager Sun, will you let someone else own the company you set up?" Li Yanhong asked.
"That will depend on what is going on. If the other party's offer is high enough, we can sell it off. I think you might have heard that our company has shares in all three major websites of Hua Xia. If you accept our conditions, then the search engine services of these three major portals can be handed over to your Baidu company. "Sun Lijie said in a relaxed manner.
Those three companies will still give in to Baidu, as long as Baidu's technologies are good enough. But Baidu, who owns the patent for the search engine, should have good technologies.
"Manager Sun, your offer is tempting, but I cannot agree to it. I will not let my company fall into someone else's hands. I heard that the major shareholder of NetEase is Mr. Ding Lei. "Li Yanhong rejected.
"Don't be anxious. Maybe you are not sure about this. You can ask Sina, Sohu, and the other companies if we are interfering with their operations. We have been helping them all the time. Didn't you notice that we are the major shareholder of Sina and the other companies, but the Chairman is someone else? "
"No. Unless you state in the contract that the majority of the shares you are getting are non-voting shares." Li Yanhong insisted.
"What percentage do you think is suitable?"
"30% is not low, and the rest are non-voting shares." Li Yanhong replied.
"49%. You all still hold the most voting shares. Also, let me remind you that the longer you delay, the harder it will be for Baidu to grow. Google is developing fast in the US. Also, let me remind you that your boss is also investing in Google. If we set up a Chinese search engine company with Google as the core, do you think your company will have a bright future? "
Li Yanhong opened his eyes wide. What did he just say? His boss is also investing in Google? Feng Yu is still a shareholder of Google?
This means Li Yanhong's patented technology is not that impressive, and others can still do it without him.
Li Yanhong gritted his teeth. "Fine. We will give you 49% of the voting shares. That's a total of 70% shares. When will the investment arrive?"
Sun Lijie laughed. "The investment will arrive on the same day after we sign the contract!"
… …
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