This is the best team: from Ctrip to Home Inns, Hanting I

Chapter 7 Venture Financing (2)
03 Re-appointment with Su Yang

Unexpectedly, three weeks later, Zhang Suyang called suddenly, saying that two IDG colleagues wanted to meet the founder of Ctrip.Ji Qi was so happy that he almost jumped up from the stool, and quickly asked: "Su Yang, how is it? Is there a show?" Zhang Suyang didn't answer clearly, but said: "I don't know yet, let's meet first, preferably your team Come together."

Therefore, Ji Qi quickly pulled Liang Jianzhang to meet Zhang Suyang in the box on the second floor of a home-cooked restaurant on Tongren Road.

Zhang Suyang brought two colleagues, one is Zhou Quan, president of IDG Technology Investment Fund, and the other is a technical expert at IDG Boston headquarters.

What surprised Ji Qi and Liang Jianzhang was that the two IDG investors did not ask about Ctrip's business model and profit model, nor did they ask the three questions that venture capital often ask: what are you doing and what are you doing?Who is on the team and how do you know each other?What is the company's current cash position?Instead, ask some inexplicable questions.

Zhou Quan said: "I want to know, what is the purpose of your founding Ctrip?"

Ji Qi said: "We feel that the Internet is a good platform, which can allow individuals to better develop their abilities, and use the power of the Internet to make our products more convenient for more customers."

Zhou Quan continued to ask: "In another 10 years, if Ctrip becomes big, what are these people in the entrepreneurial team going to do?"

The second question made it difficult for Ji Qi and Liang Jianzhang to answer, because they did not consider such a long-term issue at all.

After taking a look at Liang Jianzhang, Ji Qi said: "I haven't thought about this issue yet. Everyone is doing the Internet, and we are also doing the Internet. I think the Internet can become bigger." Then, Ji Qi talked to IDG's investors about the The story in the United States tells the story of seeing the shock of the Internet for the first time at Oracle headquarters, and how he has been looking for an entry point to enter the Internet industry after returning to China.

The meeting between the Ctrip team and the IDG investors ended in this inexplicable question.After Ji Qi and the others left, Zhang Suyang asked: "Brothers, how is this team? My vision is not bad, right?"

"Their long-term goals are not very clear, and the combination of travel and the Internet is not very clear, but their team does have complementary skills," said the Boston-based technology expert.

Zhou Quan went on to express his opinion: "The Internet is so hot now, and Internet companies are our main investment industry. Let's invest a little first! If this team is useless, let alone other entrepreneurial teams."

"The four of them are a bit like an organization. The four people have different backgrounds, and the big gear and the small gear mesh very well. For the idea that the first is to invest in people, the second is to invest in people, and the third is to invest in people. For venture capitalists, the background of this team member is very attractive, enough to manage the company they will operate." Zhang Suyang said: "Okay, let's invest a little first, and if the development is good, we will add more funds."

A week later, the results came out. IDG valued Ctrip at US$200 million, and IDG agreed to invest US$50, accounting for 20% of Ctrip's shares.

It is worth mentioning here that Zhang Suyang did not read the 10-page business plan written by Ctrip to IDG, nor did he bother to read it, so he made a decision.

1999年10月，IDG投资的50万美元到账。拿到这笔钱后，4个创始人带领30多名员工大张旗鼓地将网站做了起来。

On October 10, Liang Jianzhang changed the name of the website from Youhu to Ctrip.Ctrip.com officially launched, and advertised in the weekly "Shanghai Microcomputer":

Ctrip.com is a travel portal that provides online travel services and travel product introductions for tourists, travel groups and travel-related industries.It covers natural landscapes and cultural landscapes all over the country, as well as attractive tourist hotlines, including comprehensive information on travel agencies, hotels, restaurants, entertainment, shopping and transportation, and provides online reservations (ticket booking, room booking, group booking and meal ordering, etc.) ).Introduce a full range of customer service content such as travel news, hot spot recommendations, community forums, and clubs.Entering www.ctrip.com is like entering a dynamic multimedia China travel encyclopedia.

Later, in an interview with Internet Weekly, Ji Qi introduced the positioning and development ideas of Ctrip in detail.

Ctrip's positioning is: travel information plus travel e-commerce.Ctrip.com provides an Internet-based self-help travel, emphasizing four aspects of "station, community, district, department".

Website: On the one hand, Ctrip.com needs to gain a foothold in China and become a Chinese tourism website; on the other hand, it also needs to attract a large number of foreign tourists to China and become a Chinese tourism website. Ctrip.com will adopt an all-round and three-dimensional business model to carry out extensive cooperation and exchanges with various comprehensive or professional travel websites, travel agencies, hotels, guesthouses and various industries that serve tourism.

Agency: Ctrip.com is also a large-scale e-commerce website, that is, a virtual online travel agency. The 50-year-old team can provide a full range of products including food, accommodation, travel, travel, shopping, and entertainment online. .Netizens can directly choose to book rooms in more than 1000 hotels, more than 800 travel routes and services from more than 30 travel agencies, and they can also directly book air tickets online.

District: In the online community of Ctrip.com, tourists can share travel information they know about each other, exchange all kinds of ups and downs in the journey, express their opinions on various scenic spots and hotels, and even invite friends to travel together online. It is to make travel a thing you really like, and to bring like-minded people together.

Ministry: The Ctrip Netizen Club will become a salon for travel enthusiasts and a residence for travel enthusiasts. The club will continuously launch various activities to lead travel fashion.

04 The road show failed

Why is it Ji Qi who is being interviewed by the reporter?Because after IDG invested 50 US dollars, it not only changed the shareholding ratio of the Ctrip team, but also changed the organizational structure of Ctrip. Liang Jianzhang, who had not been CEO for a few days, was replaced by Ji Qi.It turned out that Zhang Suyang trusted Ji Qi, so Liang Jianzhang had to be changed to COO.

After Ji Qi took office, under the guidance of the idea of ​​tourism information and tourism e-commerce, on the one hand, he made the website like an encyclopedia; on the other hand, he also tried to do various Business, sell everything.Including all kinds of tickets, air tickets, hotel room reservations and group tickets for travel agencies, etc.

From 1999 to 2000, the global Internet boom has reached its peak. During this period, how many Internet companies have been established in the world?neither knows.It is no exaggeration to say that at that time there were more Internet companies than tadpoles by the river.Take travel websites as an example, there are already so many that make people dizzy, such as Ctrip, eLong, China Youth Online, City Travel Network and Green Channel Travel Network? .
Although there are more than N tourism websites, the business models of these websites are basically the same, all of which are travel information and travel e-commerce.

Now that everyone's positioning is the same, how do you know that your website is running successfully?Are there metrics to measure?Have!At this time, the only indicator for measuring Internet companies is the click-through rate.

Therefore, in order to get a considerable click-through rate, Internet companies began to conduct a "burning money" competition and put in advertisements without hesitation.

Ctrip is no exception, working hard on the click-through rate, but also "burning money" on advertisements.Soon, Ctrip ran out of money again.

During the Internet boom in 1999, the $50 that IDG invested in Ctrip was just a "drizzle", and Ctrip had to start thinking about how to find a second round of funds.

It just so happened that eBay went to Hong Kong for a road show at this time, which greatly inspired the four founders of Ctrip: Why not go to the road show?Therefore, they also made a business plan, which roughly introduced Ctrip's business model, development prospects and the current progress.Shen Nanpeng made a list of all venture capital companies in Hong Kong. Four of them arrived in Hong Kong, planning to follow their plans and run one by one.

But unfortunately, during this trip to Hong Kong, the four founders of Ctrip failed very much. The failure was a bit like "Moscow doesn't believe in tears".

Ji Qi still vaguely remembers the conversation with a Hong Kong investor:
"What company are you?"

"We're a travel website company."

"Did you know that many travel companies are now promoting zero-fee tours?"

"Zero fare? What do you mean?"

"What do you mean? Let me tell you, it's very difficult for travel agencies to get along, let alone your website. Young people, it's better to change careers and play something else as soon as possible!"

In short, venture capitalists in Hong Kong feel that although the mainland tourism market is huge, it is very fragmented and has long been done badly.In addition, compared with portals and e-commerce, tourism is not a fashionable concept.

If there is anything to be gained from the trip to Hong Kong, it only increased the popularity of Ctrip. At least those venture capital companies already know that there is an Internet company called Ctrip, which is a travel website.

However, what is most lacking at this time is money!Just like playing a game, no matter how high your level is, if you don't have enough time to replenish your energy and blood, you will still "hang".

Whether Ctrip can raise the second investment, please listen to the next chapter.

second financing

01 Successful secondary financing
The Hong Kong roadshow failed, what should we do next?Ji Qi was smoking in the office alone.

Just when Ji Qi was struggling with financing, Zhang Suyang suddenly appeared.

Zhang Suyang had just returned from Beijing at this time. A few days ago, he invested in another travel website in Beijing.

Why invest in two companies of the same nature at the same time?Because from the end of 1999 to the beginning of 2000, no one was sure which Internet company would succeed and which Internet company would die.Venture capital has no choice but to choose a few of the most promising companies to invest in in every business model of the Internet, so as not to lose opportunities but also to avoid risks.

"What? You voted for another travel website in Beijing?" Ji Qi asked a little unhappy.

"Yes. In the past two years, IDG has invested in nearly 40 Internet companies in China, and there are quite a few companies of the same nature. However, our first-round investment is not a lot." Zhang Suyang said.

"Then do you still have confidence in our Ctrip?" Ji Qi asked, staring into Zhang Suyang's eyes.

"There must be, so there is no need to ask! However, there are nearly 10 tourism websites in the country at present. Ctrip's current job is to forge its own core competitiveness, so that it is difficult for other companies to compete with you as a whole. Just As Liu Chuanzhi said, sprinkle a layer of soil, compact it, sprinkle another layer of soil, and compact it again." Zhang Suyang said.

"Cut! Now that Ctrip doesn't have a penny, it seems to be 'hanging up'. The top priority is financing, and other topics are nonsense. If you really have confidence in Ctrip, quickly introduce me to a new one. Investors." Ji Qi was a little annoyed.

After being silent for a while, Zhang Suyang said: "Let's do this! I'll introduce you to another very famous investor. Whether you can get him is up to you!"

"Who? Which venture capital company?" Ji Qi's eyes lit up.

"Softbank. The representative of Softbank China is Shi Mingchun, who is already well-known in the investment circle."

Softbank?Ji Qi didn't seem to have a deep impression of this company, but he believed Zhang Suyang's words, this should be a very good company.

In fact, at this time, many people are very unfamiliar with Softbank.Because Softbank started out as an industrial company, and later switched to the investment industry.

The boss of this company is a legendary figure named Sun Zhengyi.Here, it is necessary to introduce his growth process and investment philosophy, so as to better understand why Softbank has formed an indissoluble bond with Ctrip.

In August 1957, Sun Zhengyi was born in a middle-class family in Saga County, Japan. In September 8, he went to the United States to study and majored in economics at the University of California, Berkeley.

After staying in the United States for a year, Masayoshi Son suddenly discovered that in the United States, the only way to earn a lot of money without spending too much time is to apply for and sell patents.He thought about it, and through the quick combination method, he found the electronic dictionary from the combination of "pronunciation device", "dictionary" and "display screen".So, he immediately organized experts to develop it.After the product was successfully developed and launched, Sun Zhengyi earned the first pot of gold in his life.

In March 1980, after Masayoshi Son graduated from university, he gave up the high salary in the United States and decided to return to China to start a business.After more than a year of investigation and scientific evaluation of 3 projects according to 25 criteria, he decided to do software distribution. In September 40, the 1981-year-old Masayoshi Son established Softbank Corporation with a registered capital of 9 million yen.

On the day the company opened, he stood on a fruit box and announced to his two new employees that SoftBank's development goal was "several trillion yen, tens of thousands of people". Unreliable, the boss must be crazy, so the two resigned on the spot.

However, after 1992, Sun Zhengyi got the Japanese agency rights of Cisco Systems.At the end of that year, Softbank controlled 70% of the Japanese software sales channel market, and Masayoshi Son's career began to flourish.

In July 1994, Softbank successfully went public, financing 7 million U.S. dollars, and Masayoshi Son became a billionaire at the age of 1.4.

It was this year that Sun Zhengyi decided to transform and enter the investment industry. In November 1995, Sun Zhengyi invested US$11 million in Yahoo, which had only a few people. This pioneering move even the founder of the company, Yang Zhiyuan, found it incredible. He wondered if Sun Zhengyi was crazy.However, what Yang Zhiyuan didn't expect was that Sun Zhengyi continued to invest more.When Yahoo went public, Masayoshi Son cashed out 200% of the stock, and after getting $5 million, he was still Yahoo's largest shareholder.At this time, Yang Zhiyuan had to admire Sun Zhengyi. He said: "Sun Zhengyi is a person who can look forward to 4.5-15 years."

After the United States won the first battle, Sun Zhengyi is ready to enter the Chinese market.At this time, Lu Hongliang, his alumnus at the University of Berkeley, approached him.After five people including Lu Hongliang and Wu Ying established UT Starcom, they faced capital bottlenecks and needed to introduce venture funds.After Wu Ying explained the company's future development strategy and goals in his 5-minute speech, Sun Zhengyi was immediately attracted by Wu Ying's majestic ambition. He invested 30 million US dollars in UT Starcom on the spot, accounting for 3000% stake.Later, the development of UT Starcom really gave Sun Zhengyi a high return.Therefore, Sun Zhengyi decided to set up a special investment company.

The first venture capital fund of Softbank in the Chinese market is Softbank China Fund Management Company, which was incorporated in Hong Kong in July 1999 with a fund size of US$7 million. Shi Mingchun is the Chinese representative of Softbank China.

Compared with IDG, Softbank Zhonghua's investment style is very different.Softbank China Fund likes to cooperate with IDG. First, IDG will make the first round of seed investment, and Softbank China will enter later.Shi Mingchun's investment philosophy 54 This is the best team is: "Doing venture capital investment is like beating wolves. The more people there are, the stronger the courage." With his support, Softbank Zhonghua successively invested in Sina, Netease, 8848, Dangdang Online Bookstore and many other Internet companies, Shi Mingchun also has a soft spot for Internet companies.

Since IDG has such a cooperative relationship with Softbank Zhonghua, after Zhang Suyang left Ji Qi's office, he immediately called Shi Mingchun and told him that Ctrip is a very good company.

Soon after, Shi Mingchun appeared in Ctrip's office.

Like the investors of IDG, he chatted with the founders of Ctrip first, asking where are the founders from?What do you like to do?What hobbies do you have?
Shi Mingchun discovered that these four people had very different personalities.Ji Qi and Shen Nanpeng are especially good at saying that Liang Jianzhang doesn't talk much, but he has unique insights, and Fan Min is very friendly when talking.

After the household registration survey was completed, Shi Mingchun began to get down to business.

"Can you describe your company's business model and development space in a few simple sentences?" Shi Mingchun said with a smile.

"We provide such a product. First, the United States has very good examples of success; second, China does not have such a service; third, with the development of the Chinese market and the development of the Chinese economy, people will have such a demand .” Liang Jianzhang replied.

Liang Jianzhang's answer made Shi Mingchun very satisfied, so Softbank's investment decision was very quick. At the end of 1999, Shi Mingchun not only decided to invest by himself, but also brought in five investment companies including Shanghai Industrial, American Orchid Fund, Hong Kong Morningside Group, and IDG to invest 5 million US dollars, accounting for 450% of Ctrip's equity.

Afterwards, when talking about Softbank’s investment in Ctrip, Shi Mingchun said: “We chose Ctrip because this industry is more suitable for Internet access. This model is very clear and simple, and everyone can understand it. Things are a kind of service that I need. Secondly, the team of this company is also good. It should be said that this is the result of comprehensive selection. Ctrip is not the earliest, but it is the fastest to do things. This is related to its positioning and team. It is very relevant. Ctrip has technology and brand, and its value will be revealed in the future.”

02 The Money Burning Competition Begins

In late March 2000, the second round of financing arrived.Seeing that there was another 3 million US dollars all of a sudden, Liang Jianzhang, Shen Nanpeng, and Fan Min wrote their resignation reports overnight, laid the groundwork, and devoted themselves to the operation of Ctrip without hesitation.

With so much money invested by venture capital, what do they want Ctrip to do?

(End of this chapter)