Chapter 71

Xu Qinling gave Cheng Xiaoyu an iPhone 3G she bought in Hawaii, and also gave one to Su Yuxi.

Cheng Xiaoyu, looking at the brand new iPhone 3G, felt the urgency of time even more.

There was still about a year and a half left before the iPhone 4, which was hailed as a game-changer, would be released. From then on, smartphones would usher in a new era.

When Cheng Xiaoyu got home, he called Wang Dongliang to ask about the progress of purchasing the alumni network.

At this point, Wang Dongliang had already contacted Wan Gang, the vice president of Shouhu in charge of interactive products. Wan Gang and Wang Dongliang had worked together before and had some rapport.

When Wang Dongliang invited Wan Gang for dinner, he straightforwardly asked if Shouhu was willing to sell the alumni network, without specifying who wanted to buy it.

Wan Gang naturally assumed it was Miaopu who wanted to buy it, but this was not something he could decide. He had to consult with Shouhu's CEO, Zhang Chaoyang.

The industry was well aware of the alumni network's situation. After all, as the largest community network at the time, its acquisition by Shouhu caused quite a stir.

But by now, the alumni network had only symbolic value for Shouhu and was more of a burden.

Although Wan Gang couldn't make the decision, he was delighted that someone was willing to take on this burden. He immediately told Wang Dongliang that as long as the price was right, there would be no problem.

The two had a pleasant conversation, and Wan Gang said he would report to the CEO and give Wang Dongliang a definite answer.

Wang Dongliang put a lot of effort into Cheng Xiaoyu's request, sending all the information he could gather about Shouhu's acquisition of CHINAREN via email.

In 2000, Shouhu had issued additional shares and used the proceeds to acquire ChinaRen, the first major community website in China, for $30 million. The alumni network was one of ChinaRen's core products.

Shouhu's CEO, Zhang Chaoyang, and ChinaRen's founder, Chen Yizhou, were both physics graduates from MIT. Zhang Chaoyang returned to China first to start a business, while Chen Yizhou returned after completing his MBA at Stanford. In February 2000, the management of both companies began talks, but the plan was put on hold due to disagreements over the acquisition price. In early August, they returned to the negotiating table, and all meetings were held secretly in hotels. The final agreement was signed on the 12th.

ChinaRen had entered the top ten websites in just one year. Why did it choose to be acquired? According to Wang Dongliang, ChinaRen could have continued to raise funds and operate independently after its initial funding ran out, but Chen Yizhou believed that even if he continued, it would be difficult to become one of the top websites. It would be better to merge with another company and become part of a top-tier website. For Shouhu, the merger brought in a strong management team and a talented workforce, and allowed for complementary business operations. Zhang Chaoyang described it as a "perfect match." Some commentators believed that through the acquisition, ChinaRen achieved a "backdoor" listing, a smart move.

After the acquisition, Shouhu had 550 employees. The cash outlay from the acquisition would be recouped by the first quarter of the following year, and the integration process would be completed within one or two quarters. ChinaRen was fully integrated into Shouhu.

However, it was clear that this was a failed acquisition. Wang Dongliang and Cheng Xiaoyu had discussed why it was a failure.

Firstly, ChinaRen did not provide a direct purchasing opportunity. If it did, there would have been no need to sell. Shouhu had to re-induce purchasing power, but no website had successfully done so. Formulating an effective strategy to induce purchasing power was beyond the capabilities of any website management team. Moreover, ChinaRen's community was not designed to stimulate consumption.

Secondly, students are the most unstable user group. ChinaRen's community, while good, was not insurmountable. There were not many unique selling points, so a new community with a few new features could easily surpass it. With the same $30 million, it might take less time to build a new community than for Shouhu to integrate ChinaRen. There were many creative ideas for building communities, and Chen Yizhou and his team were just closer to the capital.

Thirdly, ChinaRen was built on advertising. After its acquisition by Shouhu, if advertising spending was cut, would it maintain its user base? If Shouhu continued ChinaRen's burn rate, would it accelerate its own demise?

Lastly, no internet acquisition had ever been successful. The best literature download site, Myrice, quickly became a mess after its acquisition. The same would happen to ChinaRen. The reason was simple: integrating resources was beyond the capabilities of any website management team.

The conclusion was that Shouhu's acquisition of ChinaRen would likely turn two already declining websites into the largest internet junk in China.

The two spent countless hours on the phone, more frequently than lovers. Wang Dongliang saw in Cheng Xiaoyu the foresight of a high-ranking official's child, his humility in seeking advice, and his dedication to thoroughly researching a topic he was interested in.

This made Wang Dongliang believe that Cheng Xiaoyu was not a fool who would waste money on the alumni network but a thoughtful and ambitious investor.

The two also deeply discussed the survival strategies of community websites. Cheng Xiaoyu knew that the biggest challenge for most websites, not just community sites, was finding a revenue source beyond advertising.

There was a large user base, but it could not be converted into cash.

However, such challenges were a joke to Cheng Xiaoyu, who had a clear vision of the future. He casually mentioned trends like developing mobile services, such as ringtones, images, and video downloads.

Developing web games.

E-commerce.

Not just placing ads, but integrating them into targeted marketing campaigns based on current hot topics, as advertising was the key to a community website's survival.

Creating new channels for mobile phones and cars to attract advertisers.

Of course, Cheng Xiaoyu had many more ideas but did not intend to share them all.

Wang Dongliang was deeply inspired by Cheng Xiaoyu's business acumen. These ideas could only come from someone with deep wisdom and extensive experience in the internet industry.

When Cheng Xiaoyu first met Wang Dongliang, he didn't even know how to set up a website. He had only read a lot about internet technology and had some personal insights, yet he could come up with highly practical ideas, which was quite unbelievable.

After receiving Wang Dongliang's purchase intent, Wan Gang discussed it with CEO Zhang Chaoyang. He then called Wang Dongliang and proposed a price of 20 million RMB.

This was clearly beyond Cheng Xiaoyu's means. Shouhu was asking for an exorbitant price.

At first glance, it seemed that Shouhu had lost a lot by selling the alumni network for 20 million RMB after spending $30 million to acquire ChinaRen.

However, the acquisition included a company with a large number of internet elites, managers, and technical personnel, which was a significant value. The alumni network also brought a lot of traffic to Shouhu.

Now, what Cheng Xiaoyu wanted was just a pile of useless data and a domain name for Shouhu.

Cheng Xiaoyu knew that in the previous life, a well-known portal site, Sohu, shut down ChinaRen in 2012 after operating it for 10 years.

His cousin worked at Sohu and was involved in the alumni network management, so he understood why ChinaRen failed.

First, there was a struggle for power and profit among the departments. After the acquisition, the ChinaRen division was caught in internal conflicts, leading to its eventual disintegration and the loss of most of its staff.

Second, incompetent product managers made several fatal decisions, such as integrating the alumni network into Sohu's Bai She Hui and cutting the kids' kindergarten product line, which accelerated ChinaRen's decline.

Third, it was abandoned. In 2012, when Sohu launched a new platform, ChinaRen's role was to redirect users to the new platform, leaving only an intern to update the homepage. By then, the alumni network was almost dead.

Finally, with no maintenance, the content monitoring system collapsed, and it was left to wither.

The 80 million user base slowly dried up and eventually disappeared.

This life's Shouhu and the previous life's Sohu had many similarities, but Cheng Xiaoyu couldn't determine how similar they were.

However, it was clear that the Shouhu alumni network was not far from its end.

They lacked Cheng Xiaoyu's foresight and couldn't see that social networks were the future. Therefore, the shutdown of the alumni network was only a matter of time.

Cheng Xiaoyu was eager to step on Shouhu's regretful body and move towards success, but what he needed most now was an excellent puppet.

After some time, Cheng Xiaoyu felt that Wang Dongliang was a decent person, with good business, social, and work skills, and a good character, making him a suitable puppet.

He felt it was necessary to have a detailed and serious conversation with Wang Dongliang. For Cheng Xiaoyu, the acquisition of the alumni network and the establishment of a social network were imperative.

Alone, he had no help and could not possibly complete the task of building a social website, so he had to convince Wang Dongliang to quit his job and help him.

Cheng Xiaoyu made some preparations and booked a flight to Beijing for the next day, regardless of the fact that school was starting the next day.

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