Just a few days after Valentine's Day, a piece of explosive news that spread quickly was undoubtedly the large-scale employee stock ownership plan of the Internet industry giant Igret.
This matter has been the target of a lot of media attention before, and most of the relevant news believes that Simon Westeros may compress the equity rewards that should be paid as much as possible. When the huge equity distribution plan, which accounted for 25% of the total share capital of Yigrit Company and was valued at US$25 billion, was announced, the reward quota far exceeded industry expectations and it simply shocked everyone's attention.
25 billion US dollars, which is already more than the entire net worth of many traditional rich people. Once all is realized, hundreds of billionaires and millionaires will undoubtedly be created.
By suddenly giving out so many shares as a reward, has Simon Westeros gone crazy again
Hundreds of media reporters from all over the world quickly gathered in San Francisco because of this news, and more and more inside stories were revealed.
In addition to the rumors flying all over the sky, a piece of news officially confirmed by Yigrit finally made the public feel that things were a little normal: there was nothing wrong with the employee stock ownership plan with a total value of US$25 billion, but these stocks were definitely not. It is distributed free of charge to the current total of 25,000 employees of Igret around the world without any conditions, but it is accompanied by various restrictive clauses.
Simply put, the more rewards you receive, the greater the constraints.
The most talked-about Big Four of Igret, Tim Berners-Lee, Jeff Bezos, Carol Bartz and Alice Ferguson, are said to want to get the total promised in their contracts To obtain 17% of the shares, the first owner must sign a new five-year employment contract.
Because the original contract has not expired, part of the three reward shares will be deferred to their respective terms of the next five years, and there are still strict performance growth indicators. Not only that, after obtaining these shares, the four people will also be subject to many restrictions on their ability to cash out in the future.
If you are forced to resign during the next contract period, a large part of the stock will be returned.
The Big Four have taken up most of the employee stock ownership plan. However, although only 8% of the remaining shares for other management and ordinary employees remain, the total value is still as high as $8 billion. Based on the current total number of employees of Yigret Company, which is 25,000, this is equivalent to each person receiving US$320,000.
In Silicon Valley, where talent is very hungry at this stage, the average annual salary has rapidly increased to US$80,000, and the average bonus is US$320,000, which is equivalent to the salary of many programmers in four years.
What's more, the distribution of this part of the shares will certainly not be evenly distributed. Most people can still only get a small amount of symbolic shares, and most of them are subscriptions at low prices rather than direct free rewards. The focus of the incentives this time is still on the management and technical core who have made more contributions to Yigrit. Many of these people will be billionaires and millionaires.
There is also a key prerequisite: most employees participating in the bonus and subscription plans need to sign a non-compete agreement for at least three years.
Many of the products owned by Ygritte are, at least on the surface, very easy to imitate.
As the wave of new technologies becomes more and more turbulent, other capital that wants to enter the Internet industry often first targets Yigrit, which has formed a number of sustainable business models. They recruit people from Yigrit to form a team, regardless of whether Whether it is a portal website, a search engine, a social networking site or an online community, etc., if you want to copy these business models, you will get twice the result with half the effort.
In recent years, the most troublesome problem of Yigrit Company has been the continuous loss of a large number of employees due to the tireless efforts of competitors to wield the hoe.
As long as this large-scale employee stock ownership plan is promoted and completed, relying on extensive non-compete agreement restrictions, it will no longer be easy for other companies to poach employees from Yigrit for at least the next three years.
For the rapidly changing new technology field, even if some employees insist on leaving their jobs and are bound by non-competition agreements and can no longer engage in relevant occupations within the specified period, then after the non-competition agreement period expires, most of the very formal skills and experience at this time will be lost. Obsolete.
Such a period of time is enough for Yigret to completely consolidate its industry advantages and leave most potential competitors far behind.
Overall, with Igret's huge valuation of hundreds of billions of dollars, Simon Westeros could keep the company at least three billion dollars in value by only spending $8 billion in stock outside of the contract with the Big Four. Years of industry advantages are still relatively cost-effective.
You know, in February, as one of the three technology giants at the core of the Westeros system, Cisco's market value has easily exceeded 150 billion U.S. dollars, heading straight for 200 billion U.S. dollars.
The development momentum and monopoly pattern are no less than that of Cisco's Igret. The IPO valuation has reached 100 billion. After listing, it may also become a super giant with a level of 200 billion US dollars. Compared with this income, even the entire US$25 billion reward plan is actually completely worth it.
Amidst the admiration and admiration, there is naturally no shortage of doubts.
For most of the general public, the biggest doubt is whether Igret is really worth US$100 billion
Many reporters began to dig deeper into this issue.
There will be news soon.
The New York Times, the paper giant on the East Coast, specially made a relevant feature in its Sunday edition on February 19. The core information involved was even more surprising to industry insiders than Yigret’s valuation of US$100 billion: Yigret's revenue in 1994 will reach the terrifying level of tens of billions of dollars.
Compared with the establishment period of Yigrit, it took five years to create tens of billions of dollars in revenue from scratch. The public who has a little idea of this should understand how terrible this is.
At this stage, most of the Fortune 500 companies with a long history have less than US$10 billion in revenue. In fact, according to last year's data, the revenue threshold for Fortune magazine's Fortune 500 companies is only US$1.8 billion, and among the 500 companies around the world, only 97 have revenue of US$10 billion.
Igret has only been established for more than five years and has already achieved goals that many companies have been unable to achieve for generations. How can this not be said to be a miracle!
Even in the new technology industry, take Microsoft, which gradually has many business overlaps with Yigrit.
Microsoft's fiscal year runs from July of the previous year to June of the following year.
In the 1994 fiscal year from July 1993 to June 1994, Microsoft, which had been established for 20 years, had annual revenue of only US$5.63 billion and annual net profit of US$1.29 billion.
The revenue part of this data is only equivalent to Yigret's revenue of US$5.41 billion in a calendar year in 1993. Moreover, Microsoft's revenue in fiscal year 1994 increased by only 31%. In comparison, it exceeded 10 billion. In 1994, with US dollar revenue, Igret's annual growth rate still reached a terrifying level of 100%.
On the other hand, according to data released at the beginning of last year, Igret's loss in 1993 was US$390 million, which seems far from Microsoft's net profit of more than US$1 billion. However, everyone understands that this It's just because Yigrit, which is in a period of rapid growth, needs to make huge investments in various aspects.
A closer look at Yigret's business will reveal that, in addition to the e-commerce business, which has been burning money and suffering serious losses, the other core businesses, such as software business, data center business, advertising business, etc., all have very high gross profit margins. Taken together, if Igret pursues profits wholeheartedly, the company's net profit margin can at least reach a level comparable to Microsoft.
Calculated based on Microsoft's 23% net profit margin in the last fiscal year, Yigret's revenue of tens of billions of dollars can theoretically easily achieve a net profit of more than 2 billion U.S. dollars.
The reason why there is no profit for the time being is mainly because Yigrit is more interested in the growth of the company, so he has made huge investments in technology research and development, product marketing, etc. regardless of cost.
Even so, according to the analysis of the "New York Times" article, Yigret's rate of making money has obviously exceeded the rate of spending money. Compared with 1993, in the past 1994, regardless of whether it was necessary to make an IPO for consideration With the beautiful financial report, Igret Company is likely to have a sizable profit balance.
When the "New York Times" article was published, it achieved revenue of tens of billions of dollars in five years, and even some professional financial media had to question this.
However, that seems to be the case.
The key to the matter is monopoly!
Igret, together with the three giants Cisco and AOL, has jointly created the Internet industry in the past five years, quickly bringing the United States and the world into the information age.
There is no doubt about this.
Because of its early advantage, Cisco has almost monopolized the professional router and switch market, and AOL's market share in the ISP field far exceeds that of even established giants like AT&T. As for Igret, not only does it have a stronger monopoly advantage, but it also covers many fields. Wider.
First of all, Yigrit has mastered almost all basic Internet tools and software. Because of the complete patent barriers built in advance, it can be said that there is no other branch at the moment.
With pricing power in hand, prices will naturally be high.
The wave of new technology is so turbulent. As long as you want to enter this field, as long as you want to create a website, you cannot do without Igret's series of basic tool software. This is exactly the ideal 'toll bridge' envisioned by Buffett. , and it is the only toll bridge for the global market.
Moreover, as Yigrit has transformed its software business from traditional selling to a new 'rent-collecting' subscription model, the damage caused by piracy has been largely avoided.
Even if it is a website hidden in the corner of Africa, if you are using pirated software, you only need to check the subscription information. If you have not subscribed to genuine software, first of all, your website will not appear on any website owned by Igret. In this recommendation system, secondly, you may also face litigation from Yigrit at any time.
Therefore, as long as a company wants to make a difference in the Internet field, it must pay fees to the 'toll bridge' of Ygret.
In the past few years, there have been hundreds of thousands of Internet companies, large and small, around the world. However, these companies have unknowingly contributed billions of dollars in revenue to Yigrit's software business.
Then there was the advertising business.
With the mature business model in Simon's memory, there is no need to explore too bumpyly. Over the past few years, Igret's advertising business has been perfectly divided into portal advertising, social network advertising, search engine advertising and advertising alliances. Plan four parts.
Because of the interface monopoly advantage that the IE browser brings to Ygritte, companies outside the Westeros system that want to obtain more network traffic can only advertise to Ygritte.
This is actually equivalent to another 'toll bridge'.
Moreover, with the rapid development of the Internet, online advertising customers are no longer limited to new technology companies, and traditional industries have also begun to invest in this field.
In 1993, Igret's advertising revenue had reached 1.15 billion US dollars. With the excitement of the entire industry in 1994, the growth of this business will only become more crazy.
The media roughly estimates that the total revenue of just two businesses, software and advertising, in 1994 may exceed Yigret's full-year revenue in 1993.
For those who know the inside story, this is actually true.
In addition to its two core businesses of software and advertising, Yigrit also owns YWS data center business, e-commerce business, application store business, online game business and even professional solutions and technology licensing business, etc., which generally have leading advantages. A strong advantage over other competitors in the industry.
Not to mention other online games, "Happy Farm", which was popular all over the world last year, had brought a huge revenue of US$250 million to the operator Yigrit within 7 months of its launch by the end of 1994, and this The development cost of this game is only 1.5 million US dollars, and the return on investment is more than 100 times.
There is also the data center business.
As competitors in the industry have been poaching in the past few years, Yigret's cloud computing technology solutions have gradually flowed out. However, other competitors are unlikely to have the advantages of Yigret in developing cloud computing in the short term, and can only position themselves in Relatively traditional data center business.
In order to confuse police opponents, Ygritte's YWS also positioned itself in the data center (IDC) business.
In the past year, Igret has successively invested in the construction of as many as 11 large-scale data centers with an investment of over 100 million US dollars in North America, Europe and Asia. This aspect far exceeds the seven large-scale logistics distribution centers of Amazon's online mall which are limited to North America. Center input.
It is conceivable that if there is not enough profit motivation, Yigrit Company will not do this at all.
You must know that although many of them are still under construction, they are only the parts that have been activated, and there is already too much redundancy compared to the needs of Ygrit itself.
Because the entry barriers to the data center business are relatively low, not to mention Yigret’s core cloud computing technology, this field is not exclusive to Yigrit. In the past few years, established giants such as IBM, HP and even Microsoft have entered the IDC field, and many small and medium-sized independent IDC companies have opened.
According to some statistics in the industry, Ygritte's YWS business has a market share of only about 50%.
However, this is only about 50%. Compared with the overall market size of the industry, which was close to US$5 billion in the past year, we can probably imagine the revenue volume of Yigrit in this business.
The ultimate e-commerce.
As Amazon opens seven large-scale logistics and distribution centers across the United States, compared with other peers that have entered the market one after another, Igret's e-commerce business is clearly in a state of excellence. Simon's memory of a lot of information about e-commerce also helped Alice Ferguson avoid many detours in the e-commerce business.
Although e-commerce has brought the greatest losses to Yigret, looking at the rapid growth in recent years, no one will doubt the huge business potential of this field.
It can be said that if each of Yigret's existing businesses is done alone, it will be difficult to achieve too much scale. However, the concentration of all these businesses immediately gave Yigret a strong synergy and monopoly advantage.
While other companies of the same type are still struggling to explore business models or do everything possible to pursue more market shares, relying on its own absolute advantages and a series of mature business models in the memory of the boss Simon, Igret has easily transformed the business models in related fields. Most of the proceeds were pocketed. Among them, the data center business with the lowest share has reached more than 50% share, the share of online advertising revenue has reached more than 90%, and the basic tool software is planned to be 100% exclusive.
When the entire industry was frantically burning money in order to carve up the rapidly emerging big pie of the Internet, a large part of these burned funds fell into the pockets of Ygrit.
For such a monopolistic industry oligopoly with revenue reaching tens of billions of US dollars and still showing high growth, the valuation of US$100 billion is definitely not much less.