Seventeen billion dollars, let’s talk.
Li Mu's words with an indifferent expression shocked Eric.Hanks and he was speechless for a long time.
Before he came, the CEO explained Sequoia's base price, which was US$16.5 billion.
The so-called base price is the maximum limit for Sequoia to participate in the bidding.
Although the CEO did not clearly state what should be done if the price required by Animal Husbandry Technology is higher than Sequoia's base price, but according to the normal process, once Sequoia sets the base price, there are two outcomes: within this price range If the price can be negotiated, Sequoia will enter; if the price exceeds this price, Sequoia will withdraw. Over the years, the third possibility has almost never happened.
Sequoia, like other venture capital firms, must calculate the potential profit margins and financial risks for every investment. For a large investment such as Makino Technology’s Series C, more than one billion US dollars in cash will be made in one go, so it is even more important to repeatedly evaluate the risks. , after all, Sequoia’s money is not brought by strong winds. It is the common asset of all board members and investors of its subordinate funds.
Under this circumstance, even if Sequoia believes that Makino Technology may reach US$170 billion in assets in the next few years, it must reasonably weigh the risks behind this. It must not be just because a company's current development is smooth. , making hasty decisions, leaving hidden risks.
For venture capital investors, when they lead or invest alone, they will definitely find ways to lower the actual valuation. On the one hand, this is to reduce capital investment, and on the other hand, it is also for better exit in the future.
Come in when the valuation is 100 million, withdraw when the valuation is 500 million, and let the next company take over the deal at a price of 500 million. This is the general way for venture capital to make money. But if you don’t grasp the premium when you take over the deal, you will lose money. When other investment banks evaluated, they believed that the price they received was too high, so it would be difficult to sell at a high premium when selling in the future.
Eric.Hanks thought a lot at once. Seeing his strange expression, Li Mu guessed that the price he offered might have frightened him. Before him, he had frightened two representatives of venture capital companies, so Li Mu didn't understand at all. He didn't take it seriously and said with a slight smile: "Mr. Hanks, there is no need to be too entangled. There is an old Chinese saying that 'Business cannot be done without benevolence.' That is to say, even if we fail to reach a cooperation because we can't agree on the price, there is still a long way between us. We are still friends.”
Eric.Hanks nodded slightly and said to Li Mu seriously: "Mr. Li, frankly speaking, we have made a very in-depth and objective assessment of Makino Technology's situation. The valuation of US$17 billion is indeed too high. , if financing is based on this valuation, I am afraid that very little capital will be accepted.”
Li Mu's expression was indifferent and he said with aloof confidence: "Mr. Hanks, I want to correct the mistake in what you just said."
Eric Hanks raised his eyebrows and looked at Li Mu, waiting for his next words.
Li Mu smiled and said: "I'm not asking for a valuation of US$17 billion. I want to start from US$17 billion. You can understand that this is a starting price."
Eric.Hanks felt the strong confidence in Li Mu at this moment. In his opinion, Li Mu's tone when he said these words was no longer as simple as confidence, but even a little arrogant.
Sequoia has been working in the Internet field for so many years and has a thorough understanding of Internet companies. It is no exaggeration to say that Sequoia is the godfather of the Internet industry. With these insights, Sequoia can basically make an evaluation of an Internet company. In other words, if Sequoia uses US$16.5 billion as the base price of Makino Technology, then most companies in this industry will not offer a higher price than this. Li Muyi It seems arrogant to him to start talking about US$17 billion.
Li Mu could see that there was a little anger and dissatisfaction in Eric. Hanks' brows. It seemed that his words had made him a little bit critical. However, Li Mu didn't care and continued to say with a smile: "Mr. Hanks, a Chinese I like a kind of jade called jade. The price of jade of good quality is astonishingly high. Even just a jade ring may be worth more than 10 million yuan, but if the quality is not good, you can buy it for just a few hundred yuan. Because the price range of jadeite is very large, a stone betting model has emerged in the industry. Stone betting is very interesting. I think it has a lot in common with the investment industry. If you are interested, I can tell you about it. "
Eric.Hanks stretched out a hand: "Please speak."
Li Mu said: "Jade is a special ore. What's interesting is that when it is mined, it is basically covered with a weathered outer skin. No one can tell how much the jade inside is worth unless it is cut open. The reason is that sometimes a stone as big as a basketball can be worth over 100 million if cut with one knife, but sometimes it is worth nothing. Therefore, in order to pass on the risk, the seller of the ore does not completely cut the ore himself, but lets the buyer buy it back and cut it himself. "
Eric.Hanks was fascinated by what he heard and was waiting for Li Mu's next words with a curious look on his face.
Li Mu continued: "Some sellers trade pure rough stones. Whether there is jade in the stone, and if so, the quality, basically depends entirely on the buyer's own judgment and luck. Generally speaking, the average price of this kind of stone is relatively low. , because the buyer bears all the risk;”
"Some sellers, when trading rough stones, will cut a little bit on the surface of the rough stone first, so that the jade inside can reveal a little color. The jargon is called opening the skylight. After the skylight is opened, if the exposed part is of high quality, then The price of this stone will also skyrocket, because with the little color exposed through the skylight, the buyer will be more confident and reduce the risk when making judgments;"
"Some rough stones have one skylight, and some rough stones even have three, five or even more skylights. However, the more skylights are opened and the better the exposed part is, the higher the price of the rough stone will be."
"However, even if you open more skylights, there is a big risk, because the skylights are only opened on the surface, and no one knows what the texture of the more jade inside is. There are many jade skylights that look great, but after cutting them in But they found that except for the skylight part, which was very good, the rest of it was worthless; and there were many jade merchants who cheated and deliberately made the skylight part look like it was of high quality. In this case, the buyer would buy it and cut it open immediately. It will cause a lot of trouble, and even the whole family will go bankrupt.”
"The opposite is also true. Sometimes the cut part doesn't look very good, but after buying it and cutting it completely, you find that the inner quality is excellent. In this case, the return on investment will naturally be astonishingly high."
Having said this, Li Mu looked at Eric.Hanks and continued with a smile on his face: "Look, stone gambling is very similar to investing. Those who dare to buy complete rough stones are angel investors; companies that have been developed for a certain period of time can let the outside world With a certain understanding, this kind of enterprise is equivalent to opening the skylight. The longer it develops and the more projects it handles, the more the skylight will be opened; once the enterprise is listed and everything is fully disclosed to the securities market, then It’s like jadeite that has been processed and put on the market for sale, with all the prices clearly marked and no deception.”
Eric.Hanks smiled and smacked his lips and said, "Although I didn't understand it very clearly, it sounds really interesting."
Li Mu nodded, changed the subject, and said: "In the stone gambling industry, no matter how many skylights are opened, there are still mysteries inside that experts cannot see through. Buyers cannot see through everything, so they cannot think that their judgment is exactly the same. The actual value of a whole piece of jade.”
Eric.Hanks heard that Li Mu was saying that Sequoia could not see through the inside of Makino Technology's jade, and he couldn't help but smile: "Mr. Li, according to your statement, the buyer doesn't know the actual value of a piece of jade. , the seller doesn’t know either.”
Li Mu smiled and said: "Of course, neither the seller nor the buyer knows. They can only rely on their own judgment."
Eric.Hanks shrugged his shoulders, spread his hands and said: "Since it all depends on judgment, there must be deviations on both sides. The most important thing is that we can reach a consensus before. If we can't reach a consensus, then no matter how good the jade is, it will not work." No deal can be made.”
Li Mu laughed, clapped his hands and said: "This is also what I want to express. If the buyer and the seller cannot reach a consensus on the value of the jade, then naturally there will be no way to reach a deal. But it doesn't matter if we can't reach a consensus now. You can go back first and wait for me to do it myself." After opening another skylight, come over and have a look. Then use your expert eyes to re-evaluate the price of Makino Technology, which has opened a new skylight. If we still can't reach a consensus, it doesn't matter. I can open another one. Open two doors until you or other venture capital investors are willing to reach a consensus with me!"
Eric.Hanks was a little confused when he heard this. He thought Li Mu wanted to ridicule Sequoia for not knowing what he was talking about, but he didn't expect Li Mu to say that he would take the initiative to open another skylight. What did this mean? He said that he understood the matter of opening skylights for jade, but he really didn't know what the corresponding operation was for opening skylights for enterprises.
Although he didn't understand the specific metaphor, Eric. Hanks still heard the unyielding domineering tone in Li Mu's words. The meaning of Li Mu's words was very clear. The venture capital must be willing to reach a consensus with him. The subtext was : Only venture capital bows to him, and he will never bow to venture capital.
Eric.Hanks felt a little disgusted with Li Mu's youthful arrogance and arrogance. At the same time, he also knew very well that he was definitely going to fail today. Li Mu was willing to offer $17 billion, and there was nothing he could do to get him to lower his offer. , then you can only go back and resume your life.
If the CEO and the board of directors are willing to change their minds and accept the offer, then the two parties will continue to negotiate. If not, then Sequoia will stand up from the negotiating table, and the project will be suspended indefinitely for Sequoia.
In that case, unless Li Mu changes his mind after hitting a wall everywhere, and then lowers his valuation in exchange for Sequoia continuing to sit at the negotiating table and continue discussions.
And Eric.Hanks was convinced that the one who would change his mind must be Li Mu!
(End of chapter)