The Millennium Semiconductor Survival Guide.

Chapter 286 Difficult choices

In this Silicon Valley, which is deeply affected by Zhou Xin, a good enough start-up company is not in a hurry to obtain external financing. More initiative.

Not only the initiative in valuation, but also the payment method, equity model, investor rights and so on.

Because the convenience and popularity of electronic payment have allowed Internet companies to find their own profit models and stable payment methods.

In the Internet wave in the late 90s, there were not a few Internet companies that knew how to charge membership fees through differentiated services. For example, AOL thought about adopting a model similar to TV memberships to provide paid services for their users, but ultimately failed to implement the idea. The fundamental reason for the landing is the lack of payment methods.

Now the biggest shortcoming in the past is not only a shortcoming, but has become a part of American's sound financial system, which makes it easier for Internet companies in the new century to create a profit model.

The profit model of Internet companies is no longer limited to advertising.

This has also formed a new result. In the original time and space, neither Google nor Facebook, these two rapidly rising Internet companies can get rid of the involvement of venture capital institutions. different ways.

It was also after Facebook that the A/B share structure became popular in Silicon Valley.

Now it is different. The structure of A/B shares has been well known by Wall Street financial institutions and Silicon Valley entrepreneurs since NewPay. Due to the painful memory of the Nasdaq bubble burst and the inflated valuation of Internet companies in the past, it has led to Wall Street investment institutions would rather cede more power to the founders, but also see a profit model with rapid development and full of attractive prospects.

On the flip side, companies with this kind of profit model are also not in need of venture capital.

Of course this also brings a new model:
"I think we should go for equity pledge loans, which are more in line with our current needs.

We need more liquidity so that we can advertise, purchase cloud resources in different places, hire more people to iteratively upgrade our products, etc. All of these require money, and people don’t want to sell more equity.

Well, one of the more popular methods now is equity pledge. With the development speed of Face Chat, many companies are willing to give us loans. said David Ibersman.

As a former investment manager, he is proficient in various financial tricks in Silicon Valley.

The loan model of equity pledge has existed for a long time, but the method of equity pledge loans that emerged in Silicon Valley in the past two years is different from the previous ones.

That is, it is a bit similar to a VAM agreement. Bank loans have no interest or very low interest. After the one-time due repayment of the principal, the bank that lent you the loan has a priority investment quota, and this quota is locked.

For example, if you release 20.00% of the shares in the next financing, the bank that provides you with an interest-free loan has an investment quota of 40.00%, which means [-]%, and the bank can choose whether to follow.

Of course, not only banks are qualified to do this kind of business, but some venture capital institutions and even individuals can also do it.

This is an extremely favorable loan model for investors. There is no interest cost. It is said to be equity pledge, but in essence it is pure credit. Lending institutions only have investment quotas, and subsequent participation in financing still requires real money to invest.

Why do we say that the essence is pure credit, because if your company goes bankrupt, the equity will be worthless, and it is not a credit loan with unlimited joint and several liabilities.

Therefore, compared with Huaguo, Silicon Valley's financial innovation and cost of capital are also a major advantage for them.

Zuckerberg and his roommates nodded frequently after listening to David's detailed introduction to this type of loan. Everyone thought there was no problem.

"I think this model can be taken, and it almost perfectly meets our needs at the moment."

After Zuckerberg finished speaking, David said: "After listening to it, everyone will definitely think that this model is beneficial to startups and has no disadvantages, completely taking the initiative in their own hands.

This is also conditional. Financial institutions will have very high requirements for start-ups to do this kind of business. You can regard it as a kind of financing with a higher threshold than venture capital. Financial institutions willing to do this kind of business generally have Adhering to the idea of ​​hoping to grow together with start-ups.

I think Face Chat has this qualification. From the perspective of user growth, payment ratio, and development speed, there will be many investment institutions willing to help us with this business.

But we also need to pay attention to one thing, that is, we cannot ask Goldman Sachs for this loan, because Goldman Sachs already has the face to talk about 30.00% of the shares. If we go to Goldman Sachs this time, the proportion of Goldman Sachs' shares will be further increased in the next financing.

My suggestion is to find other investment institutions, whether it is Morgan, Merrill Lynch or Emerging Investment.

If we look for emerging investors, they may provide us with some distinctive services, of course, it depends on whether face chat can interest Newman. "

Zuckerberg asked in a low voice: "Do you mean the opportunity to have lunch with Newman?"

David nodded: "Yes, the biggest temptation for emerging investment companies in Silicon Valley has always been the opportunity to have lunch with Newman.

Newman owns many industries, including Mphone, Riot Games, WeChat, Weibo, etc. These companies have a lot of resources, control a large number of users, and can push news to a large number of users.

But emerging investments cannot affect Newman's other businesses. If you raise funds from emerging investments, then go to the Mphone App Store, WeChat, or Weibo to talk about advertising prices, or Xinyun to talk about cloud service prices, they won't offer any discounts.

The only difference between Emerging Investment and other investment institutions is Newman. If your project interests Newman, Emerging Investment will show the information to Newman. If he is willing, the founder of the company can have lunch with Newman. Listen to some experiences.

Of course, this kind of opportunity is rare. According to the news circulating in the industry, no more than five companies have obtained such an opportunity so far, and the probability is comparable to Buffett's lunch.

I also think that face chat has this opportunity, and Newman's idea may be far more valuable than the loan itself. "

Newman is the object of Zuckerberg’s transcendence. This does not mean that Zuckerberg does not recognize Zhou Xin’s achievements and abilities. Even Zuckerberg has read a lot of news reports about Zhou Xin and some books about Zhou Xin’s product thinking. .

The more he learns, the more Zuckerberg thinks that Zhou Xin is a top genius, especially in terms of products. When other Internet founders are still focusing on the product itself, Zhou Xin has already set his sights on ecological construction.

Zuckerberg was obviously moved. He asked, "Can we still get an interview with Newman even if we are just looking for emerging investment to apply for a pledge loan? Or do we need to wait until we have raised funds and found emerging investment, and the emerging investment has obtained our shares? "

David said: "You can regard this type of equity loan as a pre-investment. After the agreement is signed, the lending institution has the initiative to follow up with the investment next time.

So as long as we choose Xinxing, they will help us send the face chat information to Newman after a review. Of course, whether we want to see you or not depends on Newman's intention.

It is equivalent to two rounds of interviews, one round for emerging investment, and the second round for Newman himself. "

Edward said: "I think we can look for Xinxing. On the premise of excluding Goldman Sachs, whether it is Xinxing Investment or other investment institutions, there is essentially no difference.

I think we can talk about a few more companies and see what conditions they offer. If there is no essential difference in the conditions, I think finding emerging investment is the best choice.

Newman can bring up some ideas, which may be of great help to face-to-face chat. "

Sean Parker said: "We need this kind of help in the early days of entrepreneurship, just like Microsoft started with IBM, we can't get rid of Newman in Silicon Valley, we need to cooperate with him.

He is the king of Silicon Valley. He started his business only two years earlier than me, but his achievements far exceed mine. Newman is the best product manager in the eyes of those of us who started our business earlier. Suggestions must be valuable. "

Sean Parker is a few years older than them. He started his business in 2000, initially as a music sharing website. Unfortunately, he encountered the bursting of the Nasdaq bubble and competition from ITunes, and his business did not achieve the expected success.

Compared with Zuckerberg and his roommates in the ivory tower, Sean Parker understands Zhou Xin's status, energy and ability in Silicon Valley better.

After listening, Zuckerberg said: "Okay, let's find emerging investments. Let's first understand the conditions for each company to open. If there is no essential difference, then we will find emerging investments to cooperate.

After our cash flow becomes more abundant, we need to add more people. We need a lot of people. It’s not just as simple as adding five people. This number has to be multiplied by ten. We need to advance simultaneously on other smartphone platforms.”

Zhou Xin didn't know that he would receive an email from Xinxing Investment in a few days, asking him if he would like to meet a young man named Zuckerberg, and then the sender would explain his background and the company he founded in the email. The company makes a detailed introduction.

Zhou Xin was chatting with Li Jingyi while answering emails: "I read the news on the WeChat official account that the number of users of face chat has exceeded [-], and it is very popular in the Boston area.

I saw the Mphone application situation from the background. Face chat is the application with the fastest growth in downloads and weekly turnover in the Boston area. It seems that your investment has achieved the expected results. "

Li Jingyi is very happy about this: "Yes, the valuation of Face Chat has reached 2000 million US dollars, and my 30.00% equity has tripled, and judging by the growth rate, the market value will maintain a high-speed growth trend."

Zhou Xin said: "So why don't you use your own money to invest in Lianchao, why do you need to work for Goldman Sachs, no matter how successful this investment is, the money you can get is nothing more than 100 million US dollars, and it may be about 60 after tax deduction.

The price/performance ratio of working for others is too low. "

Li Jingyi explained: "It's not the same thing, first of all it's your money, and second, I need a job, whether it's working for you or Goldman Sachs, I want to work for myself but I don't have the capital.

I am satisfied that I can get 60 US dollars from this investment, slowly accumulate capital, and I also want to open my own investment institution! "Li Jingyi seemed confident.

Zhou Xin also finished replying to the email after listening: "It's good that you have confidence. I will go back to Huaguo in two days, and I will go back for about a week."

Zhou Xin is going back to China for the Xinxin lithography machine. The Xinxin lithography machine started from 180nm and purchased Nikon's technology. Not only did he purchase Nikon's technology, he also dug some scientific researchers and Engineers to Zhangjiang.

Under the leadership of Lin Benjian, and after Xinxin Technology entered the field of chip foundry, the yield rate of 180nm lithography machines has increased very fast. After entering this year, Xinxin Technology's 180nm lithography machines can already be produced in the same process as Nikon and ASML. The lithography machine has a comparable yield rate.

Now I am doing research on 130nm lithography machines. When Zhou Xin was reading the semi-annual work report of Xinxin lithography machines, he wanted to talk to Lin Benjian about the wet process.

The wet process refers to the immersion lithography machine technology. Compared with the previous dry process, this process adds a layer of liquid between the last lens of the projection objective lens of the lithography machine and the photoresist. The higher the frequency of the light waves, the higher the imaging resolution.

Wet process is the key to break through 65nm in lithography machine technology. The current chip process has reached 90nm. If you want to break through, you can also rely on dry process, but it will take longer.

Of course, the wet process is not as simple as adding a layer of water. There are many issues that need to be considered in the wet process, such as air bubbles and pollution caused by immersion in the environment, compatibility of resists with fluids or topcoats, and refraction. Fluid viscosity, absorption and fluid circulation requirements with an index greater than 1.65, etc.

This is a complete set of technologies. Without a key figure like Lin Benjian, the progress of lithography machine technology to 65nm research and development is slow.

The wet process has not been researched, and it will be at least two years late for the world to enter the 65nm era. That is to say, it will enter the 2004nm process by the end of 65, which will be postponed to 2006. At the same time, ASML cannot use this technology to achieve bending road overtaking.

The field of lithography machines is still in a state of competition, and Xinxin lithography machines have the opportunity to steal chickens.

This is good for Xinxin lithography machines. When everyone is not moving, it is Xinxin's turn to catch up.

The semi-annual report of the Xinxin lithography machine said that they have completed the research and development of the 130nm lithography machine, and the follow-up is a large number of experiments and entering the production process to improve the yield rate. This is all hard work.

Similarly, if the chip manufacturing process cannot enter 65nm, it will not be so friendly to Matrix. Mphone will not be able to realize the evolution of computing power, and the gap between it and its competitors will gradually be narrowed.

Once the new core lithography machine that realizes the 130nm process adopts the wet process, it can cross this threshold at a very short speed and enter the 78nm process, which is equivalent to surpassing the half-generation gap of all lithography machine manufacturers.

But once this veil is lifted, other lithography machine manufacturers will also be able to catch up quickly.

The most important purpose of Zhou Xin's return to China is to discuss this matter with Lin Benjian. The wet process is so critical that Zhou Xin doesn't want to use email or phone calls, so he can only talk in person.

(End of this chapter)