The Millennium Semiconductor Survival Guide.

Chapter 70 AB Share Structure

Different times have different concepts. In 1999 and 2019, people's thinking is completely different.

After the news of NewPay’s acceptance of financing was released through Warren Jensen, investment institutions in Silicon Valley and Wall Street flocked to it.

But online shopping companies are not too cold.

Zhou Xin originally thought that it would be Bezos who came to him through Warren Jensen to talk about NewPay investment in the first place.

Both Amazon and Ebay will be very interested in investing in NewPay.

The result is not.

“Whether it’s Amazon or Ebay, they only accept acquisitions, not investments.

But they are interested in adding NewPay among their payment options, and neither Amazon nor Ebay has said no to it. "

Only then did Zhou Xin realize that people are completely unaware of the importance of electronic payment.

They think that electronic payment is just a simple payment, and there is no concept of financial technology in the future.

And judging from the communication with Warren Jensen, American’s current regulatory policy on electronic payment is only the “Operating Guidelines for Electronic Money Clearing Organizations” issued by the Federal Reserve Board in 1996.

Electronic payment is in a period of regulatory loopholes.

Ebay and Amazon have launched their own electronic payment systems, such as Amazon's Amazon Payments and Ebay's Ebay's Ebay Payments.

But it only stays as a supplementary part of electronic shopping, unlike the later electronic payment that became an independent company, let alone provide its own electronic payment system to other companies.

NewPay or Zhou Xin is the only one who clearly knows the superiority of the electronic payment field.

"And they all know that NewPay is very expensive, and the price is likely to exceed their affordability, so they didn't discuss the price with me specifically.

Ebay sent their payment strategy director Gretchen to talk to me about the specific implementation details.

Including Amazon, although Bezos is not very happy about my joining NewPay, they don't mind adding NewPay in the payment options. "

Through a short exchange, Zhou Xin realized that the executives in Silicon Valley now regard electronic payment as a simple infrastructure.

If you are willing to provide me with the infrastructure you have built, I am naturally happy to use it.

eBay's market value at this time is US$50 billion, and Amazon is better, with a valuation of around US$260 billion. They lack the funds and motivation to acquire NewPay wholly.

"AOL and Yahoo are the only ones who can and are willing to spend money to buy our company wholly, but what I said is that we only sell 20.00% of the shares, so AOL and Yahoo are not very interested.

However, Silicon Valley investment institutions are still very interested.

Most of their prices range from $5 million to $10 billion. ' replied Warren.

The millennium was called the dot-com bubble. How bad was it?
Just online shopping companies, in addition to Amazon and Ebay, there are Priceline with a market value of 47 billion US dollars, CDNow with a market value of 23 billion US dollars, barnesandnoble.com with a market value of 10 billion US dollars, eToys with a market value of 37 billion US dollars and so on.

When Zhou Xin asked NewPay’s marketing staff to chat with online shopping companies, he realized that American has so many listed companies focusing on the online shopping field.

The market value of each one is still extremely high.

Because of this, he couldn't understand that the highest valuation of these investment institutions was only one billion US dollars. Isn't NewPay more valuable than CDNow?

CDNow is a company that specializes in selling CDs online. The CD industry is a sunset industry, and it will be completely outdated in the digital copyright era.

Zhou Xin couldn't believe that such a company could enjoy a valuation of US$20 billion.

(The Wall Street Journal reported on Jan. 1999, 1, that CDNow's market cap at the time was about $8 million.)
After Zhou Xin looked for the specific information of CDNow, especially its stock price curve, Zhou Xin was surprised.

In just four months, CDNow's valuation soared from $1 million in January to $8.7 billion in April.

Newcomer Zhou was stunned. This kind of company can be worth so much, and the American stock market is too crazy.

Under this valuation system, it is no wonder that the bubble does not burst.

"This price is much lower than my psychological price, why are they only willing to give this valuation?" Zhou Xin asked.

Under his leadership, NewPay will not lose money even if it is valued at 100 billion, it just needs to be a friend with time.

You must know that Bill Gates is willing to give [-] million US dollars.

Warren Jensen explained: "Boss, because you chose the A/B share structure, and NewPay currently only has users, there is no more data to prove its value.

NewPay is a newborn, and being able to enjoy this valuation already depends on your past success.

The more data here means that the vast majority of NewPay users have only had one transaction on NewPay, that is, the purchase of "Plants vs. Zombies".

At the same time, they did not transfer the money on their bank cards to our e-wallets.

How much money is deposited on our escrow account, how many transactions our users make per month on average, and how many active users do we have.

There is no such data, and there are only more than one million registered users. It is difficult for investment institutions to give too high a valuation. "

Warren Jensen knew that his boss had unconstrained imagination and insight far beyond ordinary people in products, but lacked common sense in many financial fields.

The A/B share structure is also the dual shareholding structure. A company issues two different types of shares, namely A shares and B shares.

A shares are held by founders or controlling shareholders and enjoy more voting rights and decision-making rights, while B shares are held by ordinary investors, and their voting rights and decision-making rights are lower than those of A shares.

This structure first appeared in 1978, when a company named Walter Annenberg first adopted the A/B share structure for listing.

Although this equity structure has been around for many years, it was only after the success of Google and Facebook that Silicon Valley and Wall Street investment institutions began to accept this equity structure on a large scale.

Taking Yahoo as an example, Yahoo did not adopt an A/B share structure, whether it was financing or later listing on Nasdaq.Neither did Amazon.

"Moreover, many investors cannot accept the A/B share model, and they think it is a disguised reduction of investors' rights and interests.

At present, Accel Partners, Kleiner Perkins, Sequoia Capital, etc. are willing to invest in us.

Greylock Partners expressed that they could not accept the structure of A/B shares. They would rather give NewPay a higher valuation than accept the ownership structure of A/B shares. said Warren Johnson.

Among these investment institutions, those willing to accept the A/B share structure later either invested in Google or FB.

After thinking for a moment, Zhou Xin said, "Then we will proceed with the first round of financing at a valuation of US$[-] billion, and still adopt the structure of A/B shares."

　The second update is tomorrow morning.

　　Then, I would like to explain to the many questions mentioned before, can I work and start a business with a student visa?
　　First of all, Zhou Xin can apply for an OPT internship visa after coming here. Anyone with an F-1 visa can apply for 12 months of OPT. At the same time, doctoral students majoring in STEM can get an additional 24 months of OPT.

　　Secondly, after Zhou Xin obtained his bachelor's degree in Berkeley, because he is a STEM major and Hu Zhengming sponsored him, he can directly apply for an EB-3 green card.

　　In addition, it is normal to have some loopholes. I don’t know that much about that era, and there are many materials with different opinions. Unless you experience it yourself, it is difficult to find an accurate answer.

　　For example, in the Electronic Payment Supervision Act of 1999, each state in the United States still has its own laws. In New York State, there was a bill called the "Electronic Signature and Transaction Act" in 1999. It is impossible for me to check it state by state.

　　
　
(End of this chapter)