The Millennium Semiconductor Survival Guide.

Chapter 87 NewPay Acquires Confiniti
The current Internet business bubble has been inflated, but compared with later generations, the power of Silicon Valley is far from being comparable to that of Wall Street.

American's later generation, Silicon Valley, Wall Street and Washington, have not yet formed a tripartite scene. The A/B share structure has a long history, but the number of Internet companies that have adopted it is very small.

Peter Thiel and Max Levchin said they would go back and discuss it.

"I think we should agree to Newman's conditions, compared with NewPay, to be honest, our product has almost no advantages.

Maybe the only advantage is the first-mover advantage of the Pocket PC. The problem is that we don't have the funds to promote our products on the Pocket PC.

Take NewPay's incentive plan as an example. They burned tens of millions of dollars just for the incentive plan, while our investment was only $500 million.

From all aspects, we have a big gap with NewPay. "

Peter Thiel does not have strong control, and he is not too stubborn about selling the company. If he was too persistent, then Confiniti would not choose to merge with Musk's X.com and become PayPal later.

After thinking for a moment, Max said: "Actually, we are not without opportunities. The electronic payment field is close to a zero-sum game, but it is not a complete zero-sum game.

Nor will Washington accept that there is only one player in the field.

We can survive in areas where NewPay’s tentacles cannot reach in the early stage, especially in recent years that the Internet has been showing a trend of violent expansion, and we will definitely have room for survival. "

Peter nodded: "Okay." He thought Max was unwilling to be acquired by NewPay.

Max interrupted him: "I haven't finished yet, I just hope that we can explain the pros and cons clearly, so as to avoid regretting this decision in the future.

We need to judge whether electronic payment is a career we will fight for all our lives, or is it just something we can do at this stage? "

Peter: "Obviously it's something we can do. We first established Confiniti because we wanted to develop information security technology, and then we couldn't find a corresponding application scenario for this technology, so we tried to do electronics. pay."

"That's right." Max got up and walked around the room: "So electronic payment is a means rather than an end for us, and I don't object to selling Confiniti to NewPay.

Because this will not be our long-term cause, so from a secular point of view, we need to measure the benefits between selling and not selling.

Whether it is in the long run or now, there is no doubt that it will be cost-effective to replace Confiniti with NewPay's stock.

Although I don't know what the smart people on Wall Street like about NewPay, and they will agree to such harsh conditions, but the value of NewPay is definitely high enough.

In the long run, the growth of a company that ranks first in a field must be better than that of a company that ranks second. "

Peter Thiel nodded and said, "Then I will send an email to Newman tomorrow, and we will negotiate the valuation."

Like accepting an acquisition, investors need to be notified in the terms of investment.

When Clausen and Kleist learned that NewPay was willing to acquire Confiniti and that they were willing to acquire Confiniti through equity replacement, they were ecstatic.

It is purely a windfall. Originally, they decided to invest in Confiniti because of the high valuation of NewPay.

Well now, it can be exchanged for NewPay shares directly.

The replies from the two investment institutions to Peter Thiel were all in agreement, and stated that their bottom line is that Confiniti’s valuation only needs to be above US$1500 million.

NewPay’s angel round valuation of US$10 billion requires a one-time purchase of 5%, which means a single investment of US$5000 million is unacceptable to these two investment institutions.

This is like when you buy a house because of the location, degree and business of a certain community, but the lowest price of houses in this community starts at 500 million, which is simply unaffordable. Then you would rather buy a small apartment than you want to buy this community. The problem is whether you can arrive.

Nokia Investment Fund and Deutsche Bank have such a mentality. It's not that they can't afford 5000 million, but that the upper management is unwilling to invest so much money at once.

5000 million was invested in the NewPay family, which is enough to participate in more than a dozen angel round investments.

Moreover, an Internet company could go public at that time, investing in more than a dozen angel rounds, the listing probability was about 30%, and the return rate was not higher than investing in NewPay?

This is true from the perspective of profit, but from the perspective of pursuing long-term benefits, NewPay's potential is obviously much greater.

Ordinary Internet companies listed on Nasdaq only raise tens of millions of dollars, which is not as good as NewPay's angel round financing.

After simple negotiations, NewPay acquired Confiniti at a valuation of 500 million yuan in the form of equity replacement.

on the other side of silicon valley

"Peter Thiel, Max Levchin, welcome to NewPay's executive team, this is Warren Johnson, our CEO, I generally don't care about the company's specific operations, he is in charge, And then here's von Lewis, he's the technical director.

I currently plan to divide the labor like this, Peter Thiel, you will be the vice president, responsible for the promotion and marketing of NewPay, and then we will split the technology department into the information security and development department, von Louis will be in charge of the information security department, and Max will be in charge development department. "

Compared with Max Levchin, Zhou Xin still believes in von Louis' ability and loyalty.

As a startup with him all the way from Angry Birds, von Louis is about to graduate from university this year, and he has spent more than half of his senior year at the company.

In the acquisition agreement, Confiniti’s founder team needs to work for NewPay for at least three years, and if they leave after three years, there will be a three-year non-compete agreement, which means that they cannot work in the same industry.

Without Confiniti, PayPal has lost its legs.

PayPal is the merger of Confinity and X.com, Confinity is a payment application, and X.com is more like an online bank.

X.com wasn't officially founded until December 1999, but Musk had wanted to create a full-service online bank that offered checking and savings accounts, brokerage, and insurance throughout the 12s.

In January 1999, Musk had already started preparations for X.com.

Newman's participation in the press conference of Confinity's financing was reported by major media in Silicon Valley. It didn't take long for the news to become NewPay's acquisition of Confinity.

"NewPay buys Confinity, startup NewPay buys competitor Confinity to enable huge online payments business."

"It is reported that this is Newman's first acquisition of other start-up companies since he started his business. Confiniti's leadership in the PDA field is the decisive factor for this acquisition."

The news of Newman’s participation in the press conference can only be seen in the Silicon Valley media, while the news of NewPay’s acquisition of Confinity is full of major media, from the New York Times to the Wall Street Journal.

After seeing the news, Musk had the illusion that he had lost something.

　This is also a sense of luck being taken away, right?
　　
　
(End of this chapter)