Becoming a Russian Oligarch After Rebirth-Chapter 1034 - 916 Overseas Company_2

Sergei finally understood what Wang Ye really meant.

If it were up to him, Sergei wouldn’t want to "split" Facebook into three separate companies.

But reason told him that perhaps Wang Ye’s approach was the most correct after all. Any business, once it expanded in scale and reached across borders, would involve more than just business; there would also be many political factors to consider.

Clearly, in this area, Wang Ye was the true expert, while he himself understood nothing...

...

Seeing that Sergei was deep in thought, Wang Ye did not rush him. Instead, he picked up his coffee cup, sipping his coffee while he waited for Sergei to figure it out.

After all, Facebook was founded by Sergei, and even though he didn’t hold many shares now, Wang Ye still hoped to reach an agreement with him.

After all, Facebook would still need to be managed by Sergei in the future; Wang Ye hardly had the time to get involved in the company’s specific affairs.

Sergei didn’t take too long to think. Before Wang Ye had finished half his cup of coffee, Sergei lifted his head.

Looking at Wang Ye, he earnestly said, "Mikhail, if you think this is good for Facebook’s future, then let’s do it. After all, this company would probably not have truly appeared before the public without your support at the beginning."

Indeed, when Sergei first fiddled with this venture, he did it just for fun and didn’t take it seriously.

At that time, he was thinking about studying abroad and did not focus his energy on Facebook.

It was Wang Ye who invested a million US dollars to help Sergei establish a formal company and build up Facebook.

Later on, even when Facebook hadn’t shown considerable promise and was continuing to seek funds for expansion, he brought in two "big spenders," Khodorkovsky and A Bu, who invested in another round of funding at a very high valuation.

That allowed Facebook to secure ample funding for a rampant expansion on the Russian Internet.

It’s fair to say that the initial phase is the most difficult and has the highest mortality rate for internet companies.

The vast majority of internet startups die before the angel round or the first-round financing because they simply cannot attract venture capital investment.

At that stage, the products are merely prototypes with no clear future in sight.

Therefore, very few venture capital investors dare to place heavy bets on such projects.

For Sergei’s Facebook to get one million US dollars in the angel round and over a hundred million US dollars in the first-round financing was, to be honest, extremely rare in the internet industry all over the world.

Perhaps there are only one or two such cases each year...

Sergei was well aware that during the first-round financing, the reason Khodorkovsky and A Bu, the two oligarchs, didn’t even bargain and directly paid according to the valuation reported by the company’s side was not because they genuinely believed in Facebook’s bright future.

Or thought he was a once-in-a-millennium genius, so they were willing to bet hundreds of millions of US dollars?

Of course not!

The two were so generous with their investment simply because the project was recommended to them by Mikhail!

Given Mikhail’s status, the weight of his words alone justified the price!

So if Facebook could reach its standing today, becoming one of the flagship companies on the Russian Internet, with thousands of employees and even expanding into overseas markets,

it was not because he was extraordinarily talented or because Facebook was exceptionally outstanding, but because the major shareholder of the company was named Mikhail...

If there were no Facebook, Mikhail could have created another alternative, which would not lag behind the current Facebook in terms of scale.

But without Mikhail, Facebook would never have emerged...

...

Wang Ye smiled with relief. Given that the company had become this size, it was rare for Sergei to remain so clear-headed and understand why Facebook had been able to make it this far so smoothly, without becoming conceited about his achievements.

This was also quite rare, as many founders of internet companies failed to achieve this.

Internet companies and traditional industry companies are completely different because of their swift development and rapid expansion.

This can lead to a consequence where the founders’ abilities or, say, their vision, fail to keep up with the company’s development...

Perhaps in just a short span of one to two years, an Internet company could grow from its inception to a valuation of several billion US dollars!

And the company founder, from a penniless university student, would transform overnight into a billionaire.

Most people at this stage fail to see themselves clearly; they think they are unparalleled geniuses, and that the company’s success is entirely due to them.

But they fail to see how much money was burned through in the company’s expansion...

And that money came from round after round of financing from major venture capitalists.

The company founders might think they’re indispensable, but in the eyes of the capitalists, the founders might become an obstacle to the company’s further development at a certain point!

Then capital would not hesitate to kick the founders out of the company and replace them with a more outstanding professional manager.

Boss Qiao of Apple serves as a good example...

He was ousted from Apple for a significant period by the shareholders; later, when he returned to Apple, he hardly had any shares in the company, basically returning in the capacity of a professional manager.

Fortunately, Sergei was clear-headed and didn’t truly believe Facebook couldn’t function without him, and he was willing to respect the opinions of Wang Ye, the major shareholder.

Otherwise, Wang Ye might have had to take a page out of the Apple shareholders’ book...

......

After the two had reached an agreement on the main direction, the issues they discussed next were also of great importance.

It was about how to design a reasonable equity structure that would protect the interests of existing shareholders without compromising the attractiveness to new partners.

Of course, it was still Wang Ye speaking, and Sergei listening.

"The equity structure of the Moscow company can remain unchanged; there’s no need to add new shareholders. Keeping the status quo is fine.

As for China, the situation is a little more complicated.

I plan to join forces with Tencent and bring in a well-backed investment company to establish a new company specifically responsible for Facebook’s operations in the mainland region.

Moreover, according to local regulations, this company must operate independently on-site, with servers, data, and so forth, all held locally, but that problem can be solved by Tencent.

Therefore, for the equity of the mainland company, Facebook holding company can only hold a 30% stake, with the remaining 70% divided between the two Chinese partners.

The equity structure of the North American company is similar; the holding company holds only 30%, leaving the lion’s share for the new partners.

In North America, Google is my chosen partner, and there is one more spot that may go to a Wall Street Capital, but it’s not certain which one yet; we’ll select one later.

With Google’s technological prowess and its influence in the English-speaking internet world, promoting Facebook would be easy.

..."

Wang Ye spoke methodically, outlining his thoughts, and Sergei nodded continuously in agreement.

Actually, Wang Ye’s plan centered on one key point: genuine "localization"!

Once the North American company is established, besides obtaining technology licensing from the Facebook holding company, all other operations, data, and so forth, would be 100% North American in approach!

The mainland China company would be no different; if one didn’t look into the shareholder relations behind it, it might seem like another native Chinese Internet company!

That was exactly the effect Wang Ye was aiming for.

The major shareholders of both the North American and Chinese companies would be local enterprises or capital, with operating rights also held by local partners. 𝚏𝕣𝐞𝗲𝐰𝕖𝐛𝐧𝕠𝕧𝚎𝚕.𝐜𝚘𝗺

So, in the event of future complications, it’s unlikely that anyone would target Facebook...

......

Once Wang Ye finished speaking, Sergei immediately raised his hand and said decisively,

"I fully support this plan!

Since Mr. Mikhail, you can bring in such excellent companies as Google and Tencent as our partners, then I have full confidence in Facebook’s local development.

As for the shares and such, we’ll distribute them as you said; I have no objections."