11:19 PM
admin
Image via Wikipedia
As shares of Joe Chen’s Renren began trading up on the New York Stock Exchange today, I couldn’t help but recall our interviews in Beijing a few years ago. Back then, he candidly shared his view of what it takes to win the Chinese Internet race.
“We gotta big faster than rivals, and we’re fairly fast in areas that really matter. We are land grabbing everywhere,” he told me. I also remembered him telling me about his supercharged approach to building websites: “In China, we just chunk it out. We just do it.”
As I went down memory lane, I could hear Joe telling me what he’d learned from reading investment books about such business legends as Bill Gates, Larry Ellison and Rupert Murdoch. He said then he was applying what he had learned from these masters to “buy companies of intrinsic value with a barrier to entry and then nurture them.” And, the biggest lesson he took away? “I want to make sure to have an ample supply of cash to do deals.”
Today, such strategies were rewarded as his Facebook-like Chinese startup Renren scored on Wall Street. Shares rose 28.6% above the $14 IPO price in the first day of trading. Now, having raised $743.4 million in the IPO, Chen certainly has the capital and resources to ride the China Internet wave as CEO of his newly publicly traded company.
In the lightning-fast China web scene, Renren has morphed into a social network powerhouse. As social media, gaming and more recently e-commerce have caught on, Renren has focused in on four major sites: Renren social network and Renren Games plus the more recently launched group-buying e-commerce website Nuomi and business social network Jingwei.
Back in 2007, his then-named Oak Pacific Interactive combined a Chinese version of MySpace, YouTube, Facebook and Craigslist in one company. The change in business models in just a few short years shows just how swiftly China’s digital media landscape is evolving, and the wits it takes to stay ahead.
Chen looked serious as he rang the opening bell at NYSE today to kick off trading in Renren. I spoke with him right after lunch the same day and he seemed to be in neutral, perhaps not wanting to appear to be on top of the world.
It could also have been the stressful and suspenseful lead-up to the IPO of Renren. In the days before the social network began trading, a “typo” in a monthly user number was found in the prospectus and later revised in the company’s SEC filings. The head of Renren’s audit committee, Derek Palaschuk, resigned amid accusations of accounting fraud at Hong Kong-based Longtop Financial Technologies Ltd., where he is CFO.
These mishaps combined with Chen reducing his shareholdings from 28 percent to 23 percent prompted one China tech investor to remark, “Renren is certainly not a “clean IPO.” The stumbles and their reminder of the risks of investing in Chinese tech startups didn’t diminish the strong appetite to get in on China’s Internet revolution, however.
“This is the beginning of the next chapter, a prelude to line one. We’re very happy with the overall outcome and now it’s time to execute on the promise of the prospectus,” said the charismatic Chen, who is cautious to avoid a flamboyant sound bite now that he’s the head of a publicly traded company. No more half-kidding remarks like he made at a 2010 Silicon Dragon forum about doing battle with the BAT – Baidu, Alibaba and Tencent – as the biggest challenge Chinese startups face. See video.
For sure, the IPO trophy is an object of envy among every Chinese Internet entrepreneur I’ve met, starting from Robin Li of Baidu, Jack Ma of Alibaba and Peggy YuYu of Dangdang, who I profile in Silicon Dragon (along with Joe Chen, see my photo above) to a new group of up and comers. See earlier Forbes post, China’s Facebook Could Be Next Big Tech IPO.
Chen has had a recurring dream of taking his startup public as he’s watched Internet search engine Baidu and online video site Youku triple in value since their offerings. Now, the IPO of Renren could be well timed (May 4th is Youth Day in China) as more Chinese startups head to NYSE and NASDAQ – and before a possible fallout among Chinese Internet stocks.
Avoiding the limelight on one of the biggest days of his life, Chen says that it’s his social network – not him – that will be written about in the history books. “Real name social networks like Renren are not just ordinary communications tools, but are recording the history of daily life and capturing human interactions and emotions as an archive,” adds Chen, a creative and conceptual thinker who like many in the first generation of Chinese Internet stars is a returnee to China, and a Stanford-educated serial entrepreneur.
Standing behind Chen at the opening bell was venture capitalist David Chao of Silicon Valley-based investment firm DCM, an early backer of Renren. As the stock price popped 33 percent in early day trading and the valuation topped $7 billion, he pointed out that Renren was now the fifth largest Internet company by market cap in China.
DCM, an active venture investor in Asia and Silicon Valley, has a 9% stake in Renren and its shares are in lock-up for six months. Chao, who stepped in to chair the audit committee, said DCM is a long-term shareholder anyhow – and with good reason. China’s Internet and mobile markets are already larger than those in the U.S., and penetration among the huge population is still comparatively low. (No wonderFacebook wants in.)
“Renren is the first social network site of a major magnitude to go public worldwide,” he pointed out, adding “It’s a great long-term play like Facebook in the U.S.”
source: forbes.com
please give me comments thanks
Posted in: 
0 comments:
Post a Comment