Sogou mode opens new chapter of Internet industry Capital operation

When the commercial Internet appeared in China, it adopted the common capital operation means of the traditional industry, in the absence of VC, the strategic needs of the enterprise cooperation to engage in Internet companies, such as the early Yinghai Granville, 39 Group of Internet business, the Chinese yellow pages, and so on, the group of enterprises failed, and thus the end of a section of the history of capital operation.

The biggest lesson left in this regard is Yahoo's takeover of Alibaba, which did not fail. Yahoo, as a major shareholder holding 43% of Alibaba shares, but not the right to have decision-making power on major issues, finally abruptly be repurchase half of the shares into small shareholders, lost to the growing Alibaba's control.

In the modern enterprise system and the integrity of the system is still imperfect, in the process of capital cooperation, who has the final say is very important. The resources and input-output of the Internet enterprise is not as clear as the traditional manufacturing, and whoever obtains the actual control of the enterprise can gain the best benefit. Therefore, the acquisition of Internet enterprises and mergers and acquisitions, the basic to the total retreat mainly. But this kind of capital Operation Way's shortcoming is also very obvious, the success is indomitable, the defeat is a thousand miles.

The past Ali received Word-of-mouth network, Sohu received Chinaren, 17173, Sina net new technology, Tencent received Foxmail and sing, are wholly-owned acquisitions, or at least the acquisition of the company has overall control. The mistrust between companies is the cause of this one-sided phenomenon, in fact, the Internet industry wholly-owned acquisition of the results, far more ugly than this.

Until the business environment has undergone major changes in the past two years, wholly-owned acquisitions or mainstream, such as Baidu acquisition of 91 Wireless and PPS, Ali acquisition of the German and so on. But there is a mode of capital cooperation has quietly arisen, it is worth exploring, that is, Tencent to buy Sogou as the representative of the form of capital cooperation, can be called Sogou mode.

September 16, 2013, Tencent announced to the Sogou injection of 448 million U.S. dollars, and the search and QQ Input method business and Sogou existing business to merge. Sogou will provide Tencent's PC and mobile community a large user base, including Sogou input method and Sogou search for the industry's leading products.

The deal Tencent gained 36.5% per cent of the Sogou shares and increased to 40% shortly thereafter. Tencent did not seek the control of Sogou, but the use of business input will be the fate of Sogou closely linked with their own, and give management full autonomy. This kind of alternative control way, make Sogou's management team is relatively stable, not prone to loss, the business is more upper floors, to avoid the volatility caused by the changes in equity.

After the Sogou, a few months after Tencent spent 215 million U.S. dollars to buy Beijing-east common stock, and the QQ network to buy, pat the electricity and logistics departments into the east. The capital operation of this transaction, still follow the way before Sogou, from a side to prove that Tencent to buy Sogou at least in the initial effect is successful. At this point, Sogou model has been basically can be formed, or as a case for the internet after the acquisition of the case to provide a certain reference.

To sum up, Sogou model has three characteristics

1, does not seek the holding, does not seek the form control right.

2, will be a certain business into the acquisition of the company to form the acquisition of the target business of the blessing.

3, to the management with full autonomy and incentives to prevent loss of management team, business decline.

Sogou married Tencent, received a search for 7500 servers, more than 20,000 customers, will search the whole business into the Sogou three rockets. According to CNZZ data show, from September 2013 to January 2014, Sogou's market share was 10.54% (Tencent search 3.99%), 10.45% (Tencent search 3.19%), 12.01% (Tencent search 1.48%), 12.77% (Tencent search 0.37%), 13.37%. In 2013, Sogou searched for an average gross profit margin of 45%, compared with the average of 43% in 2012. Throughout 2013, Sogou search revenue reached 199 million U.S. dollars, an increase of 60% per cent.

Historical experience has proved that big companies are not necessarily good at all things, want to reach in all directions, rather than by more knowledgeable people to carry out the pan, while large companies hide behind the scenes to give resources and financial support, their own hands to do, the results are often not very good. Tencent in Sogou this case arrangement, in a sense is a kind of innovation, and this innovation can get initial success, for the whole industry is also a great thing. Because it opens up a door to all other capital partnerships, there will be more choices in dealing with the issue of capital cooperation.

The initial success of Sogou model indicates that the capital operation mode of Internet industry enters 2.0 times. In the future, whether it is the traditional enterprise Internet or the integration between the Internet companies, the cooperation and mutual win should be the most feasible direction. The reason why this concept has not been popular, the root cause is the Internet prison, the power of the separatist industry is deep-rooted, practitioners out of prejudice and sensitivity to their own interests, are unwilling to open their minds to partners, and the parties to join hands to make the chess game bigger. This is essentially a kind of petty, which does not conform to the general law of Industrial development.

The capital operation of Internet enterprises tends to put strategic demand in the first place, thus ignoring the right to development of the acquired enterprises, which is a kind of closed thinking. Species of orange is not necessarily good at planting melons, internet companies to acquire a business of their own is not familiar with the business understanding of how much more than VC. And the cooperation between the capital, and then to professional and professional managers to fully authorize the VC is essentially the model, the advanced nature of the model, will be more and more attention by the Internet enterprises. The mode of capital cooperation and authorization will wind up in the future.

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I am a micro-letter public account gejia021 independent operators, 90% of the original technology and life sentiment article, independent point of view, disdain Low-brow. In order to explain and explain the essence of Internet in China.

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