The current Internet business bubble has been greatly inflated, but compared with later generations, the power of Silicon Valley is far from comparable to that of Wall Street.
Americen's future tripartite scene of Silicon Valley, Wall Street and Washington has not yet been formed. 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 wanted to 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.
Perhaps the only advantage is the first-mover advantage of handheld computers. The problem is that we don't have the funds to promote our products on handheld computers.
Take NewPay’s incentive program as an example. They burned tens of millions of dollars in the incentive program alone, while our investment was only five million dollars.
From all aspects, there is a big gap between us and NewPay. "
Peter Thiel does not have strong control and is not too stubborn about selling the company. If he was too stubborn about this, Confinity would not choose to merge with Musk and become PayPal.
After thinking for a moment, Max said: "Actually, we are not without opportunities. The field of electronic payment is close to a zero-sum game, but it is not a complete zero-sum game.
Washington also won't accept just one player in the field.
In the early stage, we can survive in areas that NewPay’s tentacles cannot reach. Especially in recent years, the Internet has been showing a trend of rapid expansion. 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 speaking yet, I just hope that we can clearly explain the pros and cons to avoid regrets in the future because of this decision.
We need to judge whether electronic payment is a career we will strive for throughout our lives, or is it just something we can do at this stage? "
Peter: "It's obviously something we can do. We first established Confinity because we wanted to develop information security technology, but couldn't find a corresponding application scenario for this technology, so we tried to do it. pay online."
"Yes." Max stood up and walked around the room: "So electronic payment is a means rather than an end for us, and I am not opposed to selling Confinity to NewPay.
Because this will not be a career we strive for in the long term, from a secular perspective, we need to weigh the benefits between selling and not selling.
Whether it is long-term or now, there is no doubt that exchanging Confinity for NewPay stock is a good deal.
Although I don’t know what the smart people on Wall Street value about NewPay and would even agree to such harsh conditions, the value of NewPay is definitely high enough.
In the long run, the company that ranks first in a field must have better growth than the company that ranks second. "
Peter Thiel nodded and said: "Then I will reply to an email to Newman tomorrow and we will negotiate around the valuation."
Like accepting an acquisition, investors need to be notified in the investment terms.
When Clawson and Kleist learned that NewPay was willing to acquire Confinity and was willing to acquire Confinity through equity swaps, they were ecstatic.
It was purely an unexpected gain. Originally, they decided to invest in Confinity because NewPay was overvalued.
Now it's fine, it can be directly exchanged for NewPay shares.
The two investment institutions responded to Peter Thiel in agreement and stated that their bottom line is that Confinity’s valuation only needs to be above US$15 million.
NewPay's angel round is valued at US$1 billion, and requires a one-time purchase of 5%, which means that a single investment costs US$50 million, which is unacceptable to these two investment institutions.
This is like when you buy a house because you are interested in the location, degree, and business of a certain community. As a result, the lowest price of a house in this community starts at 5 million, which is simply unaffordable. Then you would rather buy a small apartment than buy this community. The problem is that you can’t afford it. Less than.
This is the mentality of Nokia Investment Fund and Deutsche Bank. It's not that they can't spend 50 million, but that the upper management is unwilling to invest so much money at once.
Fifty million invested in NewPay is enough to participate in more than ten angel rounds of investment.
Moreover, at that time, an Internet company could go public. If it invested in more than ten angel rounds, the probability of listing would be about 30%. Isn’t this rate of return higher than investing in NewPay?
This is true from a profit perspective, but from the perspective of pursuing long-term returns, NewPay's potential is obviously much greater.
Ordinary Internet companies listed on Nasdaq can only raise tens of millions of dollars, which is not as good as NewPay's angel round of financing.
After simple negotiations, NewPay acquired Confinity at a valuation of 25 million through equity exchange.
On the other side of Silicon Valley
"Peter Thiel, Max Levchin, welcome you to join NewPay's executive team. This is Warren Jensen, our CEO. I generally don't care about the specific operations of the company, he is in charge. And then this is von Lewis, who is the technical director.
I currently plan to divide the labor like this, Peter Thiel, you will be responsible for the promotion and marketing of NewPay as the vice president, and then we will split the technology department into the information security and development department, Von Lewis will be responsible for the information security department, and Max will be responsible for development department. "
Compared to Max Levchin, Zhou Xin still believed in von Lewis's ability and loyalty more.
As someone who followed him from Angry Birds to entrepreneurship, Feng Lewis is about to graduate from college this year and has been working at the company for most of his senior year.
In the acquisition agreement, Confinity’s founder team needs to work for NewPay for at least three years. If they leave after three years, they will have a three-year non-compete agreement, which means that they cannot engage in work in the same industry.
Without Confinity, PayPal is missing a leg.
PayPal was formed by the merger of Confinity and Confinity, a payment application that is more like an online bank.
It wasn't officially established until December 1999, but throughout the 1990s Musk had wanted to create a full-service online bank that offered checking and savings accounts, brokerage and insurance.
Musk had already begun preparations in January 1999.
Newman's participation in the press conference of Confinity receiving 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 acquires Confinity. Startup NewPay purchased rival Confinity to build a massive online payments business."
"It is reported that this is Newman's first acquisition of other startups since his founding. Confinity's leadership in the PDA field is the decisive factor in this acquisition."
The news reporting Newman’s participation in the press conference can only be seen in 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 felt like he had lost something.
