Turning Down a Giant’s Offer: Zhang Yiming’s Four Reasons and the Two Sides of CVC

Zhang Yiming: “Before our company was even a year old, a giant made a very attractive investment offer: a higher valuation than a VC, bundled-installation distribution on a scale of at least one hundred million, web traffic of tens of millions of unique visitors, data, and more. “Accepting could have multiplied our business growth within six months. I agonized over it for a full week. “I eventually declined because: (1) These benefits felt like stimulants. Before we had built our own capabilities, they would suppress our internal strength. “(2) Some resources distort strategy. We had not intended to work on the web, for example, but with that much traffic we would keep investing resources in it. “(3) The downside of giants: being drawn into their battles, forced to take sides or having a side assigned to you, and losing freedom of thought. “(4) An independent company can attract top talent more effectively because its dreams and possibilities are unlimited.” --- Many founders are delighted by a giant’s offer and neglect to examine the matter itself. The benefits are obvious; the drawbacks are concealed. Fundamentally, Zhang Yiming rejected the giant because he had a bigger vision. #ZhangYimingManagementJournal --- Robin: “Nothing is entirely good. To gain something, you must give something in exchange. CVC investment is praised today, but often has two sides. Before making major decisions, consider the advantages, disadvantages, gains, and losses. I suggest returning to your original entrepreneurial purpose: what is your ideal, what kind of company do you want to build, and do you want to be acquired or pursue an independent IPO? Every choice brings gains and losses. What matters most is what you want and what you are willing to exchange.”