You started a company, and very quickly it became darling of both consumers and investors. Hundreds of millions of people downloaded your app, many of who use it on a daily basis; VCs and other investors put more than 2 billion dollars in successive round over just two years.
And finally, your business is acquired for US2.7 billion.
That’s the story of Hu Weiwei, the founder of MoBike. On the 3rd of April, Meituan’s acquisition of MoBike was finalised at a general meeting of shareholders of the latter. The entire core management team all cashed out.
Sounds like a very inspiring story right? That’s how most of the media outside China see it. For example, Bloomberg published an article with the following title:
However, many media outlets in China are taking a critical stance towards Hu, saying things from she was finally forced out to she was just a puppet put forward by Li Bin, the angel investor.
“Li Bin put together everything from business idea to funding to supply chain – but he needed a figurehead who appeals to the young urban consumers,” says one of the reports (in Chinese). The article said that Li Bin even convinced Davis Wang, former GM of Uber Shanghai, to lead operations such that Hu could focus on PR work (she has media background).
Singular view of success
In addition to that, many focused on the fact that in the final shareholder vote for the acquisition, Hu was the only core management to vote in favor. She owns more than 8% of the company. Davis Wang, the CEO and Yiping Xia, the CTO, who collectively hold 15%, voted against.
Wang said at the vote: “The team has made many mistakes. My stance has always been that the company should develop independently, but an arm can’t win a wrestle against a leg, in China startups can never walk around the giants.”
Media pundits allegedly that Hu not only failed to bring MoBike to win the war, but also gave in without a heroic fight. Bad, too bad, many must be thinking.
That is a reflection of a singular view of success – you must be beating all your competitors and charting your own path independently. Alas, in the current tech scene dominated by Alibaba & Tencent, how many can achieve that?
Not a bad outcome at all
In the same week, Ele.me, a leading food delivery company who counted Alibaba as a key investor, was fully acquired by Alibaba. Zhang Xuhao, Founder of Ele.me, certainly missed the independent path – he probably wanted one, given his ambition and aggressive style.
Dai Wei, Founder of Ofo, MoBike’s archrival, also fought hard to stay independent of Didi, its core investor until recently. He finally managed to do so with the introduction of Alibaba’s money. This only raised doubt whether he can still control Ofo, given what happened to Ele.me after Alibaba invested. It will be super hard for Dai.
In comparison, Hu secured a reasonable deal for her and her team, with cash in the pocket. Although we believe the investors have liquidation preference, that still leaves dozens of millions of dollars for the team. That allows them to do many, many things moving forward.
Another game of Tencent & Alibaba
We also think that, rationally, it is perfectly understandable for Hu to support the acquisition. With Alibaba throwing its weight behind Ofo, the battle seems to be endless, and small shareholders (especially funds) held hostage. There does not seem to be anyway that MoBike can survive on its own, without full backing of Tencent.
It was alleged that prior to the acquisition, MoBike received an oral offer from Didi which would value the company at US$4.5 billion. The challenge is, Didi is a main shareholder of Ofo, and the potential co-investor Softbank is a staunch ally of Alibaba.
Tencent would not let that happen. It just led a US$4 billion round into Meituan last year, and Meituan is now leading an assault on Didi (which, interestingly, also counts Tencent as a major investor, though Softbank now probably has more say). It is just natural for it to push the acquisition deal for Meituan to gain a key customer acquisition use case.
It is only going to get more and more interesting.
Hu shared the following on WeChat:
“Everyone wants it to be more dramatic, but I would rather to see everything with a positive view. Thanks to everyone who have hailed us to the height of changing the world, also thanks to your re-examination of MoBike now. There is no “out” as many put it, for me this is a new beginning. Many have seen MoBike as a commuting tool, I see it as a beautiful lifestyle. Back to simple, essential, healthy and green, not overly focus on materialism. ‘Live better’ is also the vision of Meituan – on that we have a lot of room for imagination.”
Thanks for reading The Low Down, insight and inside knowledge from the team at Momentum Works. If you’d like to get in touch with us about any issues discussed in our blog, please drop us an email at [email protected] and let us know how we can help.