Chapter 72: Get Something Serious Done

One day in May, at Lakeside Garden, inside Legendary Entertainment.

Perhaps it was the recent windfall that had put him in such a good mood, but Gu Cheng was uncharacteristically punctual to work that day. He switched on his computer, checked his emails, sorted through the account statements, and was startled by what he found. Through the sale of the rights to "Meteor Garden," combined with Legendary’s net profit from the past four months, he now had over fifty million in idle cash at his disposal—a wealthy man by anyone’s standard.

Looking back on his arduous struggles over the past year, Gu Cheng could only sigh at how far he’d come.

“A protagonist in a typical webnovel, having fought this long, should now be thinking of investing in BAT, right? Then he could lie back, let the money roll in, put on airs, slap faces left and right, and play the part of a domineering CEO or an arrogant young master.”

Gu Cheng, though ambitious, did not object to making money more quickly. So he’d put in some effort, instructing Liu Shuqin from the market research department to look into the recent operations and data of BAT.

As for why he wanted this information, he had no intention of explaining to his subordinates.

Once the research came back, Gu Cheng realized there weren’t any good opportunities at the moment. Baidu and Ali had both secured twenty million dollars in venture capital at the end of 1999—enough for Boss Li and Ma Feng to burn through for two or three years—so they had no need for further investment right now.

Truly visionary entrepreneurs would never foolishly seek out venture capital when their growth plans weren’t in need of more funding—unless, of course, the entrepreneur never intended to build the company in the first place and was just looking for a quick cash-out.

More importantly, Gu Cheng’s investigation into industry trends revealed that Boss Li at Baidu had, in fact, found a way to ease the company’s cash burn this year—paid search ranking.

In later years, Baidu’s paid ranking would be widely condemned for enabling medical fraud, but to be fair, if Baidu only allowed bidding on purely commercial, non-public-interest keywords, the business strategy itself was sound.

The paid ranking service would be launched within the year, so Baidu wouldn’t be strapped for cash any time soon.

Among BAT, Ali’s position should have been weaker. However, in promoting his own “Monkey Edition Alipay,” Legendary Entertainment had, for mutual benefit, rented Ali’s powerful ground promotion team. As a result, Ali now enjoyed a steady trickle of several million in cash every quarter. Not a huge sum, but enough to keep morale high.

Gu Cheng couldn’t slow down the promotion of his own Alipay just to put pressure on Ali.

That left only Tengyun Corporation in Guangdong.

Tengyun’s reserves before the burst of the internet bubble last year were not as deep as Baidu’s, and running an instant messaging service incurred the highest hardware expenses—after all, search and e-commerce data were “use-and-go,” consuming little server resources, while instant messaging required massive “simultaneous online” capacity, with hundreds of thousands of users connected at once. Thus, Tengyun’s monthly bandwidth and server depreciation costs far exceeded those of the other two future giants, approaching the high costs of a gaming company like Legendary.

Yet their QQ service was free, unlike Legendary’s continuous income from games.

Even so, in May 2001, Tengyun had not yet burned through their cash. Gu Cheng discreetly contacted several of Tengyun’s major external shareholders—Yingke Digital and the like—and they remained optimistic about Tengyun’s prospects, with no intention of selling their shares.

Through various channels, Gu Cheng estimated Tengyun’s cash flow: at present, Tengyun was burning over a million yuan per month on servers and bandwidth. As the number of registered QQ users and simultaneous users doubled, those costs would double as well. The funds Tengyun had secured before the bubble burst would last another six months, so the cash crunch wouldn’t hit until the fourth quarter at the earliest.

(Note: According to the official record, Tengyun’s cashflow crisis peaked from February to April 2002, evidenced by a new service launched then: registering a QQ number required payment—one yuan per number. Ma Teng initially hoped this would bring in funds, but new user growth stagnated and users switched to rival chat software, including MSN. The policy lasted only two months before being scrapped. In this book, the internet winter is moved forward from February 2001 to September 2000, so shifting Tengyun’s burn cycle forward by a few months is quite rigorous.)

...

“Since Tengyun isn’t short on cash, I might as well focus on something else for now.”

Having realized that venture opportunities weren’t so easy to seize as in webnovels, Gu Cheng decisively abandoned the idea of waiting for opportunity to knock and turned his attention to more practical matters.

He remembered the promise he’d made offhand to Teacher Gao, to present in three months a plan for further developing Dingdang.com and benefiting legit musicians nationwide, in exchange for Gao’s help with film bureau approvals. There wasn’t even a shadow of such a plan yet.

In theory, Gu Cheng could shamelessly break his promise—Teacher Gao wouldn’t actually come slap him—but under the current circumstances, that would be a losing proposition.

After “Meteor Garden” premiered domestically, within just a week or two, some unsavory incidents had cropped up—especially in provinces known for unruly behavior and student bullies, where some began imitating the show’s characters, even to the point of violence. There was also a noticeable uptick in schoolyard puppy love.

Although Gu Cheng’s involvement had ensured the show dropped the “F4” moniker (which resembled a gang), and toned down the posturing and aloofness, it was entirely foreseeable that if nothing was done, the show would be banned after two airings. The charges would be nothing new: “promoting campus violence and puppy love,” “glorifying capitalist materialism,” and so on.

Gu Cheng was still relying on Teacher Gao to clean up after him and smooth things over with the authorities—he couldn’t just renege on his word.

“How can I improve Dingdang.com? Accelerate the rollout of ‘Monkey Edition Alipay’? Remove the MAC address restriction so ordinary consumers can register and shop on our website?”

That was the first idea that came to mind—a classic approach in line with Legendary Entertainment and Dingdang.com’s usual strategy. The technical risks, though, were enormous, and Gu Cheng wasn’t sure he could pull it off.

In 2001, China’s botnet and account theft problems were horrendous.

If he couldn’t solve payment security, and rashly lifted the physical address binding, his company would be demolished overnight by hackers. In history, Ma Feng didn’t launch Alipay until the end of 2004, precisely because of the dire security environment.

And in this timeline, things were even worse. In fact, it was Gu Cheng himself who had invented the “new application” of botnets a year ago, to trap Nasdaq investors. Now the monster he’d unleashed was biting back at his own business, and he could only swallow the bitter fruit.

The core issues of e-payments were security and trust. In an era with only twenty million internet users nationwide, people’s attachment to cash was unimaginable to anyone forty years later. Any news of account theft could instantly destroy years of accumulated trust in electronic payments.

Pondering this grim reality, Gu Cheng picked up the internal line and summoned three employees to get their input.

The first was Liu Shuqin from market research, a friend of his cousin. The other two were Chen Shoufu and Wen Huiying—both top hackers formerly involved in botnets, whom Gu Cheng had recruited and “whitewashed” after the bubble burst, turning them into cybersecurity experts.

Currently, the anti-theft plugins for Legendary’s games and Monkey Edition Alipay were developed by these two and a few trainees.

Gu Cheng had Liu Shuqin sit aside and observe, then turned to Chen Shoufu to assign a task.

“If I plan to remove the physical address binding in our payment system, how long would it take you to solve the account theft issue?”

Chen Shoufu was startled. “With just our current team? Two years wouldn’t be enough. That’s a massive challenge. Passive security scans before login won’t cut it. We’d need to develop specialized security software—powerful tools to detect and remove bots and trojans. In the long run, we’d even need a full-featured antivirus suite.”

Gu Cheng motioned for him to stop and interrupted, “Forget the antivirus for now. Just the proactive trojan and bot detection software—how long, how many people, how much money? Give me a number.”

Clearly, Chen Shoufu had given this some thought before. After conferring nervously with Wen Huiying, he gave a figure: “At least twenty more engineers, a total budget of ten million, including hardware, and eighteen months for results. If we could leverage existing domestic antivirus resources, it’d be faster and cheaper.”

Gu Cheng knew that was just to build the framework—ongoing trojan database updates and server costs weren’t included.

He could afford the money, but the time was another matter.

“Seems I’ll have to hedge my bets,” Gu Cheng sighed, then told Chen Shoufu, “Old Chen, work up a budget. I’ll approve the funds next month. Start as soon as possible. If you find any external resources, let me know at once.”

Chen Shoufu readily agreed. Gu Cheng then turned to Liu Shuqin and asked about the market research department’s responsibilities: “How efficient is our current proxy recharge system? Are cybercafé owners using it to sell products besides game cards?”

Liu Shuqin, a bit nervous, replied, “It doesn’t seem very effective. Nationwide, we have over thirty thousand cybercafés, both above and below board, using our system, but less than half have ever sold music CDs, and most only tried it a few times. User retention is very low.”

Gu Cheng’s brow furrowed deeply. He began pacing, clearly agitated. “Has the market research department investigated why?”

Liu Shuqin quickly replied, “We have, but we’re short-staffed. I’ve been following up with users on QQ, and in the past few months I’ve talked to thousands of them.”

“Have you compiled a report?”

“Not finished yet.”

“Send me the draft, then!”

“Yes, Mr. Gu.”

A few minutes later, Gu Cheng received the file in his inbox. It seemed Liu Shuqin was, at least, thorough in her work.