Chapter 109: Video Conference

der director of the company. However, I can assure you that intellectual property rights are in my hands," Su Cen said with a touch of humor."Teacher Liangguang was once an advisor for our school maga...Chapter 109: Video Conference

On the seventeenth floor of Mei Luo, this is the headquarters of Facebook's Chinese company, which was established by Su Cun as the HQ for Facebook China.

This place was built according to his vision, showcasing the creativity of a new internet-era social networking company.

There are no tea seats with views of the commercial street in front of the floor-to-ceiling windows; instead, there are scattered layouts that create a particularly vivid projection against the city's backdrop.

The structure of glass and metal has an appealing and cheerful hue.

A few rows of Xbox and PS2 game consoles with LCD TVs showing live soccer footage have been set up in the entertainment area beside the main support columns. The leather sofas opposite them invite one to stretch out and take a nap when sunshine pours in.

Next is an area with green-felted pool tables, overhead with light steel trusses and recessed lighting. In the night at Xuhui, employees working overtime at Facebook China would light up this place, casting fluorescent white screens.

Beyond that is a self-service beverage machine providing eight kinds of drinks including Coke, Sprite, Mirinda, orange juice, blackberry juice, etc. Next to it is a coffee and cocktail counter with different coffee beans and wine choices. Originally, only Nestle bagged coffee was provided here, but when Kate and other overseas returnees arrived, they personally brought up their American-style work philosophy to Su Cun: "When you enter the company early in the morning under the sunshine, pick up today's reports waiting for your attention, brew a cup of rich coffee, sit on an office chair, and smell it while enjoying the atmosphere of work. But if the cup contains only bagged coffee, how disappointing would that be" This American-style way of working resonated with Su Cun, who then instructed to set up a specialized bar for brewing coffee and cocktails here, investing nearly ten thousand dollars in building配套設施, making foreign-funded companies overhead envious. Although it was just a small amount of money, such meticulous consideration towards the employees' feelings fully demonstrated Facebook China's human-centric characteristics.

The area next to the entertainment zone is a dry cleaner, which can be used to clean stains like coffee splashes from employees' clothes. Additionally, there's an audio-visual room equipped with a bass guitar and drums, as well as a small bar that isn't too expensive.

Every aspect of the layout and details in Chinese Facebook's internal space reflects its user-friendly and humanistic approach. However, today's conference room carries an intangible pressure.

Su Cen turned his head and saw through the slightly open curtains that many employees were taking opportunities to peep into the meeting from outside, either passing by or engaging in conversations nearby.

Su Cen knew that acquiring equity in Blizzard's World of Warcraft was a significant move within Chinese Facebook. Many speculated it as laying the groundwork for entering the online gaming industry. However, this action also brought about negative effects, with people questioning whether such an investment is worthwhile, given that $25 million could hinder Facebook's rapid expansion at this critical juncture.

This amount was even more than the market value of Chinese Facebook itself, and the company was facing increasing costs for server space and bandwidth. The pressure to expand while maintaining operations was mounting. One should not underestimate the operational cost pressures faced by internet companies like Chinese Facebook beyond just manpower expenses. Even though it's no longer the dot-com bubble era where companies burn cash in a race to dominate, various costs remain high.

Expenses related to rapid expansion include server and equipment costs, bandwidth fees, as well as potential office setup expenditures, which add up to significant sums.

The current Chinese Facebook lacks a robust profit model, leading to cash reserves being squeezed when revenue doesn't match expenses. This is seen by some as an inherently risky move.

Mark Zuckerberg's face appeared on the video conference screen as the meeting began.

The first impression everyone had was of the eyes on the other side of the screen, which were slowly and even somewhat woodenly examining them with an absolutely cold and mechanical gaze. This gave people a chilling sensation as if they had been stripped bare. Every time someone's name was mentioned, someone would stand up to greet him, but all Zack did in response was nod lightly. This made the initial thought that he was just a young punk who was even younger than them somewhat disillusioned.

Su Cen knew that this change in demeanor and mindset came from Zack after he graduated from Harvard's MBA program. Moreover, since this social networking genius had studied psychology at Harvard University, there was an inherent spirit of ruthlessness within him to overpower his opponents.

When Kate explained the entire acquisition plan and financing measures next to them, Zack did not beat around the bush but went straight to the point, fixing his gaze on Su Cen's position.

"Su, what can acquiring World of Warcraft bring us I admit that this idea is quite bold and exciting, but is it really necessary I don't see any relevant data, including expected evaluation trends. Is it worth each of us putting forth our stock shares for such a huge sum of money to only obtain 30% equity Why can't we have more Moreover, is it worthwhile to squeeze FACEBOOK's growth at this opportunity cost when we will have massive future returns" At that moment, Mark Zuckerberg’s programmer-like blank eyes suddenly shone with an eagle-like depth as he spoke each word deliberately. "You should be even clearer about this than I am."

Now Zack was directly questioning Su Cen. From the perspective of Facebook's Chinese Round Table, although his words were riddled with rhetorical questions and seemed to be seeking details, they amounted to a challenge on some level, revealing Zuckerberg’s opinion that he did not believe in this plan. The key question was whether it was necessary.

A shut-in might get incredibly excited about acquiring Blizzard's games, but Zack wasn't just any ordinary shut-in; his current identity as the CEO of Facebook meant that every decision he made had to be for the greater good.

"I have a report with accumulated customer groups and scale data on Blizzard’s game products developed in previous years. It also includes user expectations surveys from 30 provinces and cities across China, including Shanghai, Beijing, Chengdu, etc., showing that the player anticipation of World of Warcraft is at its highest among all domestic games. Additionally, there are expected player group surveys from Hong Kong, Macau, Taiwan, seven states in the US such as Texas, Washington, Kansas, etc. You can look at the data presented here; I can only describe it as unprecedented. No game has ever reached this level of anticipation. Of course, we should exclude countries like Japan and South Korea with relatively advanced independent industries." "Fascinating I will take a look right away. However, besides providing capital support, what else does this offer us The game won't officially be launched until 2004; regardless of how much return on investment there might be, the critical issue is whether we'll survive to see that day" Zack spoke quickly as he pulled over Su Cen's report and immediately raised a second question.

Su Cen had visited Facebook’s data center in the US when raising funds this year. The data center was south of San Francisco Bay, California, with oppressive and stifling server rooms where rows of servers constantly exchanged and processed massive amounts of heat energy.

This year, Facebook is expected to surpass ten million users. At that point, a major overhaul will be carried out; meanwhile, the data center will relocate to Texas, where there are government-supported tech parks capable of accommodating vast numbers of Facebook servers, with favorable electricity and water costs helping reduce expenses. Su Cen understood Zuckerberg's concerns: if all the funding obtained through open financing were used for the development of Facebook and Chinese-speaking Facebook rather than allocating a portion to World of Warcraft, their expansion would be more unhurried, confident, and well-prepared, without being caught off guard by various unexpected situations.

After all, the pace at which social networks burn through money is astonishing. The $16 million they raised this year was quickly spent. Although they were operating on both Chinese and American fronts, achieving significant influence across America and solidly establishing themselves as the number one social network giant with over two million registered members, the cost was still quite shocking.

"Social networks lack a profitable business model. Currently, relying solely on targeted advertising revenue has its drawbacks for us. Targeted advertising is indeed our unique advantage in social networking, but the downside is that as targeting becomes more precise and segmented, the market will become smaller. Such single-minded capacity is far from enough to cope with future changes. Therefore, we must expand: first by developing social games to create a large number of secondary consumers who rely on social networks. Second, our long-term vision lies in combining networked social activities with entertainment platforms to form interactive entertainment platforms, aiming to bypass operators and directly participate in profit distribution. The breakthrough here is World of Warcraft."

"Without Blizzard's involvement, we can still enter the entertainment platform market," Zuckerberg said, somewhat moved. "Don't forget that we are number one in social networking." Su Cen thought, however, that this would be even more risky for him: diverting resources to build an entertainment platform requires substantial gaming or audio-visual content. Starting from a low base and needing to participate in acquisitions of related institutions could increase our non-performing assets; thus, rather than blindly attacking on all fronts, it's better to concentrate forces specifically on World of Warcraft, which will shape Facebook's future strategic direction.

Ever since Su Cen took control of Facebook, the social network had veered off its original path and was developing in a new direction. The method of integrating entertainment platforms that he was now attempting was something unheard-of in his past experiences. He didn't know where this would take Facebook, but ultimately, their strategic goal should be to transform from a simple social network into an interactive social-entertainment platform, forming a massive third kingdom in the future world with numerous profit chains as its vascular delivery mechanisms.

After Su Cen finished speaking, everyone fell silent. Some took notes, some frowned deeply in thought—Zuckerberg's eyebrows were slightly furrowed as he clasped his hands to his mouth. After a while, he nodded: "We will proceed with financing as soon as possible. I can already imagine the expressions of those arrogant investors when they hear what you have said. The lack of a profitable business model has long been a focus of criticism from Silicon Valley; I really hope that you can come to Palo Alto so that the Silicon Valley venture capitalists there can see you."

Following this teleconference, which decided Facebook's future course, Qiu Chunxin gave Su Cen a thumbs-up at the door. Only Su Cen could make even the domineering Zuckerberg nod in agreement and determine the direction of the Facebook behemoth.

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