The first shot in mobile payment was fired by surprise, startling Alibaba and hurting the innocent.
It was much like Li Shimin placing a stone on the tengen to decide the outcome in Go.
In the food delivery business, the first resource to contend for was not users, but riders, or more precisely—delivery capacity!
Chen Pingjiang made this decision purely from the perspective of the labor market.
Food delivery riders now were not as well-known as they would be in a few years.
First, people didn't know this job could make money, or how much it could make; second, some people might have psychological burdens, feeling that this profession wasn't very respectable or appealing, making it hard to accept.
Most critically, people didn't understand this profession yet; after leaving their jobs, most people would look for similar work again, and no one thought of delivering food.
The millions of food delivery workers nationwide in the future could not be replicated at this point in time, so delivery capacity was particularly important.
Controlling delivery capacity meant choking off Meituan and Ele.me's development paths.
Less than two days later, a news story suddenly landed at the top of Weibo's hot search list.
Everyone was already accustomed to this; it was clear that Renren.com had mastered Weibo's hot search list.
"Renrengou food delivery rider earned 3,000 yuan in one week."
This news, if placed in 2024, probably wouldn't make much of a splash, but in 2011, the reaction was truly significant.
Now, 5,000 yuan was considered a high salary.
"No wonder I've seen a bunch of food delivery riders emerging recently; it turns out they make so much money."
"I cried, regretting my fate; I sit in an office every day and only make 2,000 a month."
"Where do I apply? 58.com?"
"Upstairs, Renrengou's homepage has contact information; add them and ask yourself. Alternatively, you can download the Blue Knight app, fill in your details, and someone will contact you within a day at most."
"Do I also need to buy an electric bike and a uniform?"
"No need, you can rent an electric bike, deducted from your salary, six hundred a month. A set of work clothes is 150 yuan."
"Brother, how do you know so much?"
"Nonsense, I'm also a Blue Knight, but I only make 2,000 a week. His is a bit exaggerated; he probably delivers from morning until night."
"Uh, I just lost my job and haven't found a new one yet. I just feel like delivering food is a bit humiliating."
"What nonsense are you talking about? As long as a man makes money, what does pride matter?"
Weibo hot searches, Moments ads, Toutiao hot searches.
Wherever users could see, they could basically find Renrengou's recruitment announcements.
According to Gao Songbin's estimate, the number of Blue Knights was only about 200,000, and this was spread across first and second-tier cities nationwide.
Due to the scarcity of food delivery riders, the current food delivery service coverage was limited to core business districts and CBDs, with slightly more remote areas being unreachable.
A set of the most intuitive figures will show you the difference.
According to data provided by the Meituan platform in 2023, the total number of Meituan riders had exceeded 7 million.
Adding Ele.me's riders, the total number of food delivery riders nationwide exceeded 10 million.
"Although the advertisements are still effective, it's not very obvious, and the gap is still astronomical. Chairman Chen, should we change our approach? We might not need to rely solely on the direct operation model. Can we consider third-party riders?"
Gao Songbin asked Chen Pingjiang.
Upon hearing "third-party riders," Chen Pingjiang immediately realized this meant crowdsourcing.
He immediately shook his head like a rattle-drum, saying,
"Crowdsourced riders can be brought in a few years from now, but absolutely not now. Expansion can be slow, but service quality must meet standards."
Gao Songbin was somewhat confused:
"Chairman Chen, could you explain the specific reasons?"
Chen Pingjiang gave a wry smile; he really couldn't explain it.
He couldn't possibly reveal things that hadn't even happened yet.
Crowdsourced riders were a magical existence; almost everything you saw about riders was produced by crowdsourced riders.
Riders were divided into two categories: crowdsourced riders and dedicated delivery riders.
Crowdsourced riders were characterized by freedom and flexibility, with flexible working hours, often individuals or small local delivery teams; dedicated delivery riders focused more on standardization and stability, with fixed working hours, primarily serving the platform.
Crowdsourced riders could truly arbitrarily cancel customer orders, take the food delivery for themselves, film videos throwing it in the trash, or send messages insulting customers.
Of course, these were just a small part.
They weren't afraid of customer complaints at all; one complaint only cost three yuan.
Even more outrageous, they could eat the customer's food delivery that was clearly not delivered, then click "delivered" to earn the delivery fee, and report a meal loss, allowing them to enjoy a food delivery worth dozens of yuan for just a few yuan themselves.
You might ask, why did Meituan and Ele.me still heavily utilize crowdsourcing later on?
Because it was cheap...
Because third parties weren't responsible if something went wrong!
Because they didn't have to pay social security!
To calculate a simple figure, if there were three million crowdsourced workers in society, relevant enterprises could save 2.1 billion in social security each month, totaling 25.2 billion a year.
Dedicated delivery riders received orders dispatched by the system, with manual station managers adjusting orders for them, while crowdsourced riders operated on a self-assigned order model.
Regarding delivery areas, dedicated delivery riders had a 3-kilometer delivery zone; once outside this zone, they could only receive orders by returning to it.
Crowdsourced riders could pick up orders wherever they went, offering more flexibility.
Additionally, dedicated delivery riders had dedicated stations, required to attend morning meetings, and worked in morning, afternoon, and evening shifts.
Many crowdsourced riders were unsupervised, free to work or rest as they pleased.
In short, Chen Pingjiang did not approve of using the crowdsourcing model at this stage.
He was not in a hurry to expand into markets like urban-rural fringe areas, nor did he need to sink to the county or township level, because the market was still developing slowly.
Once crowdsourcing was introduced, it ruined the reputation, and it would be truly difficult to recover later.
......
Chen Pingjiang didn't care, but Wang Xing and Zhang Xuhao did.
Especially since Chen Pingjiang had unveiled the food delivery industry to the world, more and more small local agencies were being incubated.
These two keenly sensed that cooperation was possible between them.
Ma Yun flipped through two reports in his hand, one on Meituan, and one on Ele.me.
Peng Lei introduced:
"Both of these companies are applying to integrate with our Alipay, which aligns perfectly with our O2O strategy. Meituan, needless to say, we are their shareholders. Ele.me is a small local company from Shanghai, originally started by a few students, and recently received A-round investment from GSR Ventures."
Ma Yun smiled and asked, "What do you mean?"
"Of course, I'll approve them all; I'm just asking if you need to make additional arrangements. O2O business was originally the focus of mobile payment competition, especially after the emergence of the food delivery model, user consumption frequency far exceeded group buying."
Peng Lei handed over another document:
"This is a statistic compiled by a professional third-party survey company we commissioned. The proportion of users who order food delivery 5-8 times a week reached 37.2%, 9-12 times accounted for 25.1%, 1-4 times for 21.8%, and 13-16 times for 11.4%. And most critically, the younger the user age group, the higher the consumption frequency."
Ma Yun nodded gravely:
"This data is crucial."
He knew clearly that Alibaba Group's O2O business, Koubei, had been slow to take off and remained in a semi-comatose state.
Aside from the Koubei business, Alibaba's O2O layout only consisted of its small stake in Meituan.
Now, the consumption frequency of the food delivery business even significantly surpassed online shopping.
It would be false to say Ma Yun wasn't tempted.
Alibaba was inherently obsessed with traffic portals, and this time was no exception.
"Either choose one, or let them merge,"
Ma Yun finally said.
Peng Lei naturally knew what choosing one meant: choosing one for a full acquisition, which aligned with Alibaba's style.
"I think it's difficult. Ele.me is too small; acquiring it isn't cost-effective, and we'd have to make it bigger ourselves. Meituan could work, but they might not sell; they're currently the second-largest in the domestic group-buying industry."
Another investment style of Alibaba was never to touch A or B rounds; they would only jump in when the target company had grown to a certain scale, observing from the sidelines before then.
"In that case, let's talk to Wang Xing first and provide them with funding. As for Ele.me, we'll see if it survives."
......
Just half a month passed.
Meituan issued an announcement to the public.
First, it announced a $100 million investment led by Alibaba, with follow-on investments from Walden International and Northern Light Venture Capital.
Second, Meituan would launch its food delivery service, Meituan Waimai, in four first-tier cities and ten key second-tier cities.
A single case doesn't prove anything, so if Meituan entering the food delivery market didn't say much...
Less than two days later, news broke that Ele.me had secured a multi-million dollar Series B funding round, with Matrix Partners China and GSR Ventures as investors.
Two more days passed, and Baidu Nuomi announced its entry into the food delivery business.
Suddenly, the situation became lively again...
Although everyone knew Renrengou was awesome, and Chen Pingjiang was also awesome, there were always people who didn't believe in giving up.
Besides, if you can't be the boss, can't you be second best?
Being second best is also very appealing.
However, this food delivery war was far less intense than the previous group-buying war.
Only a few domestic players remained, and only they had the strength to compete.
And besides...
Food delivery involved riders and stores; those other small fry really couldn't handle it.
No orders to support riders means no riders can be recruited! This is different from group buying!
This single point strangled 99% of the competitors.
Matrix Partners China and GSR Ventures dared to continue investing in Ele.me entirely because they were aiming for the second-place position.
What a shame it would be not to enter such a hot industry.
They knew very well that Chen Pingjiang wouldn't care for their modest funds, and they were too lazy to humble themselves before Chen Pingjiang.
Therefore, investing in Ele.me and trying for second place was a good option.
While Chen Pingjiang was still in Dongjiang, Shen Nanpeng and Xiong Xiaoge cornered him.
He said with a smiling face,
"No good ever comes when you two old fellows show up."
Shen Nanpeng and Xiong Xiaoge exchanged glances and burst into laughter.
They didn't feel offended by Chen Pingjiang's tone at all, because he had the right to call them "old fellows."
If it were another small company, being addressed like that, these two would probably storm off the next second.
"Pingjiang, other companies are raising funds left and right, why is Renrengou so quiet?"
"Exactly, the last funding round was in 2009; it's almost been two years."
Chen Pingjiang chuckled,
"Are you two so eager to give me money?"
Shen Nanpeng walked to the water dispenser to get some water for himself:
"How can you call it giving money? It should be you, Pingjiang, leading us to make money. Renrengou's overall valuation has already exceeded 16 billion USD; this is a super unicorn, almost on par with your Renren.com."
Xiong Xiaoge also chimed in:
"Previously, Renrengou was profitable and not short on cash, so we didn't come to ask. Now, the food delivery business must be losing quite a bit, right?"
Of course, the food delivery business was losing money right after its launch.
Chen Pingjiang had calculated that they were losing 14 million yuan every day, which amounted to over 400 million a month.
This included delivery fee subsidies for Blue Knight riders, subsidies for new users, and also electric bikes, uniforms, and insurance for employees.
A true money pit.
No wonder few companies could afford to run a food delivery business.
As the market deepened, losses were bound to increase.
Yet, Renrengou currently didn't dare to take too much commission from merchants; instead, they had to coax them to prepare meals quickly to provide customers with a better consumption experience.
"Nothing gets past you two, huh? Since you're already here, I can't let you leave empty-handed. Old rule, give me a price. If it's too low, I'll find others."
Xiong Xiaoge tentatively asked,
"17 billion USD?"
No sooner had he spoken than he shouted to Guan Yifeng outside the room,
"Show them out!"
Xiong Xiaoge was instantly dumbfounded and quickly shouted,
"Don't! I flew for over two hours to get here. Besides, we were just joking, do you have to be so serious?"
Chen Pingjiang spread his hands:
"Old Xiong, that joke isn't funny. Ask Old Shen, would he joke with me like that?"
Shen Nanpeng chuckled, but said nothing.
Chen Pingjiang continued:
"Logically, Renrengou already qualifies for an IPO, but I've been holding back, unwilling to go public, waiting for the food delivery boom to make Renrengou big in one fell swoop. I already have one listed group, so I'm not in a hurry for Renrengou to go public; otherwise, why would I need another round of financing?"
That's what Chen Pingjiang said, but in reality, it was more advantageous to go public later.
On the day Meituan listed on the Hong Kong stock exchange in 2018, its market value soared to 400 billion Hong Kong dollars, equivalent to 349.4 billion RMB.
Could the current Renrengou be worse than Meituan?
Finally, Shen Nanpeng offered a straightforward price:
"The food delivery business has just started, and its future development is unknown. In my opinion, let's value the company at 20 billion USD overall."
Xiong Xiaoge pouted and said nothing.
Good heavens, a jump of 3 billion USD in one go; money really isn't treated as money anymore.
Chen Pingjiang thought for a moment, then slowly uttered another number:
"22 billion!"
Silence immediately fell in the office.
"Old Shen, Old Xiong, if it weren't Chen Pingjiang sitting here, but someone else from another company talking to you, I'd say 18 billion is already too much. You, Old Shen, offered 20 billion, and these extra 2 billion I'm adding are thanks to my name, Chen Pingjiang. When you invest in other companies, you have to worry about failure, losing all your capital, and whether they can go public.
But when you invest in Chen Pingjiang's enterprise, do you need to worry? A premium of 2 billion is even small. I'm also telling you clearly, this will be Renrengou's last round of funding; once this opportunity is gone, it's gone."
Shen and Xiong exchanged glances again.
It had to be said that Chen Pingjiang was incredibly confident, and of course, only he had such confidence; anyone else saying this would be labeled arrogant.
Who could blame him, when he hadn't met a single defeat since his debut?
After a while, Shen Nanpeng asked,
"How many shares do you plan to release?"
"10% is enough."
"Indeed, that's enough."
Shen Nanpeng nodded.
But was it enough? This ten percent was worth 2.2 billion USD.
Forget investing it, just burning it would last a long time.
Chen Pingjiang roughly calculated: subtracting the previously released 15%, the 10% used to acquire Dazhong Dianping, adding this round's 10%, and then removing 20% for the option pool, he would still have 45% left, which was sufficient.
This was just a simple calculation; in reality, Chen Pingjiang's stake should be close to 50%.
Because with this round of capital infusion, everything—whether it was He Zhiyu's inner circle, Dazhong Dianping shareholders, or the option pool—would all be diluted.
"I have no problem."
"Then... I have no problem either."
The two stopped stalling.
Because there was nothing more to discuss; as long as Chen Pingjiang firmly set the price, they would have to take the bait like fish.
If not Renrengou, then Meituan?
Moreover, this money would always be earned back when Renrengou went public; it was just a matter of more or less.
However, Shen Nanpeng continued:
"Of these 2.2 billion USD, Sequoia will subscribe for 800 million, and the rest of the money can't be mobilized for now."
Xiong Xiaoge also said:
"Our IDG is a bit weaker, so 500 million."
Chen Pingjiang nodded in understanding; this indeed was a lot of money.
"So there's 900 million left. Will you find investors, or should I?"
Seeing that neither of them responded, Chen Pingjiang still said,
"Then I'll find them myself."
He wasn't worried at all about the 900 million not being subscribed; once the news got out, plenty of people would rush to grab it.
After finalizing the relevant agreements with Shen Nanpeng and Xiong Xiaoge, Chen Pingjiang called Xiaoma Ge.
Xiaoma was naturally tempted by the news Chen Pingjiang revealed over the phone.
"Our relationship is good now, plus you're also a shareholder of Renrengou, which is why I'm informing you. Do you want to say something?"
Xiaoma Ge immediately agreed:
"Yes, of course, we'll take the rest."
This surprised Chen Pingjiang a bit,
"Hold on, you should at least ask Google, Qiming Venture Partners, and Capital Today."
These three were also shareholders of Dazhong Dianping previously, and are currently only minor shareholders of Renrengou.
By convention, regardless of whether they co-invested or not, they had the right to be informed, even if these individuals didn't hold board seats.
"Alright then, you ask first."
After a round of phone communication, preliminary intentions were reached, with specifics still needing discussion.
The result was that Google was out, and its shares were transferred to Tencent.
Qiming Venture Partners and Capital Today, to prevent their equity from being diluted, confirmed they would co-invest simultaneously.
As for Zhang Tao, the former CEO of Dazhong Dianping, he would also be ousted in this round, choosing to cash out and leave.
When Dazhong Dianping was acquired previously, Zhang Tao was appointed as Renrengou's Senior Vice President.
However, just three months later, he was sidelined and stripped of power, eventually unable to bear it and resigned.
Of course, after resigning, he still retained 1.8% of Renrengou's equity.
This round, it was also packaged and taken away by Tencent.
(End of Chapter)