Chapter 71: The Past and Present of the Alumni Directory

The gift Xu Qinning gave to Cheng Xiaoyu was a pon3 she bought in Hawaii, and she also sent one to Su Yuxi. Cheng Xiaoyu, gazing at the brand new pon3, felt the urgency of time pressing upon her.

There was still about a year and a half left before the world-changing pon4 would make its debut, ushering in a new era for smartphones. Cheng Xiaoyu returned home and immediately called Wang Dongliang to ask about the progress of acquiring the alumni registry.

By this time, Wang Dongliang had already contacted Wan Gang, the vice president of Skinny Fox, who was in charge of interactive product operations. Wan Gang and Wang Dongliang’s friend had once worked together, so there was some camaraderie between them.

When Wang Dongliang invited Wan Gang to dinner, he got straight to the point, asking Wan Gang if Skinny Fox had any intention of selling the alumni registry. He didn’t specify who wanted to buy it.

Wan Gang naturally assumed it was Meowpo who wanted to purchase it, but this wasn’t something he could decide alone; he needed to consult Zhang Chaoyang, the president of Skinny Fox Network.

The industry was well aware of the alumni registry’s situation. After all, as the largest community network of its time, its acquisition by Skinny Fox had caused quite a stir then. But now, the alumni registry held only a trace of symbolic significance for Skinny Fox, and more importantly, it was a burden.

Though it wasn’t within Wan Gang’s power to make the decision, having someone willing to be the scapegoat was precisely what would make Skinny Fox happiest. Wan Gang immediately told Wang Dongliang that as long as the price was right, there was nothing that couldn’t be negotiated.

The two had a pleasant conversation, and Wan Gang promised to report to the president and give Wang Dongliang a definite answer.

Wang Dongliang took Cheng Xiaoyu’s instructions seriously, gathering all the information he could about Skinny Fox Network’s acquisition of narn and sending it to Cheng Xiaoyu via email.

In 2000, Skinny Fox Network had issued additional shares, and with the money gained from selling stock, spent a lavish thirty million dollars to acquire narn, the first community website in China that was about to collapse, with the alumni registry as narn’s flagship product.

Zhang Chaoyang, the president of Skinny Fox Network, and Chen Yizhou, the founder of narn, both studied physics at MIT. Zhang returned to start a business first, while Chen went on to Stanford for his MBA before coming back. In February 2000, the management teams of both companies began negotiations. Due to disagreements over the acquisition price, the plan was shelved for a time. In early August, they returned to the negotiating table. “All discussions were held secretly in hotels.” The final contract was signed on the twelfth.

Narn had entered the top ten website rankings within a year of its founding. Why did it choose to be acquired? According to Wang Dongliang, narn could have continued its operations after spending its raised funds, but Chen Yizhou believed that even if he continued on his own, it would be difficult to reach the top ranks. It would be better to join forces with others and become part of the leading group. For Skinny Fox, “the merger would bring a strong management team and workforce, and realize business complementarity,” which Zhang Chaoyang once described as a match made in heaven. Some commentators believed that through acquisition, narn achieved a “disguised” public listing, which was a smart move.

After the acquisition, Skinny Fox reached 550 employees; the cash expenditure caused by the deal would be balanced by the first quarter of the following year, and the integration of both companies would be completed within one or two quarters. Narn was fully absorbed into Skinny Fox.

Looking back, it was clearly a failed acquisition, and Wang Dongliang had discussed with Cheng Xiaoyu why it was a case of failure.

Firstly, narn couldn’t directly provide purchasing power. If it could, it wouldn’t have needed to sell; Skinny Fox would have to induce purchasing power anew, something no website had succeeded in doing. The wisdom required to formulate effective purchasing power strategies exceeded the limits of all existing website management teams. Besides, narn’s community wasn’t founded to stimulate consumption.

Secondly, students were the most unstable group of visitors. While narn’s community was good, it wasn’t insurmountable. There weren’t many things in its community that could be sold, so to surpass narn, one only needed a few new selling points. Using the same thirty million dollars to build a new community from scratch might take less time than integrating narn. The issue wasn’t a lack of creativity, but an abundance of it; Chen Yizhou and his team just happened to be closer to capital.

Furthermore, narn was a community built on advertising. After merging with Sohu, if ad spending was reduced, could the original traffic levels be maintained? If Sohu continued narn’s money-burning strategy, would it accelerate Sohu’s own demise?

Finally, no network acquisition had ever succeeded. The best online literature site was quickly ruined after acquisition, and narn would be no exception. The reason was simple: integrating resources required a wisdom that surpassed all existing teams.

In conclusion, Skinny Fox’s acquisition of narn likely only hastened the transformation of two declining websites into the largest heap of internet junk in China.

The two spent countless hours discussing this matter on the phone, even more diligently than lovers. Wang Dongliang saw in Cheng Xiaoyu an extraordinary vision, humility, a thirst for knowledge, and a research spirit that wouldn’t rest until a question was fully explored.

This convinced Wang Dongliang that Cheng Xiaoyu wasn’t some fool burning money for fun, but an investor with his own ideas, goals, and lofty ambitions.

They also discussed in depth the survival path of community websites. Cheng Xiaoyu was well aware that most sites, not just communities, faced the huge puzzle of finding no profit points aside from advertising.

Despite massive traffic, they couldn’t convert it into cash.

Yet such confusion was laughable in the face of Cheng Xiaoyu’s “cheat mode.” He casually spoke of future trends: vigorously developing wireless services such as ringtones, images, and video downloads.

Developing web games.

E-commerce.

Integrating advertisements beyond simple page placements, creating targeted promotional plans for current hot topics, since advertising was the lifeblood of community sites.

Creating new channels for mobile phones and cars to attract specific advertisers.

Of course, there were many powerful ideas Cheng Xiaoyu left unsaid; he didn’t intend to pave the way for others.

Wang Dongliang was deeply inspired, and admired Cheng Xiaoyu’s business acumen completely. These solutions weren’t something one could conceive without deep wisdom and years of experience in the web industry.

Yet when Cheng Xiaoyu first met him, he didn’t even know how to set up a website, only having read many books on web technology and gained insights from browsing the internet. That he could come up with such practical ideas was almost unbelievable.

After receiving Wang Dongliang’s intention to purchase, Wan Gang consulted with President Zhang Chaoyang. Later, he called Wang Dongliang and quoted a price of twenty million.

Clearly, this was far more than Cheng Xiaoyu could afford; Skinny Fox was asking for the moon.

On the surface, Skinny Fox had spent thirty million dollars acquiring narn, and now was selling for twenty million local currency—a bloodbath, a “fire sale.”

But back then, the acquisition included a full company with many internet elites, managers, and technicians—an invaluable asset. Afterward, the campus network brought Skinny Fox a substantial increase in page views.

Now, what Cheng Xiaoyu wanted was only a set of data that Skinny Fox no longer valued, plus a domain name.

Cheng Xiaoyu knew well that in his previous life, a certain famous domestic portal closed narn after ten years of operation in 2012.

His cousin worked at that portal, and served in the alumni registry’s management department. So he understood, at least a bit, what ultimately killed narn.

First, internal power struggles—departmental and personnel conflicts persisted after narn’s acquisition, leading to division of the business unit, staff reduction, and eventual loss of original personnel.

Second, incompetent product managers repeatedly made fatal changes, accelerating narn’s demise (most notably, merging the alumni registry into the portal’s social network and axing the kindergarten product line).

Third, abandonment—when the portal launched its new product in 2012, narn was ordered only to funnel users into the new product, leaving just an intern to update the homepage. By then, the alumni registry was gasping its last breath.

Eventually, with no one to maintain it, the content monitoring backend collapsed at the slightest disturbance, and the site was left to die.

The river of eighty million users dried up little by little, until the flow ceased altogether.

How much Skinny Fox of this life resembled the portal of the previous one, Cheng Xiaoyu couldn’t say.

But clearly, Skinny Fox’s alumni registry was not yet at its end, but the final step wasn’t far off.

Without Cheng Xiaoyu’s godlike foresight, they couldn’t see that social networks were the future. The shutdown of the alumni registry was only a matter of time.

Cheng Xiaoyu was impatient to step onto the path to success over Skinny Fox’s regretful corpse, but what he needed most now was an excellent puppet.

After some time, Cheng Xiaoyu judged Wang Dongliang to be a decent candidate—his business sense, social skills, work ability, and character were all acceptable. He was a qualified puppet in Cheng Xiaoyu’s eyes.

He thought it was necessary to have a detailed and serious conversation with Wang Dongliang. Whether the acquisition of the alumni registry succeeded or not, the establishment of a social network was imperative.

But he was alone, with no support, and to complete such a task was nearly impossible. He had to convince Wang Dongliang to resign and help him.

Cheng Xiaoyu made some preparations, booked a ticket to Beijing for the next day, and ignored the fact that school was starting tomorrow.