Chapter 585: Option Pool Financing

Every company needs contingency funds to handle crises, which aren't just external but also internal—like how TikTok suddenly exploded, and how to stabilize the situation.

Hardware, software, and personnel must all keep pace.

Gao Zhun reported the financial status according to Fang Hong's request; although Chang'e Technology currently can't match Alibaba or Tencent, it's still in the second tier.

But many segments are still developing rapidly and require continuous investment.

Today's internet, beyond the giants like Alibaba and Tencent, includes gaming companies, and other sectors inherently require constant cash burn.

Companies like JD. com, Meituan, Ctrip, iQIYI, and Kuaishou are all burning cash.

This is an era of expansion; everyone is fighting for market share—if you don't burn cash, someone else will take your slice.

"In the early stages of development, financial strain is inevitable—it's nothing special, just overcome it. What startup doesn't face challenges? If business were this easy, everyone would do it, wouldn't they?" Fang Hong said casually.

"Hehehe!" The crowd chuckled softly.

The Principal is always like this—always giving them confidence, always handling difficulties with ease.

This is why they're willing to follow him—he always holds things together.

"Being aggressive isn't reckless—it's keeping pace with the times, outpacing competitors, outpacing time."

As Fang Hong spoke, the laughter in the room ceased; everyone understood. The market changes in an instant—one step behind means falling further behind; lose the market, and you lose opportunity.

The market is cruel—it won't pity anyone.

Fang Hong turned to Zhang Nan and asked: "What's TikTok's daily active users now?"

"Around 800,000 DAU—growth is decent. At first, there was little content or creators; these past few months we've been refining core features," Zhang Nan explained.

All new products start this way—they can't explode upon launch. TikTok is a platform that needs creators from the market to fill it with content.

This requires time for promotion!

Bilibili has content, but not much usable—it doesn't match TikTok's positioning.

One, Bilibili is mostly mid-to-long videos; two, it has few music-oriented features. TikTok's full name is Music Short Video.

"TikTok must invest heavily in video processing, Recommendation Algorithm, and content moderation—constantly improve user experience, constantly optimize features like filters, Best Special Effects."

If others shoot skits, you must make them look good—otherwise, which girl would dare appear on camera? This area needs greater tech investment, and promotion must be intensified."

This was Fang Hong's top priority—the key to achieving his three-legged strategy.

Without TikTok, Chang'e Technology will always be second-rate.

Someone in the meeting room silently took notes; someone nodded silently. Zhang Nan's expression brightened: "Principal, this suggestion is excellent—we never thought of filters and Best Special Effects."

It reminded her: some short-video creators feel insecure about their appearance—so beautify them, draw attention, and their fragile confidence will return.

She didn't know Fang Hong had just spoken offhand—TikTok's image was simply like that.

Zhang Nan continued: "We plan to invite celebrities for collaboration and promotion—using online ads, social media marketing, and offline events to attract users to download and use."

"Through subsidy incentives, we'll attract content creators, invest heavily to support high-quality producers—this will inevitably involve massive music copyright fees, which are a significant cost."

TikTok is fundamentally music-based short video—music is an indispensable component.

Take YouTube in the United States as an example—it spends hundreds of millions, even billions of dollars annually on music copyright. Fortunately, domestic copyright enforcement is lax—we can exploit loopholes.

But as user numbers grow and creators multiply, hundreds of millions of RMB will still need to be invested.

We can't invest nothing and rely purely on piracy!

Zhang Nan's promotion strategy directly borrows from Chang'e Video and Bilibili's models—Chang'e Video supports creators; Bilibili subsidizes and incentivizes them.

Applying both fully to TikTok means pouring massive effort into promoting this product.

"Don't fear investment—move boldly and confidently. Accelerate the commercial progress of all divisions," Fang Hong said, looking at Zhang Lidong.

"We're already doing it—commercial revenue has grown sharply, but it's limited by traffic, external competition, and differing characteristics of each division—we can't eliminate losses entirely," Zhang Lidong, who oversees business monetization, replied.

External competition means users can choose WeChat instead of any Chang'e product for advertising.

After all, their traffic is huge and their reach is broad.

The purpose of this meeting was for Fang Hong to urge Chang'e Technology's senior management to act without hesitation—to just do it.

Money will always be moved around somehow.

At least not everything is losing money—Today's Headline is profitable; other divisions are still in the red, but they still generate revenue, and it's growing—there's always some income.

As long as there's cash flow, we can shift funds around!

"Product innovation, tech investment, expansion pace—none can stop. Yiming, do you have anything to say?" Fang Hong looked at Zhang Yiming, the CEO.

Zhang Yiming looked around at the room: "Our situation remains severe; external threats persist. Every decision must be data-driven—to ensure product iteration and operational choices, we must not judge blindly, but rely on data as support."

He was especially superstitious about data—perhaps why he failed less; even when he failed, poor data meant immediate termination.

He just looked at data, heavily developed Big Data, and used Big Data to continuously refine the Recommendation Algorithm.

This differed from Fang Hong's approach—Fang Hong relied on vision; Zhang Yiming had real, tangible strength as support.

Of course, the two complemented each other: Fang Hong set the broad direction; Zhang Yiming handled specific decisions and deployments.

After Zhang Yiming explained his decision-making plan to the executives, Fang Hong said: "I plan to establish an Option Pool, putting in 100 million Option Stock—allocated by rank, from high to low, each person limited to 1,000 to 10,000 shares, with annual growth of 10% to 20% per person."

That is, higher positions can hold up to 10,000 shares; lower positions up to 1,000.

To exceed this limit, you must rely on tenure—each additional year of service grants an extra 10% to 20% in Option Stock; if you want more, just work hard at this company.

This is more reasonable—it better binds and motivates employees.

One hundred million Option Stock can benefit nearly all employees who've worked at Chang'e Technology for over a year, since Chang'e Technology has nearly 20,000 employees.

Of course, over time, 100 million shares won't be enough—company growth will bring new hires, and existing employees will gain more rights. But as always: sell and buy again—the price will be higher.

The cap of 10,000 shares per person exists because Chang'e Technology's growth potential is enormous—how enormous? Fang Hong remembered that in his past life, one share was worth $160.

Ten thousand shares equal $1.6 million—worth tens of millions; with tenure, one could achieve financial freedom directly. So he won't issue more—he'd rather distribute to more people, benefiting tens of thousands.

Yutu is just Yutu—it won't grow much. Chang'e Technology is the giant!

"Option Stock price is $1—100 million shares equal $100 million, 700 million RMB," Fang Hong said, and the room fell silent, everyone inhaling sharply.

Wasn't this effectively raising funds from employees? 100 million shares for 700 million RMB—this money would ease the financial strain of aggressive growth, making the funds truly alive.

Where did the Principal learn this? He's gotten smarter.

It was taught to him by Liu Tianxian's uncle, but he never dared use it, afraid of making mistakes.

One hundred million shares isn't much—if Chang'e Technology's total shares are currently one billion, Fang Hong has only put in 10% into the Option Pool.

The valuation is only one billion dollars, so even this is less than Tu Piaopiao's, hence the small amount taken out.

"If we repurchase like this, we'll need a higher price—at least 1.4 billion." Gao Zhun said.

"No problem. Set a one-year deadline. We'll decide after a year." Fang Hong was calm.

Not everyone sells their Option Stock; 60% of Yutu's employees sold theirs, meaning Yutu used employees' money in advance without having any cash.

That means he can use the money in the Option Pool for a year. If next year the company repurchases and few sell, it's as if the company spent nothing—still just seven hundred million.

This accounting is complicated, but it's not a loss for a company in its growth stage.

"I wonder if anyone will buy—$1 per share is still a significant expense." Gao Zhun worried about this, though she knew it was good for the company.

It motivates employees and brings in cash—nearly perfect—but there's an issue of confidence.

$1 per share is $10,000, about 70,000 yuan—even low-level staff have to pay several thousand, tens of thousands. Some with no confidence in the company won't buy.

Afraid the company might collapse, or performance might be poor.

"No problem. Just send an email. Don't force anyone who doesn't want to buy." Fang Hong spoke indifferently, full of confidence.

Someone will always follow him; he'll surely recover a few hundred million. Ten thousand shares isn't much for mid-level managers.

One thousand shares for frontline employees is just about one month's salary.

$1 is just symbolic.

Everyone fell silent. Many startups do this—it's not strange, they were just surprised for a moment.

Surprised that the Principal wanted to issue one hundred million shares at once, and raise seven hundred million at once.

"This Option Stock does not apply to partners. Partners are forbidden from buying Option Stock. Additionally, Zhang Nan, Gao Zhun, Yang Zhenyuan, Hua Wei, Liang Rubo—you five are now partners."

Fang Hong's words caused further surprise among those present.

Everyone turned to look at the five, their expressions filled with envy. The five, too, showed delight, trying to appear calm but unable to suppress their smiles, feeling deeply honored.

Becoming a partner means they are owners of Chang'e Technology, with decision-making power, access to Chang'e Technology shares, and profit dividends.

Zhang Yiming looked at his classmate Liang Rubo, slapped his shoulder. Liang Rubo smiled shyly, his eyes filled with encouragement and gratitude.

Liang Rubo is Zhang Yiming's assistant, responsible for product R&D, advertising systems, and user growth systems—he's also Technical Director of Douyin.

Zhang Nan doesn't handle technology; she only handles operations.

The five also exchanged glances, feeling a shared identity—they all recognized themselves as owners of this company.

Although Chang'e Technology is still developing, it's largely stable, supported by two blockbuster games.

Although Honor of Kings competes with Tencent's All People Super God, the mobile user base is large enough to fully support Chang'e Technology's current scale.

Currently, among the various divisions, Chang'e Video, Bilibili, Xiaohongshu, and Douyin require funding, but Today's Headlines generates profit.

Whether Qidian makes money doesn't matter—it's only so big; breaking even is enough. Fang Hong never intended to profit from it.

Qidian has already been taken over by Wu Wenfei, who assumed the role at the start of the year. Tencent didn't retain him; they saw little value in him—there are plenty of people who write web novels.

So this company has great potential.

"Alright, partners stay. Everyone else, meeting's over." Fang Hong clapped his hands, signaling the end of the meeting.

Non-partners stood up and left the conference room. Once everyone was gone, the partners held an internal meeting.

The meeting still focused on company restructuring: Zhang Nan takes over as President of Douyin, steps down as Operations Officer of Bilibili; Liang Rubo assumes Bilibili's Operations Officer role, with organizational adjustments and business integration.

Gao Zhun is appointed Chief Financial Officer!

Hua Wei still handles human resources, organizational and systemic establishment, and serves as Fang Hong's assistant, so he can directly access all personnel files.

He also acts as Fang Hong's internal spy—someone always watches what others do and reports back to him.

Yang Zhenyuan remains Technical President.

Zhang Lidong remains Vice Chairman, responsible for commercialization.

Zhang Yiming manages the company's overall strategic planning and technological development.

Everyone's equity shares differ: Zhang Lidong retains 2%; Zhang Yiming's equity increases from 3% to 5%, since he's done an excellent job—Fang Hong, aside from securing funds to keep Chang'e Technology afloat, hasn't managed anything else.

Of course, keeping a company of this scale afloat is no small feat.

Everyone else holds 0.5% of Chang'e Technology shares each, totaling 9.5% distributed.

Adding the unchanged Option Pool and unchanged partner shares, Fang Hong still holds the vast majority of shares, maintaining absolute control.

(End of Chapter)