Chapter 309: Li the Blade

"Dongling Gao Ke and Silver Mink have always regarded Logitech as an ally!"

Li Dongling looked at Daniel and said, "However, as allies, we should cooperate in a fair and just manner; only such an alliance can be sustained!"

Daniel took a deep breath. He knew that if he wanted to get the optical mouse patent license from Dongling Gao Ke today, he wouldn't be able to get away without losing a layer of skin.

"That goes without saying!" Daniel forced a smile, hoping only that Li Dongling's blade would cut a little lighter.

After Li Dongling and Ren Yuefeng exchanged a glance, he said to Daniel, "The Silver Mink optical mouse patent can be licensed to Logitech, but Logitech must also show corresponding sincerity!"

After saying this, Li Dongling handed the role of playing the "bad cop" to Ren Yuefeng, who had just been "furious," and the latter said to Daniel:

"Dongling Gao Ke can license all optical mouse patents and technologies, including the optical engine, to Logitech.

But for every mouse Logitech sells that uses a set of Silver Mink patents, they must pay a 7% patent fee. Furthermore, the mouse, optical sensor, and digital signal processor must all be purchased exclusively from Silver Mink!" Ren Yuefeng stated this exorbitant demand without batting an eye.

Hearing this blatant attempt to fleece Logitech, even though he had been mentally prepared to be bled dry, Daniel still almost couldn't help but jump up.

"This is impossible!"

"With a profit split like this, what would be left for Logitech?" Daniel shouted, his face flushed red.

Logitech had long since dismantled the Silver Mink optical mouse and knew that the most important component of an optical mouse was the optical sensor; for a mouse, it was like a human eye.

Whoever developed the most advanced optical sensor held the throat of the mouse industry. Daniel wasn't sure if this thing was easy to develop.

But right now, in the global mouse industry, the only commercially viable optical sensor was the one equipped in the Silver Mink optical mouse, which was jointly developed by Silver Mink, the Dongling Gao Ke Technology Department, the Hanxi Joint Laboratory, and Dongxin Semiconductor.

Even if there were a sensor capable of replacing the Silver Mink one, it would still take time to develop.

However, buying an optical sensor from Silver Mink and being forced to use only Silver Mink's sensor were two completely different things.

Once they were forced to buy optical sensors only from Silver Mink, Logitech would be unable to develop the core component of optical mice—the optical sensor—and would be at the mercy of Dongling Gao Ke from then on.

In his past life, there were only three companies in the world that could produce mouse optical sensors: Agilent, Microsoft, and Logitech. But Agilent had the best technology; Microsoft and Logitech could also produce them, but mainly for their own use, while Agilent was a supplier, selling to mouse brands all over the world.

And that 7% patent fee was truly terrifying. After deducting production, labor, transportation, and promotional costs, how much profit could Logitech possibly have left from selling a single mouse!

It wasn't yet the era where a high-end mouse could sell for thousands of yuan. Back then, mouse profits were high, and some top-tier mice could reach profit margins of 400%.

As for Logitech now, a mouse sold for at most a dozen dollars, or a few dozen dollars for the expensive ones. Logitech's profit really wasn't high; at most, the retail price couldn't exceed one hundred dollars, with a profit margin of around 20%.

Now Silver Mink was coming in and taking 7% right off the top, plus the cost of buying the optical sensors—Logitech would practically be working for free for Silver Mink.

Even Qualcomm in his past life only charged 5% of the total device price as a patent fee for a mobile phone. For a 2,000-yuan phone, they had to pay Qualcomm 100 yuan in patent fees. Of course, this didn't include the chip costs; if they purchased chips from Qualcomm, the fees would be endless.

"Logitech cannot accept these terms. No mouse manufacturer could accept such a partnership!" Daniel shook his head like a rattle-drum.

Daniel's attitude was extremely firm; he knew that if he agreed to these terms, Logitech would never be able to recover.

Li Dongling glanced at Daniel and said to him, "In fact, the terms of cooperation proposed by those manufacturers coming to the mainland from Europe, America, Japan, and other places are even harsher than Silver Mink's terms!"

Daniel was momentarily speechless. Logitech was preparing to enter the domestic market and build a factory, planning to establish a Logitech mouse production base in Gusu because production costs in Europe were too high, and Logitech couldn't afford them.

Regarding the domestic market, Logitech had conducted research, and he knew that Li Dongling was telling the truth. When those overseas companies cooperated with domestic companies, the terms they proposed were almost ten times harsher than this. Domestic manufacturers were practically working for them for free.

"Li, but Logitech really cannot accept these terms!" Daniel refused to budge.

Hearing this, Li Dongling put on a pained expression, while Ren Yuefeng kept a straight face. By this point, Daniel had lost hope for this trip to Hanxi.

Daniel felt that Logitech now had only two paths: either find a way to bypass Silver Mink's optical mouse patent wall, or ignore it and directly copy it. This would destroy Logitech's reputation and lead to endless lawsuits with Silver Mink.

Neither path was easy for Logitech, and it meant that Logitech would face huge changes, and even its IPO might be affected!

One had to know that Daniel was preparing to list Logitech on both the Swiss Exchange and the NASDAQ. But if they were mired in lawsuits, let alone listing in two places, whether they could even list at all was an unknown.

At the thought of the cooked duck flying away, the wealth freedom that was within reach—private jets, yachts, private islands, and luxury mansions—all disappearing, Daniel's heart ached uncontrollably, as if pricked by needles!

"President Daniel, Dongling Gao Ke has another proposal you might want to consider!"

Li Dongling's sudden remark left Daniel momentarily stunned.

"20% of Logitech's equity. Silver Mink wants 20% of Logitech's company equity!"

Li Dongling said directly, "Dongling Gao Ke can use the optical mouse patents and technologies held by Silver Mink to invest in Logitech. Once the investment is made, Silver Mink will no longer collect any patent fees from Logitech, and Logitech can use Silver Mink's mouse patents for free!

Of course, the optical engine and optical sensors must be purchased from Silver Mink. Furthermore, in the future, Silver Mink can establish a laboratory with Logitech to jointly develop new types of mice, optical lenses, optical sensors, and other products!"

People often only hold the greatest expectations for even the most insignificant hope after experiencing disappointment.

If Li Dongling had bluntly asked for 20% of Logitech's equity at the beginning, Daniel probably wouldn't have been willing and might have just walked away.

But after the talks were about to collapse, Li Dongling threw out this proposal, and Daniel suddenly felt that it didn't seem so excessive...

"20% is impossible. Right now, the equity held by myself, Pakosta, and Marini combined is less than 65%. It's impossible to give Silver Mink such high equity!" Daniel said after deliberating for a long time.

Over the years, in order to secure orders, Logitech had given up quite a bit of equity to investment institutions and computer manufacturers. Although he and Marini, the two founders of Logitech, still held controlling interest, they still had to go public and would need to disperse a lot of equity for financing. At that point, control over the Logitech board would become somewhat delicate.

"19%!"

"14% at most."

After Li Dongling and Daniel bargained some more, "18% equity. Additionally, Silver Mink can pay an extra 40 million USD to you, Pakosta, and Marini, and the voting rights for this equity will be delegated to you, Daniel!

If Logitech doesn't agree to these terms, I don't think any mouse manufacturer would refuse. If Logitech doesn't agree, Silver Mink will have no choice but to find other partners!"

After Daniel calculated in his head, he stood up and reached out to Li Dongling, "Deal!"

The terms proposed by Li Dongling were certainly not the best choice for Logitech, but they weren't the worst either. Logitech needed to get the optical mouse patents and technology to secure orders quickly; otherwise, not only would they lose the market, but their IPO might also run into trouble.

For this, paying a corresponding price was acceptable for Logitech. Was the equity given to Silver Mink more important, or was losing orders worth hundreds of millions or over a billion dollars, or even the potential loss from a failed IPO, more important?

Choosing the lesser of two evils, Daniel made the best choice possible right now. Even if it looked like a bad deal later, that would be hindsight. Right now, Daniel knew that doing this was the best for both him and Logitech!

For Dongling Gao Ke, 18% of Logitech's equity certainly wasn't safe, but when Logitech went public later, the equity would be even more dispersed. As long as Silver Mink could get around 25% of the equity, they could control Logitech!

By then, Logitech would also become one of the masks for Silver Mink and Dongling Gao Ke overseas. It was hard to say when this mask would come in handy, but having it was crucial!

"If we can reach the same partnership with other mouse manufacturers as we did with Logitech, then in the next few years, relying on our own shipment volume, plus the optical mouse patents, and supplying optical sensors and other components to other mouse manufacturers, Silver Mink..."

"... is expected to earn over 150 million USD annually, and possibly even over 200 million USD. Of course, this is under ideal conditions!"

Ren Yuefeng said to Li Dongling, his words filled with uncontrollable excitement.

Silver Mink was the first project since the establishment of Dongling Gao Ke. For Ren Yuefeng and the first batch of people to join Dongling Gao Ke, the Silver Mink project was a special existence.

Being able to earn over 100 million USD a year from a relatively "niche" product project—whether in the country or even overseas, Silver Mink was already at the ceiling.

For Dongling Gao Ke and Silver Mink, having this funding was enough for the Dongling Gao Ke Silver Mink project's R&D team to continuously develop higher-performance mice.

When Daniel walked out of the Dongling Gao Ke headquarters, he felt the heavy stone on his heart had been lifted, making his steps feel a bit lighter. In front of the Dongling Gao Ke headquarters, Daniel brushed past another man. Daniel instinctively stopped and looked back. He smelled a familiar scent on the other person; Daniel was certain that the other person was also a professional manager.

Just watching the other person's hurried steps, Daniel shook his head. He didn't know whose "leek" was delivering themselves to Dongling Gao Ke, waiting to be sliced. In any case, Daniel had experienced it, and Li Dongling's blade was truly painful...

(End of chapter) ===== CHAPTER 310 =====