Chapter 26: Two Fish and Five Loaves Feed Five Thousand People

"Marx once said that when studying economic issues, one must start from the facts of the current national economy. The twenty years of reform and opening up were achieved by seeking truth from facts.

Whether the macroeconomy is good or bad is merely a backdrop. Even if the backdrop is poor, there are still enterprises that perform well. Everyone here must manage their own territory well; only then can there be hope for the fundamental growth of our province's economy.

Enough has been said about the macroeconomy. I turned down four meetings to be here with you today, and I cut my opening remarks to three minutes, not to listen to more macro theory. I hope you will talk about practical matters and show us how the government can serve the business community so that we can take action and work together to improve the economy..."

Secretary Qi’s speaking pace was measured, his articulation clear; his tone and expression were neutral, revealing neither pleasure nor anger.

However, everyone present knew that he was dissatisfied with Professor Wu’s platitudes, viewing them as a waste of time. Out of respect for the Changjiang Scholar’s reputation, they simply didn't want to make things too awkward.

There is a type of scholar who is invincible in rhetoric but incapable in practice. It is as if, once the macroeconomic situation turns poor, entrepreneurs should just sit back and wait for death.

Gu Cheng, who had not previously known Secretary Qi, had planned to find an opportunity to offer his suggestions privately after the meeting. Seeing that the official was quite pragmatic, he no longer feared offending anyone.

After Secretary Qi finished speaking, the room fell into a brief silence of appreciation. As no one else stepped up, Gu Cheng stood up and spoke directly: "I think Secretary Qi’s remark that 'the macroeconomy is just a backdrop' is excellent. Buffett also said that even when the macro situation is at its worst, there are those who can make money. For instance, our Legendary Entertainment has been working hard to turn a profit right through the internet winter. I think..."

"Sir, please wait a moment. You haven't introduced yourself yet." The female secretary chairing the meeting, caught off guard by Gu Cheng standing up and speaking directly, hurriedly interrupted to introduce him: "This is Mr. Gu Cheng of Legendary Entertainment..."

Gu Cheng had never attended such government meetings before and was indeed unfamiliar with the protocol. Furthermore, in such a setting, where the Secretary quoted Marx, his own citation of Buffett seemed jarringly out of place. The female secretary was visibly shaken.

Fortunately, Secretary Qi waved his hand to stop her from "educating" him further and signaled for Gu Cheng to continue.

"I apologize. I have never attended this kind of meeting and am not familiar with the procedures. I hope everyone will bear with me." Gu Cheng offered a polite remark before returning to his point. "I have gained some insight into the internet industry within our province. Inspired by Secretary Qi just now, I have become more convinced that the development of internet enterprises should not rely too heavily on the macroeconomic climate.

A poor macro situation simply means difficulty in financing, which makes it hard for companies that chase user volume without profit. The essence of business is to make money; the madness of two or three years ago was the anomaly. Many investors couldn't find projects, yet were anxious to enter the market and inflate values, so they invested blindly.

When entrepreneurs themselves couldn't define a 'profit model'—only claiming to have traffic and users—venture capitalists dared to throw money at them. That was venture capital inviting its own destruction. The winter is simply helping us separate the wheat from the chaff, clearing out the garbage and making room for serious, normal enterprises to grow.

There are now more and more such serious internet enterprises, so the winter will pass soon; it is absolutely not the endless ordeal Professor Wu describes. How quickly it passes depends on how many internet companies realize this simple truth and map out a concrete path to profitability."

Gu Cheng’s words were sharp and assertive. Had he not been mindful of the occasion, he might have blurted out, "Any enterprise not aimed at making a profit is just fooling around."

Secretary Qi was quite satisfied with these remarks. The macro situation is merely a backdrop; individual progress can push and accelerate that backdrop. Now, this meeting had real meaning!

Unfortunately, Professor Wu could no longer sit still. To be slapped in the face by an uneducated businessman? He could not tolerate this.

While Gu Cheng was speaking, the professor had inquired about his background from the secretary. Upon hearing that Gu Cheng was a "wild card" who dropped out of high school to start his own business, Professor Wu felt his ego inflate. He hadn’t even finished college? And yet he wanted to compete with a Changjiang Scholar, a specialist in macroeconomics, over who was better suited for a government think tank? This was clearly a fool delivering himself to be crushed.

"Comrade Gu, you keep saying that 'as more internet companies find reasonable profit models, the internet winter will pass quickly.' Then I would like to ask, besides your own company, how many internet companies in the country or our province have made such adjustments and plans? How long will it take to put them into practice? Or do you rely entirely on selling online games to poison the mental health of our youth and hinder the nation's spiritual civilization?"

Professor Wu’s question was cunning, as he knew to exclude Gu Cheng’s profitable case. Moreover, he immediately took the moral high ground, labeling the profit model of online games as "spiritual garbage" and "electronic drugs."

Gu Cheng smiled: "I never said that selling online games is the only way to make a profit."

Professor Wu further blocked Gu Cheng’s retreat: "Selling audio-visual products or vulgar content—let's count those in too. You don't think you can save the internet’s macroeconomy just by relying on these, do you?"

Gu Cheng maintained his harmless demeanor: "I didn't say the main profit model is selling these either. Professor Wu, if I may, there is a saying: 'In learning, there is no order of age; in art, there is a specialty.' Regarding insights into macroeconomics, I deeply admire you, but you are truly not a professional when it comes to the internet. Whether you are a Changjiang Scholar or a high school student, the era in which you were educated did not yet have the internet; your imagination is simply not enough to grasp it."

"You..." Professor Wu’s face turned livid. If it weren't for the fact that Secretary Qi was present, he would have fiercely reprimanded Gu Cheng. Such an uncultured boor was truly an insult to his dignity!

Gu Cheng did not care about the other’s prejudice and continued shamelessly: "In the internet industry, the most straightforward profit model at the beginning was, of course, advertising. Because the traditional industry most easily replaced by internet technology is traditional media—and the largest source of profit for traditional media is advertising. As long as internet companies can establish solid sales relationships for advertising fees and form stable cash flows, the internet winter can end immediately. Most enterprises will be able to emerge and regain the trust of the capital market."

This was a perspective Professor Wu had never considered, as he had never studied the profit logic of internet companies. However, he was too embarrassed to ask.

Fortunately, Secretary Qi stepped in: "Comrade Gu, according to you, were the internet companies of two years ago planning their prospects based on this logic? If so, why did the bubble burst?"

"I think it was because market trust was broken. It’s like a television station: even if it only has 1 million viewers today, as long as it can prove an 'expected viewership of 10 million in five years and 30 million in ten years,' venture capitalists will temporarily value it as if it had 5 million or 8 million viewers to secure a stake.

But if it is exposed that the station’s data is fraudulent—that it doesn't have 1 million, but only 100,000 or 200,000, and the growth potential is not 10 million but only 1 million—then venture capital will panic and withdraw. Most internet companies at that time suffered a crisis of trust; the entire investment community grew suspicious of the future growth of almost every company in the industry, and thus, the internet winter erupted."

Secretary Qi’s narrowed eyes squinted even tighter: "Why did this trust collapse collectively and so suddenly?"

"Because it was already overvalued, and there was a lie that misled all of Wall Street into overestimating the industry's traffic, which was eventually punctured."

Gu Cheng wanted to explain further, but to his surprise, Secretary Qi seemed quite well-read, muttering to himself with his eyes half-closed: "What you are referring to must be the craze of 'fake active user counts'."

Gu Cheng was stunned, then immediately praised him: "Exactly. Secretary Qi, you are very knowledgeable."

Secretary Qi waved his hand and said with a sense of pity: "Trust is like the boy who cried wolf; it is easy to destroy but difficult to build. Even if we rebuild it, it must be done one internet company at a time. From this perspective, it is not unfair for the winter to last another three to five years."

There are ten birds on a tree; shoot one, and zero remain. The one who pulls the trigger is the internet company that lost credibility. The one shot dead is the venture capitalist who invested in that company. The remaining nine are the venture capitalists who invested in the peers of that internet company. When they see one peer die, they all flee in fear.

To bring the nine birds back, one needs nine portions of feed. But to scare them all away, only one bullet is needed.

The effort is disproportionate. This principle, Secretary Qi understood, Professor Wu understood, and everyone present understood. After all, those who could attend this meeting were certainly not the shortsighted.

No one felt that Gu Cheng finding a business profit model was equivalent to finding a solution. Because there is no such magician in the world who can scatter a single portion of feed and bring all nine birds back, while keeping them there. Do you think this is a miracle of Jesus from the Bible? Feeding five thousand people with two fish and five loaves?

However, Gu Cheng proceeded to take up the thread of conversation.

"I have a way to rebuild this trust." Gu Cheng paused, observing the reactions of the crowd. "We don't need to wait for every internet advertising operator in the world to rebuild their credit. We only need to rebuild one central intermediary platform that provides guarantees for all internet advertisers, and then establish the credibility of this single platform."

A central intermediary platform for all human internet advertising?

Everyone, including Secretary Qi and Professor Wu, was stunned. This kid was surely full of hot air! How many internet companies and advertising operators are there in the world? To dare to claim that one could establish a single company to unite the industry and act as the ultimate intermediary and credit guarantor for all mankind? Are you Jesus, or the Savior?

Many people had already started laughing, unable to restrain themselves even with Secretary Qi present. Youthful arrogance, indeed!

Only Secretary Qi remained composed enough to ask calmly: "How do you intend to do this?"

"Secretary Qi, I cannot tell you how right now. Give me half a month, or a month at most, and I will present an executable plan for you to review. However, I cannot guarantee that the primary beneficiary of this plan will be the internet companies of this province—I must seek the help of some peers in the capital.

But I only have one request—if I show you a feasible plan and you approve it, would you be willing to help me lobby some people so they believe that 'the internet winter will pass soon and now is the time to invest in internet infrastructure upgrades'?"

Secretary Qi cautiously asked: "Whom do you wish to convince?"

Gu Cheng smiled effortlessly: "The leadership of China Unicom."

"Very well, but I want to know why you are doing this."

"I will tell you that after I have proven it. It is not that I am being secretive; it is just difficult to explain in a few words."

"Fine. Regardless, I, Qi, have a clear conscience. Since it is for the sake of the country and seeking truth from facts, why should I not do it?"

A group of entrepreneurs and scholars looked at Gu Cheng as if he were an idiot. So you want to show off, kid? Let’s see how you talk your way out of this later!