readease Chapter 256 Acquisition of Valve
Chapter 256 Acquisition of Valve
Chapter 256 Acquisition of Valve
Sequoia Capital showed great respect by consulting Ernst immediately when Carlyle Capital joined the Silicon Valley investment fund.
At the same time, Ryan Ruiz, president of Leap Games, also learned of the news.
"I thought you would refuse," Ryan Ruiz said, his tone tinged with doubt.
Ernst put down his coffee cup upon hearing this. "Refuse? The business world isn't a street brawl where whoever has the strongest fist wins. Here, profit comes first. Only a fool would turn down money."
"I have no blood feud with Carlyle Capital. At most, we've had some friction before. Now they're bringing real money and can even protect YueDong Games. Why should I refuse?"
"Besides," Ernst leaned back on the sofa, his arms crossed over his chest, his tone slightly teasing, "they've already lowered their stance. If I keep holding onto it, I'll be being unreasonable. If word gets out, people will say Ernst has no class."
To be honest, Ernst really didn't expect that Carlyle Capital and Cockerill would back down before he even made a move.
However, Ernst didn't really have any objections to Carlyle Capital.
In the business world, there are no permanent enemies, only permanent interests.
As long as it benefits YueDong Games, sitting down with Carlyle Capital for coffee, a chat, or even a collaboration is not a big problem.
But Koklian was different. A cold glint flashed in Ernst's eyes. He had no intention of letting it go so easily; the real show was yet to come.
"So, this really was all your doing?" Ryan Ruiz finally asked the question that had been on his mind.
These past two days, rumors have been circulating wildly in Silicon Valley's investment circles. It's unclear where the leak originated, but it's said that Sequoia Capital was used as a pawn by Ernst.
Especially since yesterday afternoon, a large number of investment institutions have flocked to San Jose like sharks smelling blood, eager to know if there is an opportunity to participate in this opportunity to get on board. As a result, more and more people believe Ernst's theory that he set up a trap.
Ernst couldn't help but laugh and shook his head. "How could that be? I don't have that kind of ability."
This kind of thing can never be admitted. In business, it's common to set traps, but you have to keep appearances.
"This is nothing but Wall Street's attempt to sow discord, but nobody's a fool," Ernst said dismissively.
The news definitely came from Wall Street; it's obvious what happened.
He certainly wouldn't release such information, and neither would Sequoia Capital, since it would be tantamount to contradicting themselves. Who would be so foolish?
That leaves only Wall Street.
They did this for two reasons.
First, it was intended to sow discord between him and Sequoia Capital, and indeed, the entire Silicon Valley capital market. Second, it was meant to deter other investors and create hesitation.
They wanted to tell investors who were preparing to enter the market: "Look, Ernst even used Sequoia Capital to inflate the valuation, adding leverage to the investors. If you want to enter the market, you'd better think it over carefully, or you'll end up losing everything."
Ernst, unfortunately, had a terrible track record in this regard.
Whenever money is involved, he never backs down from his battles with Wall Street, always demanding exorbitant sums.
Otherwise, Wall Street wouldn't be ridiculed, with people calling Ernst some kind of super big spender.
He picked up his coffee, took a sip, and changed the subject, asking about something he was interested in: "I heard you're planning to acquire a newly established game company? And you offered seventy million US dollars right off the bat?"
Upon hearing this, Ryan Ruiz shook his head helplessly and said with a wry smile, "You already know? It seems the news travels really fast."
"How could I not know? I had just taken Wall Street for a fool, and not long after YueDong got the funding from them, the media started to expose that YueDong Games was stupid and rich and had become someone else's fool, and that they were a brainless company."
Some media outlets confidently asserted that Leap Games would be Ernst's first Waterloo, claiming the company was wasting investors' money, and some even suggested replacing President Ryan Ruiz.
Ernst's consistent principle was to trust those he employed and not to employ those he didn't trust.
Since we have chosen to trust, we will fully delegate authority and will not question things based on unfounded rumors.
The reason he brought this up today is that he happened to see the information about the acquired company while looking at data at YueDong Games Company these past two days, and he immediately became very interested.
Because the company's name is Valve, and it also has a well-known nickname: V社 (V Society).
The hit game Counter-Strike by YueDong Games was actually inspired by Ernst's ideas. Even YueDong Games' current gaming platform, to some extent, follows the path of Valve's Steam platform.
Ernst never imagined that, after all the twists and turns, his own company would end up acquiring this company; it was as if fate had brought them together.
"Tell me, what are your thoughts?" Ernst asked curiously.
He was curious to know why Ryan Ruiz would be interested in a newly established game company that hadn't yet released a mature product, and even be willing to offer a high price of 70 million US dollars.
Ryan Ruiz gathered his thoughts and slowly said, "Actually, my initial idea was very simple: to consolidate Leap Games' dominant position in the FPS game field. There are more and more companies making FPS games on the market now. Although our Counter-Strike and Call of Duty have always occupied the top positions, we can't let our guard down."
"I first noticed Valve at this year's E3 gaming expo. I wonder if you watched that expo?"
Ernst nodded. "I've heard about it."
E3, or Electronic Entertainment Expo, is organized by the Entertainment Software Association (ESA) in the United States. It brings together many game developers, video game publishers, and hardware and accessory manufacturers, primarily showcasing their products to retailers and the media.
When Ryan Ruiz realized Ernst knew, he didn't explain further: "This exhibition has been held since 1995, and its reputation has grown over the years. It has become a global gaming industry event, attracting the attention of many industry professionals and players every year."
"At this year's E3 gaming expo, Valve showcased a first-person shooter game they developed called Half-Life. But to be honest, compared to our Counter-Strike and Call of Duty, this game is indeed somewhat rudimentary, and it seems more like an imitation of classic games like Quake and Doom."
"That's why almost no game publishers were willing to partner with Valve to publish this game at E3."
"Everyone thought that with YueDong Games involved, a rough game like Half-Life would never gain market recognition and would be difficult to succeed. What's more, what they showed at the time was only a half-finished product, only a portion of the game content was shown, and even when it would be officially launched and available to players was still unknown."
"Then why were you still willing to acquire them?" Ernst pressed.
"Because I think that regardless of whether Half-Life is ultimately successful or not, it will be a good thing for Leap Games."
Ryan Ruiz explained, "If Half-Life doesn't do well, or even flops, then we at Leap Games will be in the FPS..."
"The status of the field will not be affected; it remains the undisputed uncrowned king."
"But if Half-Life becomes an unexpected hit, we won't lose out. It will definitely bring a lot of users and revenue to the platform."
At this point, Ryan Ruiz changed the subject, "However, after I learned more about the company, my thoughts changed. I found that this game company was very creative and very different from other game companies, which was the main reason why I later decided to acquire them."
"Oh? How is it creative?" Ernst suddenly became interested, as his understanding of Valve mostly came from his memories of later generations.
"Because this company not only recruits professional game developers, but also a large number of mod creators," Ryan Ruiz said.
"Enrich the game content," Ernst pointed out incisively.
What is a MOD?
They are essentially game modifiers, those game enthusiasts who create entirely new gaming experiences by modifying the original content of a game.
Generally speaking, because these mods are secondary creations, they often add more playability than the original content, and can even breathe new life into an old game.
Valve's approach is essentially the same as YueDong Games' strategy of supporting small and medium-sized game studios.
However, Leap Games has abundant funds and is not short of money, so it can provide a good creative environment for talented developers with ideas, allowing them to develop a brand new game from scratch. This is the overall strategic plan.
Valve, on the other hand, recruits modders and uses their creativity and ideas to enrich the content of its existing games, focusing more on in-depth development of individual games.
But in any case, in an era when most game companies were still developing their own games behind closed doors, Valve's idea was very ahead of its time.
Given their limited funds, it's no wonder Valve achieved such great success by being so unconventional and breaking with industry traditions.
"So how's the acquisition going?" Ernst asked, a hint of anticipation in his voice.
He has already begun to imagine what kind of position YueDong Games will have in the FPS and gaming platform fields after acquiring Valve.
Ryan Ruiz nodded first, then shook his head, a complex expression on his face. "They don't seem to mind being acquired. After all, our YueDong Games is one of the industry leaders now, so being acquired by us would be a good option for them."
"However, when they initially proposed an equity acquisition, I immediately refused."
Ernst nodded upon hearing this; that was correct.
Even if he knew this was the future Valve, he would never agree to the equity acquisition.
What is the current status of YueDong Games? It is one of the leading companies in the gaming industry, holding blockbuster games such as Counter-Strike and Call of Duty, as well as a huge user base on its gaming platform.
And Valve? It's just a small company that was founded not long ago and doesn't even have a single mature game yet.
If this sets a precedent for equity acquisitions, won't other game studios acquired by YueDong follow suit and offer all sorts of outrageous conditions?
"Later I raised my offer, and they started to soften their stance. However, we still have some disagreements, mainly concerning the percentage of shares to be acquired and the company's future autonomy."
"Valve's two founders have quite the ambitions," Ernst remarked with interest.
"That's for sure," Ryan Ruiz said helplessly. "They want to retain most of the company's shares, but they also want to have autonomy over the company. They want to have all the benefits."
"I told them they only had two choices: either they relinquished control of the company, in which case we could retain their independent R&D rights and allow them to continue developing games according to their own ideas; or the two of them together would remain the majority shareholders of the company, but decision-making power would have to be handed over, and YueDong Games would take the lead in how the company develops games in the future."
Ryan Ruiz smiled slightly. "However, as I raised the offer to $70 million, Valve's two founders have now had some disagreements. I estimate that good news will come soon. After all, a valuation of $70 million is astronomical for a small company that has only been established for a short time, and they shouldn't miss this opportunity."
Ernst nodded in satisfaction after hearing this.
Half-Life isn't the point; Valve's creativity and talent are what matter most.
Rather than saying that the $70 million valuation represents the acquisition of the company itself, it's more accurate to say that it represents the acquisition of the future ideas of these people. This is also why YueDong didn't acquire it outright.
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