Kelpen Huaying invested heavily in Amazon as early as June this year, when they valued Amazon at $60 million.

Netflix's valuation is more than double that of Amazon. In addition to the impact of large-scale marketing, there are several other reasons.

First, compared with the same single category of books, Netflix has a higher willingness to pay from entertainment content.

Second, the unique subscription model created by Netflix is ​​far more competitive than Amazon's business model, and Netflix has the huge advantage of exclusive track.

You should know that videotape rental is a huge market of tens of billions of dollars in North America. Although there is already an industry overlord like Blockbuster, Netflix has taken a different approach and chose a differentiated competition method. Starting from the newly born DVD standard, it successfully broke the barriers created by the starter. Even if Blockbuster wants to enter the market after realizing it, it is difficult to say what advantage it has in the business model.

In front of Netflix, Blockbuster's original advantage became a huge burden for them. If they wanted to migrate formats, they would have to pay billions of dollars.

Blockbuster's only advantage is its huge capital, which is exactly what capital can give to Netflix.

On the morning of October 6, Mark Randolph officially signed an investment agreement on behalf of Netflix and Kelpeng Huaying partner John Dull.

This legendary venture capitalist in Silicon Valley has invested in many well-known companies such as Compaq, Symantec, and Caijie since the 1970s.

Including Netscape, which was just listed this year, was also invested by him.

Netflix has another condition to accept Kelpen Huaying's investment, and Mark Randolph expressed his hope that John Dull could serve as a director of Netflix.

For the company's smooth investment, John Dull agreed to the request.

John Duer, a well-known investor, blessed Netflix's reputation as Netflix raised $10 million more.

Long before the investment agreement was signed, John Duer also made his own request, hoping to meet Netflix's early investors.

The boss behind Netflix is ​​Tao Yushu. They already knew about this when Kaipeng Huaying did the due diligence.

The tycoon in Hollywood, who is a powerful film industry, has turned into a boss of an Internet company like Netflix. Even if John Dur is knowledgeable, he can't help but become a little curious about Tao Yushu.

The meeting place between the two parties was in Buck's restaurant, and the atmosphere after the meeting was pleasant.

Tao Yushu talked about her views on Netflix's future development. Unlike most of the Internet companies that are currently in a state of exploration, Netflix has had its own very clear path plan since its inception.

It was also this that made John Duer finally decide on his investment in Netflix.

With the investment of KPeng Huaying, Netflix received a financing of US$20 million, with extremely sufficient ammunition.

The outside world thought that with Netflix's radical style, it would definitely make more radical investment decisions this time.

Unexpectedly, after getting the investment, Netflix not only did not make any big moves, but instead suspended the "Netflix Please Watch Movies" activity that had been going on for a month.

The outside world was confused about Netflix's actions, but they were extremely clear inside.

Netflix has achieved explosive growth in the past month.

The number of orders increased by more than 8,000% from the original monthly orders.

DVD sales alone reached US$520,000, with more than 60,000 subscribers, and the annual subscription users reached 24,000.

Based on this sales and user scale, even if Netflix's current business stagnates, its annual revenue is expected to reach US$20 million.

This is undoubtedly a miracle for a company that has been established less than a year and has been online for less than four months.

You should know that before Netflix appeared, Amazon, the most popular online bookstore in the United States, estimated that its annual revenue would be only $5 million.

Of course, for Internet companies, the early revenue scale is not decisive, and capital always looks at future potential.

What Netflix is ​​truly valued by investors is that it has found an effective business model between the Internet and the real economy, and the prospects of this business model look extremely wonderful.

According to Kelpeng Huaying's analysis, the next five years will be the five years of rapid growth in the DVD industry. With the vigorous development of the Internet, Netflix's subscription users are likely to reach the level of tens of millions.

By then, Netflix's subscription model alone would be enough to become an industry giant with revenue of over one billion US dollars, not to mention other possibilities that its online sales could bring.

However, Netflix's rapid development over the past period has not come without cost. In just one month, the company burned nearly 12 million US dollars.

Many people think that the most expensive thing in Netflix's activities is to give away DVD players, but in fact, the purchase cost of DVD players only accounts for a small part of the 12 million US dollars, and Netflix's expenses are spent on purchasing DVD video tapes.

The scale of subscription users has skyrocketed, and behind each user is the purchase cost of at least 6 DVD video tapes. Netflix alone spent $7 million.

Fortunately, these video tapes can be circulated repeatedly, and the high reuse rate of content will dilute marginal costs as the user scale continues to grow.

As soon as the event stopped, the outside world thought Netflix could not withstand the huge financial pressure.

In fact, the $12 million was burned out in real money, but the subscription fee collected in advance made up for nearly 50%.

With the financing of KPG Huaying, Netflix has sufficient funds now.

The reason why they stopped their activities was that their business grew too fast and they had to pause and digest.

Recruitment, server expansion, procurement optimization, and the newly built warehouse, the originally empty office was suddenly crowded with people in more than a month. The entire company was like boiling water in an iron pot, and there was no time to relax for a moment.

Mark Randolph has only managed a company of dozens of people. Netflix's rapid development is undoubtedly a huge test for him and his several management teams.

Fortunately, after several months of running-in, everything seems to be in order and there are no major problems.

"Baseda started purchasing a large number of DVD video tapes last month, and it seems that it can't help it. I heard that they also plan to establish an online rental model, but there seems to be differences between the board of directors and management, and the progress is not going smoothly."

At Netflix's latest internal meeting, Tao Yushu exchanged recent news about competitors with several senior executives of the company.

Lin's Pictures has gained a foothold in Hollywood in the past two years and has rich connections. It is not difficult to understand Blockbuster's trends.

Netflix's rapid development was unexpected, as if Monkey King jumped out of a stone, which startled the industry giant Blockbuster.

But they soon calmed down. After Blockbuster's analysis, they believed that no matter how fast Netflix develops, it would be subject to the popularization of Internet and DVD standards.

Within a few years when it is visible to the naked eye, it will not be possible to pose any threat to Blockbuster.

However, Blockbuster did not take the emergence of new competitors completely lightly, but made targeted arrangements.

However, the disadvantages of large companies gradually emerged at this time, and it was difficult for the ship to turn around.

The original business is continuously creating huge wealth for the company, but instead becoming their transformation, making it difficult for them to make a decision to make big moves and can only change directions through small-scale attempts.

But such a level of action obviously cannot have any impact on Netflix, but it may cause them to fall into a strategic blur and make it difficult to see the road ahead.

"There is also good news that Global will announce support for DVD standards tomorrow!"

As soon as Tao Yushu finished speaking, applause suddenly erupted in the conference room.

Netflix has been online for more than 5 months, and the data proves that movie content is the top priority of the DVD industry, accounting for twice the proportion of music and games.

Universal is one of Hollywood's most important film companies. Their announcement of supporting DVD standards will inevitably accelerate the development of the DVD standards camp.

Since May, Sony Pictures, Lin's Pictures, MGM Pictures, and New Line Pictures jointly announced their support for DVD standards, the rise of the DVD camp in Europe and the United States has been amazingly fast.

There are more than ten movies including Polykin, LIVEENTERTAINMENT, SIMTAR, ELITE, Pioneer Entertainment—.

Well-known companies in the music and gaming fields have successively announced their support for DVD standards.

Now that Universal joins, DVDs are catching up with VHS faster, and the situation is very good.

Today's meeting lasted for nearly two hours. In addition to sharing information, Tao Yushu's main energy was to develop the company's strategy in the next six months. Everyone was full of confidence after the meeting.

Tao Yushu kept Mark Randolph and Reed Hastings. For the smooth development of Netflix, she spent more than half a year in the United States.

Now that the development of the website is basically on the right track, she also has to manage several other companies under her.

After explaining to the two, Tao Yushu left the company.

When she returned to Woodside's house, she saw Tao Yumo sitting on the sofa in the living room, watching the movie while gnawing on the apple.

"When did it arrive?"

"Arrived at noon."

Tao Yumo came to the United States for two things this time, one is the release of "Toy Story 2" and the other is the launch of Pixar animation.

It has been almost two years since the release of Toy Story 1. Dituni has made many trips to Pixar during this period. They even asked Toy Story 2 to be released on video.

Tao Yumo naturally would not compromise on Disney's various unreasonable demands.

She decided to put Toy Story 2 in Christmas, which was quite a bit of a storm.

She talked about Pixar for a while and complained about Tao Yushu's exploitation of her.

In the past six months, she has been very tired.

"Didn't you always think about planning to usurp the throne? You can't stand it after only a few days of control?" Tao Yushu said.

"It's not that I can't stand it. I'm not the boss of the company, so how can I command the arrogant soldiers and generals under your command?"

"Oh, this is not like what you can say."

The sisters said a few jokes, and Tao Yumo said seriously: "To be honest, the shrinking trend of the Hong Kong film market has become more and more obvious in the past two years. You have transferred the battlefield well. There is no need to invest in the set in Tseung Kwan O, right?"

"Hong Kong movies are desolate and are also one of the production centers. Besides, there is Star TV, so the projects that should be invested in need."

In recent years, there have been rumors that the Hong Kong government intends to sell the land of No. 67 Film Studio in Tseung Kwan O, which happened to be lacking a large-scale shooting base in Hong Kong.

Tao Yushu has been staring at this matter, and there has been some movement in the land in the second half of this year.

The two sisters chatted, and Tao Yushu asked, "Where is your brother-in-law?"

"Go to the library."

Tao Yushu nodded. Lin Chaoyang has been preparing for the new book in the past six months. The content types of the new book this time are very different from those in the past. Lin Chaoyang has consulted a lot of information.

Speaking of this, Tao Yushu felt a little guilty. How could there be so many Chinese materials in the United States for him to check!

In order to accompany her for the past six months, her husband has been staying in the United States, delaying his creations.

At around 7 o'clock in the evening, Tao Yumo went to bed early after the jet lag.
To be continued...