From Xunlei to Xunlei: Three Ups and Downs of Chen Lei

This is a situation that no one has thought of. Chen Lei was sued by his former owner for corruption six years after joining Xunlei. On October 8, Xunlei issued an announcement stating that the Shenzhen Municipal Public Security Bureau had initiated investigations into the company’s former CEO Chen Lei and others suspected of embezzlement. Lei Jun was once Chen Lei’s idol. In 2014, when Lei Jun invited him to join Xunlei, Chen Lei, who was already Tencent Cloud’s top leader, chose to accept it. But what he didn’t expect was that the drama of “the nobles help each other” was sung to the end, but it was a runaway.

From outsiders to those in power

Xunlei, founded by Zou Shenglong in 2003, is a common memory of a generation of Internet users. Its software installed capacity was once second only to Tencent QQ. Xunlei Kankan, launched in 2007, was once the largest installed audio-visual software in China. From downloading to playing, it solved the user’s pain points at the time.

Looking back at a set of data, in fiscal 2013, Xunlei’s operating income reached 175 million US dollars, net profit was 10.66 million US dollars, and monthly activity reached 300 million. The cumulative monthly activity of its products was close to 800 million. Such high-quality financial data made Xunlei only one step away from listing. In April 2014, Xiaomi Group, Kingsoft, Morningside Capital and IDG Capital jointly participated in Xunlei’s US$310 million E round of financing. Soon after, Xunlei successfully entered the market. Starck went public, its stock price rose 24.75% that day, and its market value exceeded $1 billion.

Since the US$200 million in the E round of financing comes from Xiaomi, after Xunlei’s listing, Xiaomi’s shareholding ratio is as high as 28.3%, becoming the largest shareholder. When Kingsoft is included, this proportion will increase to 41.8%. Xunlei will also become a “Xiaomi family.” For the company’s founding team, this meant that their identity was quietly changing from a founder to a professional manager, but Zou Shenglong and others, who were caught in the joy of going public, did not expect what would happen in the future.

In addition to funds, Lei Jun also brought a newcomer to Xunlei, that is Chen Lei, the former general manager of Tencent Cloud Computing. In November 2014, Chen Lei joined Xunlei as the CTO. This is also the first CTO of Xunlei in the true sense.

In an interview this year, Chen Lei said that he was not optimistic about Xunlei’s cloud computing at the beginning, but Lei Jun moved him with a sentence: Do you want to be a company that has the final say?

In 2017, after serving as CTO and co-CEO, Chen Lei became the CEO of Xunlei, realizing his wish of “finalizing”, but this time he took the position, but it was more like a victory of Xiaomi’s internal fight against the old team. Non-peaceful evolution.

After Xunlei’s listing in 2014, the company’s development has not been smooth. In the long run, download tools have been the first decade of Internet creation in China. With the advancement of Internet infrastructure, it has been in decline in the second decade. Xunlei’s once biggest rival, QQ Tornado, which was incubated from Tencent, was not so much defeated by Xunlei, as it was that the other party took the initiative to retreat and had no intention of continuing to compete in this “chicken rib” market.

At that time, Xunlei’s revenue mainly came from advertising revenue and membership revenue (cloud on-demand, etc.). The former was a common traffic monetization model of early Internet companies, but it would also significantly reduce user experience. Not only was it repeatedly rectified by the Cyberspace Administration of China, but also As netizens become less sticky about downloading tools and software (after all, the internet speed has improved), their income will also decrease. As for membership income, there is obviously no possibility of substantial growth.

Lei Jun, who shouted out the concept of “Outdoors”, naturally understood this truth. He liked Chen Lei’s potential in the cloud computing business, rather than wanting him to be an ordinary CTO serving Xunlei’s old business.

At that time, Zou Shenglong and other members of the old team also made a lot of efforts to develop new businesses, such as games, live broadcasting, etc., but they basically failed. In 2014, the video industry began a variety show melee, and the insufficient funds Xun Lei saw early defeat. In April 2015, it was sold at a price of 130 million yuan. On the contrary, it was the cloud computing and blockchain business that Chen Lei did, which brought revenue growth.

In June 2015, Chen Lei released the network service product “Star Controls CDN”. Lei Jun personally called it the Uber in the CDN field, and said that the real reason for investing in Xunlei was to favor “Star Controls CDN”: “We invest in Xunlei After the news came out, everyone thought that we were investing in downloading, investing in Xunlei’s membership business, and looking at Xunlei. Of course, these businesses are also doing very well. In fact, we are really optimistic about the Star Controls released today.”

Lei Jun also said that in the future, Xiaomi’s mobile phones and other smart hardware will use Star Controls CDN services. In addition, Bilibili, Kuaishou, iQiyi, Panda Live and other companies have also become Star Controls customers.

From left to right: Zou Shenglong, Lei Jun, Chen Lei

From left to right: Zou Shenglong, Lei Jun, Chen Lei

After the listing, Xunlei’s stock price has been falling, and has finally recovered. In the six years of Xunlei’s listing, there have been three such ups and downs, and each of them is closely related to Chen Lei. The market value of Xunlei is about the same as Chen Lei’s personal experience, and several ups and downs finally bottomed out.

In July 2017, Chen Lei became the CEO of Xunlei. He later commented that he shouldn’t be the CEO because he was enmity with the old team. At that time, Baofeng Yingyin was listed on the Growth Enterprise Market and its stock price rose. Zou Shenglong hoped to make a management buyout of Xunlei. This idea had a disagreement with the major shareholder Xiaomi, and ultimately could not be reconciled. Chen Lei became the new CEO in this context.

In October shortly after, Xunlei broke out in conflict between the old and new factions.

In 2015, Yu Fei, the former head of Xunlei’s legal affairs (also the old man of Xunlei), established Xunlei Big Data to develop financial business with the support of Zou Shenglong. The core business of this company is P2P, which represents the interests of the founding team. Xunlei holds 28 shares. %, and used the Thunder brand and traffic. At that time, the risk of P2P thunderstorms had gradually emerged. Chen Lei was dissatisfied with this and poke the issue to the board of directors, and had a fierce conflict with Yu Fei and others.

He later told him that Zou Shenglong found him and said that he “has neither a stand nor a position to manage this matter.” Zou Shenglong also proposed a wholly-owned acquisition of Xunlei Big Data by Xunlei for 50 million yuan, but it was rejected by the core directors. This is equivalent to Xunlei’s 50 million yuan to buy risk and let Xunlei’s executive team cash out.

This infighting came to an end at the end of 2017. Chen Lei and others won a big victory. The management of Xunlei Big Data Company repurchased all the shares of Xunlei Company in the big data company and switched from the Thunder brand to the Golden Dog brand. Yu Fei was removed from all positions in Xunlei Group on November 29. On December 12, Zou Shenglong stepped down as chairman and Wang Chuan, co-founder of Xiaomi, became chairman.

Xunlei entered the “millet era” and Chen Lei became Xunlei’s “power”.

The failed Thunder transformation

In the evaluation of others, although Chen Lei has a technical background, he is also very business savvy. In fact, from the changes in Xunlei’s income composition, it can be seen that Chen Lei’s leadership is inevitable.

In the early days, Xunlei’s revenue mainly came from advertising and membership, but advertising revenue has dropped significantly. After 2016, membership income began to shrink, but revenue from cloud computing and other services began to grow rapidly. In the critical 2017 fiscal year, cloud computing and other business value-added income reached 94.5 million U.S. dollars, accounting for Xunlei’s total revenue that year Nearly half of that, and still in rapid growth ($120 million in 2018, accounting for 51.7% of total revenue that year).

In October 2017, Xunlei launched the virtual currency “Playing Coin”. From the perspective of the model, this is actually very similar to issuing virtual currency: By purchasing a 399 yuan Yunke cloud host, you can choose to withdraw 500 yuan within two years (equivalent to a year Investment with a return rate of 12%), or mining to obtain WinCoin, and wait for WinCoin to appreciate in value. The daily output of Wankecoin is fixed, at 1.64 million per day in the first year, and then the output is halved every year-everyone knows what this is essentially.

After the product was launched, it became popular. On Taobao, the official price of 399 yuan Wankeyun was fired to more than 1,300. There is no market, and it is reflected in the capital market, which is the long-silent Xunlei share price welcome. After a big outbreak, it continued to soar from around US$4, and reached a historical peak of US$27 at the end of November. The board of directors who had made a lot of money at this time naturally chose to support Chen Lei without hesitation, and the founding team was sadly out of the game.

From Xunlei to Xunlei: Three Ups and Downs of Chen Lei 1

It should be said that Chen Lei’s doubts about P2P were correct. At that time, Xunlei big data was indeed at great risk. In February 2018, shortly after leaving the Xunlei brand, Mojingou was exposed to a break in the funding chain. If it was retained or even wholly acquired at that time , Which is equivalent to burying a thunder for Xunlei. But is there no risk in what Chen Lei does? As the losing party, Thunder Big Data also announced at the end of 2017 that Wankecoin is an illegal fundraising of ICO in disguise-this is not so much a battle of routes, it is more like a battle. P2P and ICO “dog biting dog” farce.

The end of 2017 was the most beautiful moment for Chen Lei and Xunlei, after which Xunlei went from bad to worse.

Chen Lei has his own transformation plan for Xunlei. After gaining the company’s leadership, he plans to gradually stop Xunlei’s download business. The reason is that many download businesses involve pornography or copyright issues, which poses great legal risks and are of value. It is also declining and replaced by cloud computing and other value-added services led by Chen Lei. These services are also mainly concentrated in the Net Heart Technology company he established. What is significant is that although Chen Lei became the CEO of Xunlei, he spent Wangxin seems to have more energy, and all aspects of Wangxin’s treatment are better than those of Xunlei’s old business.

If Zou Shenglong and others have not adapted to the transition from a founding team to a professional manager, Chen Lei seems to be an entrepreneur as a professional manager.

On the other hand, the share price of Xunlei that was blown up by Wankeyun is like a bubble, and it cannot be avoided in the end.

First of all, as early as September 4, 2017, the “Announcement on Preventing Token Issuance Financing Risks” jointly issued by the People’s Bank of China and other seven departments will include initial coin offering (ICO) and other financing through the issuance of tokens. The ICO was halted, the ICO was classified as illegal fundraising, and domestic Bitcoin trading websites such as Bitcoin China and Huobi were shut down. Although Xunlei stated on its official website that “PlayCoin is based on the “Wake Cloud” smart hardware, digital assets relying on sharing economy cloud computing and blockchain technology” instead of ICO, but then there have been transactions and hype on the Internet. The platform of guest currency.

After that, Wanke Cloud changed its name to “Lianke”, but it was still named by ICO in disguise. In January 2018, China Internet Finance Association even called Xunlei “Lianke” “Issues Virtual Digital Assets with Mining Machines as the Core” (IMO). The model is at risk. And because the transaction was restricted, Wankecoin could not be realized, and later it became the Xunlei customer service-this is actually similar to the Tencent Q coin. The official price of Wankecoin (about 3-4 yuan for a Wanke currency), leading to its Lost the space for speculation and directly pulled the share price of Xunlei.

At the beginning of 2018, Xunlei’s US stock investors initiated two class actions against Xunlei because Xunlei made false statements about the legitimacy of ICOs (ICOs), knowing that they were illegal, which significantly affected the stock price. .

But this was a small trouble. The real trouble for Chen Lei was that his transformation of Xunlei was not successful.

According to the Xunlei financial report, the total revenue of Xunlei in 2017 was 201.9 million U.S. dollars, but the total revenue in 2019 fell to 180.7 million U.S. dollars. In addition, the loss also expanded from 37.81 million U.S. dollars in 2017 to 53.42 million U.S. dollars in 2019. During his tenure as CEO, Xunlei did not actually make any achievements, nor did he pioneer outstanding commercial projects.

Until September 2019, Xunlei’s stock price has continued to fall to about $2, and the stock price ushered in a small rebound in October, mainly due to the official setting of blockchain as an important breakthrough in independent innovation of core technology. However, Xunlei Its own blockchain business did not have any waves, and its stock price soon fell.

This was also the last time Xunlei’s market value rose significantly during Chen Lei’s period.

Xunlei stock price changes

Xunlei stock price changes

Take over, go abroad, file a case

At 10 o’clock in the morning on April 2, 2020, Wangxin Company was taken over by Xunlei, and then Xunlei filed a complaint against Chen Lei to the Shenzhen Public Security Bureau. At the board meeting that day, Chen Lei was dismissed, and Li Jinbo, the major shareholder who reached a share swap agreement with Lei Jun, became the new chairman and CEO. Chen Lei later said that he was at home with a fever at this time and knew nothing about what happened.

However, there are also media reports that on the day he was dismissed, his former driver, Yao Mou, invited individual security personnel of Wangxin Company to dinner on the excuse that he was entrusted by the leader to go to the company’s computer room for work, using the security personnel’s access card At 23:30 in the evening, he brought five 1T hard drives into the computer room of Wangxin Company in an attempt to steal company data and source code.

During this process, Yao was found smoking out of the computer room by the company’s monitoring system. The company immediately implemented remote access control, leaving the five hard drives that Yao brought into the computer room to obtain data in the computer room. Yao absconded after the incident. On April 3, Xunlei Company reported to the local police station, but Yao refused to come forward and the person is nowhere to be seen.

It is also understood that Yao is suspected to be the cousin of former Xunlei executive Dong Yu. Dong Yu was originally a general public relations officer of Tencent Cloud and had a lover relationship with Chen Lei. Later, he became the vice president of Netheart Technology and the senior vice president of Xunlei. During this period, he had a son with Chen Lei. In the internal fight in 2017, Dong Yu spoke on behalf of Xunlei many times and won the “Outstanding Contribution Bonus”.

Dong Que, Senior Vice President of Xunlei Group and Vice President of Wangxin Technology

Dong Que, Senior Vice President of Xunlei Group and Vice President of Wangxin Technology

Xunlei’s accusation against Chen Lei is suspected of embezzling company assets in a false transaction link, creating false contracts to obtain company funds, and the amount involved is huge. According to reports, Xunlei’s new management has evidence that a Xunlei bandwidth provider named “Xing Fusion” is actually a company controlled by Chen Lei. Chen Lei used various illegal means to transfer a huge amount of funds to Xing Fusion. Deception was used to attempt to transfer the core technical personnel of Xunlei to the “Xing Fusion” company.

In this regard, Chen Lei said that a large part of the company’s new business is bandwidth business. Because the Ministry of Industry and Information Technology clearly stipulates that bandwidth can only be purchased from licensed enterprises, in order to avoid the risk of the network core, he bought the shell company of Xinghui. Xin buys hardware and then sells it to miners. The businesses of these affiliated companies are public within the network, and there is no interest transmission behavior accused by Thunder.

From Xunlei to Xunlei: Three Ups and Downs of Chen Lei 2

However, in addition to occupational embezzlement, Xunlei also accused Chen Lei of corruption during his tenure, suspected of embezzling huge amounts of company funds through false reimbursements, excessive wages, etc., and suspected of embezzling tens of millions of company funds for illegal currency speculation prohibited by the state. .

In addition, there are many unthinkable plots that have been exposed. For example, Wangxin Company has signed a service agreement with a third party and hired two technical experts in Hegang, Heilongjiang as the blockchain technology consultants of Wangxin Company. However, after investigation, it was found that the real identities of the two experts serving as the blockchain technology consultants of Netheart are two farmer couples in their 60s in Hegang, Heilongjiang. They are actually relatives of Dong Yu’s hometown in Hegang, Heilongjiang. It was sent to Dong Yu’s hands.

It is also reported that many key positions of the company have been placed in Dong Yu’s Hegang fellows and girlfriends. They have facilitated Chen Lei and others’ fictitious transaction links, preparation of false contracts, and arbitrage of company funds.

However, Chen Lei and Dong Hao, after being dismissed in early April, went abroad with the epidemic and have not returned. Overseas Chen Lei once said that the accusation from Xunlei was an unnecessary murder, but his clean going abroad at that time and the delay in returning now greatly compromised the authenticity of his words.

However, the prospect of Thunder, which has moved twice in a few years and was almost abandoned by Xiaomi, makes it difficult to be optimistic.