Chapter Three: Hao123 and Future Strategy (Please Add to Favorites)

As expected, the clothing store did exceptionally well in the afternoon and evening, with a steady stream of customers. Although not everyone who came in made a purchase, the store’s tasteful renovation, fashionable clothing styles, and excellent service attracted many young people, resulting in a significant number of sales. It could be said that the clothing store made a sensational debut on Culture Street, achieving a triumphant opening.

At ten o’clock that night, his parents tallied up the day’s income. To their amazement, it exceeded 9,300 yuan—just 700 short of 10,000. Due to discounts, the store’s share from Metersbonwe was 25% of sales, but after further reductions for the discounts, only 15% remained. Still, based on today’s sales, this amounted to over 1,300 yuan. After deducting the daily rent of about 60 yuan and various other expenses totaling less than 100 yuan, the daily gross profit reached 1,000 yuan.

Even if sales declined after the discount period ended, earning ten or twenty thousand yuan a month would be no problem at all. Hearing that they could make so much money, smiles never left the faces of Zhou’s parents. After tidying up, the family of three made their way to Uncle Yao’s place. The supermarket had already closed, and Uncle Yao and his wife were restocking missing items and rearranging the shelves.

Compared to the clothing store, the work at the supermarket was far more exhausting and tedious. With only the two of them to manage everything, Uncle Yao and his wife were understandably tired. So Zhou Xuan suggested that Uncle Yao hire two more people: one to handle the register and another for stocking and organizing the warehouse. Uncle Yao, relieved of these tasks, could then focus on procurement and logistics, while Aunt Yao would act as the manager, overseeing finances and day-to-day operations.

When Zhou Xuan and his family arrived, Uncle Yao reported that today’s sales reached over 15,000 yuan. Seeing the couple’s tired yet joyful smiles, everyone felt delighted and insisted on celebrating with a late-night meal.

During the meal, everyone was in high spirits and praised Zhou Xuan several times. Now that both the supermarket and clothing store were running smoothly, Zhou Xuan stayed home alone the next day.

With his family’s worries resolved, Zhou Xuan began thinking about how to strike gold on the Internet. It was still only 1998, and the number of Internet users was barely in the hundreds of thousands. It wouldn’t be until June that the number would finally surpass one million. So Zhou Xuan had plenty of time and no need to rush; the main goal for this year was to amass capital.

In the early days, all Internet ventures burned through money. Without capital, one could only give up shares to investors. Of course, getting investment was not necessarily bad—big capital brought advantages in promotion and going public. Yet, every time Zhou Xuan thought of Chinese Internet companies whose founders ended up holding only a tiny stake, or worse, saw most of the shares seized by foreign capitalists who made off with huge profits every year, he couldn’t help but feel a sense of sorrow.

What troubled Zhou Xuan was how to secure both control of his company and support from the capital markets in the future. Some might say he was dreaming: wanting to go public and attract investment, yet unwilling to part with too many shares, was a near impossibility. Anyone who read "Currency Wars" knew that in the face of capital, the individual was insignificant, and even a nation could be brought to its knees in an instant.

After much thought, Zhou Xuan still couldn’t find a solution and decided to leave it for another day. Speaking of the golden age of Internet entrepreneurship, one could not overlook Li Xingping and his creation, the hao123.com web directory.

With the Internet just beginning to take off in China and most users being complete novices, few remembered or knew how to enter website addresses. The hao123.com directory offered tremendous convenience. Between 1999 and 2002, the site rapidly grew, capturing 90% of the market share for web directories while other Internet companies largely ignored the sector. Even when giants like Sina and Sohu later launched their own directories, they were unable to shake hao123’s dominance.

Finally, in 2004, Baidu acquired hao123.com for 50 million yuan in cash plus some Baidu shares. There was no denying that Li Xingping and hao123.com were nothing short of a miracle.

If Zhou Xuan simply followed in Li Xingping’s footsteps and sold out a few years later, pocketing tens of millions and a stake in Baidu, he could live a life of ease. With his knowledge of the decades to come, Zhou Xuan could also buy into world-famous Internet companies during the dot-com crash in 2000, acquiring shares that would later make him a billionaire from just the dividends. He could spend his days playing ball, fishing, and traveling the world—truly, “the world is so big, there’s nowhere you can’t go.”

But this wasn’t the life Zhou Xuan wanted. A soldier who doesn’t dream of being a general is not a good soldier. Zhou Xuan was still young and longed to make a name for himself, hoping that people would remember there once was a man named Zhou Xuan who created a miracle in the Internet age—like Bill Gates, Warren Buffett, and in time, Jack Ma, Pony Ma, Steve Jobs, and others.

Nineteen ninety-eight was a year when major Internet companies were still amassing strength; the future BAT trio had yet to formally emerge. As for the portal sites, Zhou Xuan had even less interest in joining them—they were a trap at this stage.

Still, if he had the opportunity to invest in the three major portals early and acquire some shares, then cash out before the dot-com bubble burst, it would be a decent move.

When the bubble hit, he could buy in at rock-bottom prices, making money and ensuring he held significant influence over the Internet landscape to come. But all of this required vast sums of capital.

hao123.com was just a directory site and not profitable in itself. Zhou Xuan saw it as a traffic driver. Once his instant messaging software, YY, was launched, he could quickly boost its registrations and capture a large share of the market.

Why call it YY? Not because Zhou Xuan was particularly fond of the later voice chat software, but simply because this novel was a "wish-fulfillment" story about urban rebirth.

Joking aside, Zhou Xuan decided to make the future’s most lucrative product, QQ, his own. To rapidly promote hao123.com, he planned to develop an Internet café management system. Before 2002, Internet cafés were booming; opening one was a sure path to wealth.

Besides using the management system to force a hao123.com icon onto every computer desktop, Zhou Xuan also aimed to use it as a revenue generator. His idea was that once the system reached a certain scale, he could form an Internet café alliance. In the age of online gaming after 2000, this would be a key bargaining chip, greatly enhancing his company’s ability to promote games offline.

Moreover, Zhou Xuan intended to build a nationwide chain of Internet cafés, partnered with his supermarket chain, to spread across China and establish a foundation in real industry. With such operations, especially employing so many people, his voice would carry much more weight with the government.

And of course, there were still many valuable domain names unregistered; Zhou Xuan resolved to snatch them up ahead of time—yet another chance to strike it rich.

Publishing, hao123, Internet café management software, domain names—these were Zhou Xuan’s priorities for 1998. All of it was about making money and building up capital.