DangDang, “the Chinese Amazon” (though without Amazon-style market share), listed on the New York Stock Exchange to great fanfare on December 9th, 2010.
Just over a month later, DangDang CEO Li Guoqing exploded at Morgan Stanley and Credit Suisse in a profanity-laced tirade (click here for sanitized reports), blaming them for a botched IPO that severely undervalued the firm. From Li Guoqing’s Sina Weibo:
“Lyrics for a rock song: You (Morgan Stanley) gave out a valuation of 1-6 billion, but in Hong Kong the opening statements stated only 0.78 billion, stop fucking acting. You f**kers knew first day of launch that valuation would be 2 billion, but you still priced USD 16 per share, which comes to 1.1 billion. My CFO was in panic mode, I held back a breath and silently cursed you motherf**kers.”
Li’s statement shocked thousands of Weibo users and spread like wildfire.
Next, two Sina Weibo accounts claiming to be employees of Morgan Stanley fired back at Li in personal attacks of the most severe degree. Morgan Stanley has launched a preliminary investigation and does not believe that the responses are actually from its employees. Nonetheless, the virulent defense by Morgan Stanley “employees” also exploded on the Chinese Weibo-sphere, a PR disaster for both firms.
A response by @迷失的唯怡 openly questioned Li Guoqing’s intelligence, refuting Li’s assertion that Morgan Stanley made undue return on investment via DangDang’s IPO. The Weibos insult Li’s family, his parents, and his “well-connected” wife:
“Our investment firm didn’t charge you a fucking single extra cent, go home and work that out with your broken-gong brain [shit for brain]. Do you know what you are? You are a beggar! For the last ten years have you lived a day without being chased after by debt collectors? How many of your debts did your wife repay? You really think Morgan Stanley and Credit Suisse believed in you? If not for Yuyu [Li's wife], you would be left on the streets of Beijing as a piece of shit.” – @迷失的唯怡
“‘If Morgan Stanley is bad’, then why the hell did you come to us with your wife crying about how poor you were? Big joke. ‘Goldman Sachs is good’, then go to Goldman Sachs–how come I remember you two [Li and his wife] were rejected by them two years ago, if I recall correctly.” - @露西娅天气
“A Literary Hobby”
This afternoon, in a sober response, Li posted this in his Weibo.
1. Li Guoqing’s “Rock Song Lyrics” are purely fictional, his own literary hobby.
2. Offensive use of language was wrong, and the “lyrics” were not targeted at specific industry or firm.
3. The “lyrics” do not reflect negativity towards a certain industry.
4. Li Guoqing’s response to 2-3 users are offensive, but did not use any actual offensive words (i.e. swear words).
5. Li Guoqing’s “lyrics” were written to comfort his own pains and to warn follow companies planning to list in the U.S.
6. Weibo is open media, all are welcome to comment, but please refrain from using offensive words. DangDang agrees with entrepreneurs being active in Weibo, but please keep it clean.
7. Whether you like Li Guoqing’s statements or not, DangDang sincerely welcomes you all.
In their own preliminary statement, Morgan Stanley said that the two involved employees were in fact not from their firm. I checked the account of one of them; many of her followers are certainly from Morgan Stanley and she’s well educated in the investment business. There are still doubts as to their true identities.
In the meantime, I presume Li is looking for a new hobby.
- 2011 promises many more US IPOs for Chinese internet companies. Firms should carefully select a bank; banks should take PR precautions.
- Valuation – how much is a hot Chinese internet company worth? Recently there has been talks of Sina spinning off Sina Weibo, readying it for an IPO. According to Innovation Works founder Li Kaifu, Weibo’s valuation should be placed at USD 1 billion, even though Weibo has barely has any revenue. How well can bankers (or anyone) understand the Chinese internet to present a proper valuation? The one trait that all Chinese IPOs share is extreme volatility.
- Founders should be kept under tighter restraints on social media, especially when many companies policies are designed to regulate employees’ internet behavior. The same should be no less true for the boss.
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