Character Feature: Wu Jihan emerges from the darkest moment

Wu Jihan will never forget the night he cried bitterly in Hong Kong.

On December 16, 2018, another founder of Bitmain, Zhan Ketuan, launched a "coup" and threatened to cancel the stock option incentives of managers who were not loyal to him, saying that "the company is only allowed to have one CEO." Wu Jihan "burst into tears" after hearing about this.

At that time, Bitmain was in the process of listing in Hong Kong, and Jihan Wu and Zhan Ketuan were listed as co-chairmen and co-CEOs in the prospectus.

Bitmain was sincerely invited by the Hong Kong Stock Exchange to go public, but after the disclosure of the brilliant prospectus, everything began to stagnate.

One month later, Bitcoin Cash (BCH), which Wu Jihan valued the most, was forked by Satoshi Nakamoto of Australia. After the fork, the entire digital currency world began to collapse. Affected by this, Bitmain went from an annual profit of 1 billion US dollars to the brink of bankruptcy. Zhan Ketuan blamed Wu Jihan for this.

On December 17, Wu Jihan returned to Beijing and agreed to let Zhan Ketuan remain as chairman, Wang Haichao, whom Zhan Ketuan trusted relatively, as CEO, and he himself would no longer retain any position. In the subsequent large-scale layoffs, Wu Jihan's Copernicus team and blockchain division were all laid off.

Xiaohan, who was once high-spirited, has become silent, his baby-faced body has inexplicably grown a beard, and his Twitter account, where he once fought, is basically no longer updated.

Wu Jihan reached the darkest moment of his life.

"Darkest Hour" is also a film about the most important choices Churchill faced during his tenure as British Prime Minister.

In the darkness, Wu Jihan is still using his power to silently influence Bitmain; at the same time, he and his close comrades-in-arms started an underground war using the financial and legal tools that Zhan Ketuan "looked down upon".

On October 29, 2019, Wu Jihan officially returned.

“I don’t want to be a CEO”

The media has written a lot about Wu Jihan's rise to wealth, so there seems to be no need to elaborate on it.

Interestingly, Wu Jihan often said that he did not want to be a CEO. His dream was to become an investor like Buffett. This is in stark contrast to the micro-control style of Zhan Ketuan and other Chinese entrepreneurs.

He was born in Chongqing and graduated from Nankai Middle School, one of the best high schools in Chongqing and widely recognized for its liberal school spirit. Although a photo of Wu Jihan was widely interpreted as a poor family, in fact, it was a well-off family.

Unlike Sun Yuchen, Wu Jihan was admitted to the Department of Economics at Peking University, which is one of the majors with the highest college entrance examination scores. During college, Wu Jihan also took a minor in psychology. Compared with Sun Yuchen's politically obsessed college life, Wu Jihan is more like a wandering scholar from Sichuan. He once said that his dream is to travel around and have a good time one day.

He talked about his dream again at the staff meeting on October 29, which was why he gave up the position of major shareholder and chairman to Zhan Ketuan, "I just want to hand the company over to someone and then go travel around."

Bashu Youshi is not without entrepreneurial ambitions. In 2013, when Bitmain was founded, Wu Jihan sold almost all of his Bitcoins in order to tape out chips. If this huge sum of money were left today, it would be an astronomical figure.

"Pretending to be crazy and stupid to persuade others"

During the entrepreneurial process, the differences between Wu Jihan and Zhan Ketuan began to emerge. Wu Jihan believed in liberalism and investment rationality, while Zhan Ketuan was obsessed with clan and power.

In 2014, Bitmain's chips and mining machines had already gained certain advantages, but faced with the pursuit of competitors, the development of the next generation of chips could not be delayed. However, Zhan Ketuan suddenly believed the promise of someone claiming to be from the Central Security Bureau to invest R&D resources in a digital payment chip. Wu Jihan knew it was a scam, and after much persuasion, Zhan Ketuan finally gave up.

In 2015, Wu Jihan tried to retain Yang Zuoxing, the core of chip R&D, and promised him 2% of the company's shares. This was rejected by Zhan Ketuan, who was only willing to give 0.5% of the shares, similar to his assistant. This time, Wu Jihan failed to persuade Zhan Ketuan. The arrogant Yang Zuoxing then left, and in 2018 and 2019, he significantly eroded Bitmain's market share with the Shenma mining machine.

When Zhan Ketuan insisted on his own way, Wu Jihan said that he had to "play crazy and foolish and persuade him hard." But in the early days of the company, this persuasion was effective. Zhan Ketuan also seemed to play a role of accepting persuasion and trusted Wu Jihan. He once said that a big reason for the company's success was Wu Jihan's deep understanding of Bitcoin.

Perhaps it was because of the many differences that Zhan Ketuan and Wu Jihan formed a gentleman's agreement: if one person agrees, they can do it, and if one person opposes, they can't do it. But this also led to the two sides and their teams becoming clearly divided. Fortunately, with the surge in the price of digital currencies and the superior performance of the S9 mining machine, Bitmain reaped nearly $1 billion in profits in 2017, with less than 800 employees at that time.

Both of them are moving towards their dreams. Zhan Ketuan recruited a large number of R&D and sales teams to start making artificial intelligence chips, and planned a roadmap that goes beyond Moore's Law; Wu Jihan invested in a large number of companies to realize his dream as a venture capitalist, and forked Bitcoin in 2017, and Bitcoin Cash was born. Although there have been constant turmoil since then, BCH has always been among the top five digital currencies in the world.

On the surface, both parties also affirmed each other's dreams. At an internal staff meeting, someone asked Zhan Ketuan what currency to buy. He hesitated and said, of course, BCH. Bitmain mining machines also allow BCH to receive payments, and thus accumulated a large amount of BCH, which of course laid a huge hidden danger later.

BCH fork after listing failure

In September 2018, Wu Jihan, who was in charge of the listing plan, submitted a prospectus to the Hong Kong Stock Exchange. Wu Jihan once said that the Hong Kong Stock Exchange sincerely invited Bitmain to go public. Bitmain's gorgeous prospectus disclosed the full picture of the company to the public for the first time, shocking the world.

The prospectus shows that in 2017, Bitmain's revenue was $2.5 billion and its net profit reached $953 million; in the first half of 2018, its revenue was $2.85 billion and its net profit was $743 million. Such excellent data has made the media put Bitmain on the same level as Meituan and Xiaomi, and its market value has soared to $30 billion.

However, some concerns in the prospectus were ignored. Gross profit margins are gradually declining, mining machine prices are falling, and inventory is rising; the company holds nearly $900 million in digital currency assets, most of which are BCH.

The media may ignore this, but the Hong Kong Stock Exchange will not. Perhaps in their hearts, they already know that this company with a gorgeous appearance has reached a difficult time when it has to go public to raise funds.

Generally speaking, the hearing will start 3 months after the prospectus is submitted. But during this period, a BCH fork event that shocked the industry began. "Fork" can be simply understood as multiple groups maintaining a chain/digital currency have different opinions, so a group forks the original digital currency into a similar but brand new digital currency for maintenance and development.

After reviewing the situation, this fork brought many serious consequences to Bitmain. First, the BCH fork opened the prelude to the big drop in the digital currency world. Bitcoin and BCH have been falling since then, Bitmain's mining machines cannot be sold, and the digital currency assets in hand have also shrunk significantly. Second, Australian Satoshi Nakamoto, who disagrees with Wu Jihan, controls many media and continuously spreads rumors against Bitmain around the world, such as owing TSMC hundreds of millions of accounts.

Both of these have had a serious impact on Bitmain's listing.

Three months later, the hearing did not take place as scheduled. On November 15, the prospectus of Canaan Creative, another mining machine manufacturer that had submitted its listing application earlier, became invalid. Bitmain is about to face the same fate.

Zhan Ketuan launched a "coup"

BCH forked and Canaan's IPO failed. Wu Jihan was anxiously making the final effort for the IPO in Hong Kong. At this time, Zhan Ketuan launched a "coup".

According to Wu Jihan, Zhan Ketuan gathered most of the middle-level managers at Fengdu Jiahe, a western restaurant near Bitmain. He threatened everyone that "the company is only allowed to have one CEO" and if they did not support him, the equity incentives that had been granted would be cancelled. Zhan Ketuan also attributed the company's predicament to the sales and marketing departments that Wu Jihan was in charge of.

Wu Jihan burst into tears after hearing the report. He returned to Beijing overnight to negotiate with Zhan Ketuan, and finally decided to let Zhan Ketuan serve as chairman and hand over the CEO position to Wang Haichao, who was closer to Zhan Ketuan. Wu Jihan resigned from all positions. In exchange, Zhan Ketuan agreed to the layoff plan.

Wu Jihan laid off most of the mining farm staff, the Copernicus team responsible for BCH development, and the newly established blockchain division. However, Ge Yuesheng attracted external investment and moved most of the team to a new company called Matrix. Zhan Ketuan laid off the terminal artificial intelligence chip team and artificial intelligence C-end product team from Taiwan. Functional departments were laid off to the lowest staff level. Only the mining machine department, the company's cash source, was basically not laid off.

Wu Jihan grew a beard, and rumors began to circulate that he would leave Bitmain and join Matrix. On the other hand, Zhan Ketuan was full of energy and began to frequently appear as the chairman of Bitmain, accepting interviews, releasing AI products, and participating in the National Day military parade.

Zhanketuan wants to create his own corporate values. He defines the company as a "computing chip company", a term that combines mining machines and AI chips. With the help of HRDs from Huawei and 360, Zhanketuan adjusted the organizational structure and gradually eliminated Wu Jihan's old subordinates. Zhanketuan also emphasized many times that all types of currencies should be treated neutrally and objectively in the future, and the implication is nothing more than giving up BCH.

Did Wu Jihan lose?

Out of the Dark Hour

Although it experienced a brief dark period, as the price of the currency rebounded in the second quarter of 2019, Bitmain quickly got out of the trough and its huge inventory was instantly cleared. The success of the 7nm mining machine and the full support of TSMC made Bitmain's products once again sought after by miners.

The company is back, Wu Jihan is gone, and Zhan Ketuan can be said to have reaped a double harvest.

But in retrospect, he made several serious mistakes: first, he did not understand finance and legal affairs and did not pay any attention to Wu Jihan's actions; second, he was extremely suspicious and removed the heads of finance, administration, government relations, etc. who he had originally recruited; third, he blindly trusted the HRDs from Huawei and 360, which led to resentment within the company.

At this time, Wu Jihan was secretly planning a counterattack. According to Caixin.com and relevant sources, Bitmain does not have a VIE structure. In simple terms, Cayman controls Hong Kong, and Hong Kong controls Beijing. The Hong Kong company does not have a board of directors, and Wu Jihan is the executive director. Wu Jihan changed the legal person of the Beijing company through the Hong Kong company and set up many legal obstacles in Cayman.

Zhan Ketuan knew nothing about this. After the incident, he angrily said that he had never expected to learn legal thinking.

On the morning of October 29, Wu Jihan issued an internal letter to dismiss Zhan Ketuan from all positions, and then held a general meeting to dismiss the original HRD and his team, and to start a salary increase for all employees. In addition, the company increased security, and everyone was given a photo of Zhan Ketuan, and he was no longer allowed to enter the company. Zhan Ketuan seemed stunned, and only published an open letter on WeChat Moments 10 days later, saying that he would fight back with legal means.

On the eve of World War II, Churchill made many enemies in the country, which ended his political career, but he was appointed to take charge of the country when it was attacked from all sides.

Wu Jihan won. He walked out of the darkest moment.