Chapter 28: Don't Panic, We Made Some Money by Speculating in Stocks During the Summer Vacation
Everyone immediately turned their eyes toward Fang Hong without saying a word. He then spoke in an orderly manner:
"A team must make the best use of its talents and strive to be both a good and successful team. While I have no problem being the team leader, in reality, I am more suited to be Quantum Beat's Chief Strategic Architect. My strength lies in formulating strategies for the company. What do you all think?"
As soon as he said this, everyone reflected on Fang Hong's previous statements and felt that his reasoning made sense. Even Xu Jingren couldn't help but nod silently.
Fang Hong continued, "However, my execution and operational skills aren't great—or rather, I'm not the best in our team in that regard."
In truth, Fang Hong was more than capable in execution, but given the current situation, this was the most appropriate thing to say.
Because in his mind, Quantum Beat was just one piece of the larger business empire he truly intended to build. He had no intention of leading this small puzzle piece himself, nor did he have the time or energy to do so.
At best, Quantum Beat was a stepping stone in the early stages of his business empire. The top leadership roles would be filled by his team, while his job was to manage these leaders.
After a brief pause, Fang Hong looked directly at Xu Jingren and said, "I think Jingren is the best fit for this role, so I believe he should be the CEO of Quantum Beat."
Xu Jingren was stunned for a moment. "Huh? Me?"
Fang Hong smiled and looked at him. "Don't doubt your abilities. A bystander sees more clearly. Trust my judgment. If it weren't for you organizing everyone, we wouldn't even be sitting here having this conversation right now, would we?"
Xu Jingren laughed. "That's true. I'd feel bad if I refused my brother's trust."
Fang Hong continued, "I think Gao Yuan is best suited to lead technology development, and Sun Xin would be ideal for heading publicity..." He then assigned roles to the rest of the team members based on their strengths.
After another ten minutes of discussion, the team roles were officially determined:
CEO: Xu Jingren
Chief Strategy Officer: Fang Hong (responsible for overall company strategy)
Technology Development Lead: Gao Yuan
Publicity Lead: Sun Xin
Fang Hong then moved a stool over and sat down. "Next, we need to discuss the equity distribution of Quantum Beat. The six of us are co-founders, and how we allocate equity is a major issue—one that can't be taken lightly. Many teams have fallen apart due to disputes over shares. I don't want that to happen to us."
Everyone nodded seriously, sensing the importance of the discussion.
Xu Jingren asked, "From the way you're talking, it sounds like you already have a plan?"
Fang Hong smiled. "I read a lot of business management books this summer, and now I can put them to use. For Quantum Beat's ownership structure, I suggest we adopt an AB share system, meaning different voting rights for different shares. This allows us to separate control from financial investment. For a company to grow—especially in an industry like tech that requires heavy early-stage investment—we'll need external funding."
Xu Jingren and the others nodded in agreement.
Fang Hong continued, "Capital is a double-edged sword. If used correctly, it can be a powerful tool. If used poorly, it can turn against you. The way Cisco's founders were ousted is a prime example."
Everyone nodded again. The more they listened, the more convinced they were that they were on the right path. Fang Hong's thought process was clear and logical. To them, he was undoubtedly the "brain" of their team.
As they sat in the dormitory discussing further, Fang Hong explained, "If we introduce external capital, we have to share ownership with them. If we have equal voting rights per share, we could easily lose control. The AB share structure prevents this issue—investors share profits, but they can't seize control."
He paused before continuing, "Under this structure, our founding team will hold Class B shares, which have 30 votes per share, while external investors will hold Class A shares, which have only one vote per share."
At this point, Xu Jingren hesitated. "This will protect us from external takeovers, but what if there's internal disagreement among the founders?"
Lou Gaoyuan immediately replied, "That's easy—if there's a dispute, we listen to Fang Hong."
Xu Jingren nodded. "I get that, but what's the actual decision-making process if disagreements arise in the future?"
Everyone turned to Fang Hong again, and Yuan Jie added, "Yeah, what's the best way to handle this?"
Fang Hong answered concisely, "A one-vote veto and an agreement on acting in concert."
After some discussion, the group ultimately agreed to grant Fang Hong veto power and collective decision-making rights.
For Fang Hong, this arrangement was ideal. His roommates were young and trusted him completely. Moreover, he had an "Item Card" that could further secure their loyalty in the future, ensuring no surprises down the road.
As for Quantum Beat's control structure, Fang Hong intended to hold these powers temporarily before transferring them to Qunxing Capital when the time was right. Since Qunxing Capital was ultimately controlled by him, he could later step away from Quantum Beat's visible leadership while maintaining influence from behind the scenes.
Finally, Fang Hong said, "Now that the ownership structure is settled, the next step is equity distribution. Since there are six of us, I suggest reserving 20% of shares as an option pool for future talent and key personnel."
Everyone agreed—it was a reasonable plan.
Although Fang Hong could have manipulated his roommates more, he chose a fair approach. Still, he had structured the agreements strategically. For instance, he did not include a "weighted average anti-dilution clause," which meant that future dilution would disproportionately affect the co-founders while preserving Qunxing Capital's control.
Ultimately, Fang Hong planned to dilute his roommates' shares to about 3% each, ensuring they retained a stake but never enough to challenge his control.
For reference, Mark Zuckerberg once reduced a Facebook co-founder's 34% stake down to 0.03%—a ruthless move Fang Hong considered excessive.
Instead, he calmly declared, "Of the remaining 80%, you each get 13%, and I take 15%. However, since you've given me veto power, my control premium alone is worth at least another 15%, meaning I effectively control 30% of the company's value."
In reality, Fang Hong's influence would grow as Qunxing Capital acquired more shares. Eventually, his roommates' 13% stakes would be diluted down to around 3%.
However, giving them equity ensured they felt a deep sense of ownership and motivation to grow the company.
"A professional manager has no real loyalty," Fang Hong reasoned. "But a co-founder with a stake in the company will treat it like their own child, pouring in their full effort."
His roommates agreed without objection. After all, Fang Hong had contributed the most, making it only natural for him to be the largest shareholder.
"Alright," Fang Hong said firmly. "Now that our ownership structure is set, the only thing left is funding. We need capital."
At this, the team's excitement faded.
"None of us have money!" Yuan Jie sighed.
Fang Hong chuckled. "Relax. I've got it covered. I'll secure investment."
His roommates stared at him in surprise.
"Investment? From where?" Xu Jingren asked skeptically.
Fang Hong grinned. "Let's just say... I know a few investors. And besides, I made some money trading stocks this summer."
With that, it was time to bring in Cao Chenghui, General Manager of Qunxing Capital.