Media reviews said that Charles Chao finally held the actual control right, and could dance on the same level as William Ding and Zhang Chaoyang.
This article was written by Fang Xue from Beijing.
Looking at it now, in the history of Sina, Charles Chao is an exception. He was once considered by the industry to be a "reserved, conservative" figure.
"I guessed the beginning, but I didn't guess the ending," which was true for previous CEOs of Sina. It was hard for Sina's CEOs to escape the "2-year fate", including Sha Zhengji, Wang Zhidong, Mao Daolin, and Wang Yan.
In May 2006, Sina officially entered the Charles Chao era. A media outlet described a detail: when walking into the press conference venue, Charles Chao, this new leader, revealed a barely noticeable smile, then quickly returned to his usual calm demeanor. Three years later, recently, the Sina management team led by CEO Charles Chao will purchase approximately 5.6 million ordinary shares of Sina at a price of about $180 million, becoming the largest shareholder of Sina with a shareholding rate of 9.4%.
"The MBO is an exciting and celebratory day for Sina, the management team, and myself," wrote Charles Chao, who led the Sina era, in an internal email sent to employees. Renowned internet analyst Hong Bo stated that this meant the management team led by Charles Chao would achieve full control over Sina.
Sina now has a surname. The fact that Charles Chao can fully control Sina is filled with both偶然ness and inevitability. This can be seen from the history of Sina.
Charles Chao took office
The predecessor of Sina, Sina.com, was established at the end of 1998, formed by the merger of Sifang Lihua Information Technology Co., Ltd. and Huayuan Information Co., Ltd., and launched a homonymous Chinese website. Among them, Sifang Lihua held 60% of the shares, while Huayuan Information held 40%.
Before going public, after multiple dilutions, the largest shareholder of Sina was not founder Wang Zhidong, and the equity was quite scattered. After Sina went public in 2000, Wang Zhidong held 6.3% of the shares, while Zhang Chaoyang held 33.6% of Sohu, and William Ding held 58.5% of NetEase. This led to the inability of company managers to manage and implement long-term strategies for Sina.
The dispersion of equity also led to one result: the frequent changes in Sina's CEOs. Another result was: steady growth but without highlights. Especially after 2001, Sina lagged behind William Ding's NetEase and Zhang Chaoyang's Sohu in the two major value-added areas of SMS and games. The status of Sina as the "first portal site" was greatly threatened.
In May 2003, Wang Yan became the CEO, president, and director of Sina, leading to the joke within the industry: "one person works, eight people look at reports." Wang Yan's departure corresponded somewhat with the financial report issued by Sina for that quarter: net profit decreased by 32%. When Sina's shareholders made adjustments to the management team, the reason was always the same: poor performance.
When Charles Chao took office, Duan Yongji, an early investor in Sina and founder of Sifang, expressed: "From the outstanding leadership and execution skills shown by Charles Chao over the past seven years, he is intelligent, independent, and willing to take challenges. I am full of confidence in Sina's future."
In September 1999, Charles Chao was considering leaving PricewaterhouseCoopers for two American companies. He called Mao Daolin, then COO of Sina, for advice. At that time, Sina was preparing for its IPO and looking for a CFO. Through Mao's introduction, Charles met Wang Zhidong, the CEO. A few days later, Charles agreed to join Sina as the vice president in charge of finance.
Under his promotion, Sina completed important acquisitions of Guangzhou Xunlong and Shenzhen Crillion, two major wireless value-added service companies, in 2003 and 2004 respectively, propelling Sina into the forefront of the wireless value-added field and gradually moving from loss to profit.
In 2005, the enterprising Charles Chao was assigned to oversee advertising operations. Upon arrival, Charles replaced the main responsible persons and reorganized the internal structure. In the second quarter of 2005, Sina successfully widened the gap with its competitors. Charles was also the most active promoter of Sina blogs.
What was particularly widely reported by the media was that during the sudden massive equity acquisition by Shanda, Charles Chao and Wang Yan worked tirelessly for three days and nights to formulate the "poison pill plan" and repelled Chen Tianqiao.
These achievements won honor and position for Charles Chao. "He is the person who understands Sina the most," commented Chen Tong. Within Sina, it was already rumored that "there are only places the CEO cannot reach, but no place Charles Chao cannot reach." Duan Yongji described Charles Chao with words like "data-oriented, calm, rational."
In May 2006, when Charles Chao took office, Sina's revenue ranked third among internet companies, but three years later, today it ranks fifth, and profits can barely make it into the top ten. However, Charles Chao did not step down.
One key reason was in April 2008, when Duan Yongji left. To some IT observers, Duan's departure meant that Sina's CEO Charles Chao, after calming the "Chen Tong resignation" storm, finally gained full control of Sina.
Why Charles Chao
After Duan Yongji's departure, the story of Sina under Charles Chao's administration continued. Unlike previous Sina CEOs, Charles Chao was the first to come from the CFO background, with a 10-year history at Sina, working alongside three CEOs for nearly seven years.
Charles Chao is known as the person with the highest credentials in Sina's media sector. He holds a master's degree in journalism from the University of Oklahoma and worked as a journalist in the U.S. Before that, a graduate of Fudan University, he worked as a journalist at Shanghai Television.
Later, after obtaining another master's degree in finance from the Graduate School of Business Administration at the University of Texas at Austin, Charles came to work in Silicon Valley in 1993. At PricewaterhouseCoopers, he was responsible for providing auditing and business consulting services to high-tech companies in Silicon Valley, USA.
This person, known in the industry as "reserved and conservative," also had a daring side.
During his university days, Charles carried a camera, boarded a train, and traveled from Heilongjiang to Hainan Island, seeing all kinds of mountains and meeting different people. Once, in Little Huangshan in Jiangxi, a local guide took him up the mountain and they stayed in a small inn halfway up. Everyone else went back down the mountain. However, it rained heavily for two consecutive days, and no one could climb back up. At that time, Charles stayed alone on the mountain for three days.
There was neither loneliness nor panic; Charles felt lucky to have seen the most beautiful scenery. This was the university-age Charles Chao who was "carefree, adventurous, and persistent."
Charles believed that careers could change people.
In the eyes of his colleague Wang Yan, "you wouldn't feel his passion and impulsiveness in just one or two minutes, but over time, you realize he really doesn't care about anything and works his heart out." During his tenure as chief financial officer, Charles never took a vacation.
When Charles first joined Sina for its initial public offering (IPO), he had to work 16 hours a day, handling work handovers at PricewaterhouseCoopers while taking on the role of vice president of finance to oversee the IPO process. Therefore, some media analysis pointed out: "working tirelessly" was truly Charles' consistent style, and it was also the main reason why it was him, and not someone else, who ended Sina's turbulent history.
Seven years as Sina's CFO and three years as CEO have made the adventurous Charles very pragmatic and confident. He once told the media, "No one understands Sina's business better than me; no one can match my overall operation of each business line."
On December 22, 2008, Sina announced that it would issue an additional 47 million common shares to purchase assets related to Focus Media's building TV, frame advertisements, and shopping mall advertisements businesses. However, due to the excessively long approval process, Sina believed that China's Ministry of Commerce would not approve the transaction before the final deadline of the acquisition, forcing the acquisition plan to be abandoned.
At the end of September, Charles Chao announced the Management Buyout (MBO) of Sina's management team. Not long after, the financially savvy CEO of Sina, Charles Chao, once again showcased his superior financial skills perfectly in the capital market. On October 16, China Real Estate Information Group (CRIC), a joint venture between Sina and E-House China, was listed on the NASDAQ Stock Exchange in the United States. It was the first Chinese real estate technology concept stock listed on NASDAQ.
Compared to Charles Chao's elation, some media comments were also highly complimentary: Charles Chao finally held the actual control, and could dance on the same level as William Ding and Zhang Chaoyang.
Regarding this point, Charles Chao, who has already created history for Sina, firmly believed, "With this acquisition of equity, plus the shares originally held by our management team, it has exceeded 10%, making it impossible for any other player to invade Sina from the capital level."
It seems that Charles Chao has obtained the power to dominate the new world. However, there are also voices of doubt in the industry, believing that Sina's MBO is a tightrope walk for the rather prudent Charles Chao.
The doubts arise from where the $180 million for the MBO led by Charles Chao and the management team comes from? The combined annual salaries of Sina executives amount to only a few million dollars.
Therefore, the commentary points out: one possible speculation is "finding investors for MBO", thus, at least in the current stage, the Sina executives are essentially still small shareholders. The constraints on them have just changed in form.