Yidao Cash Bleed Continues, LeEco Might Offer Its Membership As Compensation
摘要： To date, TMTPost still hasn’t seen any official statement from LeEco and Yidao. If China Business Journal’s report is accurate, in any case this would benefit LeEco. On one hand, this solution compensates the users. On the other, LeEco’s listed company, le.com’s performance will be boosted as its member figure will surge. However, its legitimacy will require further discussion and the transfer of liability will need the approval from the creditors.
An insider from Yidao reveals that the cab-hailing company has prepared a plan B to comfort its users, China Business Journal reports. If Yidao fails to find financing, users’ deposit will be transferred to LeEco and get LeEco’s membership in return. This signals that Yidao is facing a dim prospect in this round of financing while facing cash bleed.
To date, TMTPost still hasn’t seen any official statement from LeEco and Yidao. If China Business Journal’s report is accurate, in any case this would benefit LeEco. On one hand, this solution compensates the users. On the other, LeEco’s listed company, le.com’s performance will be boosted as its member figure will surge. However, its legitimacy will require further discussion and the transfer of liability will need the approval from the creditors.
Yesterday on April 29th, Yidao’s founder Zhou Hang made a public appearance and discussed the dispute with LeEco for the very first time. He stated that he wished all the best for Yidao and the dispute was not caused by personal matters. He also made a comment on LeEco’s founder Jia Yueting:
People do good things, and also bad things. In most cases, people do what they have to do.
Constant exposures of Yidao’s cash bleed
At present, Yidao owes money to about six car rental companies, a total debt of ￥50 million, including over a ￥2 million debt owing to Hebei Zhongrui Communication Technology.
Aside from owing money to companies, it’s reported that Yidao also owes money to its platform’s drivers. Since June 2016, many drivers on Yidao’s platform have been complaining having trouble withdrawing money from Yidao. On February 23rd 2017, Yidao announced officially that relevant system has been forwarding data to the information platform of the regulator, which might cause temporary errors. During the same period, Zhou Hang started to leave Yidao.
On April 9th 2017, rumor had it that Zhou Hang had joined Shunwei Capital as a venture partner. It’s revealed on April 15th 2017 that Zhou Hang had sold all of his Yidao shares.
On April 17th 2017, Zhou Hanng confirmed in the afternoon that Yidao was indeed suffering from cash bleed and LeEco was to blame as it took ￥1.3 billion from Yidao. Zhou Hang’s statement confirmed the cash bleed rumor and brought the ￥1.4 billion debt to the table.
LeEco responded quickly on the same day, claiming that the company had never touched any of Yidao’s money, including the money topped up by the users, and that Zhou Hang is purposefully damaging LeEco’s image, accusing Zhou of slandering.
Both parties accused each other fiercely and Yidao’s three founders, Zhou Hang, Yang Yun, and Tang Peng all announced to resign from Yidao on April 20th 2017. Subsequently, Yidao appointed a new management team for Yidao in the afternoon on April 21st 2017. The six out of the seven people in the team are from LeEco.
Yidao’s founding team then backed away from the management team with LeEco taking control.
But Yidao’s cash problem still looms large.
On April 18th and 19th, Yidao faced pressure from the withdrawal crisis, as drivers gathered to protest in front of Yidao’s office in Beijing and Shanghai. Many drivers who failed to withdraw their money from Yidao refused to leave the scene.
On April 21st in the afternoon, Yidao’s board chair He Yi stated: “Yidao is having breakthroughs in finding finance currently. The cash withdrawal issue worrying Yidao’s drivers will be fixed in May.”
Despite the reassuring statement, many media outlets reported on April 25th that Beijing Municipal Public Security Bureau demanded Yidao to prepare ￥3 million for drivers to withdraw cash every day, otherwise Yidao’s actual controller Jia Yueting will be subpoenaed. However, Yidao clarified that the reports were all falsified.
So far, Yidao’s cash crisis remains unsolved.
Zhou Hang: He did what he had to do
An interesting report from Tencent Finance recorded Zhou Hang’s very first comment on Jia Yueting on the GMIC conference after the dispute.
“All my statements are not personal, that’s my bottom line. I don’t judge,” Zhou Hang said when asked for a comment on Jia.
“People do good things and bad things. Most of the time people do what they have to do.”
Zhou Hang also said that he’s not able to influence Yidao’s operation as he doesn’t control Yidao anymore. “But I am still Yidao’s founder and a shareholder,” Zhou added.
According to Zhou Hang, he does wish all the best for Yidao and all of the statements and actions weren’t personal. “I did all these in hopes of making Yidao better. If there are some wrong decisions that might harm Yidao, I as a founder will be very upset.”
“For reasons known to all, I left Yidao and joined Shunwei as a partner,” Zhou Hang confirmed his departure and joining of the investment firm.
In Zhou’s opinion, failure is an inevitable destiny for entrepreneurship. “Some people believe that I hold a pessimistic view towards failure, and asked me subtly if Yidao has been a failure. To be frank, it’s a very shallow opinion,” Zhou said.
“There is no a set definition or standard for an enterprise’s success,” he added, saying that innovations are also trial-and-error for an innovation-oriented enterprise, and that trial-and-error attempts are supposed to lead to failure.
“In China, most of the time innovations are valued when they succeed. Only when we can change this mindset and really value innovation itself, can we make actual innovation. There is no point of driving innovation with success,” Zhou concluded.
[The article is published and edited with authorization from the author @TMTPost, please note source and hyperlink when reproduce.]
Translated by Garrett Lee (Senior Translator at PAGE TO PAGE), working for TMTpost.