Tech giants start by disassembling systems

Chapter 76 The Words of Capital

2019 October.

The news of Tianying's acquisition had been dormant for a month. Industry attention had gradually shifted away. Until Haotai Capital held its first media briefing after the acquisition was completed.

The event took place at a five-star hotel in Futian District, Shenzhen. More than thirty media outlets attended, covering almost all sectors: technology, finance, and industry. Taohuayuan was represented by Lu Weimin, while Haotai Capital was represented by Xia Kanghao, an executive director—45 years old, primarily engaged in PE investment in the hard technology sector, and had previously maintained a relatively low profile.

The first half went smoothly. Lu Weimin introduced Tianying's next direction—to continue to cultivate the consumer market, introduce new capital to accelerate product iteration, and plan to release a new flagship model before the end of the year. All the statements were within expectations.

The problem lies in the question-and-answer session.

A reporter from a financial weekly stood up and specifically asked Xia Kanghao a question.

"Mr. Xia, there's been a lot of speculation about Haotai Capital's motives for acquiring Tianying. One view is that Tianying's biggest weakness is flight control—it lags behind competitors like Hongyuan by more than three years. How much is Haotai planning to invest in flight control?"

Xia Kanghao smiled. His smile carried a slight impatience at being asked a question he knew well.

"Please don't mind me saying something bluntly."

He leaned toward the microphone.

"You tech people always value technology above all else. But in my twenty years of investment experience—flight control systems aren't as mysterious as people say. Are they some kind of rare commodity? Is it about throwing money at chip-level technology? No. In the end—and I'm telling you this—the ultimate winner in the drone industry won't be a company that just writes code better than others."

The room fell silent for a moment.

Coincidentally, Lu Weimin was sitting right next to him. He wanted to say something, but didn't have time.

Xia Kanghao continued.

"We at Haotai Capital have researched the entire industry. Flight control systems are readily available from companies like Dapao. We can just buy them. Upstream, there are open-source solutions from Europe and America, and professional solution providers in China. Our next step is to streamline Tianying's self-developed flight control team and then purchase mature solutions as a package. Where will we invest the money saved from Jinshang and solution provider business?"

He blinked.

"Channels, brand, and marketing. These are the long-term competitive advantages of the drone industry. Companies like Dajiatong and Hongyuan will ultimately be content with being just factories—their technology is excellent, but nobody knows about it, and they don't qualify as brands in the eyes of consumers."

Xia Kanghao spoke casually, even with a touch of humor. A few people laughed. Several reporters covering technology didn't laugh.

Lu Weimin's face paled slightly. But he didn't change the subject. As the CEO, cutting ties at this moment would only worsen the situation.

Another reporter followed up with, "Mr. Xia, do you mean that Tianying will no longer develop its own flight control system? This seems inconsistent with Commander Lu's statement just now."

Xia Kanghao waved his hand.

"The in-house R&D team will retain a portion as a technological reserve. However, as the controlling shareholder, we will not continue to invest heavily in projects with excessively long payback periods. This is basic capital rationality."

"How far can a company go without developing its own flight control system? Hongyuan has already turned flight control into a platform..."

Xia Kanghao interrupted him directly.

"Hongyuan? Hongyuan is a very interesting case. I respect their technology. But in the capital market, what matters most is cash flow and market share. It's the ability to turn investment into wealth. As for your question about 'how far'—I'm not interested in the word 'far.' I only care about how long it takes to go public and how long it takes to exit."

The entire room fell silent once again.

This statement was the final blow. The previous statement, "Just buy open-source solutions," was already explosive enough, but adding "I'm not interested in the word 'far'" directly brought to the forefront a long-standing issue in the domestic tech industry over the past two decades.

Lu Weimin took over the follow-up questions and tried to smooth things over, but it was too late. By the time the media briefing ended, a group of reporters were already whispering among themselves at the door. That evening, Xia Kanghao's exact words were copied verbatim into the headlines of three major financial media outlets.

Xia Kanghao of Haotai Capital: Developing your own flight control system is pointless; just buy open-source solutions.

"I'm Not Interested in 'Distance': How an Investor Views the Final Step in the Drone Industry's Development"

"The Everlasting Dialogue Between Capital and Technology: A Look at the Tianying Acquisition Announcement"

The next morning, the three articles were flooded with posts in drone industry WeChat groups, on industry Weibo topics, and on the Weibo accounts of tech influencers. The comment sections were filled with warm and friendly messages.

"This is the most straightforward expression I've ever seen from an investor. They're getting straight to the point, blatantly open about their interests."

"So, after Tianying was acquired, was the plan just to package it for an IPO and then sell it?"

"An investor says he doesn't care about the 'distant future'—how can he even say that?"

"I suddenly understand why there are so few tech unicorns. Because in the eyes of capital, a keen eye is a discount factor."

The most outrageous comment came from a veteran engineer who hadn't been in the drone industry for five years: "How many corpses have I seen in this industry? Every single one of them has one sentence engraved on it: Flight controllers can be bought. The companies that could buy them are all dead now."

At 10:00 AM, Hongyuan's official WeChat account was flooded with private messages. Multiple media outlets wanted Hongyuan to make a statement. The fact that its competitors had been acquired and that investors had publicly discriminated against Hongyuan's "self-developed flight control system" provided a crucial window for Hongyuan to voice its concerns.

Sun Chen walked into his office with interview requests from three media outlets.

"President Su, this is a fantastic opportunity. Really. Everyone at Hengliu is waiting for us to make our stance clear."

Su Chen didn't answer. He sat in front of the computer for a long time. On the screen was a full transcript of Xia Kanghao's words. He watched it twice.

"I do not give interviews."

Sun Chen was stunned. "President Su, this—"

"Accepting this will only turn it into a war of words between Zhongtianying and Haotai. The industry doesn't need to watch Hongyuan and Haotai hurling insults at each other. But the industry does need someone to clarify certain issues."

He closed his computer.

"Cancel all your social engagements tonight. Give me one night."

Sun Chen didn't ask any more questions. She turned and left the office.

That night, the office lights on the seventeenth floor of the Longhua headquarters stayed on until 2 a.m.