Is it a misunderstanding that Hupu, which once reached a peak valuation of 7.7 billion, is now only worth 500 million?

The day before yesterday, Xunlei announced that it has reached an agreement with Shanghai Kuanghui Internet Technology Co., Ltd., the operator of Hupu, and plans to acquire Hupu with 500 million yuan in cash.

Three months ago, "Dark Undercurrents Waves" heard about this from the CEO of a sports community. We also asked Yin Xuebin, the current CEO of Hupu, whether he had considered the option of being acquired. After a five-second pause, he replied, "No."

Compared to the acquisition itself, the figure of 500 million is more concerning. In the first half of 2019, Hupu received a 1.26 billion yuan investment from ByteDance and was preparing for a second attempt to go public. At that time, Hupu's valuation reached a peak of 7.7 billion yuan. From 7.7 billion to 500 million, the old saying that "men's spending power is worse than dogs" is being repeated.

But there is actually a misunderstanding. When Hupu made its second attempt to go public, it included businesses other than the community, such as ShiHuo and Lurenwang. In 2020, Cheng Hang, the founder of Hupu, revealed to 36Kr the composition of Hupu's income, "The proportions of advertising, e-commerce, and innovative monetization are approximately 48%, 38%, and 14%."

An informed source told us, "Now the community is the main business of 'Hupu', and the original ShiHuo, Zaowu, etc. are no longer within the business scope of 'Hupu'."

And the subject of this acquisition by Xunlei, Shanghai Kuanghui Internet Technology Co., Ltd., is the community business. To put it plainly, the splitting of e-commerce or innovative businesses such as ShiHuo is the main reason why "Hupu" dropped from 7.7 billion to 500 million. And in such a downward environment, using cash instead of share swaps, 500 million is not excessive.

According to Yin Xuebin's revelation to "Dark Undercurrents Waves", "After 2021, Hupu has been profitable and doing well. Both income and traffic are continuously increasing." Despite 90% of its users being men, the structure has an advantage, "They are all young people and college students." And the next business focus of Hupu is to anchor the user's discussion and expression experience, strive to make product innovations, and build a community for mainstream male topic discussions.

One view is that the repeated failures of Hupu's IPO are related to its overly single monetization model. In the prospectus submitted by Hupu in 2017, advertising revenue accounted for as high as 61%, and value-added services including e-commerce accounted for only 20%. A CEO who also runs a sports community business believes that Hupu's users do not have enough stickiness and can only be monetized through brand advertising, which is indeed too single.

And according to "Dark Undercurrents Waves", after the business split, the proportion of advertising in Hupu is even more extreme, reaching 90%. So much so that when Yin Xuebin asked the audience at the 20th anniversary of Hupu what they saw first when they opened Hupu, the audience joked, "JD.com and Taobao."

As a community that has survived through the PC and mobile Internet eras and is still active on the front line - Tianya of the same period has become a thing of the past. What is more surprising about Hupu (or Cheng Hang himself) is its investment and incubation capabilities: It established Dongyu Capital to invest in several sports star projects; the two e-commerce businesses - DeWu and ShiHuo - that were incubated internally one after another have now surpassed the value of the Hupu community itself.

It can be understood that the Hupu community is now just a part parallel to many projects such as ShiHuo, and perhaps the most valuable thing is the founder's affection for this brand name.

Han Mu, the founder of Lanxiong Sports, once wrote in an article on the 18th anniversary of Hupu that Cheng Hang has intentionally kept a distance from the company - privately, he would say that "Hupu" has become the cause of his brothers. He also said, "In the past year or two, I've heard many rumors about the sale of Hupu, but fortunately, no deal has been successful. Because in my opinion, although Hupu's profitability is not that strong at certain times, and Cheng Hang himself has a need to cash out, Hupu is still a 'treasure that never runs out'."

In November last year, Cheng Hang, the rarely seen founder of Hupu, and Yang Bing, the co-founder (also the founder of DeWu), came to the 20th anniversary birthday party of Hupu.

At the scene, Cheng Hang, who believes that Hupu is not weakening because "men like to be with men", joked that they originally invited the famous talk show actor Yang Li, "but the other party said that our values don't match and refused." And Yang Bing reviewed the process of founding Hupu, "There is a kind of happiness close to that of a child... In that era, social platforms could still allow people to curse."

Looking back, this was the final farewell.

Image Source | IC Photo

Layout | Yao Nan

Text | Shi Jiaxiang

This article is from the WeChat public account "Dark Undercurrents Waves", author: Shi Jiaxiang, and is published with authorization from 36Kr.