Exclusive | Interview with Chen Cong of Dongqiudi: In the past, I regarded everyone as a good person.

 

Text | Shi Jiaxiang

Editor | Liu Jing

 

On the evening of October 30th, Chen Cong, the founder of Dongqiudi, suddenly decided to respond to some questions online. It was his first live - streaming, and with hasty preparations, it was interrupted twice. After the live - streaming ended, he still suffered from habitual anxiety and didn't fall asleep until eight or nine in the morning. This state has lasted for more than half a year.

Half a year ago, because Tianxing Capital, the investor in Dongqiudi's Series C financing, filed an arbitration against Dongqiudi, more than 40 trademarks of Dongqiudi were bought by its competitor, "Zhibo8", at a price of more than 20.9 million yuan.

During the agonizing half - year, Chen Cong never appeared to explain the reasons. Until the day before the live - streaming, he received the judgment result from the First Intermediate People's Court of Beijing: the auction of Dongqiudi's trademarks was revoked.

He originally wanted to respond to the whole thing officially, but later he couldn't hold back and wrote an article in half an hour and posted it on his WeChat Moments. In it, he wrote that "Zhibo8" had colluded with the so - called "shareholder" Tianxing Capital, split Dongqiudi's trademarks, and blocked other buyers to divide up their core assets at a low price.

All this turmoil started in September 2016. Dongqiudi received Series C financing led by Suning at that time, and Tianxing Capital invested 30 million yuan as a follow - on investor. Chen Cong didn't care much about this money. He chose Tianxing Capital mainly because "they played football together and had a good chat". Even now, it can still be found that Tianxing Capital and Dongqiudi had a friendly football match on Zhichun Road.

In Chen Cong's view, when reviewing the whole thing now, although there are rights and wrongs of the relevant parties, it is also the result of many coincidences. Chen Cong founded Dongqiudi at the age of 24. For such a young entrepreneur, as he said, "it's very difficult to figure out so many things."

Yesterday, "Undercurrent Waves" interviewed Chen Cong in Dongqiudi's office. Regarding the ins and outs of this dispute, the rights and wrongs of several parties involved, and the 11 - year journey of founding Dongqiudi, Chen Cong answered frankly. He is a person with a distinct personality and doesn't avoid anything. He repeatedly asked us if he had expressed himself clearly.

There are no desks and computers in Chen Cong's office, only several sofas for solitude and meetings. Chen Cong said that he no longer manages the daily operations of the company. He only uses his mobile phone to handle emails and check the Dongqiudi App.

After moving to the 11th floor of Jinqiu Building in 2015, Dongqiudi has never moved again. If there hadn't been this public opinion storm, it would still be growing at its own pace in an unknown corner.

 

I've been taking painkillers until I vomit for half a year

Undercurrent Waves: "Zhibo8"'s lawyer responded to you yesterday, believing that the trademark rights of Dongqiudi after the auction belong to "Zhibo8", just like a real - estate auction. You should give way.

Chen Cong: This is nonsense.

Houses are different from trademarks. Trademarks need to be transferred first before you can give way. Dongqiudi has more than 160 trademarks, and they only bought more than 40. According to the law, when an enterprise transfers a trademark, it needs to transfer similar trademarks together. Otherwise, if trademarks are in the hands of different companies, the market will be in chaos - we can launch Dongqiudi, and they can too.

So the normal logic is that we can use the trademarks until "Zhibo8" completes the registration and transfer.

Undercurrent Waves: Who currently holds the trademarks?

Chen Cong: The trademarks are in our hands, but they are in a frozen state. In fact, the trademarks after the auction are also in our hands. From a legal perspective, the property rights belong to "Zhibo8", but the right of use has always been in our hands. They need to complete the registration and transfer before they can use them.

The official version of Dongqiudi hasn't been launched yet. Dongqiudi Pro has been launched first to ensure that users can download it normally. Maybe it will be available in a few days.

Undercurrent Waves: How did you first get in touch with Tianxing Capital?

Chen Cong: There were several partners in Tianxing Capital before. They were all football fans and played football together. They seemed like nice people, but the negotiation was quite casual. It was in 2016, and the financing in that round was more than 180 million yuan, led by Suning.

Undercurrent Waves: In 2016, the situation of private PE firms like Tianxing Capital was not very good. Why did you still take their money?

Chen Cong: I didn't even understand the relationship between LP and GP at that time. I basically didn't study these private PE firms. I thought it was just a follow - on investment with a small share. Moreover, many of my friends were invested in by Tianxing Capital, and now they all come to ask me how to handle this matter.

Another reason at that time was that we happened to split the company into a VIE structure, so the investments from Suning and Tianxing Capital came in the form of debt - to - equity conversion. Around 2020, Tianxing Capital asked to get back the 30 million yuan invested at that time.

During the pandemic, our business was a bit difficult. We gave 10 million yuan first and planned to pay the rest in installments. As a result, halfway through the negotiation, in 2021 or 2022, Tianxing Capital suddenly filed an arbitration. At that time, we thought that we would give the money in the end anyway, so we didn't spend time on it.

Undercurrent Waves: Since the other party has applied for arbitration, this matter must not be simple. Why didn't you "spend time on it"?

Chen Cong: The interest we initially gave to the shareholders was quite high, 12%. So the arbitration amount was forty or fifty million yuan, including the principal of thirty million yuan and other fees. But to put it bluntly, we didn't think they were bad people. We just wanted to have a good talk and give them whatever they asked for.

It was difficult for us to pay back thirty or forty million yuan at once, so we kept negotiating with them. But every time we finished talking, the other party would go back on their word the next day and ask for an additional three or five million yuan. It was always like this. Then in June or July last year, we learned that the trademarks were going to be auctioned.

Moreover, in fact, we didn't know that only 40 trademarks couldn't be transferred until the day the auction was completed.

Undercurrent Waves: It seems that you are quite careless and have always been pushed forward.

Chen Cong: I am really careless. One wrong step leads to a series of mistakes. I didn't expect the trademarks to be really auctioned.

Undercurrent Waves: Is it possible that Tianxing Capital thought you didn't have enough cash?

Chen Cong: Later, even if Tianxing Capital asked for ten or twenty million yuan at once and the rest in installments, we would find a way to handle it. But later, no matter how we negotiated, we couldn't reach an agreement. In fact, after the auction, we also proposed a settlement agreement to Tianxing Capital and asked other shareholders to help collect the creditor's rights, which was higher than the 20.9 million yuan auction price, but they also refused.

Undercurrent Waves: If you could pay back the arbitration money within a certain period, theoretically, the auction wouldn't have happened.

Chen Cong: Last year, we were large - scale repurchasing shares from the original shareholders. Basically, whenever a shareholder wanted to exit, we were paying in installments. So we couldn't take out so much money at once from the account. Unless it was during the World Cup or the European Cup.

Second, our internal judgment was that the trademarks were of great value. If the big players in the industry didn't participate, there wouldn't be so much money involved, and they definitely wouldn't compete by buying trademarks.

The day before the auction, we were still talking with Tianxing Capital about how to repay the money. We didn't expect "Zhibo8" to become a variable in this matter.

Undercurrent Waves: What's the current internal situation of Tianxing Capital?

Chen Cong: We didn't have much contact with them in the past four years. Many of their employees have left. From 2020 to now, I've met four groups of people from Tianxing Capital. Now, there should be only three partners in Tianxing Capital, plus some post - investment personnel.

Undercurrent Waves: When reviewing the whole process of your interaction with Tianxing Capital, which decisions do you think were not ideal?

Chen Cong: First of all, when we received the investment, the company didn't conduct a thorough background check. We were too naive and thought the share was small, so we didn't think too much about it.

Second, the subsequent communication was not very smooth, and we didn't know their problems. If we had known how difficult their situation was when negotiating the repayment in 2020, we could have tried to lower their expectations and quickly solved the problem by repaying the money.

Finally, after the trademarks were frozen, we didn't take counter - measures. To be honest, I initially regarded everyone as good people. This incident really surprised me and had an impact on my values.

Undercurrent Waves: Have you communicated with "Zhibo8"?

Chen Cong: On the first or second day, we tried to persuade them not to pay the money, saying that the trademarks couldn't be transferred. If they thought there were some grudges, we could have a good talk. Don't turn it into a dead - end situation.

Undercurrent Waves: In 2015, for a while, when you searched for "Zhibo8" on Baidu to download it, you actually downloaded "Dongqiudi". At that time, you responded that all the advertising placements were on regular Internet companies and complied with the rules. Has your opinion changed now?

Chen Cong: At that time, we were competing with each other to gain users, just like now, when you search for Dongqiudi, other apps may also rank at the top. Although I was stubborn and said so at that time, in fact, we had already stopped. If you feel uncomfortable, I won't do it to make you sick.

Because the three - character name "Zhibo8" can't be registered as a trademark, there are also many "Zhibo8" - related things in the market. I'm not targeting anyone. During the period when the trademarks were taken away, we even thought about the worst - case scenario and simply named our app "Zhibo8" (laughs).

Undercurrent Waves: What's your current thought?

Chen Cong: To be honest, I'm a bit regretful. I feel that I've been hurt for too long. After going to the court in June, if I had directly made a public report, written an article, and made a video with my ID card for reporting and posted it on Dongqiudi, and there was the European Cup at that time, and our app hadn't been taken off the shelves, it would have gone viral immediately. Maybe the problem could have been solved quickly.

Now, the core is to get justice. Everyone in the company is under too much pressure. We just want to expose this matter, tell the football fans what happened, and also remind others not to mess around.

Except for this incident, Dongqiudi is doing well and doesn't want to be over - exposed. Really, I've been taking painkillers until I vomit for half a year.

 

It was very difficult for me to figure out so many things at the age of 27

Undercurrent Waves: A few years ago, there were rumors that Dongqiudi was going to go public?

Chen Cong: Actually, I never wanted to go public, but I couldn't tell the shareholders that (laughs). If we were good at dealing with capital, we wouldn't have chosen the Dongqiudi or football track at the beginning. At least, we would have chosen to do something in the sports field.

Undercurrent Waves: Did you think so even during the rapid financing period before 2016?

Chen Cong: I started my business in 2013 when I was only 24 years old. I didn't figure out how to deal with capital or get financing.

The economic environment was in an upward cycle. You just followed what others did. I just wanted to raise funds desperately to expand the market. Even later, when adjusting the VIE structure, I also followed others' advice.

During this process, the capital cycle entered a downward phase, and the Dongqiudi company wasn't as attractive as expected. The Chinese football market isn't large enough.

Undercurrent Waves: When did you realize that the environment had changed and Dongqiudi stopped its rapid development?

Chen Cong: Actually, it's not entirely due to the environment. During the Series C financing, Suning was the leading investor. It gave a higher valuation. At that time, Suning also bought Inter Milan and planned to cooperate with a sports giant. But Suning was also doing Suning Sports.

All our subsequent structural difficulties stemmed from our cooperation with Suning, not only the investment but also the investment business cooperation, integration, and restructuring. Suning was unwilling to sign the debt - to - equity conversion agreement, and I was unwilling to sell.

After a long period of discussion and adjustment, no other institutions were willing to invest, and no one wanted to invest in a company with a debt of 150 million yuan.

At that time, we were also investing a lot of money in the overseas market, All Football, but we ran out of money halfway.

Undercurrent Waves: Didn't anyone tell you that there were risks?

Chen Cong: Things went too smoothly before, so I had a high tolerance for risks. At that time, I thought it would be quick to split the company into a VIE structure. But that year, it happened to be the time when the country's foreign exchange control was the strictest, and it didn't allow RMB to go abroad, which delayed the process for a long time. As a result, Suning's attitude also changed.

Assuming that the structure was completed within the year, it would have become equity immediately, and there wouldn't have been the problem of repaying the debt later. There were so many operations at that time that I can't explain now. It was all a series of coincidences.

Later, after we couldn't get financing in 2018, the industry also started to decline, and then the pandemic came. There were no football matches for half a year, and we lost six or seven million yuan a month. Now, we are repurchasing shares, and the problems just keep coming. After this trademark incident, the company has become quieter instead.

I was only 27 years old in 2016. It was my first time starting a business, and I managed to reach the Series C financing. Many things were experienced for the first time. It was very difficult to figure out so many things at the age of 27.

Undercurrent Waves: How much money has Dongqiudi raised in total?

Chen Cong: I haven't calculated it specifically. Maybe it's more than 300 million yuan.

Undercurrent Waves: How much more do you need to repurchase?

Chen Cong: About 100 or 200 million yuan. Sequoia and Xianfeng, the earlier investors, don't have the need to exit yet.

On the day of the judgment, I was still negotiating with Suning. We made a schedule and planned to finish all the repurchases by 2026, which happens to be the year of the World Cup. I'm a bit traumatized now. As long as the negotiation result isn't overturned later, I'm okay with it.

 

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