The founder of Cudi Coffee was forced to hold on to 1.89 billion, and after 20 years of entrepreneurship, he is still a bad man when he returns
The so-called thunderstorm every year, this year is particularly many, a few days ago Cudi Coffee had another big event, its company founder Lu Zhengyao, was sentenced to compulsory enforcement by the Beijing court, and the execution target actually reached an astonishing 1.89 billion yuan.
The name Lu Zhengyao may be relatively unfamiliar to most people, but if you mention Shenzhou Car Rental and Luckin Coffee, which he also participated in the establishment before, it should be considered that everyone knows it.
Especially Luckin Coffee, in the financial fraud scandal exposed in 2020, Lu Zhengyao has always been considered one of the masterminds.
Although Luckin was delisted because of the exposure of fraud, Lu Zhengyao only withdrew from the company and was not subject to other investigations, which can be regarded as a safe pile.
Even in 22 years, he was able to make a comeback, and the Cudi he created was once considered Luckin's strongest competitor, and many people thought that Lu Zhengyao could create a business miracle again.
As a result, I didn't see a miracle, but a familiar smell came again.
Lu Zhengyao is a native of Fujian, born in 1969, graduated from the University of Science and Technology Beijing in 91, and worked as a communication equipment agent in Zhongguancun, Beijing.
It was also in this process that Lu Zhengyao got acquainted with Liu Erhai, the famous godfather of investment in China.
In 2005, Lu Zhengyao started his first business and established UAA, an automotive after-sales service company. In the first round of financing, the lead investor was Liu Erhai, who was already in charge of Lenovo Investment, and the first investment reached 8 million US dollars.
With the UAA foundation, Lu Zhengyao quickly expanded his business to the field of car rental, and it was from here that CAR was established in 2007, and a formulaic modern alchemy has begun to take shape.
The whole process is divided into three steps, the first is to attract venture capital to expand rapidly, then to impact the listing with the volume supported by burning money, and finally to cash out at a high level in the capital market and choose the opportunity to leave the market.
This formula may seem like a smooth one-shot formula, but in reality, 99% of businesses get stuck in the first step.
After all, investors' money is not blown by the wind, and if you want to persuade them to pay for it, either they have real technology, or they really have a story, or they have a real relationship.
And Boss Lu is obviously in a superposition state of good stories and hard relationships.
In terms of storytelling, whether it is Shenzhou Car Rental or later Luckin Coffee, the starting point of Lu Zhengyao's story is that the Chinese population base is large, so whether it is car rental or coffee, there will be unparalleled growth potential.
However, necessary conditions are not equal to sufficient conditions, and a large population does not necessarily mean a large market.
Especially at that time, China was not the only one engaged in car rental, and the rapid growth of the number of private cars and the continuous development of online car-hailing were constantly questioning the true potential of the car rental business.
But these problems did not trap Lu Zhengyao, because relationships are the core competitiveness of Shenzhou.
Liu Erhai first provided Lu Zhengyao with a bridge loan of 10 million US dollars, and then in 2010, Legend Holdings became the largest shareholder of CAR for 1.2 billion yuan.
In addition to Liu Erhai and Legend Investment, Lu Zhengyao also hooked up with Li Hui of Warburg Pincus at this time. In 2012, Warburg Pincus invested US$200 million, and at the same time set up a bridge for Hertz Rental Car in the United States to join the strategic investment, which directly helped CAR successfully land in Hong Kong in 14 years.
At that time, the listing price was 8.5 Hong Kong dollars, because of the A-share bull market, global Chinese concept stocks are soaring, and CAR has also doubled in less than a year, and soon exceeded 20 Hong Kong dollars.
With the end of the initial shareholder restriction period, the last step of Boss Lu's alchemy also came as scheduled.
From June 2015 to March 2016, in nine months, Lu Zhengyao and several major shareholders frantically sold 42% of CAR's shares, cashing out a total of $1.6 billion.
Shenzhou Automobile plummeted all the way and soon broke down, and most of the small and medium-sized investors who followed up after the listing became the miserable leeks under Boss Lu's bloody sickle, and they lost all their money.
What is quite black humorous is that in 2016, after Boss Lu cashed out, he also won the "China Brand Forum China Brand Figure" award of People's Daily, Xinhuanet's "2016 China Social Responsibility Outstanding Figure" award, "2016 Best Business Leader Award" by China Business News, "Entrepreneur of the Year" and "2016 Top Ten Economic People of the Year" by "Southern Metropolis Daily"
It can only be said that Boss Lu's "hard relationship" has long been beyond the scope of the investment community.
The great success of CAR's capital operation has also made Lu Zhengyao, Liu Erhai and Li Hui regarded as the "Golden Triangle" by the business community and called the "Shenzhou Department".
And the next work of the Shenzhou Department is Luckin Coffee.
In October 2017, the first Luckin Coffee opened in Beijing, and since then it has spread across the country with wildfires, and by the end of the second year, the number of Luckin stores had reached 2,000, and by the end of '19, it had doubled to 4,507.
Luckin's overlay has a very obvious Lu style, not seeking profits, regardless of costs, and can even be said to be unreasonable.
Previously, when CAR was at its peak, it had as many as 45,000 vehicles, which was equal to the sum of the 2 to 20 in the industry, and similarly, Luckin opened 2,000 stores a year and 4,000 stores in two years, except for Starbucks, it was also far ahead of all competitors.
In May 2019, Luckin landed on the NASDAQ, setting a record for the fastest listing in the world.
You know, at this time, it is less than 18 months away from trial operation, compared to the 21 years from Starbucks' establishment to listing, Luckin is simply riding a rocket on the road.
However, the hidden danger of rapid expansion has long been buried.
Although Luckin can pull out the façade of a listed company in a short period of time, this model of losing money and making money is obviously unsustainable.
And even if the goal is set to go public and cash out, the performance is too bad, and it is difficult to fool small and medium-sized investors to send money, so what should I do at this time?
Now we all know the answer, and that is fraud.
In January 2020, Muddy Waters Company came up with an 89-page short-selling report, directly accusing Luckin Coffee of financial fraud and inflating its operating income by 2.2 billion. At the same time, the company's management also cashed out about $2.5 billion through multiple equity pledges.
At first, Luckin refused to admit it, but with the increasing pressure from all parties, it finally issued an announcement admitting that it had indeed falsified 2.2 billion before the first year of listing.
As for who should bear this responsibility? Luckin said that it is the responsibility of CEO Qian Zhiya and COO Liu Jian.
This statement is obviously unconvincing, everyone thinks that this is abandoning the car to protect the handsome, Qian Zhiya and Liu Jian, two senior workers, actually helped Lu Zhengyao carry the black pot.
And because Luckin's fake appearance is too ugly and the methods are too ugly, it has had a very bad impact on the entire U.S. stock market.
Not to mention the 80% plunge of Luckin itself, Baidu, JD.com, and Pinduoduo have all suffered together, and even Americans have taken advantage of the situation to boycott all Chinese concept stocks.
Therefore, the domestic Securities Regulatory Commission also felt disgraced and said that it would also be held accountable.
And the so-called "brothers are birds in the same forest, and they fly separately when disaster comes", and the golden triangle of the Shenzhou system also appeared at this time.
Prior to this, Liu Erhai and Li Hui had already set up their own businesses, leading Joy Capital and Centurium Capital to invest in Luckin respectively. They were able to tolerate Lu Zhengyao's money-burning marketing at any cost, and naturally they were also betting that after Luckin went public, they could reproduce the precedent of Shenzhou Car Rental, and they could quickly obtain high returns in the stock market.
But they don't know (or pretend not to know), this Lao Lu's methods turned out to be so wild, and he was caught directly counterfeiting 2.2 billion, which is really breaking through the bottom line of business.
So after the incident was exposed, they stood up for the first time to cut it, and Liu Erhai also organized an internal investigation team with another independent director, Shao Xiaoheng, to self-examine the financial fraud.
These actions are a kind of crisis management for Liu and Li, and the core goal is to deal with the hearings of the US regulatory authorities, try to keep the shell of Luckin, and not to be taken out of the US stocks. Of course, this is also about absolving them of their responsibilities.
But in the eyes of Boss Lu, you have all picked it up, don't you want me to carry the black cauldron? After all, Rui Xing sacrificed Qian Zhiya and Liu Jian like this before.
So at the end of June, he suddenly asked Luckin to issue an announcement announcing the convening of an extraordinary general meeting of shareholders to discuss the removal of the directors of Golden Triangle and Shao Xiaoheng. Immediately after Luckin announced that it would be delisted on the NASDAQ, Boss Lu directly used the way of flipping the table to block the possibility of finding out who was spitting on the dinner table.
This is not over, at the beginning of July, it was supposed to be four people who quit the board of directors together, but Liu Erhai and Li Hui found that why the newly added executives were all from your old Lu?
With you, you borrowed a knife to kill people, and took advantage of the company's crisis, but you killed the two of us?
However, although brotherhood is made of plastic, brothers are not made of plastic, and capital bosses are not fuel-efficient lamps.
At the end of the month, Centurium Capital issued a request for another reshuffle of the board of directors, on the one hand, to eliminate mainland personnel, and at the same time to ask Shao Xiaoheng to re-establish as an independent director to cooperate with the investigation.
At this time, Lu Zhengyao was no longer able to resist.
As mentioned earlier, he pledged a large amount of equity to a number of banks in order to cash out.
Originally, if the fraud was not exposed, Lu Zhengyao could rely on stock price fluctuations to sell high and buy low, but the exposure of Troubled Water disrupted all the rhythm.
Luckin's plunge and delisting made these banks sue Boss Lu in turn, and in the court, of course, Lu Zhengyao couldn't win a little, and the result was that the equity was liquidated, and Centurium Capital in turn became the largest shareholder, and at the end of July, the board of directors was reorganized, and the Lu family was basically wiped out.
And Boss Lu's last hope is Guo Jinyi, the new chairman and CEO of Luckin, CEO Guo has been his assistant to the chairman of Shenzhou since 16 years, and it stands to reason that this is his lineage.
The results proved that the brothers were unreliable, and the subordinates were even more unreliable, Guo Jinyi quickly drew a clear line with Boss Lu, and Luckin Coffee basically achieved "de-landing" in 21 years.
After the betrayal of his relatives left, Lu Zhengyao was also out of the game, but the thorn of Luckin still brought him a huge psychological shadow.
So we see that in 22 years, Lu Zhengyao went out of the mountain again, and he chose the coffee track. The newly built Cudi is completely copying Luckin's style of play to fight hand-to-hand, and if you want to analyze it psychologically, Boss Lu obviously has the intention of revenge.
However, time has passed, and the original Boss Lu has the blessing of the Shenzhou system, and he has never worried about burning money, but now?
The disturbances of Luckin Coffee have completely ruined Boss Lu's reputation, and the investment community has avoided it.
Therefore, in Cudi, Lu Zhengyao can only take another "joint venture" model, that is, small capital to join, to attract small and medium-sized investors to burn money with Boss Lu.
Many small bosses don't understand Lu Zhengyao's "glorious performance", that is, they are bluffed by the name of the business tycoon, and they are attracted by the prospect of benchmarking Starbucks, so they blindly invest money in it, and after a year of soaring, 99% of them are losing money.
Including Lu Zhengyao himself being forcibly enforced, this is not the first time. At the beginning of the year, he added a new piece of 7.81 million executed information, and the total amount of his execution at that time had exceeded 1.09 billion.
Lu Zhengyao, who used to be able to easily realize modern alchemy, now finally found that without the blessing of big capital, he couldn't even take the first step.
Do you think Lu Zhengyao can make a comeback? Welcome to leave a message in the comment area.