(Stills from "The Wolf of Wall Street")
Now it is difficult to say what Kunlun Wanwei is a company.
In 2008, Kunlun Wanwei, which originally started with browser games such as "Three Kingdoms", was once called "Little Tencent" when it was brilliant. In 2015, after Kunlun Wanwei landed on the GEM, the light of its main game business gradually dimmed, but the founder Zhou Yahui, who had an unusually keen sense of wealth, turned his attention to investment.
Over the years, Zhou Yahui's investment style has been bold and controversial in the market. From games, social networking, Internet finance, live broadcasting, metaverse, to the current new energy and large models, Kunlun Wanwei has hardly missed a feast.
According to the official introduction of Kunlun Wanwei, its business has covered information distribution, social networking, entertainment, metaverse, games and AIGC and other fields, including AGI and AIGC, overseas information distribution and metaverse, technology equity investment and other three major sectors.
Since the beginning of 2023, due to the fast train of the AI model, Kunlun Wanwei's share price has soared nearly 4 times, and the market value has also reached nearly 50 billion yuan. At the end of November 2022, before the release of ChatGPT, the company's market value was only 17 billion yuan.
▲ (Photo source/Straight Flush)
On April 23, Kunlun Wanwei disclosed its 2023 annual report and 2024 first quarter report. According to the financial report, in 2023, the company will achieve operating income of 4.92 billion yuan, with overseas business revenue accounting for 86.0%, an increase of 8.4% year-on-year, and net profit attributable to shareholders of listed companies of 1.26 billion yuan, a year-on-year increase of 9.15%. In the first quarter of 2024, Kunlun's overseas business revenue accounted for 88.4%, and the overall gross profit margin reached 78.4%.
However, under the hustle and bustle, it is not easy for Kunlun Wanwei to continue to dig gold in the large model market.
According to the financial report, Kunlun Wanwei's R&D expenses in the first quarter of 2024 reached 349 million yuan, a year-on-year increase of 104.4%. As a result, the net loss in the first quarter was 187 million yuan, and the net loss after deducting non-profits was 194 million yuan. Due to the acquisition of large model companies and other businesses, Kunlun Wanwei's attention-grabbing investment business also suffered a loss of 129 million yuan in the first quarter.
However, this net loss quarterly report did not affect the market's confidence in Zhou Yahui's future "trading". The day after the earnings report was disclosed, Kunlun Wanwei closed up 6.50%.
01, Zhou Yahui continued to run wildly
Born in the late 70s of the last century, Zhou Yahui's most impressive story is his accurate capture of market hotspots and mergers and acquisitions. But in an interview with the media, he bluntly said that he should be the first-echelon boss, reaching the height of "Wang Xing, Zhang Yiming", and what he cares about most is the identity of the entrepreneur.
But the biggest difference with Wang Xing and Zhang Yiming is that Zhou Yahui is obviously not a believer in time.
He once said: "I summarize more than ten years of entrepreneurial experience, an organization must change a wave of people in four to five years. Because the employees have not been successful for four or five years, they quickly slipped away by their own calculations. So I strongly recommend that when you start a business, you must think about four years to end the battle, unless a particularly good project is worth all-in, otherwise the world is changing too fast. If you can't end the fight within four years, I don't think it's a shame to be in Fast Failure, as the saying goes, it's better to die sooner than to live. ”
Driven by his bold personality, Kunlun Wanwei, which has a high degree of matching with the AI concept, has never hidden his ambition to do a big job since the large model entered the game. Zhou Yahui also became "focused" on the goal. "The past three years have made it very clear to me that a company needs to focus on one direction. ”
In April 2023, Kunlun Wanwei's self-developed large model "Tiangong" made a high-profile appearance, and self-proclaimed "China's first domestic large language model with real intelligence" and "China's first double 100 billion large language model benchmarking ChatGPT".
In the face of the opportunity, Zhou Yahui's turn also became extremely fast. In the same year, Kunlun Wanwei sold the new energy business "Green Vanadium New Energy", which had high hopes, and announced a strategic focus on AI.
At the same time, Kunlun Wanwei quickly completed the "family bucket" operation, iteratively launched the "Tiangong AI Search", the AI game "Club Koala", and the open-source 10-billion-level model Tiangong Skywork-13B series, and promoted "Tiangong" to pass the record and frequently attack at the technical and product levels...... After this adjustment, the AGI and AIGC business has also become one of the three major business segments of Kunlun.
▲ (Image source/Tiangong AI search)
Entering 2024, with the emergence of products such as the MoE (Hybrid Expert) model, the Wensheng video model Sora, and the Wensheng music video Suno, Kunlun Wanwei has followed suit and accelerated its own pace.
In June 2023, the star start-up MiniMax will fully switch to the MoE model, and in 2024, it will launch the first MoE model "Abab6" in China. Because MoE can split complex tasks and reduce the cost of model training and inference, it is regarded as one of the ways to popularize the application of large models in the future.
Soon after, Baidu founder Robin Li mentioned in a public speech that large-scale AI native applications will be mainly based on MoE, that is, a mixture of large and small models......
In response to the hottest MoE concept, on February 6, 2024, Kunlun Wanwei released a new version of the MoE large language model "Tiangong 2.0" and a new version of the "Tiangong AI Intelligent Assistant" APP, and said that the latter is the first 100-billion-level parameter large language model AI application equipped with MoE architecture in China and free for all C-end users.
On April 17, 2024, Kunlun Wanwei officially released the Wensheng music model "Tiangong SkyMusic", which is claimed to be China's first music SOTA (state-of-the-art, a model used to describe the current optimal effect on a task in machine learning) model, "It is the first time that China's self-developed large model technology has led the world in the field of AIGC."
02. Why did Tiangong choose open source?
The bet on the large model, along with the rise in stock prices, has brought Kunlun Wanwei back to the center of vision in the secondary market for a long time. In May 2023, Kunlun Wanwei was included in the "Da Mo MSCI China A Share Onshore Index Constituent".
However, as PMF (Product/Market Fit) has begun to become a high-frequency hot word in the venture capital market, how to realize the positive layout into commercialization and performance growth has become a more important proposition in the future.
On the commercialization route, facing the developer market, there has always been a dispute between closed-source and open-source for large models. The former, such as OpenAI, has adopted a closed-source strategy since the release of GPT-2 in 2019, with the company selling access to large model APIs but no longer publishing details about its training data and model architecture.
The advantage of closed source is that model developers have more control over access to the code, thus protecting intellectual property and technical secrets and ensuring security. At present, domestic start-up players such as Baidu Wenxin model, Huawei Pangu model, iFLYTEK Xinghuo model, as well as MiniMax and Dark Side of the Moon have all chosen the closed-source route.
The open-source model is represented by Meta's Llama model, which is in direct opposition to ChatGPT. The advantages of open source are that it is conducive to reducing the cost of commercial software procurement and enhancing customizability. Although it is not easy to quickly bring conversion benefits in the early stage, it can quickly reach users and drive the prosperity of the industry by using the attraction of "free". In the future of closed source, it is necessary to screen out users with strong willingness to pay, and build an ecosystem through cooperation.
At present, in addition to Kunlun Wanwei, domestic open source companies also include Alibaba Cloud Tongyi Model, Tsinghua University ChatGLM-6B, Peking University ChatLaw and so on.
From the perspective of Kunlun Wanwei, reaching users and increasing market awareness are regarded as the current focus. Fang Han, the current chairman and CEO of Kunlun Wanwei, once publicly shared: "The free, C-end model can give birth to the next generation of killer applications. ”
In October 2023, Kunlun announced the open-source of its 10-billion-level large language model "Tiangong Skywork-13B series", and in March 2024, Kunlun announced the open-source digital agent full-process research and development toolkit AgentStudio.
A person familiar with the matter explained to the "City Boundary" that Tiangong's open source has few restrictions on developers, "Developers can directly download and make applications as long as they abide by the relevant treaties, and there are no restrictions on commercial use." ”
According to it, most of the Chinese large models in the current open source community are not fully commercial, but require additional applications and commercial authorization processes by developers. "There are also cases where there are clear provisions on the size of the company, the industry, the number of users and other dimensions, and no commercial authorization is given. ”
▲ (Fang Han, Chairman and CEO of Kunlun Wanwei)
In addition to the large model, Kunlun Wanwei has also released a variety of AI products and services. Especially in important overseas markets, in the second half of 2023, Opera, a browser product under Kunlun Wanwei, announced that it would cooperate with OpenAI, launch native AI assistants, integrate a variety of AI tools and other measures, claiming to be the world's first independent browser brand with full access to AI.
At the same time, Kunlun Wanwei has also released AI virtual social products Linky, AI animation skyreels and other products overseas. According to the research of Soochow Securities, in April, Linky's ranking on the Google Play popular free social list in the United States increased rapidly, with 4/19 and 4/20 rising to 8th and 5th respectively, and the overall list ranking increased to about 30.
03, the capital bureau of the "tuyere catcher".
However, judging from Zhou Yahui's past investment history, Kunlun Wanwei's continuous layout on the large model side, the most lucrative return direction in the future is likely not to come from the business side, but from the capital market that he is more familiar with.
In the years before the large model was born, not only did Kunlun's stock price fall into the clouds, but the company's profits were getting thinner and thinner. According to financial data, Kunlun Wanwei's net profit will continue to decline in 2021 and 2022: a year-on-year decline of 69.32% in 2021 and a year-on-year decline of 25.49% in 2022.
But contrary to Kunlun Wanwei's own performance, Zhou Yahui's investment layout follows the wind. Since 2015, Zhou Yahui's investment in Yingke, Qudian, Dada, Kuaikan Comics, One Mu Field, etc., although there is a lack of connection on the surface, behind them all represent the hottest industries at that time.
In particular, Qudian's investment has attracted wide attention from Zhou Yahui's investment. In 2015, introduced by Cao Yi, the founder of Source Code Capital, Zhou Yahui participated in multiple rounds of investment in Qudian. In 2017, Qudian was successfully listed on the NASDAQ in the United States, and Zhou Yahui accurately hit its rhythm from take-off to end, and gradually reduced his holdings of Qudian after listing. Later, according to the statistics of all parties, the listing of Qudian brought about 1.64 billion US dollars in revenue to Kunlun Wanwei.
After a small test, Zhou Yahui was out of control. In 2016, Kunlun Wanwei and 360 acquired Opera, a Norwegian browser company, and climbed the tide of Internet going to sea. From 2016 to 2017, it acquired the American same-sex social networking site Grindr (which was sold in 2020), and in 2017, when the board and card games were booming, it acquired the board game platform.
In 2021, Kunlun Wanwei wrote the "metaverse" into the third quarter report of 2021, which once attracted the attention of the Shenzhen Stock Exchange. In 2022, Kunlun Wanwei will again "close" the new energy outlet, in addition to the previously invested Dongyue Future Hydrogen Energy and Honeycomb Energy, and announced a capital increase of 300 million yuan to "green vanadium new energy".
However, from 2022 onwards, Kunlun's investment income is not as smooth as it was a few years ago. According to the financial report, between 2017 and 2021, Kunlun Wanwei's investment income continued to expand, accounting for 31%, 46%, 47%, 67% and 107.7% of the current net profit respectively. In 2022, this indicator has plummeted to 8.67%.
At present, judging from the 2023 financial report and the first quarter report of 2024, the enabling role of AI in Kunlun's Wanwei business has not yet been clearly revealed.
In 2023, although Kunlun Wanwei's revenue increased by 3.8% year-on-year to 4.92 billion yuan, the net profit attributable to the parent company increased by 9.15% year-on-year to 1.26 billion yuan. However, if you disassemble it carefully, you will find that in 2023, Kunlun Wanwei's fair value change income and investment income will be 1.283 billion yuan and 255 million yuan respectively, totaling 1.538 billion yuan - in other words, Kunlun Wanwei's profit growth during the year still has investment-driven factors.
In the first quarter of 2024, due to a sharp increase of 104.37% in R&D expenses and phased losses in investment business, Kunlun Wanwei's net profit declined year-on-year, and even turned from profit to loss. Data show that Kunlun Wanwei lost 187 million yuan in the first quarter, a year-on-year decrease of 188%.
When commercialization has not yet seen the light of day, Zhou Yahui's capital operations have begun to be intensive.
On June 20, 2023, Kunlun Wanwei issued 5 announcements in a row, officially announcing that Zhou Yahui's ex-wife Li Qiong, as a major shareholder, carried out a shareholding reduction plan of no more than 3% at the high point of the stock price. After the reduction, Li Qiong also said that more than 50% of the amount obtained from the reduction of shares after tax will be lent to Kunlun Wanwei at an annual interest rate of 2.5% "to support the long-term development of the company's AGI and AIGC business".
This kind of alleged "left-handed to right-handed" borrowing behavior obviously cannot be bought by the market and regulators. The Shenzhen Stock Exchange immediately inquired about this series of operations, and Kunlun Wanwei's stock price began to fall step by step.
At the same time, Kunlun Wanwei also announced that in order to build an AGI platform, it would acquire an AI company called Singularity Zhiyuan for 1.145 billion yuan. However, the market found that although Singularity Zhiyuan is called an artificial intelligence company, its controller, Wang Liwei, once served as the general manager and CFO of Kunlun Wanwei. As of the end of the first quarter of 2023, Singularity Zhiyuan's total assets are only 4.56 million yuan, but the total liabilities are as high as 39.1722 million yuan.
Three months later, Kunlun Wanwei issued an acquisition announcement, announcing that it would invest 680 million yuan to acquire 58% of the shares of a computing chip company named "Aijie Kexin" to implement its own AI development strategy. Soon after, the company was found to have just been established on August 1, 2023. After only 2 months of establishment, it was bought by a listed company for 680 million yuan, which is too unbelievable.
As a hot catcher in the market, Zhou Yahui's sense of capital is unparalleled. Being able to bet in time and soar in stock prices in the era of large models once again proves his excellent vision and quick decision-making. However, as the next stage of market competition begins to enter the knockout round, whether Kunlun Wanwei is willing to be a long-distance runner still needs to be tested by the market.
Author | Dong Wenshu
Edit | Li Yuan
Operations | Liu Shan