Chapter 25: Momo Hits One Hundred Thousand Registrations, WeChat Sets Sail

The page switches to the CSI 300 Index. It is 9:25 AM. Today, the CSI 300 opened at 2,804.58 in the call auction, marking a low opening of 0.9%.

Observing the market, Yan Fei felt it was certain to open low and trend lower. Reviewing several technical indicators, he noted that the CSI 300 was in a downward channel, and the 2,800-point mark was bound to be breached.

He backtested the CSI 300 market data. Last November marked the lowest point in recent years, while the current peak of 3,803.06 had been reached after a nine-month climb from 1,606.73. With the index currently at 2,804.58, the bull market had effectively ended, lasting only nine months with a 137.5% gain.

The previous bull market, from July 2005 to October 2007, lasted two years and three months. This suggested that the bellwether for the A-share market had changed, along with the rules of the game. Future bull markets would likely be short and bear markets long, with bull runs potentially becoming increasingly brief.

Yan Fei pondered this conclusion. He believed that after four years of market tempering since the introduction of stock index futures and short-selling rules in 2005, large institutions and major investors had mastered the art of profiting from bear market stages. Having realized that shorting in a bear market was easier and more profitable than riding a bull market, they had cut this cycle short. Even if future bull markets occurred, he expected them to last no longer than a year.

Shaking off these complex thoughts, Yan Fei turned his attention to potential support levels. He quickly calculated: the first at 2,953.76, the second at 2,791.54, the third at 2,663.14, the fourth at 2,466.33, and the fifth at 2,237.09. Two minutes into the session, the CSI 300 had fallen to 2,799.54, breaking the 2,800 threshold.

This was perilously close to the second support level. Looking back at recent days, the bulls had attempted a strong defense at 3,122.45 but failed, crushed by a bearish green candle of over 7% that obliterated the first support level. Yan Fei reasoned that the bulls had abandoned the first level because they knew it couldn't hold. However, he believed there was a strong chance they would defend the second level. There was a nearly 400-point gap between 3,122 and 2,791, and this position represented a 26.61% drop from the 3,803 peak. Typically, when a market index falls by more than a quarter, a powerful rebound follows.

Staring at the index as it dipped to 2,795.49, Yan Fei did not hesitate. He dumped his capital into the market, buying 500 lots of long positions at the market price.

In an instant, the order was filled at an average price of 2,798.46. The CSI 300 stabilized, oscillating around 2,797.85.

The oscillation lasted only seconds before a massive 2,000-lot long order surged, devouring the sell orders above and rapidly pushing the index to 2,802.45, successfully reclaiming the 2,800 mark. The bears responded with a barrage of sell orders, leading to a brutal clash at the 2,800 level.

Countless retail and major investors watched the fierce battle, shouting in excitement. Yan Fei felt his blood pumping, eyes locked on the critical position. The 2,800 mark represented the faith of the bulls; if it held, the main bullish force would gain market support, drawing in institutional and retail investors alike.

Five minutes later, the battle ended with a victory for the bulls. It was a costly win, and the bears remained formidable, but the CSI 300 stood firm at 2,842.56. Cheers erupted among investors, who rushed to follow suit, flooding the market with long orders. Within half an hour, the index broke through the 2,900 mark, with the bears offering almost no resistance.

Just as the retail investors and institutions were ready to celebrate, a massive bearish order of over 5,000 lots slammed into the market, instantly driving the CSI 300 down to 2,851.67, leaving a straight waterfall line on the chart.

Even Yan Fei was caught off guard, his pupils constricting as he stared at the screen, rapidly weighing whether to liquidate his position. Suddenly, the market surged again as a massive long order, like a prehistoric beast, emerged from the depths, swallowing the panic-selling orders and stabilizing the index at 2,864.54.

Seeing the 2,000-lot long order, Yan Fei breathed a sigh of relief. He estimated that today belonged to the bulls; if they could hold this momentum, tomorrow would be much easier.

Glancing at his account, which held 62.96535 million RMB, with about 57.57 million in remaining capital, Yan Fei decided to transfer the funds. He planned to allocate a portion to Momo Technology and hold the rest for Zhang Xiaolong’s needs.

With his strategy set, Yan Fei drove his GT500 to the Momo Technology office. Upon entering, he found dozens of people working busily. The atmosphere was vibrant and full of youthful energy, which satisfied him greatly and bolstered his confidence in the project.

Li Fu and Zhou Xiaohong were in a meeting with key staff. Seeing Yan Fei, Zhou Xiaohong hurried over and respectfully said, "Boss, we are holding our first meeting for the core team. Would you like to say a few words?"

Yan Fei agreed and followed her into the conference room. Li Fu welcomed him with a smile and gestured for him to sit. Yan Fei surveyed the dozen or so faces—some respectful, some indifferent, some fawning—likely due to Li Fu having introduced his identity.

"Welcome to Momo Technology," Yan Fei said, his voice ringing out. "I believe that in a few years, you will be proud of the choice you made today. Momo will become a unicorn in stranger-based social networking, if not the dominant force. A valuation of ten billion is not a dream. The 20% equity incentive pool, totaling 24 million shares, will be distributed to those who contribute to the company before we go public."

The room erupted in cheers. Seeing their newfound fighting spirit, Yan Fei continued, "We are a startup. We value results. The capable move up, the mediocre move out. No politics, only performance. Everyone must fulfill their duties, or they will be replaced."

After the meeting, Yan Fei called Liu Suxin and asked her to transfer 20 million to Momo Technology as an investment. He then summoned Chen Meina, the financial director he had headhunted for 400,000 a year, to handle the capital injection.

He then spoke with Li Fu regarding the company's status. "We have 122 employees, 86 in technology. The Momo app has been live for three days, along with the website and PC client. We have 108,764 registered users and 78,643 active users yesterday, with a 72.58% three-day average daily activity rate."

Yan Fei frowned. "The activity rate is good, but the total registration is too low. Don't be afraid to spend money. Partner with more channels, run registration promotions. There are 24 million smartphone users in China, and that number is growing rapidly. I want 1 million registrations by the end of September, and at least 10 million by the end of the year. Otherwise, you will be replaced."

Li Fu looked pained, knowing that 10 million users would mean one in five smartphone users would need to be on Momo. After a moment, he said, "Boss, if you provide a 100 million budget, I am confident I can reach 10 million by year-end."

"Done," Yan Fei said firmly. "The registered capital is 120 million, and I will ensure it is fully paid in this year. I only want results, not excuses."

As he prepared to leave, his phone rang. It was Zhang Xiaolong. "Mr. Yan, I’ve resigned from Tencent. Our company is set up with 100 million in capital. You hold 90%, I hold 10%, and you hold the 20% equity pool in trust. We have 110 employees."

"Great work, Mr. Zhang," Yan Fei said. "What is the company name? When does the app launch?"

"Guangzhou Weixin Technology. The app is called Weixin (WeChat). I designed the logo myself; I’ll email it to you. We plan to launch in a day or two."

Yan Fei was delighted. "Excellent. I’ll transfer 10 million to the account so you can pay in your 10% share and mitigate your risks. I’ll transfer the remaining 90 million next month."

They discussed details, aiming to dominate the acquaintances-based social market. The pressure from Tencent was immense; while Tencent might not prioritize the "stranger" market, they would surely fight tooth and nail for the "acquaintances" market. Yan Fei didn't have much time.

He transferred the funds, then opened the email to see the WeChat logo: a face looking at the Earth, back to the crowd. A profound sense of loneliness resonated within him, perfectly complemented by the bubbly, cute icons. It was a design that compelled one to connect.

"It’s brilliant," Yan Fei told Zhang Xiaolong. "I feel an urgent desire to use it to contact friends and family. I’ve just transferred another 27 million to the corporate account."

Zhang Xiaolong, seeing 37 million in the account, was energized. "We’ll work overtime to launch tomorrow night and aim for 1 million registrations this month."

"I trust you, Mr. Zhang," Yan Fei said. "We’ll talk at least once a week, and meet every two weeks to refine our strategy."

After an hour-long call, they hung up, both driven by the dream of becoming the new social king of the mobile internet era.

Yan Fei left the office at 6 PM. After spending hours reading financial texts, he woke the next morning, ate breakfast, and opened the Shanghai Copper Futures 0912 contract. The market gave him a massive, pleasant surprise. With a broad smile, he stared at the price, ready to harvest his profits.