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Zhu Xiaohu finally appeared and pointed the finger directly at Zhang Yutong.

This past Thursday, Zhu Xiaohu sent two messages in a row on WeChat Moments. One responded to the recent Yang Zhilin arbitration incident, and the other divided the people involved in the entire incident: Kimi and Zhang Yutao were willing to be exempted. As well as the Dark Side of the Moon Company, they support young people in pursuing their AGI dreams; but at the same time, they separate Zhang Yutong and consider him to have violated his fiduciary responsibilities. Finally, he expressed his confusion about Kimi always being bound to Zhang Yutong.

These signals have pushed the Dark Side of the Moon financing case, which has been delayed for more than half a year, to a new situation: it seems that most conflicts are reconcilable, but only between Jinshajiang Venture Capital and Zhang Yutong. A "dead end".

Yesterday evening, "Undercurrent Waves" had a long interview with Zhu Xiaohu. Zhu Xiaohu has clear responses to the key issues. For example, Jinshajiang’s attitude towards the Dark Side of the Moon, the subtle positions of many parties in the game, and the inside story of the interaction between him and Zhang Yutong, the two key figures in this fight. The interview shorthand exceeds 20,000 words, and we have excerpted the most critical parts below.

In the past six months, "Undercurrent Waves" has followed the Kimi incident from beginning to end:

"Zhu Xiaohu went left, Zhang Yutong went right"

"Exclusive｜Kimi Founder Kimi Yang Zhilin was brought to arbitration by a former investor"

"Exclusive｜"Kimi Yang Zhilin Arbitration Case "Underwater Story Revealed"

We do not intend to criticize or judge any of the people, institutions and companies involved, but the Kimi case exposed an issue that is rarely discussed in the venture capital industry: in In the Chinese business context, how to leave a company gracefully and how the stakeholders should deal with themselves.

Many years from now, the Kimi incident may become a classic lesson plan in the history of Chinese venture capital.

Talk about "cutting": "Why should we tie a simple issue to a complex issue?"

"Undercurrent": Yesterday you He posted two posts on Moments, mentioning his willingness to exempt Zhang Yutao and Dark Side of the Moon. Does this mean that the arbitration case submitted against them will be settled?

Zhu Xiaohu: If they are willing to cut off, the previous arbitration case can be settled immediately. Both of us have just submitted the arbitration and haven't paid the money yet, so it hasn't started yet.

"Undercurrent": What exactly does cutting mean?

Zhu Xiaohu: Zhang Yutong is Zhang Yutong’s business, Yang Zhilin and Zhang Yutao are Dark Side of the Moon’s business, let’s talk about them separately. The latter is now easy to reconcile. The main contradiction is that at the time of the spin-off, it was said that Zhang Yutao only used to help part-time, but later he went to work full-time as CTO.

At the beginning, Yang Zhilin said that if Zhang Yutao left full-time, how many shares would be compensated, and he still recognizes this thing now. So just give it to us according to the compensation he said before.

But Zhang Yutong’s problem is completelyThe difference: She completely breached her fiduciary duty, and those 9 million initial free shares were completely illegal gains.

"Undercurrent": You seem to have pointed all the fingers at Zhang Yutong. This is also the focus of your second post today. In the few hours between these two posts, what happened in the negotiations between the two parties? ?

Zhu Xiaohu: We have no negotiations today. It’s just that I wrote relatively little in the first article, but later I wrote more in detail. The reconciliation was almost done. The only point of disagreement was that they were unwilling to separate from Zhang Yutong and must include Zhang Yutong.

"Undercurrent": From an external perspective, Dark Side of the Moon binds Zhang Yutong because financing is very important for large model companies.

Zhu Xiaohu: But to be honest, financing today is not as important as it used to be. In addition, Yang Zhilin and Zhang Yutao are very simple questions. The shareholders of Dark Side of the Moon require that they obtain an exemption from the old shareholders of Loop Intelligence before December 15 this year. If they cannot get it or we file a lawsuit, they will reduce their valuation by 10%. This means returning 10% of investors' investment or issuing additional shares. This is a big punishment, so they are willing to reconcile with us.

But Zhang Yutong’s problem is a very serious matter. Why would they tie a very hard question to a very easy question?

"Undercurrent": What are the opinions of the old shareholders of Circular Intelligence? Are your attitudes unified?

Zhu Xiaohu: Now that we have filed a lawsuit, we all agree that this matter has played a very bad role. We don’t understand why this company is so protective of Zhang Yutong now. She is neither a director of Dark Side of the Moon nor an executive of Dark Side of the Moon. We also don’t understand why they can’t bring order to the chaos and march lightly.

"Undercurrent": Where are the investors in Dark Side of the Moon? What is your attitude?

Zhu Xiaohu: Many of the investors in Dark Side of the Moon are our friends. We also chatted a lot, and we all said we should give it a try. Although my understanding of large models is different from theirs, it doesn’t matter, right? Let them go and let them develop, no problem. But for Zhang Yutong’s problem, we need to be responsible to the LP. She violated her fiduciary duty and misappropriated the fund’s assets. We can't let her go in this matter.

"Undercurrent": If events do not develop as you expect - for example, whether Zhang Yutong and The Dark Side of the Moon maintain their current relationship, what would you consider doing?

Zhu Xiaohu: If we can't reconcile, we will definitely go to court. We must prove to our LPs that we will do our best to protect the fund assets.

"Undercurrent": Some people say that you deliberately spelled Zhang Yutong's name wrong in your circle of friends (note: Tong is written as Tong).

Zhu Xiaohu: Maybe it’s because we usually use English names internally and rarely use Chinese names. Her internal WeChat ID is the pinyin abbreviation y of her middle character. So we usually call her Y. The full spelling of her name is too long.

Talk about ""Concealed": "She admitted that she was the anonymous founder"

"Undercurrent": Zhang Yutong replied to us before, saying that she would have a transition period , will also work as a consultant and post-investment support in Jinshajiang, but your statement is that she has been fired. Which of these two versions is more true?

Zhu Xiaohu: I wanted to break up peacefully when I was rehired as a consultant. There were already many related rumors in the market at that time, but she denied them all, so we chose to believe her. Later, she said she wanted to go out and explore some AI things, and we were OK with that. Whatever she wants to explore, we will also retain all of her interests in the Jinsha River. It has been very benevolent and righteous.

We gave her an agreement to break up amicably and become a consultant, which required her to sign a promise that she would not have any direct or indirect interests in the Dark Side of the Moon. But she never dared to sign. Later we discovered that she had a huge stake in it. After taking action, you have to be fired, right? The so-called re-employment of the consultant did not take effect because she did not sign it.

"Undercurrent": How did the actual hammering process happen? When did you get involved?

Zhu Xiaohu: It will be around Qingming Festival this year. At the beginning, we also heard rumors in the market that Zhang Yutong had interests in Dark Side of the Moon. Later we asked in the company's internal WeChat group, but she kept denying it. I asked her for the shareholding structure table, but she wouldn't give it to me. So we have no evidence either.

But around the Qingming Festival, that is, after their last round of cashing out, some people came to me because they didn’t get any money, and then they sent us the equity structure table very nicely. Then we found out she had 9 million free shares in it. Later, he received another 3 million shares from Yang, for a total of 12 million shares. She was the second largest individual shareholder of Dark Side of the Moon when it was founded, second only to Yang Zhilin.

"Undercurrent": Whose name is this share in?

Zhu Xiaohu: Under the name of her husband’s BVI (British Virgin Islands) company. Regarding whether these shares belong to her husband or herself, when we later sent a lawyer's letter to inquire, she admitted that the shares belonged to her and she was the founder from the first day. Later in Alibaba’s financing round, there was a clause that required everyone to agree to transfer the shares held by her husband to an anonymous founder. We asked who this anonymous person was, and her lawyer’s letter admitted that she was behind this BVI.

"Undercurrent": From not admitting to admitting, what happened in between?

Zhu Xiaohu: She didn’t admit it when it was inside the Jinsha River. Later, the shareholders of Circular Intelligence sent two directors to have a meeting with her, but she also denied it and replied, "Ask my husband." Later we hired a lawyer. Hiring a lawyer is very expensive and troublesome, okay? Later, we sent three legal letters, and after three inquiries, she said that she had her reasons and that she was the anonymous founder. To this day I still don’t quite understand why she admitted it.

In fact, if she doesn’t answer, we will know. Later I heard that the lawyer at the time was fired. However, this matter must be testified in court. It is difficult for other investors and directors to lie for you.

"Undercurrent": Are the investors of Dark Side of the Moon aware of this?

Zhu Xiaohu: Because it is under the name of a BVI company, many investors don’t know who it is. Most investors don’t invest much, the proportion is very small, and they don’t know who is who. After this incident was exposed, some of their investors were also very angry.

"Undercurrent": In other words, this structure is very hidden.

Zhu Xiaohu: Maybe she had a lot of uneasiness when doing this, so she thought of many ways to cover it up. For example, when the company was valued at US$200 million, she asked her husband to invest US$150,000 and then hold a very small proportion of the shares, so that her husband could legitimately appear on the company's shareholder list. And when others question why this person appears on the shareholder list, she can say that he invested money and real money in it, but most people will not ask for more details, thus covering up the fact that she has 9 million initial shares. .

But $150,000 is a drop in the bucket for Dark Side of the Moon. Of course, it doesn't matter to Yang Zhilin, because before the company was established, financing funds were received, and the 150,000 didn't matter. However, we were shocked when we saw the shareholding structure. Many early investors invested tens of millions of dollars, but there were not as many shares as 9 million shares. 9 million shares, at today’s price of 12 yuan a share, would be worth 100 million US dollars.

"Undercurrent": The fiduciary responsibility here refers to the fund in which Zhang Yutong is the managing partner. Do related interests need to be disclosed in a timely manner?

Zhu Xiaohu: All funds and all employees must be disclosed. Any project we invest in, the income gained from the project belongs to the fund and will be calculated as a return to the LP.

Talk about fiduciary duty: "There are really not many cases where it is so big, so obvious, and so naked."

"Undercurrent": Regarding the split of circular intelligence, you mentioned that the Dark Side of the Moon project will be launched in 2021, and it will be a core asset that has been developed for two years. Can you expand on this?

Zhu Xiaohu: The Dark Side of the Moon project team will be available in 2021. For example, Huawei's large Pangu model was made by this project team. Loop out people and Know-How. From the 2021 reports, we can see that Circular Intelligence will start large model training in 2021, and it is named the Moonshot Project.

"Undercurrent": But there was still a big difference between the large model at that time and the later GPT.

Zhu Xiaohu: They are all large LLM models. It may be just the difference between GPT2 and GPT3.5.

"Undercurrent": "More than 20 employees left" were they taken away through negotiation beforehand, or were many people voluntary later?

Zhu Xiaohu: It was agreed to take him away. The only point of disagreement was Zhang Yutao. It was supposed to be part-time at first, but later it became full-time. But Yang Zhilin said that compensation would be based on the share ratio mentioned at the time, and we have no disagreement.

"Undercurrent": The role of Chen Qicong, CEO of Circular Intelligence, is also crucial. Did he agree to the split at that time?

Zhu Xiaohu: The problem cannot be solved whether the CEO of Circular Intelligence agrees or disagrees, because so many major assets need to be separated, which requires all shareholders, especially according to the company's articles of association, the majority of shareholders of each round of investors need to sign and agree. Then it needs to be signed and approved by the board of directors.

Chen Qicong asked Zhang Yutong whether she had reached the Dark Side of the Moon in March and October last year, but she denied both times. And even if the CEO agrees, it is useless because it must be disclosed to all shareholders and directors. Zhang Yutong holds 9 million shares in it, so he has to apply to avoid voting, right? This is a reasonable, legal and compliant spin-off. According to the company's articles of association, 2/3 of the investors in each round must agree to be legal and compliant.

"Undercurrent": Some people think that "directorship" is not a full-time job, and its responsibilities may not be so strict.

Zhu Xiaohu: Board members are not paid, but it does not mean that your obligations and responsibilities must be linked to the money you receive. The duties and responsibilities of directors are also very clearly stated in the company's articles of association, so you cannot violate the rules. This is the bottom line.

"Undercurrent": Regarding fiduciary duty, the so-called fiduciary responsibility, there has not been much discussion in the domestic investment industry before.

Zhu Xiaohu: Fiduciary duty complaints in Hong Kong or Cayman are basically accurate. At home, it's the same.

"Undercurrent": What about US dollar funds?

Zhu Xiaohu: Because the U.S. dollar structure was handled by overseas companies in the past, it was more difficult to prove it to be honest. I read other people's comments below me and said that there are a lot of comments. Many people say that it is just that it is really so big, so obvious, and so naked, but it is relatively rare.

Talk about "sour grapes psychology": "Any talk of intergenerational conflict and Jinshajiang's disapproval of big models are all covering up the facts"

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"Undercurrent": One theory is that Zhang Yutong once took the initiative to ask Jinshajiang whether he wanted to turn to the dark side of the moon, but you refused.

Zhu Xiaohu: We have indeed been unfavorable, so when they came out in March and April last year and asked us, we said we would not invest. Here is the understanding of technical models and business models. Are all the predictions I made before confirmed? Has the big model not become differentiated so far? So we never wanted to invest and we don’t want to invest now.

But the core problem here is that she did not disclose 9 million shares.

"Undercurrent": Some people think that the old shareholders represented by you have a "sour grapes mentality", and even think that your differencesfrom an intergenerational conflict.

Zhu Xiaohu: What is intergenerational conflict? We have also invested in many young people’s companies and AI companies. Intergenerational conflict is simply putting money on one's own face. I posted on Moments this morning and was so annoyed by trolls that I couldn’t stand it anymore.

As for the intergenerational conflict, this is not only a breach of fiduciary responsibility, not only business ethics, but also a violation of the law.

"Undercurrent": What do you think is the original source of all these problems?

Zhu Xiaohu: To be honest, if Zhang Yutong confessed from the beginning, it would not be a big problem, but she did not disclose it from the beginning. The longer it goes on, the bigger the problem becomes.

"Undercurrent": You have been communicating about this matter for at least half a year, but what is the fundamental reason why it is still difficult to reconcile?

Zhu Xiaohu: Regarding the split, there is always a number that everyone can agree on. The problem is the illegal gains. You always have to give everyone an explanation, apologize, and then return part of the shares, but you don’t admit it and just hide. The trolls talk about intergenerational conflicts and the differences between the two generations. , and then said that Jinshajiang is not optimistic about big models - they are all covering up the real facts.

"Undercurrent": In this matter, what do you think is the most appropriate thing to do at the earliest?

Zhu Xiaohu: From the first day you hold shares, or when you know you hold shares, you should disclose it to all circulating shareholders. Because this is a conflict of interest. At the very least, when signing the director's resolution in January this year, you should state that you have a conflict of interest and apply for exemption or avoid voting, right? You cannot hide, conceal.

"Undercurrent": At the moment, what do you think Zhang Yutong might do as a suitable gesture?

Zhu Xiaohu: She still has to give everyone an explanation. She has to apologize and either give back part of her shares or most of them. In short, you have to settle this matter. You have to hide it without admitting it.

"Undercurrent": There is another key question: As you said, Zhang Yutong was fired, does this mean that she cannot obtain the carry of Xiaohongshu?

Zhu Xiaohu: In fact, we have been negotiating with her, and we were very friendly to her at the beginning. Because she has always denied having shares in Dark Side of the Moon, we gave her an "amicable breakup plan". As long as she signed and admitted that she had no indirect or direct interests in Dark Side of the Moon, she could retain all her rights and interests in Jinsha River.

But she never signed. After we got the conclusive evidence, we had no choice but to fire her by the end of April. After she was fired, all the benefits were gone. When she worked on the Xiaohongshu project, she was not yet a partner, so it was completely a performance reward. The premise for us to allocate performance rewards is that you must serve in the organization. If you are no longer an employee of Jinshajiang, you will not be able to share your performance.

"Undercurrent": Through this incident, do you have a deeper understanding of the chain of LPs, GPs, and entrepreneurs?

Zhu Xiaohu: Investors are the weakest after investing their moneyPowerful. Like now, the most valuable part of the company is taken away, and then the entrepreneur has the final say as to how much money will be distributed.

"Undercurrent": Why is there no such story in the golden age of the Internet? Is it because the entire venture capital relationship has now entered a freezing point?

Zhu Xiaohu: At that time, investors were struggling and entrepreneurs were struggling as well. How could a project raise hundreds of millions of dollars in Series A and increase to 3 billion US dollars in one year? In what round will Wang Xing be able to raise hundreds of millions of dollars? Many people think this is because the relationship between venture capital has reached a freezing point, and some even mentioned buybacks. However, Circular Intelligence is a US dollar investment and has nothing to do with buybacks. There is no personal buyback. Human greed has always existed. In the golden age of the Internet, without such a big spin-off, people may not have been so bold, and they were more honest and simple.