"Three Hidden Doors" of the Dark Side of the 200 Billion Unicorns: Cutting off overseas business, returning to basic model development, and getting caught up in old shareholders' arbitration suspicions.

The dark side of the star company in the big model track has once again attracted attention. Firstly, on Monday, the dark side of the moon became embroiled in arbitration suspicions. According to sources familiar with the matter, the compensation amount demanded by the initiating party in the arbitration is close to one billion dollars. Shortly after, news of several key overseas product leaders leaving the company to start their own businesses became the focus. Regarding the arbitration matter, the dark side of the moon responded to a reporter from the "Science and Technology Innovation Board Daily" through a proxy lawyer, stating, "We believe that this matter lacks legal basis and factual basis, and we will present a defense in accordance with the law." As for the departure of the overseas product leaders, a source close to the dark side of the moon revealed to a reporter from the "Science and Technology Innovation Board Daily" that the dark side's overseas project was discontinued in June of this year because the overseas business did not achieve the expected profitability. "The company is currently more focused on the development of the Kimi product, believing that enhancing intelligence capabilities is more important at this stage." It is reported that in order to achieve this goal, the dark side of the moon hired the former chief research manager of Microsoft Asia Research Institute in August. As a large-scale model startup company, the dark side of the moon rose to fame earlier this year due to a significant investment from Alibaba, becoming a unicorn in the star track with a valuation of 20 billion. Subsequently, the company's flagship product Kimi gained popularity among consumers, and even sparked an investment frenzy in Kimi concept stocks in the secondary market. However, controversies surrounding this star company have also increased. Stopping overseas exploration, focusing on Kimi development The background of the dark side of the moon's foray into overseas business is that many large-scale model companies have ventured abroad in order to alleviate profit concerns. Among them, MiniMax, another leading large-scale model startup company, achieved success in its overseas exploration. Its overseas product, Talkie, reached 20.62 million monthly active users in October, surpassing the leader in the chatbot field, Character.AI. The Ohai product launched overseas by the dark side of the moon earlier this year was a direct competitor to Character.AI. In this emotional companion AI product, users can freely choose the character they want to chat with and engage in text conversations. Additionally, in addition to text chat, users can also engage in voice conversations with virtual characters. Another overseas product they launched is the AI-generated video tool Noisee. However, the development of their overseas business did not meet the dark side of the moon's expectations. According to the aforementioned source, as early as June of this year, the dark side of the moon realized that the overseas business was not as profitable as expected and chose to stop investing in it. "This is in line with the Silicon Valley entrepreneurial concept of Fail Fast, where one recognizes and accepts the possibility of failure early in the process of developing new products or services in order to adjust direction quickly or stop investing resources." The reporter noted that it was also in June of this year that Yang Zhilin openly stated, "We will focus our efforts on doing a good job with Kimi as a product and brand." With the business entering an adjustment period, talent within the company began to move. It was reported that Ming Chaoping, the former head of the Noisee product at the dark side of the moon, is currently raising funding for his new startup project with an estimated value of 50 million dollars; the former head of the Ohai product also recently left to start a new venture. However, according to the aforementioned source close to the dark side of the moon, the company has recruited many new people. "Tang Xu, the former chief research manager of Microsoft Asia Research Institute, joined the dark side of the moon in August, mainly responsible for developing end-to-end voice models to create a product similar to GPT-4o to enhance Kimi's functionality. Overall, personnel changes are following business adjustment trends." Therefore, amidst discussions in the AI market on how to commercialize, the dark side of the moon has refocused its business on the development of large-scale models. In September of this year, Yang Zhilin stated during a speech at Tianjin University that text models determine the intelligence ceiling, and multimodal capabilities expand the skill range through text, speech, video, images, etc. It is known that end-to-end voice models are currently a very important business direction for the dark side of the moon. Just recently, Kimi made progress in voice functions and started the gray test of voice calls. As for the highly anticipated video generation large-scale model, market reports previously indicated that the dark side of the moon currently has a team of around ten people working on the development of video models. However, plans for external release have been delayed to ensure the product's distinctiveness. In terms of monthly active users, according to statistics from third-party organizations, Kimi's monthly active users surpassed ten million in October, second only to Dou Bao and Wen Xiaoyan. The growth rate of monthly active users reached 36.54%. Claiming one billion dollars? Struggling with arbitration suspicions In contrast to business adjustments, what the market and public opinion are more concerned with is undoubtedly the arbitration suspicions surrounding the dark side of the moon. The reporter learned from the "Science and Technology Innovation Board Daily" that the applicant for this arbitration is from Cycle Intelligence and five of the seven investors in Cycle Intelligence: Jinsha River Venture Capital, Jingya Capital, Boyue Capital, Huashan Capital, and Wanwu Capital. The arbitration involves the co-founders and CTO of the dark side of the moon, Yang Zhilin and Zhang Yutao. Currently, the relevant electronic arbitration application has been submitted to the Hong Kong International Arbitration Center, but the specific details of the arbitration have not been disclosed. Cycle Intelligence was a previous entrepreneurial project of Yang Zhilin and Zhang Yutao, established in 2016 as an AI software provider for enterprise marketing and customer service. It is reported that during Cycle Intelligence, Yang Zhilin was not the CEO but was primarily responsible for AI and product-related business, while Zhang Yutao was the CTO. The CEO, who was not involved in the subsequent establishment of the dark side of the moon, was Chen Qicong. The source revealed that the amount of compensation demanded by the initiating party in the arbitration is close to one billion dollars. Currently, the actions taken by the arbitration party against the dark side of the moon have been ongoing for several months, and the timing coincided with the dark side of the moon receiving a significant investment from Alibaba. The dissatisfaction of the old shareholders with the share compensation shares arose from this. According to the source, before founding the dark side of the moon last year, Yang Zhilin had reached a consensus with several old shareholders and directors of Cycle Intelligence, "including verbally, via email, and through agreements, and no one raised objections at the time." At that time, the volume of the dark side of the moon was still small, unexpectedly rising to the top tier of domestic large model companies later on, causing dissatisfaction among some institutions that did not participate."Difference."A legal director specializing in capital markets and private equity business told the "Sci-Tech Board Daily" reporter that the practice of using new company shares as compensation originated from Silicon Valley. "Old investors, including Jiangsu in Silicon Valley, should be very familiar with industry rules. As a serial entrepreneur, Yang Zhilin would normally give corresponding explanations to the old shareholders who originally supported him." From publicly available financing information, it can be seen that Loop Intelligence has completed a total of 5 rounds of financing to date, with investors including the 5 institutions mentioned in the arbitration, as well as ZhenFund and Sequoia China. It is worth mentioning that ZhenFund and Sequoia China, who did not participate in initiating the arbitration, were the investors in Loop Intelligence's angel round of over $200 million. However, the earliest investor in Loop Intelligence, Jiangsu in Silicon Valley, did not appear in the shareholder lineup of Loop Intelligence. Regarding large-scale models in China, Zhu Xiaohu, managing partner of Jiangsu in Silicon Valley, has always openly expressed his pessimism. Another informed source revealed to the "Sci-Tech Board Daily" reporter that the earliest angel investor in Loop Intelligence, former managing partner of Jiangsu in Silicon Valley Zhang Yutong, played a significant role in the establishment and financing of the company. Zhang Yutong left Jiangsu in Silicon Valley in April this year. There were reports at the time that Zhang Yutong would join Loop Intelligence, but this news was later denied by Loop Intelligence. The legal director mentioned above stated that there are currently three points of dispute in this arbitration cloud: Firstly, did Yang Zhilin violate non-competition obligations by starting a new business? Secondly, if Loop Intelligence was really not highly regarded at the time, why did the old investors let the tech guru Yang Zhilin leave Loop Intelligence? Thirdly, was the quick completion of the over $200 million angel round of financing solely because of the technical expertise of Yang Zhilin, or were there other factors such as personnel, technology, and market conditions at play? Yang Chuanping, partner of TianDa GongHe, said in an interview with the "Sci-Tech Board Daily" reporter that starting a business during a non-compete period is definitely prohibited. "If such a phenomenon exists, it requires the waiver of relevant rights holders, usually in written form. If it is an oral agreement, relevant evidence is needed to prove its existence and validity." However, according to the legal director, "based on the current information, it seems that the two parties did not sign any agreements related to non-compete periods for starting a business, otherwise the old investors would have focused on this. On the other hand, there may be disputes over intellectual property (IP) rights in Yang Zhilin's new venture, meaning whether Yang Zhilin could have used Loop Intelligence's technological achievements to start Moon's Dark Side." "In particular, in the background of old investors claiming not to have obtained waiver letters, arguments can be made. However, in the situation where the burden of proof falls on the party making the claim, it may be difficult for the old investors to prove this." The legal director further stated. The informed source mentioned above told the reporter that the arbitration news is just the tip of the iceberg of the conflicting interests between the two parties, and the disputes around this star company will continue until all parties reach an agreement. This article is sourced from "Finance Community", GMTEight Editor: Xu Wenqiang.