Auto Industry

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Internet tycoon resigns from LeEco’s listed unit

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Jia turns his focus to making cars

Commencement speeches are usually meant to give a few encouraging words for graduates heading off into an unknown future. But a US Supreme Court judge did the opposite. Back in June, Chief Justice John Roberts gave a speech at a high school where his son also graduated, saying that he hoped the graduates failed – because ultimately that will help them succeed.

“I wish you bad luck from time to time so that you will be conscious of the role of chance in life and understand that your success is not completely deserved and that the failure of others is not completely deserved either,” he said in the speech.

His speech would probably resonate with LeEco’s founder Jia Yueting. After months of struggling to stay afloat, last week a court in China froze Rmb1.2 billion ($175 million) of assets held by Jia and his tech firm over late debt payments.

Finally succumbing to investors’ pressure, Jia also announced his resignation last week from the board of the company’s Shenzhen-listed unit Leshi. It came barely a month after he’d stepped down from the chief executive role at Leshi (see WiC368). “Today LeEco faces huge challenges and I take full responsibility,” Jia wrote in an open letter. “We will fully repay our debts to financial institutions and suppliers.”

This appears to have officially marked the end of his ambitious mission to create an ecosystem that combines content with hardware and spans everything from smartphones to electric driverless cars.

The downward spiral of LeEco still comes as a shock for many. “Who would have known that a tycoon that was once worth billions of yuan and promised to change the world has now lost everything overnight,” one commentator wrote.

Jia’s departure has prompted an outpouring of sympathy within entrepreneurial circles. “It is too early to talk about the success and failure of Jia Yueting. But what’s certain is this: he is a man with sentiments, a man with big dreams. He dares to take risks and he works very hard,” Liu Qiangdong, founder of e-commerce firm JD.com wrote on his Tencent weibo.

Feng Lun, the owner of developer Vantone, concurs: “It is too early to make conclusions. The road to entrepreneurship is very difficult. Nevertheless, while it is important to have a vision and a business model, execution is also very important.”

Still, there were a lot of people who felt the fall from grace was a moment of schadenfreude. After all, Jia once defended his “crazy” electric car dream by saying, “Only a dream that is being laughed upon by 99% of the people deserves that 1% chance of success.”

“In the history of mankind, there are many geniuses who were mad. Ludwig van Beethoven had severe paranoia; Vincent van Gogh was schizophrenic. God gave them talent but he also gave them misery. However, while Jia Yueting is not a genius, he does possess what many geniuses share: the dream to change the world and a strong sense of mission. So even when the smartphone is not perfect, he’s already moved on to electric cars. If he can have his way, he will probably move on to spaceships next,” says Securities Times.

Entertainment Capital, however, detects some media hypocrisy. “Did Jia Yueting change? No, he’s still the same person. The only people that changed were those who worshipped him when he was successful. But when he failed, those same people abandoned him so quickly as if they didn’t even want to be reminded that they once were supportive of him,” says the entertainment industry blog.

Is it too early to write Jia off? After all, the tech tycoon has often been touted as China’s Steve Jobs (though he’s also bragged that LeEco surpasses Apple in design, craftsmanship, hardware and in its business models). Like Jobs, there may be a second act.

In his resignation letter, Jia insists he remains committed to launching the FF91, the flagship electric car designed by Faraday Future. But that dream is slipping further from reach too. The Financial Times reported that Faraday Future, which is backed personally by Jia, has put on hold a plan to build a $1 billion factory in Nevada for the FF91 due to lack of funds.

And the bad news just continues: the Wall Street Journal reported yesterday that Vizio is suing LeEco for $60 million over unpaid deal termination fees. Jia called off his $2 billion acquisition of the US television maker in April.


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