Nov 08, 2016 01:32 PM EST
LeEco CEO Faces ‘Big Company Disease’; Admits Company Is Growing Too Fast; Slash Salary to $0.15 [Video]
LeEco CEO Jia Yueting admitted that the company has gotten so big and so fast that they face "big company disease."
In a letter to Reuters, the Chinese conglomerate said that the company is facing the disease due to having expanded at an "unprecedented rate." LeEco's hyper-growth has led Jia to state in his letter that the company blindly sped ahead of its plans that caused their cash demand to balloon. Having limited capital and resources as he claimed, they got over-extended in their global strategy.
According to Bloomberg, LeEco is the holding company for various businesses that includes sports media, automobiles, smartphones, and TVs, aside from its core business of LeTV streaming service. It invested in an electric car plant and putting up Future Faraday in Nevada that eyes to rival Tesla. LeEco also invested $2 billion in its acquisition of Vizio Inc.
In a bid to push LeEco's plans in developing electric vehicles, Reuters reported that Jia sold part of his shareholdings in the company. Interestingly, Jia's sister also sold her shareholdings and lent the proceeds of the sale to him, free of interest. Nevertheless, the electronic concept car dubbed "LeSee" is yet to get off the ground.
Despite this, LeEco said in August that it plans to pursue an investment worth nearly $2 billion to build an electric car plant in Eastern China. The report did not indicate if this planned plant is in any way connected to Future Faraday or from where the funding for such endeavor would emanate from.
Jia mentioned in the same letter that he, along with his management team would take full responsibility for the situation. In what probably may be construed as self-inflicted punishment, he said that he would cut his annual salary to a pittance of 1 yuan ($0.15).
For now, it seems Jia is going back to basics for pledging to pay more attention to the listed subsidiary, LeTV. Jia intends to integrate other parts of the conglomerate into the listed smart TV platform firm.