If you want to popularize the knowledge of "Internet", you need to use it when writing a paper

First of all, what you need to know is that although "Internet" and "Internet thinking" are both popular, their inner tones are completely different. Internet thinking is a concept promoted by companies such as Xiaomi 360, while the Internet is a government concept. Then, what some people need to know is - if you want to reprint, please indicate Zhihu and Sinovation Ventures, otherwise the marketing department will come to your door.

Let me digress first. Everyone knows that there are two regulatory models in various countries. One is highly centralized like ours; the other is market freedom, such as the United States. In a country with a free market, you will not see any high-tech industrial policies. But in fact, the United States has not completely let go. Obama said it three years ago, and it is still being implemented and is very successful, that is, the reshoring of manufacturing. The U.S. manufacturing industry is now desperately trying to repatriate. As for our country's policies, there are four words, "top-level design", that is, a top-down, overall relevant and practical, step-by-step policy. Top-level design is different from vision. Vision is a very vague term. For example, talking about the golden decade of Silicon Valley is very vague, but top-level design adds the concept of timeline. We are now completely skipping the level of electronic equipment manufacturing and vigorously embracing the "Internet". So what is the official definition of the Internet? It means applying the Internet to every aspect, including transportation, life, logistics, and automobiles. In the end, it is nothing more than moving towards smart life and smart cities.

But the government’s promotion is one thing, and the actual effect is another. Just like Shenzhen was not initially positioned as a high-tech industry area, but later a large number of companies such as Tencent and Huawei emerged, and now it is a base camp for hardware entrepreneurship. Its level of innovation is on par with Beijing, and even exceeds it by many in some fields. .

On a micro level, the concept of the Internet is more correct than Internet thinking, but the disadvantage is that it only has direction and slogans, which is completely opposite to the concept of Internet thinking, which has strategies but lacks direction.

Let’s start with Internet thinking. Many people think that Internet thinking may be to increase traffic, build a platform or ecosystem, and then establish a business model. Then, I thought of countless unprofitable Internet products, and then said that JD.com burned a lot of money, Xiaomi didn't make much money at the beginning, Didi was giving out coupons like crazy, Alipay was giving out red envelopes... There is a joke invented by a foreigner like this It’s said that two brothers drove a truck full of watermelons to sell them. The cost of the watermelons was five dollars and they were sold out quickly for four dollars. Sold out, counted the money, and lost money. The elder brother said to his younger brother: "Look, I just said I should drive a bigger truck!"

The most ridiculous Internet thinking is that there is no need to think about the business model first, and that it will one day It will come out naturally. This attitude is not only passive and one-sided, but also ignores the prerequisite for this possibility - the company has enough money and time. The success of Google and Facebook is entirely due to survivorship bias. They survived because they emerged in Silicon Valley, during the growth period of the Internet explosion. The objective environment allows them to have sufficient resources and untapped markets to burn until they find a business model. As for Jingdong, it probably doesn’t need any introduction to how many corpses it is accompanied by.

In places with big market capital and abundant capital, such as Silicon Valley or Beijing, there is room for survival without considering the business model. This is like playing Texas Hold'em. Players with more chips should take more risks and can keep following, because the last card may turn the game around. But if you are not a VC but an entrepreneur, or you are in a city where venture capital is underdeveloped, then of course you must calculate your cards correctly. When Uber and Airbnb were born, they did not have as vast an untapped market as Google and Facebook, so they proposed precise business models from the first day.

Even if a business model is proposed at the beginning, it may not be able to reach the end. Many of them turn out to be false in the end. Take the group buying that everyone is familiar with as an example. Its business model is simply to take advantage of the easy group buying momentum on the Internet to make some manufacturers willing to sell goods and services at reduced prices.

Group buying websites are media. They use quantity to determine price for manufacturers and price to determine quantity for consumers. This is a two-pronged strategy. For this strategy to be successful, the biggest factor is that manufacturers and consumers must be able to continue to gain profits from it (manufacturers ) and satisfaction (consumers).

Let’s start from the manufacturer’s perspective. Naturally, they want to sell out all the products and avoid creating any inventory. For practitioners in the front-line service industry such as catering and beauty, group buying is a way that can indeed reduce staff idleness. A more extreme example is airplanes. The cost of a flight is fixed anyway, so it is best not to have idle seats. The same is true for movies (group purchases of airplanes have always been available: travel agencies). For these businesses, in order to maximize profits through this extreme impulse approach, the following assumptions must be met: 1. Costs will not increase (that is, the production capacity itself is sufficient); 2. The quality of goods/services will not decrease; 3. No Exclude original customers. For those who sell goods, these three conditions are relatively easy to achieve, but for the service industry, it is not easy to achieve these three conditions at the same time.

Suppose there is a restaurant that is neither making a profit nor losing money, but the boss estimates that there is still 25% capacity that has not been filled. The people from the group buying company may convince the business operators: If you can use all the remaining 25, even if the price is only half price, you will still make more money than you do now! Therefore, the owner may accept the group purchase conditions and fill up the production capacity with meager profits. Unfortunately, the customers came, but also caused more trouble. The first is that customers are not able to fill up the daily production capacity on average as expected. Usually I am very free, but then suddenly there is a frantic rush to redeem the group buying coupons before their expiration date. This does not achieve the original purpose at all. Then, negative reviews began to appear on the Internet, and the main reason was poor service quality. As for why the service quality is poor, the main reason may be that the owner overestimates the limit of the service that can be provided from the beginning. On the other hand, it is also related to the uneven time of customers coming to the store. In the end, the industry will find that after several times of cooperation with group buying, the business becomes more and more sluggish, and it becomes even less profitable than before, with profits falling further.

Of course, group buying websites and customers must have thought about these things, so they will try their best to ask everyone to make reservations, and when the seats are fully booked, they will ask customers to change time. However, customers tend to consume before the deadline. If an order with a deadline of usually three or four months cannot be digested within one or two weeks, the troublesome question of whether the redemption coupon can extend the deadline will arise. So what if there is a limited use date when ordering a group purchase coupon? This will greatly reduce consumers' willingness to buy, and will also cause the issue of whether pricing should be differentiated on popular dates or weekends. In short, it is close to impossible to guide or limit the time consumers spend at home. This is also the key to whether the industry is willing to continue to cooperate with group buying. Therefore, there should be only a few manufacturers that can profit from it and are willing to cooperate with group buying.

But in theory, diversity is not the main reason why consumers are willing to spend in group purchases, so why will there be fewer customers in the long run? This starts with what consumers think. Needless to say, the problem of quality decline is the biggest problem is the change in consumer psychology. Pricing is one of the keys in marketing. Whether the price is appropriate basically determines whether consumers will pay. In theory, price is determined by supply and demand, but there are many exceptions, such as boutique markets or special niche markets. Just like we all know that mineral water is not mineral water at all and the cost is extremely low, but a bottle of water costs more than ten yuan and everyone still pays. The important reason is that everyone is used to this price, and consumers are not buying mineral water. The price of water is not compared to tap water at home, but to other drinks such as Coke or coffee. There are two key points here. The first is habit and the second is comparison. The psychological mechanism behind the two is the anchoring effect of price. In other words, the original low price of group buying will make customers feel that the price-performance ratio is very high, so they will be very happy to buy it; but after customers have become accustomed to the group buying price, the value of these goods/services to customers will drop to this price.

Therefore, when there are more and more homogeneous products on group buying websites, customers will compare these homogeneous products and become accustomed to the amazingly low prices of these products; when the surprises are no longer surprising, customers will have a new understanding of the prices of goods/services. Once anchored, it is less likely to make impulsive purchases. Therefore, when consumers cannot continue to get higher satisfaction from the low-priced goods/services purchased in group purchases, this two-handed strategy business model is destined to begin to decline due to declining consumer demand.

So the fundamental problem with group buying is that there is no viable business model. Even if low prices have value to consumers, these low prices cannot be maintained forever because there are not enough consumers to buy them. accounts, and partners who are willing to join group buying are destined to be left with some manufacturers whose competitiveness is inherently poor. The actual value of the goods/services these manufacturers are willing to provide will gradually decrease to match the discounted price--regardless of whether the price was deliberately raised from the beginning. Irrationality will not last forever. After consumers lose their passion, the market will naturally return to its original mechanism. To put it simply, group buying is just a shot of stimulant for consumers and manufacturers, and then earns profits from the irrational expectations of both parties. Therefore, this untenable business model, although it has massive funds to promote it, has still not become a successful case of the so-called "Internet thinking".

In the Baidu Encyclopedia entry, you can see the origin of "Internet thinking": When Robin Li gave a speech to a group of traditional business owners, he said: "We entrepreneurs must have Internet thinking in the future. Maybe you do "The problem is not the Internet, but your way of thinking must gradually think like the Internet." At this time, "Internet thinking" was just an idealistic and conceptual slogan, which was still very vague. The real emergence of a specific definition of Internet thinking began with Zhou Hongyi's extensive publicity on various occasions. These speeches were also compiled into a book with repeated content called "Zhou Hongyi's Internet Methodology." Zhou Hongyi believes that there are four points in Internet thinking:

1. Users come first. In the Internet economy, as long as you use your product or service, you are God! Many products are not only free of charge, but also of extremely high quality, and people are even welcome to use them at a premium.

2. Experience is king. Only when something is made to the extreme and exceeds expectations can it be called an experience. For example, someone handed me a mineral water bottle, and when I drank it, it turned out to be 50-degree Moutai. This is beyond my experience.

3. Free: Hardware is also entering the era of free. The hardware is sold at cost price with zero profit, and then relies on value-added services to make money. Although Internet hardware such as TVs, boxes, and watches do not make money, they do make money through advertising, e-commerce, value-added services, etc.

4. Disruptive innovation: You have to make things cheap or even free; make things extremely simple to impress people, and win users if the experience response exceeds expectations. Lay a solid foundation for your success. (This definition is not the same concept as "disruptive innovation" proposed by Harvard professor Clayton Christensen)

Look carefully, the second article "experience is king" applies to any enterprise. It is not a characteristic of the Internet, but any All enterprises should do this, and the fourth item overlaps with the second and third items. Therefore, it is probably the first and third items that are truly unique to the Internet. The key point of these two points is that it is free (or subsidized), and then relies on value-added services. Putting the four together, it means that when you find user needs (for example, drinking), you should create an experience that exceeds expectations (Moutai), and then it is best for Moutai to be free and use different value-added services (premium wine bottles) to make money. There is nothing wrong with this theory in itself. The problem is that it has certain premises and does not apply to all situations.

From the above theory, we will first deduce a paradoxical phenomenon: Suppose I provide service A for free and make money with value-added service B. Then why doesn’t the next competitor provide A and B services for free and make money with value-added service C? If this cycle continues, how big of a truck do I need to drive to finally make money? Here comes the essence - the prerequisite for launching service A at a loss is that market A must be monopolized.

For example, only network effects (Facebook), technological excellence (Google), brands (Xiaomi) or economies of scale can prevent competition. When the market can be monopolized, seizing the market is the first priority. Only businesses that can be monopolized have momentum, popularity, and the rationality of "losing money and making a profit". At this time, it makes sense to sprint for growth. It’s difficult to follow this model for most physical goods because of the high unit cost. A Maverick electric scooter costs more than RMB 3,000, which is already very cheap, but in the entire motorcycle market, it is a drop in the ocean. It cannot build a monopoly trench, and it is difficult to make up for losses from other sources. Zhou Hongyi only dared to suggest that TV "does not make money", and did not say that he wanted it to be free. Xiaomi uses a prepaid group purchase model for mobile phones, which can lower supply prices, but its largest revenue still comes from selling mobile phones.

Although free is a need of users, and meeting needs is what any company must do, it is not necessary to rely solely on free to meet needs. But the most suitable thing for free is when it helps to improve the experience of the product or service, including improving the functional experience or other incentives. For example, Google needs to be free to attract the most users, and the information these users search for will further improve Google's search results. Therefore, free technology can improve Google's services. Only when Facebook is free can it attract the most users to sign up, and the more people sign up, the higher the social value of Facebook, so free will help produce the best experience. On the contrary, this premise obviously does not apply to luxury goods, because the high price itself is a value. Do you want free LV? B2B services are not suitable for free, because companies will be suspicious of free products. The enterprise collaboration service tool Slack is one of the world's top startups in the commercial field, but it is not free. In fact, enterprises pay for it. Slack does not allow advertisers to pay, firstly because companies do not want information to fall into the hands of advertisers; secondly, once Slack collects money from advertisers, its products will inevitably be tilted towards serving advertisers.

In our country where the industrial revolution has not yet been completed, any new concept looks shiny. If you say to a pancake stall owner, "You need to think about the Internet," or "The Internet era has arrived," he will probably think it makes sense, and seems to mean the same thing, because it is too abstract. The Internet thinking or Internet in his mind may refer to the launch of food delivery apps or the like. But if you say: "You have to have an Internet mindset, the pancakes are free, and there is always a way to make money in the end." He will probably say: "You think my pancake stall is not big enough?" This kind of Internet thinking in a narrow sense is ridiculous.

The paradox is: In Silicon Valley, the birthplace of the Internet, no one has ever heard of the concept of "Internet thinking". Because the truth of Internet thinking is just market thinking, that is, the market first finds out the demand, and then goes back to consider the business model and production costs. In traditional manufacturing, customers are oriented abroad, so foreign companies bear the responsibility of facing the market. When traditional industries compete for orders, they actually compete on cost, construction period, quality rate, etc. They have become accustomed to thinking about costs first and then pricing. At most, they consider marketing after developing their own brands. Therefore, the moment when Robin Li first proposed Internet thinking was when he was speaking to a group of bosses of traditional companies.

So Internet thinking is a reflection on traditional manufacturing thinking, which has been suspended in the transformation stage of our manufacturing industry, just like lean startup is a reflection on the Internet bubble at the beginning of the century. However, in European and American countries, market-oriented thinking is deeply rooted, and their most valuable industry is no longer manufacturing. So for them, the so-called Internet thinking is not revolutionary at all. It is like filming Avengers 2. They will never consider the production cost, but only consider its market, whether it is movie theaters, product placement, DVD, TV station rebroadcasts, peripherals, games, etc., the business model includes online and offline, free and chargeable dimensions. This is the thinking of thinking about market demand first, and then designing products and business models.

The Internet is also not applicable to all industries and all links. For some industries, it may only be able to transform certain links in their business processes, and it may not even be able to transform traditional enterprises. Bring more profits.

Some consumer companies can transform their business processes, innovate online experience models, and integrate offline resources, while traditional manufacturing companies may be more likely to intelligently transform their market methods and sales channels through the Internet. Everyone can imagine that in the future, the Internet will gradually penetrate into life, so that the concept of "Internet" will disappear, but this is the "future", not the present that will happen immediately.

To truly apply the spirit of the Internet in traditional industries, don’t always think about finding a successful cure in a short time. Not a good APP can save a company, nor can a successful business model. Can sweep the market. The person or team that succeeds in the end is not because they find a certain key to success, nor because they suddenly find a certain way to make money, but because they accumulate years of experience, constantly try to correct mistakes, and then improve their organization and methods of doing things. Adjust it into the essence, continuously accumulate and strive for excellence, and finally accumulate amazing strength. The biggest change in connecting to the Internet is to adjust yourself to this fiercely competitive environment, and the speed of change exceeds the speed of competition.

Right now, the speculative behavior brought about by the Internet trend is far more than the actual revolution or innovation brought about, because many start-up companies may generate cash flow, which brings some inflated valuations. Base. But it is not objective to say that this is completely a bubble. Remember what Wenchu ??said - "top-level design", which has been tried and tested. No matter how big or small the effect is, it will always be effective.

So what should ordinary entrepreneurs pay attention to? First, check whether the market is right? Always think about: How high is the ceiling in your own vertical market? What are the surrounding markets? Are there other competitors that are scarier than my current competitor? How strong are the boundaries of my vertical and how long can I play here?

If everyone is vying for the top spot and their playing styles are similar, the best way is to raise some money faster and earlier. But if I am one round behind others in financing, and my playing style is not fundamentally different from others, I have to think about what other playing methods allow me to overtake, or choose to change the sub-battlefield.

And if the market is chosen correctly and you want to change your playing style, what should you do? Look at what more advanced and developed countries are doing? What's the play style? Pay attention to the faster-growing opponents' play styles and understand the pioneer users. Observe parallel sub-markets, domestic and foreign, first and second tier.

If after trying it can be determined that the business situation of the vertical market is not good, there is no point in continuing to fight, and there are huge problems with future growth, then decisively change markets. If the change still doesn't work, restart and reconsider the general direction. As long as there is a team with money and execution ability, there are still many opportunities for Internet transformation.

Conclusion: Although my writing is as gentle as water and seems to be full of confidence, it is not actually for the purpose of expressing myself, but a process of self-understanding. What is an investment manager? From a work perspective, investment managers are people who look at industries, find information, visit companies, evaluate values, find teams, and help grow. But I think investors should be people who can face various voices rationally and kindly, and after making comprehensive judgments, they should not forget to keep an open mind and be ready to admit their mistakes at any time.