How do hardware startups make 500 million valuations in half a year

A hardware company, set up only six months, the wind has given the highest valuation has reached 500 million, the olive branch of the internet giants and the top VCs. The team is only two people, one of which is Taobao waiter. To the amazement of all the little partners, the founders of the company did not know what internet thinking was a year ago, or even the Internet. If the company can succeed in the future, it must be a legend. In order to avoid advertising suspicion and related to the requirements of financing confidentiality, this does not mention the company and product name.

Public-chip, prepaid, OEM, Word-of-mouth, social marketing, that's their model. Of course, this valuation is not casually given, and internet companies burning money to rob users is completely different, two people's team six months to create 4 million profit, and only thousands of users. Please see clearly, it is profit, not sales.

Watches, hand ring, ring, TV box, router, electronic scale, sphygmomanometer, fetal heart monitoring, air purifier, TV, air-conditioning, water purifier, hardware +app combination of heat gradually rise, whether it is the entrepreneur, or the giant, do not talk about the grand narrative smart home, it is simply behind the extreme. Although many internet giants have been killed in the hardware field, but also do not have the experience of hardware, and can not focus on a certain area, it is important that their proven platform advantages in the hardware does not exist. So, for many entrepreneurs, the chances of success in the hardware field are higher than those of the Internet. Many people believe that the hardware has a threshold, but also high cost, investment money is not expensive, the seed users get difficult. There are really a lot of problems, and this requires a more innovative model for product and marketing.

Public chip is an ideal model that can even subvert the sales model of all hardware. Music and millet, the core is also a public-chip model, but they have a lot of investment in the social marketing promotion, so that their products do not need mass production can obtain a large number of orders. They take the user's money again to the manufacturer to order, cash flow pressure and risk to the lowest. For startups, it is impossible to have their two of a lot of upfront investment, which requires a more ingenious use of public-chip mode low-cost or even 0 local access to the first batch of users. If your first batch of users is good enough, they will be able to give you a steady stream of new users.

The company, which is worth 500 million, has only 500 of the first products, or 500 users. In the early days of product promotion, almost all of his own personally use micro-letter or online to promote. The communication of micro-letters and face-to-face communication makes him and his products and users build up a basic trust. Among them, one of the Internet's senior experts feel that his product is good, helped him to do the first public marketing, which brought him a great benefit. The first users of the product have a lot of quality customers, such as the CEO of the Internet company, the Big V of the circle, the executives of the investment company and the senior executives of the big companies.

These users are more likely to believe in the spread of the circle, and are already influential communicators, less sensitive to price, easy to accept Internet products and new sales models. After receiving the order, the founder relied on his own hardware professionalism, purchased a variety of components of high quality, and quickly found a generation of factories to do OEM. In order to save cost, use common mould to make, although the industrial design is not outstanding, but the quality still maintains very high standard. In comparison with the international famous brand of similar products, the small company's products can still win a chip, and the price is only One-fourth. He sent the contrast test video of the product online. In product services, he will go to the user home with the user to test the hardware effect, and its good scientific literacy and eloquence so that these seed users feel very steadfast, let them feel that products are not shanzhai goods, but is full of science and technology fan of the small public Internet trendy public products. This batch of quality seed users have gained a relatively good product experience and a novel marketing experience, spontaneously spreading within their circle. Free Word-of-mouth ads bring a steady stream of orders to the small company.

Unlike the "traditional internet mentality" of internet companies that burn money to consumers, the company has been making money from the start, and its profits have been high. Shop Small Two don't understand why the company need financing, her idea is to now make money mode and speed, again in half a year can earn 10 million or more. If you make money, why do you have to raise it? In fact, the founder also hesitated. When a big company offered 50 million cash and 50 million equity mergers and acquisitions, he realized that his company was so valuable. Earning 10 million is no longer attractive to him, although he was busy running for his first suite a year ago, and he had no idea what it called social marketing.

Of course, he is not the first to do the hardware of the entrepreneurs, his successful start there are some accidental factors, if not the Internet senior experts to help him, he may be difficult to make the first batch of products, cultivate the first batch of quality users. Ironically, however, the veteran expert, an angel investor, did not invest in the hardware company because he did not think it was a success for an entrepreneur who had never previously understood internet marketing.

The public is not a panacea. Find the first batch of users, users do not need too much, but enough quality, there is a strong Internet communication capabilities, the company needs to make convincing or even exceed the expected quality of products, so that users feel reliable follow-up services, preferably with a little bit of the trendy feeling, so that users willing to do product dissemination for the company. This is the key to the public-chip model.

(Responsible editor: Lu Guang)