JI: Key 3 steps of China's Internet venture capital to the pond

China's internet industry, should be one of the most competitive industry in China, if you leave a little over a year or two, then you will be doomed to be unable to keep up with the latest concepts. In recent years, the rise and fall of video, SNS, group buying, electric business to mobile internet, entrepreneurial armies. According to Morgan Stanley, there are about 2.3 million websites in the entire Chinese internet, and about half of the hot money that venture capital enters China is in the Internet industry, and a group of the smartest young people is also doing business on the Internet. In such a competitive situation, 60,000 companies can have 1 listings. So far, 60% of these listed companies are listed below the IPO price, at the same time after the listing and need to maintain financial transparency, and need to explain to investors, often live more hard, and in the listed enterprises, there are 70% market capitalisation by two companies occupy, one is Tencent, one is Baidu. The internet industry has not been like the beginning, "timing + luck + persistence" on the possibility of a quick, now the threshold of entrepreneurship has become more and more high, any area, including the subdivision of the field is no longer a blue ocean. Faced with such a reality, many entrepreneurs and investors are lost in the confusion, how to find a relatively good entrepreneurial direction? According to the pond Eric data show that the 2011 Chinese online shopping market transaction size close to 800 billion yuan, The network advertisement Market scale is 51.29 billion yuan, the net swims market scale is 47.62 billion yuan, the movie box office is 13.2 billion yuan. Which type of pond is bigger and more obvious, although platform class electric trader is carrying on fierce fight, but the traditional enterprise that opens a shop on the platform, original brand even generation operator, can have good profit and space. The pond is big enough to keep big fish in the future. Attention to business model after the pond, the second concern is the business model. Business model is equivalent to the real estate industry location, if the location is not a good house can not sell, if the business model is not good, business days will be very hard. In my previous speech, I published a pyramid, the pyramid is divided into three layers, the bottom is a product-centric enterprises, including film production companies, gaming companies, because they have the risk of product cycle, every 3-5 years need to have new games to improve their product line. Although Zhang Yimou and Chen Kaige are excellent directors, no one can guarantee that his next movie will make money. The middle and high level of the pyramid is a platform and community-centric enterprise, but also a better business model of the enterprise, product cycle risk is relatively small. Tencent, for example, has half the turnover from the game, he only needs to provide a platform, and then enjoy the split. The same example of Ctrip, as a platform-type enterprise, in hotel reservations, air tickets booking, tourism, business management four business, its third quarter revenue growth of 20% to 1.17 billion yuan. Capital markets also know the rules of the game. That's why some product-centric gaming companies are making a lot of money, growing at 20% or higher each year, but the general price-earnings ratio is not high, like the city of swimming and perfect space-time.The surplus is floating around 4, and the Giants ' network is about 7, even if they have a lot of cash in their hands and the capital markets are unwilling to give them high prices. Compared with the same period, the platform type of companies are 5-6 times higher, such as the Ctrip P/E ratio is 24, Baidu P/E ratio is 22, the recent popularity of Qihoo 360 is even more than 60, mainly because of the risk of their product cycle is relatively small. After the core competitiveness is elected to the business model, the next thing to choose is the core competitiveness. If you have the same business model, you need to compare to see who is doing well, perhaps management wins, perhaps the process wins. For example, Ctrip and art do business exactly the same, but last year Ctrip income than art dragon income more than 5 times times, operating profit more than 20 times times, this is the core competitiveness of the difference. What is core competitiveness? Michael Jordan may be the NBA's greatest athlete to this day. Six NBA champions, retired two times, won the first three championships after the retirement, and played two years of baseball, although his body is still so good, speed still so fast, people are still so smart, But as a baseball player, he was dropped from the big leagues to a small league, and the individual hit rate was the second-lowest in the small leagues. Two years later, he came out to play basketball, and won the NBA championship three consecutive times, this is called core competitiveness. Even a great athlete, a superstar, like Jordan, must choose the sport he is best at, and so does the enterprise, not everything can be done, or it is very important to choose the sport that you are best at. Enterprise three levels of harmony now this society, there is a trend of intensification of social contradictions, enterprises as an institution, we must pay attention to the overall harmony, a great enterprise generally has three levels of harmony, one is very high customer return, the second is very low staff turnover rate, the third is to have pricing power. 1, repeat customers with Ctrip for example, Ctrip 80% turnover is from repeat customers, the new Oriental more than 80% students choose a course after the choice of a course, because they particularly like these courses like these teachers, have repeat business has a benefit, because repeat customers general consumption will be higher than the new guests, the second is rain or shine, They all contribute cash flow. On the other hand, the cost of getting a new customer is 5-10 times more than that of an old customer, so it has a big impact on the profitability of the company. 2, the employee turnover rate is the second is the staff, if you can make your staff happy, the staff will be more creative, every day he worked overtime some time will be very happy, so your company's production, turnover will rise. Every year in the United States, Fortune magazine reviews the top 100 Best Employers, 2005 years ago in 20 years, 100 of the best employers in the stock returns to 16 times times the return on equity, compared to the average enterprise 2-3 times, a big reason is because of their employees, you can give employees a good incentive. An enterprise staff turnover rate is too high, illustrates a few things, the first is the incentive mechanismOut of the question, the second is the boss's character is particularly bad, the third is the enterprise culture out of the question. A lot of times you just see a business non-stop people go, you do not need to do further investigation you know this enterprise must have what serious problems. 3, pricing power is the final issue of pricing power, in our industry, Baidu's pricing power is quite high, and last year we saw that each of its average user spending grew by 50%-60%, on the one hand, the number of users, advertisers or paid search users increased, On the other hand, spending on each user is also increasing. A significant part of this 50%-60% growth comes from the price hike of Baidu Advertising, what is the advantage of rising prices, that is, to increase this part of the turnover directly into a net profit, the same bottle of water, I can sell a piece of money can also sell one, the more money in the case of the cost does not increase directly into a net profit. I previously recommended you read the art of pricing, which refers to the United States 500 companies, as long as the price of its products can be increased by 1%, the average profit can rise 10%, pricing power is very important. In addition to having a very low turnover rate, the great enterprise very high customer return and very high pricing rights, there is also a point is to do a good defense, I mentioned earlier in the group buying industry in just one year, 1500-2000 of the fall, part of it because of its entry threshold low, another reason is not good enough for customer service , but there is also a reason for the high expansion of their own defense does not do well. In the 2010 World Cup, you may remember that the Spanish team won the championship, Spain played 7 games and scored only one goal per game, but it was the best defense, almost every game, defensive control, offense and luck, a great team must be a good defensive team, and A great enterprise must be a good defensive enterprise, and a corporate defense is 360 degrees, is three-dimensional, regardless of your financial to do a good financial management, cash flow management, and then in the brand PR to do these public relations crisis management, and in the talent, product line have a lot of risk management to do, It is possible to have a champion in the future. Although the financial crisis in early 2009 spread to internet companies, even if the listed Chinese Internet companies share an average return of more than 200%, while the same period of the Hang Seng Index, the Nasdaq return is basically 40%-50%, the internet industry in China will also be the fastest growing industry. (JI, director general of Morgan Stanley, oral, Tracy finishing)