SOURCE Capital Cao Yi: Focus on Internet finance, the value of product-oriented entrepreneurs

[Core Tip] VC session and Entrepreneurial circle is changing, toward "small and beautiful." In the new generation of VC eyes, what is a good product?

Since 2013, China's internet has ushered in a huge window of the U.S. listing. A large number of companies successfully listed behind the VC's beautiful exit, which also allows more funds to be returned, so that emerging companies and products have more rich financial support. On the other hand, the Internet has enabled a large number of entrepreneurs to realize their personal financial freedom, some of whom are willing to bring their money back to the new group.

The investment community is also changing as large sums of money pour into the internet industry. In order to be able to better use their investment ability, and to obtain a higher return on investment, some of the old well-known investment institutions in the young backbone began to come out, with new logic to choose and invest. Not long ago, Cao Yi, the former Chinese Vice president of Sequoia, announced that he had left Sequoia Capital, created source capital and acted as a partner.

Cao Yi himself is a generation of people, but in the investment industry has been a full 10 years, can be said to span the internet "two generations" time. Cao Yi previously invested in a number of well-known TMT companies in Sequoia Capital. The new source capital future focuses on early TMT investment.

So what are the qualities that the new generation of Internet products should meet in this highly qualified young investor, and where are the direction and areas in which Chinese entrepreneurs will have greater potential for future development? The logic of investing may just provide entrepreneurs and product people with a perspective that has never been discovered before.

Where is the new product innovation opportunity?

I. Positioning specific application scenarios and specific groups to transform traditional industries

Internet finance is one of the key investment fields of source capital. Cao Yi believes that deep into the life of specific applications and specific groups, especially the Giants are unable to touch and fine operation of the field, is the financial consumer products can grow rapidly. Banks, for example, take up most of their own loans, but mostly do not get used-car loans, and although they pull in their own homes and second-hand housing loans, they will never do decoration business. This gives the opportunity for the use of second-hand car credit and decoration business as a cut-in point for Internet financial products.

Similarly, in the O2O field, although already has the United States Regiment, 58 city This kind of local life service domain big company, the BAT giant also is in the active layout, but the home economics, the United States first-class height vertical subdivision life scene still appears a large number of products. They take the intermediary mode of operation, break the traditional employment relationship, help offline individual merchants better resources allocation, especially subversion of the original way of sharing, most of the income to the cleaning aunt, nail teacher such a service provider, both at the user and merchants have been recognized at both ends.

Second, expand overseas market to enter favorable period

There are two more promising directions for Chinese entrepreneurs in the future: one is to transform the traditional industries, the other is to enter overseas. In fact, China's Internet, especially the development level of mobile Internet, has become the forefront of the world. This makes it possible for Chinese companies to bring mobile interconnection products and services to other countries. Although the United States still dominates the Internet technology, China already has some of its own comparative advantages.

In the traditional English-speaking countries, because of cultural and economic differences, Chinese products can not be head-on confrontation with the United States. But in non-English-speaking countries in many Latin American and African countries, China's mature models and teams are able to expand. Brazil, for example, has a higher per capita GDP level than China, but far below the US, and Chinese products can be translated and adapted to lower costs after localized processing. This also can understand why Baidu focus in Brazil to launch the Portuguese language version of the search.

In addition, China's own innovative products and models, but also in the United States less involved in the field, such as mobile security, browser, desktop, games, such as the flow-oriented, tool-oriented and entertainment-oriented products, can get better results overseas. The successful listing of Cheetah Mobile and state digital has proved this advantage.

Third, intergenerational turnover brings about the change of enterprise management and consumption idea

Although China has a large and small thousands enterprises, and there are no lack of high-quality enterprise-class products, but so far the enterprise IT market has not as the United States as a group of listed companies. Cao Yi does not think the issue is focused on the product itself, but on the overall perception of Chinese business owners. The United States as early as the middle of the last century has a highly mature enterprise management system and talent, they have already accepted the concept of enterprise information management. And China's reform and opening up only more than 40 years, most of them still in office is not enterprise IT user groups. But the emerging 7080 enterprise managers are gradually replacing the previous generation, they often have more advanced management thinking, can accept and use the information management methods. That is, in a few years, China will also usher in the enterprise-level market blowout.

Another case is the booming market for used-car online trading, leasing and credit, in the context of the growth of the Chinese auto market and the rapid rise in the number of private cars, as well as changes in people's buying ideas. But even if it was done four or five years ago, the likelihood of failure would be much greater.

Three basic characteristics of successful products

Cao Yi For example, if the growth path of a product is divided into 10 stages, the 1th stage is how the product reaches the user, the 10th phase is the ideal business ecology it constructs. But whether the product can go from 1 to 10 or even how to take the 1th step requires a lot of effort. Cao Yi believes that products that can eventually move towards success should have at least three features:

Fit the real prototype. Demand cannot be created out of thin air, but can be stimulated or better satisfied. Successful products are often the mapping of real-world needs in the virtual world. The source of investment in the secret, it corresponds to the reality of gossip, small notes, anonymous letters, etc. do not want to expose the real identity of the information dissemination behavior, or to consult some not suitable to confide in the problem.

Appropriate entry point. After the product enters the market how quickly obtains the first 100,000 or 1 million users, examines is it can accurately grasp the user biggest pain point. Some products themselves have a good user experience, but did not find the right point of entry, will have a certain impact on the subsequent rapid growth.

The ability to evolve continuously. If a product in its growth process, can continue to capture new user needs, to expand more direction, then it has evolved into a successful product capabilities. And if the product's philosophy and ideas are always the same, then it can only be in the starting point of stagnation.

So Cao Yi says he is more focused on product-type entrepreneurs because they have a deeper understanding of the evolving product.