The failure of the famous Internet companies: Lessons

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kaixin, BYD, ITAT, nine city, Zcom, Yan Yan Media, prosperous group, DB Network, Mysee, a tea sitting, the media, Wuxi Suntech, blog network, PPG, 酷6网, Grain Dojo and other well-known enterprises of the failure of the lessons, perhaps for the current benign operation of enterprises to knock a bell.


text journalist Jiangchuan


The sadness of Chinese enterprises is not the frustration and failure, but the loss of self, and finally make themselves a prisoner.


One, success attachment disease. The losers who have been so concerned have had a successful past. UT Tatsu Kang's phs, happy net of "stealing vegetables" and "Trading Friends", 2005 blog Network, 2000 Tom Online wireless Value-added ... But they seem to ignore that a momentary success may be due to the entrepreneur's personal heroism and passion, may be from the occasional opportunity and specific cultural specific needs of the grafting, may be derived from speculation and the fate of God's gift.


second, bigger and stronger syndrome. One is crazy to buy, Chen in charge of the grand to build "entertainment Empire", since 2006, directly or indirectly acquired more than 180 companies, but the prosperity of China, friends of the Century, the heyday of the sun ... Seems to have been water drift, no "follow-up answer." The second is wildly diverse, Prince of milk in the basic success of the milk industry, children's wear, business, cosmetics, food, media, and so on, a quick step into the front, the results of the extension of the battle line, dispersed resources and energy, the broken capital chain collapsed. The third is the United States Neil Disease, Enterprise to the world's top 500 sprint process, blindly seeking large and fast, do not attach importance to the cultivation of their own resources and management level of improvement.


its third, the main body loses disease. Every entrepreneur aspires to be "Google of America", "Yahoo America", "Amazon America", "American Facebook", "American Twitter", "American Groupon" ... Results ppg did not become land ' s end,fm365 did not become AOL, Harbor did not become Huawei, 8848 did not become Amazon, the Grand box did not become a Sony ... In the era of global competition, learning is very important, but too much emphasis on imitation learning, not only lost the innovation, and lost the possibility of leading internationalization and trend. More importantly, the enterprise loses the subjectivity the process, the international hot money capital factor also cannot neglect.

Zhang, of
Sohu, said: "has been following the direction of Wall Street to do things, too much value for short-term profit products, each quarter to deal with the results of the worry." ”


Kaixin: Happy not up


Alexa data show that since February 2010, happy Net launched a "fun restaurant" game brought a peak of traffic, then all the way down, 1.5 time, happy Net's daily user volume fell to about 70%. In the last 3 months, the number of Web page visits has fallen by as much as 38.74%. The Internet Dark Horse, once flourished, is slowly being bleached and being discarded.


February 2008, Happy net quietly online, soon to get the Northern Lights 5 million U.S. dollars investment, the next year, including Qiming venture, the Northern Lights and Sina Venture investment amount of 20 million U.S. dollars of capital, the valuation at one time reached 100 million U.S. dollars. However, today, it not only falls to the altar, it is difficult to rival Sina Weibo, Renren, Tencent friends and other SNS community sites, and the fall of the fast people surprised.


In addition, happy NET also adjusted the group buying mode, will be the group buy products and customer service will be all handed over to group a site F group, the future only to provide Third-party platform services, the industry is not only difficult to identify with, but more a bit of singing the sound of decline.


Lesson: The essence of SNS is social relations, the spirit of the Internet is open, contrary to these two points, happy net harvest only lonely.


BYD: A nightmare


since 2010, BYD has been in the continued decline in sales and poor financial results of the struggle, during the network of dealers to return the storm is exposed to the deep problems of BYD. On September 26, 2011, BYD's H shares fell below HK $11, and from 2008 it was only 11%. 2011 years in the report disclosed that BYD's first 6 months to achieve revenue of about 21.5 billion yuan, down 11.4%, net profit of 275 million yuan, down 88.63%, net assets yield from 13.82% to 1.43%.


BYD is stuck in a nightmare dream. In fact, BYD's current profit is still mainly from the traditional automotive sector, its true competitiveness is not the new technology leadership, but the Chinese labor force to play to the extreme of the creation of specific production research and development methods. For now, Mr Buffett's aura of BYD is no longer, and the concept of new-energy vehicles is dashed, and BYD's future is no brighter.


Despite the sluggish car business and the tight capital chain, BYD's expansion is still blazing. The total budget for the 12 projects under construction is up to $20 billion. These projects in the approval of the land is to the local government "Junlingzhuang", want to stop all stop.


Lesson: The sustainable development of enterprises relies on new technology leading strength rather than on the concept of new energy, but not Buffett's aura.


ITAT: The price of violating common sense


Itat left to the industry's innovative move is the nameless small and medium-sized clothing factory and the vacant store to achieve docking. The "Iron Triangle" pattern follows: the manufacturer (supplier) is responsible for the supply, the owner (site provider) is responsible for providing the property site, while the Itat is responsible for the overall store management; three parties share the risk, the sharing of profits: Property owners bear the risk of floating rental, suppliers bear the risk of inventory and logistics distribution costs, The Itat undertakes the promotion expense and the salary, the proportion divides into: The factory 54% 60%, the property owner could, but Itat can obtain 25%-36%.


ITAT almost shattered all common sense in retailing. If the Itat this set of "0 loans, 0 rent, Zero inventory" mode, another interpretation, is: "(no one to the clothes + no one to go to the lot + second-rate ERP system + chaos of the industry") x advertising bombing = China's most aggressive retailer.


but the HKEx was apparently not fooled into questioning the sustainability of the fast-growing company after asking more than 100 questions about the wheels. Then they concluded that if the itat were to lose money, the mechanism for sharing the benefits would collapse completely, and that would not guarantee the interests of more shareholders.


Lesson: (No one wants the clothes + no one to go to the lot + second-rate ERP system + chaotic business) x advertising bombing = The most successful retailer in China? Think with your toes.


Nine City: the
of slacking

April 15, 2009, when Nine City CEO Xiaowei an internal mail exposure, to the public "express" Nine City and "Wow" break up.


2009, the nine-city income was 111 million dollars, which is less than half the 2008. In 2010, the city's revenues were only $15.58 million trillion, and only about 6% of the 250 million-dollar revenue for the year to 2008. This means that, after losing "World of Warcraft", nine cities lost 94% of their revenues. Accordingly, nine cities began to fall into endless losses, as of the second quarter of 2011, the nine cities have been losing 10 consecutive quarters.


according to the 2010 year and 2011 one or two quarterly earnings data, the nine cities per quarter of the main business net loss of 10 million-12 million U.S. dollars. It also generates a net cash outflow of around 10 million dollars per quarter.


If you must find a reason for the plight of the nine city today, the root cause is actually two words: slack. From the nine city to take the "World of Warcraft" proxy, the entire nine cities are lying in "wow" on the sleeping. "World of Warcraft" for the nine city with a huge income and fame, so that nine city has become one of the most well-known online gaming company, but in the personnel composition, organizational system, product development and operation, nine city and did not borrow the situation when the good times to adjust.


lesson: Into also "World of Warcraft", the defeat also "World of Warcraft", a product lay the Jiangshan, but also became the biggest reason for the stagnation.


zcom: The rout before the Dawn


April 2006, Zcom won the SIG, and Carlyle invested tens of millions of dollars. Zcom had a staff of more than 200 at its peak in 2007, but after high-level exodus and repeated layoffs, fewer than 30 employees were added. At present, the zcom is only the maintenance form, the business is still concentrated in the electronic magazine, the main income source is the brand advertisement, the effect advertisement and the handset and so on cooperation channel. As for profitability, it has not been able to restore the level of normal business development.


there is no limit to the number of periodicals, no paper and printing costs, low cost of distribution, all this makes people to the electronic magazine this new media has placed infinite reverie. The problem is, why are these leading companies unsustainable in an industry that is not short of money?


high costs are a big reason. Because the whole industry chain is immature, the lack of good content providers, in order to obtain content from the traditional content providers, resulting in a large number of operating costs.


However, in the huge investment, the income of the electronic magazine platform is not optimistic. Like other Internet companies and print media, the income of electronic magazines is also two sources, either by issuing fees to users or by advertising to businesses. But neither of these models is mature.


lesson: High cost, difficult to profit, management confusion, solve these problems, can turn "money" into cash flow.


Yan Huang Media: "Boost" death


Yan Yan, the media has been unlimited, founded 4 years, financing amounted to 45 million U.S. dollars, at the beginning of 2008, claiming to occupy the National hospital LCD advertising market share of 80%; its collapse is also stunning, in October 2008, investors to freeze Yan Huang account completely, Yan Huang Media from the peak of thousands of people quickly cut to only dozens of people. It has a strong rise, domineering full, often bid than the opponent several times, or even 10 times times the price of competition for the site; it fell equally wonderful, in one day, investors and the founder staged mutual recall, each with the official seal coerce full Wukong.


LCD Advertising Market has been a segment of the market, and the hospital LCD advertising has been further subdivided, supporting an independent listed companies, the risk must be greater than opportunities.

The business model of
outdoor advertising is actually very simple, The imitation is very strong, the most important is the scarcity of resources to seize. The simpler the model, the higher the demand for scale and capital, in a sense, the scale and capital are almost the only moat of corporate defense.


, by the wind in the pursuit of more than 10 enterprises, in fact, from the beginning is doomed to be difficult to big fate. As an entrepreneurial project is not a must, but if the target listing is a bit ambitious. Even if the flat liquid crystal this piece of the biggest subdivision area, also can not contain 2 listed companies, the crowd finally fell to be the end of the acquisition is proof.


Lesson: The pattern is heavier than the market, the speed depends on the reserve. This is a strong and strong era, the weak need is dormant and time, rather than to kill.


Changsheng Group:


the victim of the "gambling Agreement"


in China in the early 90, the real estate market just started. Shikhang, who made the packaging carton, chose to enter the field boldly. In the years to come, he has developed the days show mansion and other famous dishes, catching up with the first upsurge of real estate in Guangzhou. 2000 years or so, Shikhang's property kingdom reached its peak.


However, in this industry known as profiteering, Shikhang up early, but took a losing battle. Paradoxically, the death of the Shikhang is only a "chronic poison" agreement signed with Goldman Sachs.


December 18, 2006, the prosperous group signed an agreement with Goldman Sachs ' venture capital Gssia to issue a 25 million-dollar callable convertible bond, at a rate of 7%, accounting for about 12% of the issued equity.


Meanwhile, the two sides entered into the "betting on" agreement before the end of 2007: If the IPO succeeds, Goldman can make up 12.5% of the shares, whereas if the prosperous group does not make its initial public offering during the period of the bond, the venture capital may require Shikhang to buy all of its callable convertible bonds at a predetermined price. In addition, if the prosperous group fails to repay the principal within the year, the interest on the convertible bond will be calculated at 28% per annum.


This agreement seems to have no big problem, the only focus is that the penalty is too high, once the listing failure, to any company is nearly enough to kill.


Lesson: You can trust foreign investment banks, but you have to have enough judgment and discernment, because most of the time, foreign investment banks are just a wolf who wants to make a fortune.


DB Net: Walk on Crooked


June 2003, Zhengli created 163888 Web sites to develop K8 recorder software, and 163888 has become China's leading network singer. Xiang Xiang, Yang Xen just wait for network singers to launch successfully in the website, "Mouse Love Rice" and other network songs rage, registered users reached 12 million. 163888 of the so-called "Chinese first music community" won IDG200 million dollars in October 2004. 2006 also won the 6 million dollar investment of Alcatel VC. June 2007, the website renamed Decibel Net, but rely on selling space and collecting membership fee profit model is unsustainable, advertising has become the main source of income. Zhengli was arrested in 2009 on suspicion of operating pornographic video chat business. The company has always been at a loss, and new investment has not been in place.


Lesson: Two rounds of financing 8 million dollars a dozen water drift. First, the effective profit model is the key to sustainable development; second, the Gentleman loves the wealth, takes the Youdao.


mysee: Vanity


February 2005, the high burning establishment of the domestic first Peer-to-peer video research and Development technology company Mysee.com, Xipei invested 1 million yuan. In early 2006, the Northern Lights and Cybernaut and other institutions voted 2 million dollars. But Mysee burning money too fast, dozens of people, each month to burn more than 1 million yuan, office light decoration will spend more than 1 million yuan, but also spend a lot of money to buy video content. For 8 months, 2 million dollars of investment has been depleted. In addition, the high burning moment is the most concerned about their visibility and image, he gave lectures everywhere, to promote the achievement of wealth, but only for their own market, not for the company to do the market. In the eyes of investors, high fuel investors to packaging their own money, and even other uses, but is not used to do business for the company.


lesson: The Northern Lights and Cybernaut and other institutions have invested 2 million of dollars in vain. Do more practical things, less false.


a tea sit: Listing game


2005, Shen's personal fund SMI took a seat in the wind. At that time, a tea sitting set the "2008 to 2010 period of the listing" target. From 2005 to 2008, 3 years, a total of tea sat through 3 rounds of financing, financing amounted to 47 million U.S. dollars. But in 2008, a tea sitting more than 10 joined the collective to sue it to court, the reason is a tea sitting "trick" franchisee investment, forced to occupy the franchise and become the actual control of the franchise store. And in the Franchise Shop renovation project, equipment procurement, raw materials procurement, and so on, a tea sitting with the master of the company's corporate chapter, seal, financial chapter of the convenience, directly to the money, even appeared "a purchase of pork 35 tons" of the ridiculous after the invoice. So painstaking effort, integrity disappeared, even if the capital to push the listing, how to win the trust of investors?


lesson: SMI, IDG and other institutions 47 million U.S. dollars investment future worrying. Unscrupulous, all in order to go public, this is wrong thinking.


media: By hot money dazzled the mind


2003, Jiangnan Spring to find a building video advertising this new blue sea, just 2 years of successful landing on the Nasdaq stock market. After the media has acquired a crowd, framework, seal Prudential and many other competitors in the building advertising market unified. Its shares are up to $66 trillion, with a market capitalisation of more than 8 billion dollars. Unfortunately, after the IPO Jiangnan spring in the industrial speculation and capital game of the road of no return farther. He not only did not solve the central system management problems, but also neglect in the team building up and down strength, the company did not do, but blindly thinking about how in the capital market circle money, and finally lost himself in front of money. In 2008, CCTV 3.15 Party exposure of its companies in the wireless suspected of sending spam messages, the shares fell all the way, until 4.5 U.S. dollars, the market value of 630 million U.S. dollars, evaporated nearly 8 billion dollars!


Lesson: Market capitalisation fell to $630 million from the peak of 8 billion dollars. Companies do, capital only meaningful, otherwise, by hot money led by the nose, will be caught in the whirlpool of speculation.


Wuxi Suntech: the figure sadly


December 2005, Wuxi Suntech became the first Chinese private enterprise to be listed successfully in the New York Stock Exchange market. In the "global warming" concept of panic, Wuxi Suntech received a warm pursuit of capital, the stock price as high as 86 U.S. dollars, the market value of 14.5 billion U.S. dollars, after Baidu. However, October 11, 2011, Wuxi Suntech shares fell to 2.47 U.S. dollars, the market value of 450 million U.S. dollars, evaporation of 97%! The photovoltaic industry really has the technical content of cutting wafer production firmly in the hands of the United States, South Korea's enterprises. Suntech is more like an assembly of High-tech parts processing plants, does not have the core competitiveness. When the domestic Changzhou Trina, CLP and other enterprises swarmed, the market instant into a tragic red sea. After the financial crisis, governments reduced subsidies for solar energy.


Lesson: October 11, 2011, Suntech stock fell to 2.47 U.S. dollars, the market value of 450 million U.S. dollars, the highest evaporation of 14 billion U.S. dollars. Core competitiveness, core resources is the fundamental competition.


Blog network: Giant Squeeze


2002, Xingdong created a blog in China, after 3 years the site has maintained more than 30% monthly growth, the global ranking has soared to more than 60, and in 2004 won the Chen and sheep east of the 500,000-dollar angel investment. In September 2005, Graniteglobal Ventures, Mobius Venture Capital, SoftBank and Bessemer Venture Partner1000 million dollar Investment, "blog China" renamed "Blog Network", also shouted out "1-year Super Sina, 2-year listing" goal. In a short six months, the blog network from more than 40 people to expand to more than 400 people, 60%-70% of the funds are used in personnel wages. They also spend a lot of money on videos, games, shopping, socializing and many other projects. In fact, at the end of 2006, Sina as the representative of the portal site's blog power has been completely beyond the blog network and other emerging vertical web sites, Xingdong hard to find out the road is easily replicated.


Lesson: Two rounds of financing 10.5 million of dollars, was squandered. Money to save flowers, even if the flowers should be put on a workable plan; Don't underestimate the advantages of the Giants.


PPG: died of man-made


October 2005 PPG pioneered a new business model for selling shirts through the Internet. The concept of light assets and the reduction of circulation links, coupled with the explosion of advertising, PPG quickly became the market leader. From 2006 to the end of 2007, PPG obtained TDF, set Rich Asia, Kay Peng Hua Ying and San Shan investment company more than 46 million U.S. dollars investment. By 2008, the industry appeared where customers sincere goods, excellent shirt nets, carris, such as dozens of imitators, PPG not only lost the position of the eldest brother, the lawsuit is entangled, the executive diaspora, more outgoing founder Liang Volume absconded. Liang surface is to do e-commerce, but supporting logistics, warehousing is his own company or indirectly related to him, he kept to these companies dozen money, investors money disguised into his own pocket.


lesson: 46 million dollars of rounds of financing were shifted in disguise. One of the purposes of entrepreneurship is to make money, but not just to make money, PPG's failure once again proves that in business, people are how important factors.


酷6网: The victim of the course battle


酷6网 once with the potato, Youku together known as the video industry f3,2009 at the end of the sale of 44 million dollars sold a grand, and become the first listed video business. But 1 years later, 酷6网 founder Shanyou left, the loss of the year, the bloody big layoffs, and now also change focus on the community, UGC (user generated content) and short video. Chen originally hoped that cool 6 development direction is "the video information News", but Shanyou wants to insist to buy the genuine copyright "The big Mode", the final huff. In the second quarter of 2011, the net loss of 21.6 million U.S. dollars, the year-on-year expansion of 39.4%, the chain expansion of 98.2%. The annual loss of 2011 is expected to exceed $50 million trillion. Shanda has invested nearly 200 million dollars in cool 6, but the grain has not been collected.


lesson: Burned 200 million dollars, and ended up in an awkward transition. Management and founder of the concept of different, the enterprise will not have the right direction and end point.


Grain Dojo: Capital chain Fracture


October 2004, the founder of China-Mong group Wang Zhengwan 51 million yuan of registered capital officially established Beijing Grain Dojo. At the same time in Beijing, Jilin and other land to build production base. At the beginning, the company invested heavily in CCTV and the major well-known media publicity, only 1 years to open up a 1.5 billion yuan non-fried instant noodles market. However, the sudden burst of huge market demand, not only the grain dojo continue to increase capital investment, but also the continued expansion of the management problems brought about by the increasingly prominent. In the summer of 2006, Grain Dojo began to be powerless. Staff wages, the reimbursement of dealers and the payment of large amounts of money is owed. At the same time, bank loans have also begun to expire, and funding problems are concentrated in the short term. 2008, the grain dojo in debt more than 600 million yuan application for bankruptcy, 2009 Yi Main Cofco.


lesson: 1.5 billion yuan market, finally is the debt 600 million yuan bankruptcy end. Differentiation, rapid expansion, and even marketing are justified, but must be based on a strong management platform.