The rules and risks of young team entrepreneurship

I want to talk to you today about the value and risk of investing in a young team. I would like to say three things.

First: 25 and 52 years old

Entrepreneurs in the United States are generally very young, and are all 20 years old for Internet entrepreneurship. Comparatively speaking, the average age is about 30 years old. So 30-year-old entrepreneurship is indeed a golden age. But from the age of entrepreneurship in China and the United States, what is the difference? China's entrepreneurial age is a little bit later than America's, and the big problem is that I think it's a matter of innovation, and America is largely a technological innovation of the original ecology. So there's a lot of new ideas coming out of Stanford and so on, and China has a lot of opportunities for social and business models that require experience, and from that point of view, Chinese entrepreneurs are more likely to understand the average age of American entrepreneurs.

There is also the problem of entrepreneurial ecology. China's entrepreneurial ecology in a gradual improvement in the process, a decade ago is a Gobi region, now is much better, but this aspect is actually compared with the United States is a big gap. But regardless of age or small, we say this is not wrong, 25-year-old entrepreneurial, always better than the 52-year-old business.

Second: The background of the Times

Running on both sides of the country, I personally feel that China's opportunities are actually more than in the United States, because most of the innovation in the United States or in Silicon Valley a very small place, and in China, entrepreneurship is very wide spread. We have read the book "Outliers", there is a point of view, to be born in the right place, the right time, and now you are born in China is a suitable time.

Why, because the difference between China and the United States is that if the technology industry and the traditional industries are seen together, the United States is like a pizza pie, which is the traditional industry and the above Silicon Valley innovation, everyone is not amorites, you do your big data, I do my tradition, and in this process, technology to the traditional industry infiltration, Transformation and subversion, creativity, different degrees. Lei teacher said, do everything in a tuyere, in fact, China is a tuyere, because many industries in China are more and more open, many industries are still immature, this era is the best era, in China to do a start-up company, is certainly better than other countries, much faster, Because there is a great chance of social industry chain change behind this.

Third: The challenges and advantages of entrepreneurship

Before I talk about the challenges and opportunities of entrepreneurship, I'll start with three rules.

The first is called possible rule, Success = failure.

What do you mean? Just as we all know, there is such a statistic, probably from 2003 to 13, probably cast 9000 to 10,000 companies, in the United States two board listed company is probably more than 80 companies, the success of 15~20 companies, so the probability of success is how high? Rare。 Whether it is a venture or the probability of a successful investment, you might as well play mahjong. So it should be known that entrepreneurship, failure is the norm, success is a very state of things.

The second is change = return.

Since there are so many people starting a business, how to improve the success rate, to become a great company? I think it's simple, how much you have changed and influenced the world, and how much the world will pay for the company. This may be a bit empty, let's talk about Alibaba. Alibaba value 200 billion, why value 200 billion? In 2003 to see Alibaba, China's traditional retail is very underdeveloped, chain only in 1 line cities have, 2, 3 line cities do not, such a huge gap. When you think that Alibaba is buying and selling things, but behind Ma changed three things, the same, the ebay model is to communicate with email, the Chinese people are not accustomed to using email, MA invented Wang Wang, direct communication; second, China's usual no trading system, he invented the Alipay, can be directly online transactions, The Third Kind, Ma Yun has made the logistics. One person has created three things to China's electric quotient ecology, which is not changed in the world.

Simple talk about Jing Dong. In a nutshell, Beijing east to the world's changes, Jingdong created the world's fastest distribution network, the day will be able to arrive, I think this world no one can do it out. Look at the 2010-year electric dealer, we have invested a lot of money, probably burned about 1 billion, but did not do it, thinking inside he has no change in the world.

The third is the return = Market x share. It's a rule of comparative commerce, and it's about whether the company can make a big payoff. Return refers to the extent of market share, and if the market pull out, the market = technology x growth, and then the monopoly capacity of X speed, and then the monopoly ability to pull out to see, in fact he is a consumer hug for you, and how long you can maintain consumer love for you. All the discussion behind all the challenges and advantages is based on this.

The first risk: the market.

For most entrepreneurs, many people say that the market is too big to eat, but from the investment of some successful cases, it is not so think, I think you should think less.

Let's look at two formulas: 10x (1+100%) 5=320;100x (1+10%) 5=161

The two formulas mean market = base x growth rate. If your starting market is 10, if you grow at 100%, you will be 320 in 5 years. If your market is very big now, but he is a very low speed growth, 5 years later is 161. The rationale behind this is: we are going to do a market is you can not see, very small, just a 10, so we all feel no meaning, should not do, but the growth rate behind it is very fast, many people do not necessarily realize, so it five years later become an unexpected market.

So to find a big market, this sentence is ambiguous, in fact, we are looking for a small market now, but the future of a large market. Two is looking for a market that most people don't necessarily recognize.

Second risk: decoupled? NO

Why to say this, I feel very simple, if say, a market you also saw, I also saw, we do together, that is better than product, not to say my product is better than yours, but say my product is 10 times times better than you, otherwise simple 10 times times, otherwise than he experience good 10 times times. That's a problem, that's good, but not 10 times times better. This will lead to a mix of people, to make a thousand-regiment or Hundred-Regiment war.

Third risk: Moat? Yes

Entrepreneurs often pay attention to your users, but often do not think, in the end what is your barriers? What moat (moat), as an entrepreneur, very early to think of a problem. The first is the resources, the second is the moat of technology, such as Google's technical barriers, the third is the brand, such as Coca-Cola, and the fourth is the network effect, such as Facebook. He is because of the network effect, my friends are inside, my things are in, I can not escape. A large part of the network effect is the behavior effect, the habit of consumption, the use of habits, let him feel that transfer to other places is very inconvenient, this is the network effect. The last one is the cost, if you do not have, it is necessary to see if you can do a cost effect.

This is my summary of the risk of entrepreneurship.

Let's talk about the advantages of young startups and where the value is.

First advantage, Niche is future.

Young people suitable for entrepreneurship is a big reason is that you are not mainstream, because you may be generation, 85 or after, although now is not the mainstream of society, but ten years later you are the mainstream of society, 10 years later you use things must also be the mainstream of society. So the biggest advantage of young people is that you are the user of this society, you must have their own needs, so I think this is a very good advantage.

The second advantage is the speed (faster than Faster,speed is modifiable).

I just said three points of risk everyone can not evade, if my product is no better than others 10 times times, but the market = base x growth rate; When you have all the things you don't have, if you have the speed, just find a little advantage in other areas and you'll be better than others. The greatest advantage of young people is speed. So I say the entrepreneur to use speed to compete, is I think you very much cherish the second your value and advantage.

Finally to give you two 10, but also the "10x10" rules of Entrepreneurship. The first "10", refers to what you do is 10 times times better than what is now, the second "10" means that 10 years later can have a little influence on the society, you remember this point is enough.