Venture Exchange 20th: 13 "slow" start-up

Wen/Wang Yiyu

"Daytime busy website, Night sleeps kitchen." "This is a true portrayal of the founders ' founding team in the early stages of entrepreneurship. Now they are starting their own business for 13 years, and the "slow" entrepreneurial path is very distinctive.

The birth of the network is not short, but it is neither new Oriental, good future-style traditional offline education institutions, nor is the emerging Internet-style online education start-up companies. It was born in 2001, the first wave of the internet fiery wave, experienced from the BBS to the electric business, from the electric business to school pc brilliant era. and ups and downs, in the mobile internet wave of the emergence of this online education opportunities.

By colleagues called "Otaku," the founder and CEO of Cai Rui nearly two years rarely appeared, do not know whether the hot atmosphere of the online education is infected, this time he looked very radiant, glowing.

"Single wood difficult to become a forest, Hu network to support entrepreneurship, in order to create online education ecological circle to achieve industry-win." "Arnold (Fu Cai Rui's network name) in the interview on NetEase Technology."

The network currently has 80 million registered users, influence radiation 200 million learners. Arnold plans to build a 1 billion-magnitude user platform, and through the large data analysis, the payment of electricity dealers to achieve the user's operation and management.

Students ' interest in entrepreneurship

Interest, in 2001, at that time, the Shanghai Polytechnic University, the junior students of Fu Cai Rui founded the Forum, after a year of accumulation, quickly became the national popular free foreign language learning resources community.

"The first users were mostly poor students and small white-collar workers who were just working, and 90% were women," he said. Their common feature is the desire to improve on the level of foreign languages, but not the ability to spend a lot of money to the offline organization training. "The needs of early adopters have been supportive of the growth of the web, and they are still loyal users of the network, and even recommend that their children and friends join the learning platform," says Arnold. At that time BBS completely free, user support is really the biggest driving force for entrepreneurship.

With the heat of studying abroad and the entry of a large number of foreign enterprises, people's demand for the promotion of foreign languages is increasingly urgent. The network continuously increases the product module according to the user's demand, for example, to join the listening training, translation and other modules, and in 2005, the online line of the "Jiang Blog", for the different needs of users founded 46, Japanese, postgraduate, IELTS and other channels, and launched the "Web2.0 Tribe" Community Edition, joined the social elements.

2006, Arnold graduate, at this time the network also accumulated nearly 200,000 registered users. In the face of these sticky users and the potential for huge business in the future, Arnold chose to move the network from public goods to commercialization. Since then, from 8 employees, 80,000 yuan funds to start, the net every year to 200% of the speed of development.

"Slow" Financing history: a booster for business expansion

The network currently has a total of three rounds of financing, each of the financing, Choi Rui can be used as a business expansion of the booster. The most recent was the $30 billion B-round financing in 2013, the other two time intervals, respectively, of the 2009 round of financing and the 2007 Angel round of 1 million dollars.

"2006 Years of entrepreneurship, we are in a community to rent a house to do the office, day busy site, night to sleep in the kitchen." Friends and family are not supportive, do not understand us. Arnold recalls the beginning of his venture. But like many entrepreneurs, Arnold is very grateful to the network of angel investment institutions Yuan Wo Capital (formerly known as "Suzhou Venture Group"), although they have now quit-the online education is not hot, investors simply because "people" only to invest in this team, gave the net this money.

The second financing in 2009 was that Arnold wanted to develop the business of the company, to change the revenue structure to increase revenue. For a long time ago, the network relied on advertising as its main revenue. "At that time, advertising is the only way we survive, advertising costs from publishers and training institutions are the main sources of income." At that time, the vertical education site is very few, although not worried about customers, but you have that point of traffic, to be big is difficult. ”

With the rapid heating up of Taobao and other electricity, the network began in 2007 to open the company's business, to undertake the BBC, the VOA official content authorization, to become a good easy to access electronic dictionary official authorized network sales channels, online sale of new Oriental online, Chinese accounting school courses.

The rapid success of the electric dealers in lieu of advertising became the main source of revenue in that time, but 2008 years of financial crisis, the electricity business decline sharply. Arnold had to find the next profitable product again.

Luckily, Arnold found a round of financing at the most difficult times, but the net did not disclose the amount and the investors.

This year, the network also moved the office to the Shanghai Zhangjiang High-tech Zone, the rent is from 10,000 a month to 100,000. Arnold received a round of financing, hired more than 100 teachers for full-time staff, specializing in the production of a variety of audio education courses. Did not choose to do the popular video course, the first is that audio can save a lot of bandwidth and server costs, the second is to "reshape online education" scenario.

"Many companies want to put offline mode completely to the line, and to achieve as much as possible, so the use of famous teachers + video live or recorded." But I think that should be abandoned offline, dedicated to online users to create courses. Based on this, Arnold will teacher audio combined with PPT, with the flash form of high quality, focused, clear and orderly courseware. Because the learning efficiency is greatly improved, the user's response to the course is very good.

Today, the curriculum of the school has included the English and Korean Japanese law, such as language courses, study abroad, postgraduate and primary and secondary education and many other courses, as a result of foreign language learning started, so far the content of language courses still accounted for about 70% of the net.

In the revenue, 5 years after the online net, the revenue accounted for the entire company's total revenue of 40%, and the electric business basically flat. The advertising business accounts for only 20% of the year's revenue. On the scale of the company, just moved to Zhangjiang in 2009, the company has only 60 employees, and now has expanded to nearly 700, and there are nearly 2000 people in the part-time team, there are more than half of the service school, including university teachers, excellent English students and in-depth users of netizens.

It was not until 2013 that the net took the third round of financing ――3000 million dollars. In the current Internet environment, the pace of financing is too slow and valuations are not that bright. But Arnold thinks, valuation is not the goal that the enterprise pursues, now the training organization that run under the line is more and more, have no reasonable revenue structure, no amount of money is not enough to burn. "The financing only diluted a few percent of the shares, in the case of the net, 2009 years after the money has not been burned." ”

Mode change: Platform

After the second round of financing, the network began to build an online education platform. To this end, Arnold specifically at the beginning of this year to make an organizational structure adjustment, the establishment of BD expansion department services to the partners.

"The daily growth of a hundred thousand of users, no matter how hard, only rely on the network itself can not meet the needs of all users." "The rapid growth of user demand, let Arnold see, to build the ecological circle together to win to further promote the growth of the scale of the network." Based on this, the network opened the "CC classroom", hundreds of small and medium training institutions can be in the CC class to open courses, quickly enrich the content of the Web curriculum. These training institutions can get more than 70% of the income split, Arnold said, "There is an art training teacher, the previous one months up to 230,000 income, but now 20 days can earn 300,000 yuan." ”

The network also organizes business conferences and salons on a regular basis, in the hope of gathering Internet and educational resources for online education. In this activity, the network also found a lot of in-depth cooperation partners to help the network perfect platform module.

Recently, the network also with the music network to reach strategic cooperation, will be the education content and resources of the network through music into the TV hardware terminal.

There are no particularly successful platform-type cases in the field of online education. "Education is a very special area, and even on the internet it is very difficult to achieve the explosion of massive user growth, the industry has no shortcuts." "Arnold said that the network has accumulated 13 years, only to achieve 80 million of the users, the need for a long period of accumulation is a major feature of this industry."

In order to maintain the company's rapid growth, the network in the product research and development investment is very large, accounting for more than half of the total investment, and the other investments in most of the focus on education and teaching and it technology, and the market only accounted for 10% of users, mainly by word of mouth. As early as 2012, the net revenue of the network has been over billion, and online education can reach more than 50% of the gross profit margin is relatively large.

"We are not now successful in entrepreneurship, still on the road." "But compared to the early days, we now have a clearer goal and a firmer direction," said Arnold. "It can be said that we have entered an orderly state compared to other online education startups, but it will take time to grow." ”

Investor comments

Yin, founder partner of Tsing Chuang Venture

In the last two years, the rapid development of online education, the main reasons are four: the first is to meet the demands of the teacher education, the second is the increase of the time cost of urbanization, third, the Internet intelligent development trend, the penetration of traditional industries; four, it satisfies the information asymmetry across the region.

We are more optimistic about the 0-6-Year-old Preschool, K12 and professional online education, but the domestic education has its particularity, need a period of accumulation and industry resources support. Online education is a generation that belongs to the future purely in the Internet, and the network has accumulated for many years in the field of online education, showing a very good explosive trend, which can meet the need of experiential learning in the present time.

The current online education investment is very hot, I think there is a bubble in this field, because capital like chasing hot areas, to some extent, the growth of entrepreneurial bubbles. In addition, education itself has industry barriers, in a short period of time can not achieve the explosive growth of users.