What kind of money?

Basically, internet companies are synonymous with money-burning companies, which spend far more than traditional companies. However, if the word burning money as a derogatory words, then itself a bit of a problem, because the child can not bear the wolf, on its own every year where the drum beat a little profit to grow up http://www.aliyun.com/zixun/aggregation/3518.html " > Internet company, hardly. The key is to see where the burn is.

Recently, e-commerce burning money King Jing Dong Liu in an interview with the Chinese business network, mentioned such a point of view: "But the money has two kinds of burning method: a burning to the market, smashing ads, burning will never come back." And Jingdong burning money is burned in our information system up, burning in our warehouse distribution, which has become our fixed assets. This money is not wasted, Jingdong is the burning of money into a valuable system, including logistics systems, information systems. "And not to say whether Jingdong has actually implemented such a method of burning money, purely in terms of concept, it is desirable."

In the early years, Amazon was also famous for burning money, desperately throwing money at warehousing and logistics construction. This has become an important reason for its long inability to achieve high profits. The capital market is dissatisfied with Amazon and finds Bezos a tough guy to hear. But in general, this method of burning money makes the "break-even point" (break Evan) has a real meaning: its cost in the early years have been put in, as long as the past few decades, the future of income, are net profit.

Network companies in the final analysis is to pursue the scale effect, only enough scale, to make the original is a loss of trading into a lucrative business. The intention of burning money is to quickly form a scale in the shortest possible time, to block potential competitors, and then eventually get huge profits. But some methods of burning money, I think is not to burn out a lasting scale.

A rather unreliable method of burning money is the rapid expansion of the personnel input. Although business in the final analysis is done by people, "21st century is the most shortage of talent", but the huge human consumption, so that internet companies are not so much technology-intensive companies, but rather labor-intensive enterprises.

People are actually a very unreliable animal, such as a good senior executive suddenly one day to start their own business so that take away a group of customers and backbone employees, although it is a headache for enterprises, but in fact, there is no good way to solve. The business community has such a law that needs to be criticized, but it is true: the value of people in a certain sense than the machine, the community to enjoy the best service. Also set up for the company.

When they get paid, they quickly expand their ranks, and most of them will die later. A very famous case is the lesson of blogging China. People need to manage to become a team, the rapid expansion and the same need to improve the management capacity is usually not synchronized, so the company closed down, the cause of failure.

Another less reliable way to burn money is to put it into advertising. Theoretically speaking, advertising investment and sales revenue will be proportional to the relationship. But sales that are built on advertising are not sustainable unless the business is put on a permanent campaign. Unfortunately, consumers are a group of forgetful people who are not going to be your consumers because they saw an ad two years ago. The brand effect of smashing ads is extremely fragile. It will not be the cornerstone of the correct investment in fixed assets, but a beautiful halo.

Is burning money into manpower, but also burning money into advertising, this market is there? Not before, today, that is group buying. The so-called one billion threshold is actually based on personnel expansion and advertising investment, this line of tragedy, sooner or later will happen.

To be honest, group buying sites, including Groupon, generally show no localized service features: It's still a bunch of ping floating on the cloud. Burning money in people and colorful ads, I look at the hanging.