Where to? Zhungchengsu: How does a start-up company compete? How to lose money?

Where have you been fighting these years, from the first to today we struggle for ten years, the success of the entire industry has made a loss. Even Ctrip 11 years of the company also lost money, today I talk about how enterprises should compete, such as a leading company easy to make mistakes, a relatively backward company opportunities, and how to see price war.

1. Growth strategy

The first question, where to go on the market, actually we have been very bad. Each quarter about two to 300 million of the cash loss, accounting losses of five to 600 million, but the basic stock price is relatively stable. A lot of people ask me to say cc how do you do, why open capital market can accept you this? Everybody thinks that the listing is to be profitable, in fact it is not. To study history, Amazon lost money when it went public, and the highest quarterly cash loss rate was 75%. Our basic control is that the cash loss rate is no more than Amazon's speed.

Why do capital markets accept losses? If you are not the first in the market, or even if you are the market first, your business growth and your income growth rate if you can guarantee over 60%, and in a relatively long period of loss, the market is acceptable. You can calculate, if you maintain at more than 60% of the growth rate, about two years you can turn the entire business 2.5 times times, four years can turn 6-7 times, this proof if the scale of business is always in the case of high-speed growth, your investment is very effective. and the market space, addressable harsh is very very big.

Next you will say that 100% of the growth rate you need, this is the problem of addressable harsh, 100% of the growth can be maintained for how long? Every startup is going to have to think about a problem, especially after the company enters the C round, and you start to define very clearly how big your addressable harsh is. Because everyone in the early days, it must be a single point of breakthrough, just start point is a special function to open the market. But when you enter the high growth stage, you need to know where the end of the growth is. At least under the current product and strategy, where is the end? Growth is not endless.

Like today's ticket business, where to go Ctrip is profitable. Our two together accounted for the entire Chinese ticket market close to half, and two now Ctrip is 40%, to where is 60% growth, what does this mean? This growth will last for at most a year, because the second year, the two of us add up to more than 100%, this must not be done, contrary to the laws of mathematics. So if your growth rate is doomed to addressable over 60% growth in your harsh, then it's pointless to hit a price war.

This in turn involves the issue of leading and backward strategies. Why to where can be in Ctrip six years after the establishment, today can still be able to make a threat to Ctrip, one of the biggest problem is that Ctrip is fundamentally wrong his addressable harsh, this is also now a lot of online companies are guilty of the problem. What is the specific problem? When Ctrip entered the market, he has always said that the online travel is his addressable harsh, but have you ever thought that online travel is a 40%-50% annual growth rate of the market, when you have the market 50% today, Even if you grow fast, you have 40%-50%, but due to the rapid growth of the market every year, the space released will be very high. And the growth of the market itself, if he is online to the introduction of wireless, resulting in this online travel is suddenly in the acceleration, in the process of acceleration, accurate definition of addressable harsh is very important.

For example, if you define the entire tourism market as a addressable harsh, then the tourism market is resource-constrained: The total number of hotels is so large that it cannot be built overnight at 40%-50% growth; airline seats, shipping power is so much, it's impossible to 40%-50 a year. % of the growth rate, food and beverage may be higher, but there are probably so many people in China, you can only eat three meals a day, and your breakfast is not likely to eat outside, this addressable harsh is relatively constant.

So I think there are a lot of companies, once into the high growth stage, to see you competing right, we must define the entire market in a constant market, relatively stable market, rather than defined in the fast changing market. In a fast-moving market, if you are No.1, it sounds great, and there is a real risk, because if the market itself suddenly accelerates, your business strategy and model are likely to change radically. Another bad thing about this business model is that from a different point of view, he is not a path to your original business model, but a fundamentally similar one.

For example, meeting, the first meeting is the exhibition, there were many listed companies are the exhibition business. Later it was largely replaced by video conference, and now you can safely go to meeting your needs through im very quickly, so I think that when we define addressable harsh we must constantly abstract it, It ultimately solves the fundamental appeal of man, not to do it every day, but I suggest that a company has entered more than 100 million U.S. dollars in valuation, income in a certain scale, the business is also in the high growth track, you have to think every six months, I this business to the abstraction of a level, is doing a thing, and then to the abstraction of a level, Is doing a thing, if meet this level of demand in the end I have a few options.

For example, dining, dining in a restaurant is a level, group purchase may be a level; The hotel is the same, the hotel is a level, stay more on a level is what? Is that I go out to need accommodation, there is the possibility of my local consumption, there is the need for accommodation, and then to the previous level, Airbnb proposed a new concept, you do not need to stay in the hotel. Human fundamental demand is staying out, the fundamental solution staying out a lot of ways.

I suggest you keep thinking, do you have a more fundamental and more abstract level that will bring you different space? In essence, you can think about whether your current business has a 100% growth rate or at least 60% growth, and a chance to stay in the next three years. If you see the current business model in the market has entered a near to the final stage, your strategy will be completely different.

For example, you see that your market is nearly 50% of the market share, then you have to see whether the profit, your compression costs, cost control will be prepared in advance. If you still want to maintain a high growth, you have to consider solving the same fundamental problems, there is no alternative, there is no similar to the expansion of the market to solve the fundamental, basic needs, only you think clearly, you will take a different strategy.

2. How to fight the price war

Everybody says to fight price war, price war can take market share, also have subsidy, why should you subsidize? Many companies die in what? He took the price war and high investment as his sole goal in the pursuit of market share. In fact, my view is that the pursuit of market share is always a tactical goal, the real problem is that you have to think clearly when you address this harsh, you need to have a final game concept. If you occupy this market 70% to 80%, you have to think about what a market's most critical resource is, what resources are not expansionary, and are highly exclusive. When you have finished the market, you may not be able to get in.

For example, tourism industry, the typical is the seat resources and hotel resources, because the hotel is not possible to expand high-speed, this is an exclusive resource. Like some content business, copyright is exclusive resources, if you fight to a final game, it is certainly to have some key exclusive resources to hand, so as to ensure that your business model long-term sustainable.

If you need to monopolize your resources, you'll have to step you may have a 5% of the time when you have an access to exclusive resources or certain resources, you can at least use him; when you have 25%, you may have some control over this exclusive resource; When you reach 50% of certain market shares, You may have complete control over some of the exclusive resources that may be exclusive. In every market the pattern is not the same, but the key is to say to you in a addressable harsh to think clearly, which is the exclusive resources, these exclusive resources you need how much market share can be from quantitative to qualitative change, these several points to draw out, and then the price war good, big put forward or better, His whole advance was a very clear phased goal. 49% may be meaningless, 52% may be wasted, 50% just good. If you make the plan very clear, when you accelerate, do not do the oil filling tactics, because there are many companies looking to lose money for growth, but completely meaningless.

When you have a very clear goal: my market share today is 5%, I think to 15% I need to put this resource, the use of authority or my accessibility to carry out quantitative change, when there is a very clear plan, should make an afternoon plan is, with the shortest time, a money down, Once you reach 15%, pile up the resource and lock it down. Therefore, the rate of loss of money is not a linear growth, and ladder, step-style is a better scheme. When you start to lose money, the more the better, the faster the better, because so, competitors can not be prevented. When you lose a point to take away immediately, because has reached the target, 50% just good, 51% on the line, and then piling up the resources to occupy.

When you are occupied, others rob the market share you can wait, why? It is possible that when you master the 20% market, others may also have access to the right, you can not prevent, if you from 20% to 50% is your financial resources today, the surrounding ecosystem your entire human resources do not have, you can only let others do. But the pace of the game is to control their own, so the price war is not dragged away by others, dragged away by others the price war is very easy to be dragged to the ditch. Because you do not know what other people's strategic goals are, if the other one dozen you fight back this is not good, all price war should be active, do not passively launch.

But before you start, you have to think clearly:

First, your strategic goal is what, you stage to market share is how much, how much you can lock resources, you to this point how to lock resources;

Second, if you're going to do this, what is the friction of time, is not you in a short period of 100 million directly occupied, or this thing is born slowly process, in time tolerance, the fastest speed to get the market share you want, and then immediately stop. This is the price war I think a very important element, so you can control;

Third, want to know where the return ticket is. Start planning well, ready to invest 100 million, play down a look, competitors if you understand, he also hit the price war, you may not be able to reach the market share, this time people want to understand that you have to have an exit plan, for example, my plan is to play a quarter, the market share to 10 points, then I take the resources. When I look at it for two weeks, the progress is far less than I thought, and it is time to withdraw. Therefore, before the start of the march, including the competitor's reflection, the industry reflects all have to do a detailed plan.

The whole price war is not a goal at all, even the market share is not the goal, the real is that he is a ladder function, ladder of functions, when you hit a certain share, ladder sex to you occupy. Then you wait and see other situations, when your company is larger, you may have different lines of business need to quickly obtain resources at a certain time, the company headquarters may need to coordinate, may be in each link than you expected resources, time consumption longer. This is something that I think is very important in the expansion period.

Many companies eventually die of expansion, because he visited the market share, did not pay attention to lock resources, he has no exit strategy. When he even hit 60% of the market share, as soon as a stop, will immediately fall from 60% to 30%, which is meaningless, so the real price war to hit to what extent? Is desperately hit the time, may from 10% dozen to 13%, you immediately can stop to more than 10%, on the line, a little waste can not have.

Growth phase If you're already a harsh leader to be particularly concerned about whether your business is still growing at a high rate, my view is that if you are a harsh No.1, your business can maintain at least 60% growth, and profitability is simply not important. If you lose 100%, you should lose. There is only one way you can make a profit, that is, you are 100% faster, you really don't know how to spend money, how to spend you are profitable. For example, Tencent Baidu, in this case you can profit, in addition I think the profit is guilty. You give a lot of opportunity cost to others. When you dominate a competitor and you are three times times as competitive as your competitor, you always hit him and you play the game. But if you meet a tough competitor and you make a little profit, give him a chance to hit your 50% and you may never get rid of him.

Many companies from the profit to the loss of the company can be suddenly defeated, a company that is always losing money is not easy to be defeated, why? When a company is profitable for a period of time, your company's internal control and management will change a lot, you will start to control costs. After a profit of one or two years, the company especially after the listing, your whole thinking method will become a profit-driven, when you want to ensure profitability, your financial staff on the business will be more and more, the longer the time, some of the company's more radical people will leave, relative to do things start safe, The more balance people will stay, the whole company's genes have changed. So this loss is not everyone will lose, loss is also a skill.