Reborn As The Billionaire National Husband, The Boss Of Populus Euphratica!

in a sense.

The Internet industry is a money-burning industry.

The reasons for this are complex.

Internet companies produce products, unlike traditional companies that produce products

Whether products produced by traditional enterprises are placed in wholesale markets or stores, there will always be people looking at them.

Internet companies produce products and put them there, and no one will look at them.

This is the most essential difference

Therefore, Internet companies spend most of their money on promotion and publicity, which is the bulk of it.

and,

There is another conclusion on the Internet: all products that can be copied will eventually be copied.

In other words, Internet products are the most vulnerable to plagiarism.

Anyone who has been an Internet product manager for several years should know that there will be such a question during the interview: What should you do if your product is plagiarized by TX?

The boss of Smartisan Technology also said that software is easy to copy.

You have worked hard to plan it for a year or two, but it will be ready and online in less than half a year.

Therefore, for Internet companies, their products should all be Internet products, which are the most susceptible to plagiarism. If they do not spend a lot of money in the early stage to burn the market, acquire users and establish their own competition barriers, it will be fine if their products are not that good. , no one copied it. If his product is good enough, but he doesn't have the money to burn the market, then hehe, the eyes of countless big guys behind him are watching, and they will copy you until you die. Business is very unreasonable.

Wang Cong naturally would not give others such an opportunity.

This is why he has to plan ahead and get Toutiao and Meituan out first.

to be honest.

Wang Cong knows very well that in the Internet industry, as long as he can take the lead, he will really be one step ahead and lead step by step.

This is not a joke, it is a fact.

In fact, burning money has always been a common phenomenon in the development of Internet companies.

In the early years, media people talked most about the bursting of the Nasdaq bubble and the winter of Internet companies. They worried all day about when Sina and Sohu would be able to make profits.

At that time, Sina's losses per quarter were about 30 million US dollars, which was also a huge loss!

Then Sina went public and raised US$400 million. Even if it didn't develop, it would still lose money in three or four years.

Later, at the end of 2002, Sina announced profits.

Similar is Youku. Youku went public a few years ago and is still losing money today. However, they have a lot of cash. How can they stay ahead of their competitors and lead the market if they don't speed up investment in development?

According to Wang Cong, the truth is actually very simple.

If a company can have clear development goals for a certain period in the future and sufficient cash flow support, burning money in exchange for time to compete for the market is not only right, but also necessary.

Otherwise, development may be preempted by competitors or even miss the window of time.

Because from the market structure, the Internet is different from the traditional restaurant business. Restaurants are basically a completely competitive market. As long as it has characteristics, a good location, and a price advantage, it will never be too late to open a restaurant.

However, due to network effects and lock-in effects, a certain market on the Internet will often form a natural monopoly or oligopoly market once it is relatively mature. The leader has a huge advantage and is reluctant to spend money when it is time to spend it or has no money to spend, thus missing the opportunity. , the cost of re-entry may be unimaginable.

For example, we all know that search engines and Weixin are very profitable, but after Baidu and Penguin, how many companies can develop similar products?

Of course, Wang Cong also understands that not all money-burning is right.

At least there must be a relatively accurate prediction and analysis of the market and competition landscape, and a relatively accurate calculation of the cash that can be grasped or the situation of continuous financing.

If you are poisoned by too many entrepreneurial myths and think that if you start a business, someone will invest in it, you will be stupid and clumsy in spending money, and it will be too easy to become a stepping stone for others.

Wang Cong once read a book, and he felt that the views written in it were very correct.

No matter when, the development of the Internet follows the power law.

The meaning of the so-called power law is actually very simple.

The money earned by the first place is much more than the money earned by the second place to the last place combined, and the money earned by the second place is much more than the money earned by the third place to the last place combined.

This law actually existed in the traditional economic era. It is the "number one and number two law" mentioned by Jack Welch, the former president of General Electric. However, the Internet, especially the mobile Internet, has amplified the power law several times.

Because the traditional economy has regional divisions [but the Internet has broken regional divisions.

So once you find an Internet vertical segment with opportunities, you have only one core goal: to become number one as quickly as possible, or second at worst.

If you accidentally become third or even worse, it basically means that your business has failed.

so.

Wang Cong summed up a theory: if a business relies on the conventional path to achieve a major milestone, it will take two years to spend 10 million, but with more funds, it will take 15 million a year to complete it. can be realised. Then we must throw out fifteen million without hesitation and spend one year to achieve it.

the reason is simple.

Because development speed means scale advantage and valuation space, a year's first-mover advantage is a solid moat, or a year's lagging behind will completely eliminate you from the competitive game.

For capital, if you pay 0.5 times more cost and reduce time cost by half, you may win a doubled increase in project valuation. This realistic benefit is very calculated.

"I will invest more."

When Wang Cong left, he said to the person in charge of the company: "Strive to make products and promote them in the shortest possible time.

"Okay, don't worry."

The person in charge nodded quickly.

After getting in the car, Wang Cong took a deep breath, knowing that the real challenge was about to begin.

For entrepreneurs, when you are the first person in a certain niche, it is best to raise funds as soon as possible, because the temporary first-mover advantage is not a long-term advantage, especially when the model is replicable and there are no technical barriers to start a business. Rising competitors may quickly overtake them in corners through the power of capital.

When there are multiple competitors in the same field, if you are not number one and you do not have as much money as your opponents, the result is often tragic.

Especially when your competitors use money to subsidize your common merchants and users, it is simply a fool's errand to imagine that you can defeat your competitors with your trivial differentiated features or self-imagined innovative marketing methods.

Because the (good) attack of the capital dimension is the crushing of high dimensions against low dimensions, and there is no way to fight back.

As a person with foresight, Wang Cong knows very well.

The money-burning logic of the Internet is actually very simple, which is to kill your opponents as quickly as possible and gain market monopoly and pricing power.

When you have similar conditions to your competitors, when you also have capital power and use it to please your merchants or users, you may have disruptive lethality. At the same time, your number of users and market size And the valuation will increase significantly, thus gaining an absolute competitive advantage.

This is a high-dimensional dimensionality reduction attack on low-dimensionality. This crushing destructive power is enough to make even the most powerful competitors unable to fight back.

Wang Cong is very aware of this operating model, so he is considering how to finance the two projects of Meituan and Toutiao.

After all, talk about it.

With the 200 million US dollars earned before, I definitely cannot afford this money-burning model.

And among the candidates that appeared in his mind, the first one was Layer!.