The article directories

  • One, foreword
  • Second, from traditional industries to Internet startups
    • 2.1 Entrepreneurship in traditional industries
    • 2.2 Entrepreneurship in the Internet industry
  • The Internet doesn’t smell that good
  • Fourth, each field of refinement is different
    • 4.1 The first is a particularly profitable vertical
    • 4.2 The second is the vertical field without too much technical content, which can be easily copied as long as the money is in place
    • 4.3 The third type is the technical field, which requires both money and time
    • 4.4 Survival rules for small enterprises
  • Five, the end

One, foreword

This article is just a shallow understanding of the Internet industry, to throw the use of jade, you are welcome to leave a message in the comments section

Second, from traditional industries to Internet startups

2.1 Entrepreneurship in traditional industries

To start a business in traditional industries, it is to purchase raw materials, process and produce, and sell them. If you want to make money, it is:

Profit = unit price * Quantity sold – Cost (material cost, labor cost, rent, R&D cost, advertising cost, tax)

Either take the civilian route to make money by making large sales, or take the high-end route to make money by making high unit price by brand premium, of course, the black heart manufacturers, three no workshop is to make money by desperately lowering the cost.

From small roadside stalls to big Mercedes Benz and BMW, this is the way to make money.

It was very popular in China in the 1980s and 1990s, and everybody did it. At that time also did not have what investor, all is husband and wife shop, relative field son, take own money stem.

2.2 Entrepreneurship in the Internet industry

But when venture capital institutions rise, the rise of the Internet industry, it is not this model.

The logic of Internet entrepreneurship is to make the number of users first, regardless of whether you can make money, anyway, the number of users continue to grow, and then draw pie to venture capital institutions, get investment to continue this model, commonly known as burning money for the market.

From thousand out of the regiment war Meituan, out of your online travel war ctrip, drops out of your network about car war, out of your delivery war of hungry yao, from the Shared cycling war out of the worship, ofo: hello, P2P war of annihilation, and also no one retail and online education war in ongoing, The whole Internet industry is doing so (also complain that there is no anti-dumping law).

Therefore, the biggest difference between the profit model of Internet companies and that of traditional companies is that traditional companies make money by producing real products and selling real products. If Internet companies cannot enter people’s lives, the founding team can only make money by cashing out of high stock prices.

The Internet doesn’t smell that good

The Internet doesn’t smell that good

Today, mention industry tuyere, big IP these concepts, let a person think of the Internet, shanbei grandma know the Internet, of course, people only know the “Internet” three words, put as if the Internet is China’s economy accounted for the largest industry.

Indeed, in terms of the national economy, the GDP created by the Internet industry only accounts for more than 6% of China’s GDP, making it an indispensable part of the whole GDP.

However, from the perspective of Internet companies and Internet products, except for a few Internet products, such as Meituan and Taobao, which have been successfully rooted in people’s lives, stable and market-supported profits have been formed.

Most Internet products have no profit path at all, and now many AI companies are the same. Because they cannot combine with their products, they either cannot make profits, or they can only package their algorithms into SDK and live by selling SDK.

Even in areas with a grounded and user base, it is difficult to feed on membership fees and advertising fees, and the way to make money is to make a big pie hit the high stock price and cash out.

Most Internet projects don’t make money, even if they do

For any Internet product, profit is a must, otherwise entrepreneurs, investors, research and development personnel will drink the wind…

But the user charges money this behavior itself is not happy, after all, we want to white piao.

For entertainment software, strong video members, strong music members, many people are excluded.

Tool software is the same, network disk member speed is sprayed, users know all over the world to find crack is not charged members; Cloud note-taking software is the same, it is good for everyone to use it for free. Once the capacity is insufficient, users will start to say, “Doesn’t it smell good to take notes with Word?”

Entities are a little better. This kind of users have a stronger awareness of paying, such as paying deposit for shared bikes and didi taxi, and less abuse.

For most of the Internet products to attract money is not strong, the company can only from the “user charge money” this action.

First, before charging money, we must make it very simple for users to charge money, just click on the phone fingerprint identification.

Second, after charging money, we must let the user feel that the money spent is worth it, do not regret.

What is the Internet model

Instead of asking what is Internet entrepreneurship, it is better to ask what is Internet model.

In fact, as long as the rapid information transmission mode of the Internet is used, as long as it is small as a we-media, a tool software, as long as it is a large online game, a large e-commerce platform, as long as it is “the number of users first, then slowly realize” this mode can be called an Internet mode.

Fourth, each field of refinement is different

It also uses the fast information transmission function of the Internet, but the intensity of competition and the logic of making money are slightly different.

4.1 The first is a particularly profitable vertical

If a vertical attracts a lot of money, it’s basically a battle of gods, with new players coming in and investors pouring money into it. It’s a perfect combination of entrepreneurs and investors.

For online games and e-commerce, the two lucrative areas have long been favored by venture capital, after all, venture capital institutions care most about the return on investment.

The network game

Take online games for example, this thing is more than online video, online music to make money, the bottom line is that the game players’ willingness to recharge the game is better than a video membership, have a VIP to listen to music. So somebody else B station all turned to play games (may be video members really can not sell), look at iQiyi, Tencent video these, relying on what super VIP, leading on-demand, can not earn a money, but also scolded…

Written as a Java back-end, graduate in boss and hook the CV, I see connect there many start-ups are game company, I don’t want to throw such company, main is to listen to the classmate say work overtime game company strength (don’t know really, know the friend said the comments section below), so I went to a software company, From then on, CRUD life began. Sorry now, I have never been to a game company.

As network game field, although has been tencent, netease, notoginseng and entertainment division of the giant, but small factory, we have added is uncontrollable coughing later may be to make money, after all, I see the game on mobile phones and computers so many ads clearly than software (money or released a new game to advertising).

Why are game players more willing to recharge than other software to buy VIPs?

Basic reason lies in the network game, as a kind of competition like entertainment, can stimulate the user to the greatest extent, charge interest, because the value of the charge can be in with other to charge users against the biggest extent, struck, comparative, but other forms of entertainment, such as watching video, listening to music) is difficult to do this, or can’t do such a large degree, So there is no incentive for users to charge. Network game, as long as it can ensure the charge users does not charge the users have to suppress advantages, can satisfy the human to compare the psychological, to make charge users to play cool, this is the success of tencent game, because it is familiar with charge of users, netease game failed, because it doesn’t charge users and charge users don’t open.

Even if it is the same network game, different themes have different ability to attract money. Subject matter to warm blood, conquer the best psychology, only in this way to stimulate the maximum extent of players competitive psychology, and similar running karting, QQ speed this kind of slightly lost in this aspect, in addition, that is why do not want to develop female-themed online games, because of the lack of profitability.

Even if it’s a male-themed game, it’s better to fight enemies than to beat monsters, because fighting enemies directly puts paid users and non-paid users in the same arena, which better reflects the value of charging money. So, at the same level, League of Legends/Honor of Kings > CrossFire > Dungeons and Warriors, for the following reasons: Hero league/king glory is purely between players against killing, fill the value of money is the direct embodiment between players, through the wire is given priority to with against the enemy, but the customs clearance of the auxiliary grind, underground city and warrior is given priority to with customs clearance to play blame, auxiliary against killing, slightly weighed on profit (I’m not a professional electric running hand, hardcore gamers can make fun here).

E-commerce and online shopping

This can also be the same as online games, taobao, Jingdong, Vipin-meeting this a few, then a sudden rise to kill in a fight more, this goods thief cow force, set up a few years directly more than sold more than ten years of electric jingdong. Later, there were various kinds of necessities, Bingo, etc., as well as a lot of cross-border e-commerce, giving people the feeling that the market cake will never be divided into the same, after all, everything that can be sold offline can be sold online, including the work of setting up stalls and selling vegetables in the wet market.

Why is the power of e-commerce especially strong?

In fact, for participants, only the money charged now can be earned back in the future, so that users will be willing to charge. To do this, taobao, jingdong, spelling, many businesses without paying for through train, online stores can’t rush home page, almost can’t earn money, only money, comprehensive ranking in the front of the row of the default, then cover charge cost with product sales, to make money, so this is an investment, not a consumer, so that the user is willing to pay.

4.2 The second is the vertical field without too much technical content, which can be easily copied as long as the money is in place

If a vertical field does not have too much technology content, as long as the capital is in place, it can be easily copied, which is also the venture capital likes this field, after all, as long as the money is thrown, simple and crude, and the money is fast.

Live streaming platforms, online car hailing, online food delivery, online video, online music and shared bikes are all the same model. They can either burn money to grab users or Copyrights. As long as they spend the most money to seize the market, eliminate all competitors, and finally make money.

In this field, whoever can win the favor of big capital will become the winner in the future market. Take live streaming platform as an example, such projects (such as online car hailing, takeout food and shared bikes) basically have no technical content and burn money. Competition of live streaming platform cannot build moat.

When the livestreaming industry just started, all platforms kept expanding users, cultivating their own anchors, and turning potential users into their own users. When netizens rewarded anchors, livestreaming platforms pumped water, just like collecting rent. Of course, all livestreaming platforms made money.

However, when the upper limit of broadcast industry to industry users, the market has no live the potential users of the platform, at this time, the platform in order to continue to expand the pumping mode, can start to other platform users killed red eye, after all, if a live platform collapse, other live platform can split off its host and user, right, It is an unlimited price war that costs money. When you go bankrupt, you will divide up your users and live broadcasting. The platform operation will continue to pump water and collect rent, and finally there will be only big platforms like Douyu and Huya left.

Other money-wasting projects are the same as livestream platforms. Although they are down to earth and easy to find a profit model, the threshold is also low, anyone can enter and the replicability is strong. Just as someone said, “Even if Meituan fails, there will soon be a number of online takeaway platforms and local living platforms.

The only certainty is that no matter how many fights there are, the one who ends up doing it will be the one who gets the big bucks.

4.3 The third type is the technical field, which requires both money and time

The field with technical content needs both money and time, such as chip research and development, domestic operating system development, etc., which venture capital does not like, mainly because it takes too long to raise money, which is contrary to the rapid appreciation of capital.

For all research projects, users are usually positioned as enterprises rather than user groups. As long as the products are well done, they can not only get corresponding subsidies, but also sell the products to enterprises. At the same time, entrepreneurs can keep their original intention and not be restricted by capital, so as to make better products.

However, this kind of research project, the initial investment of research and development will be very long, and the research and development personnel need relatively high professional, if the entrepreneur can not find investors or get the corresponding subsidy, their own money may not be able to support the early research and development.

4.4 Survival rules for small enterprises

Each vertical has its own advantages and difficulties:

Some lucrative fields, such as online games and e-commerce, have the advantage of strong liquidity and the best way to make money, while the difficulty lies in the fiercest competition. Although entrepreneurs are constantly entering the field, few of them can do it.

The advantages of entertainment and tool fields close to users’ lives, such as live broadcasting and takeout, lie in the fact that it is easy to find a profit route of its own. The difficulty lies in the fact that the entry threshold is low and the replicability is strong. If you want to survive in the war of burning money, you need to find the hardest donor father.

Some high-r&d fields targeted at enterprises, such as domestic operating system research and development and domestic chip research and development, have the advantage of stable demand, low intensity, and difficulty in requiring a high-quality RESEARCH and development team, and need to be prepared for several years of research and development failure.

Life, some are difficult to close to the user and is difficult to sell AI algorithm of enterprise products, products such as algorithm, password cracking products, the JVM optimization products, is not affected by the muzzle of capital, low work intensity, relax to do product, the difficulty lies in the implementation is hard to fall to the ground, it is difficult to find a profitable route, the algorithm of many products, Finally, I can only do the paper review, selling SDK and so on.

In fact, for small companies, for any entrepreneur or an entrepreneurial project, as long as it can complete the “production-sales (including publicity)” mode, ensure stable cash flow, build moat, basically will not die.

Here to talk about their views, to provide a few product routes:

Two routes under the user-led advantage: project-based route: small companies can either take the project-based route to stabilize their customers and build moat; Product route: or go hold small customer resources/fans resources, go market route.

Under the advantage of technology leading, there are three routes: Product route 1: either take the route of black science and technology products, take the route of high-tech products, and build a moat; Product route 2: Either take the small product route, limited capital and manpower to do the best of small products despised by large companies, to build a moat; Product route 3: either give the big product to the big company, only take a small direction of the big product, make precision, provide service for the big product, and construct the moat with precision.

Route to small markets with poor information: Make money big companies don’t like, Midwest customers.

Building a moat to ensure the safety of cash flow is the way to survive.

Five, the end

Having said so much, Internet entrepreneurship looks sweet, but there are also their own difficulties, the money is not so easy to earn. For ordinary people, paddling at work is the most stable.

Play code every day, progress every day!!