This is really a terrible age of the Internet.

The rise of Toutiao gives Tencent a headache, and Pinduo even makes Taobao and JINGdong nervous. The emergence of VIPKID also gives Good future a sense of crisis. All this is due to the incredible growth rate of these unicorns.

Qutoutiao, a unicorn platform for mobile information, went public in the US on Thursday, with its share price soaring and five times cut off. Qutoutiao, which debuted at $7 and opened at $9.1, soared to a peak of $20, up more than 190%. Come to think of it, its predecessor, Toutiao, hasn’t even gone public yet. Although it is only two years old, Qutoutiao has a record that even Internet giants envy. Its growth of the road, a “fast” word.

As of August 2018, the accumulative installed number of Qutoutiao APP reached 181 million, with 62.2 million monthly active users, ranking second only to Toutiao in content aggregation in just over two years, according to The company’s prospectus. In addition, qutoutiao enjoys exponential growth. In 2016, the year of its establishment, its revenue was 57.95 million yuan, which soared to 520 million yuan in 2017, an increase of nearly 9 times over the previous year. In the first half of 2018, its revenue was 720 million yuan. This is a more than five-fold increase from 110 million in the first half of 2017.

Listed in the United States, “second place”, “unicorn”, under these bright labels, many people try to dissect this mobile information APP, and imitate its growth. One view of Qutoutiao’s sudden rise is that it just got the Internet traffic business right, based on its explosive user growth.

Traffic business is all about people

“Small profits but quick turnover” is a relatively old business, the process is to make the volume first, and then the superposition of small profits, and finally form a relatively rich profit. So, the core of it actually lies in quantity, quantity first, then talk about other.

So is the Internet traffic business. The first is to use the Internet tool to make a platform, and then attract users to use, when more and more users accumulate, the platform will have traffic. With traffic, platforms can either offer paid services or sell it to advertisers for cash.

It is no exaggeration to say that all Internet companies are more or less doing this traffic business. Take e-commerce as an example, what supports Taobao and JD.com is the daily purchase behavior of hundreds of millions of users. The more users, the bigger GMV and the more profits. Take livestreaming as another example. Douyu and Huya could not work if a large number of users did not sit in front of their computers every day to watch their favorite hosts. There are also short videos. The reason why Douyin Kuaishou has been able to conquer all the way is that there are too many people who like watching short videos, and Douyin and Kuaishou have appropriately captured a large number of them.

It was meant to be. On the one hand, as an Internet platform, traffic is the basis of survival; On the other hand, in the process of getting bigger and bigger, the more users the platform absorbs, the more scale effect will become prominent and the value of traffic will become higher and higher. This is why many apps can do well with a large number of users alone, as long as there is a steady stream of traffic, there is no need to worry about advertising revenue. Toutiao has set a target of 50 billion yuan in advertising revenue in 2018, thanks to the extraordinary amount of traffic from its various content distribution platforms.

In other words, the flow of business may indeed be early to “extensive management”, but the more backward, must be “intensive farming”, why these platforms do up, rather than “Beijing west”, is not “tomorrow headlines”, the reason lies in these platforms can retain users, steady flow.

Qutoutiao’s advertising revenue currently accounts for about 90% of its main revenue, which indicates that qutoutiao’s main business in the past two years is traffic. But what if that’s it, and the headliner turns into a unicorn?

There are three ways to make fun headlines

Traffic business is like the Internet school of the uniform “uniform”, everyone has one. But under the “school uniform”, platforms wear their own personalized clothes. That is to say, light flow business, not Taobao, also not JINGdong, you have a little different things.

Apart from the flow, why jingdong can do it after Taobao, because it is different from Taobao in the way of B2C, but also self-established logistics. The reason why Douyin can do it after Kuaishou is that its positioning is different from kuaishou. What makes a good headline?

First, assess the situation, take a differentiated route, to avoid the sharp edge of today’s headlines. As a matter of fact, qutoutiao was not facing an optimistic entrepreneurial environment at that time. Two years ago, Tencent News, Toutiao, netease News, UC Toutiao and other companies dominated the rankings for a long time. It can be said that the whole mobile information industry has been carved up by giants.

In this case, if you try to imitate the giant, you will die. On the one hand, viewing mobile information users generally have fixed usage habits, it is not easy to leverage this habit; On the other hand, since the early days, most mobile information platforms tend to be more content focused and less likely to study users and then make the right response.

So Qutoutiao saw the 1 billion “sinking users” and began to target users in tier 3, 4 and 5 cities for targeted content distribution. Now, 60 percent of Qutoutiao’s users are sinking. In combination with the rapid user growth and development of Qutoutiao in a short period of time, It is indeed effective to start with sinking users.

Second, the ability to retain users is strong. At present, many new economy enterprises have the best ability to burn money while retaining third-rate employees. As a result, they are tired of doing business, or at last they have no business at all. Conversion rates and next-day retention are data metrics that a platform, especially one that is being aggressively promoted, needs to look at.

In the field of mobile information, there is an ugly data, that is, the login rate of many platforms is less than 30%, and many users have become “zombie fans”. Qutoutiao knows this, so it created a points system from the beginning. Specifically, when the user completes related tasks, such as reading or inviting, the user receives points that can be redeemed for cash.

This points system actually has two purposes, to attract customers and improve engagement. On the one hand, through the points system to mine users’ social relationship chain, so as to achieve a more efficient and low-cost large-scale customer acquisition; On the other hand, through the point system to stabilize users’ daily usage habits, let users live, rather than just come once.

But the points system alone may not be enough, because there are many platforms that have also developed points system, but did not do well, not as many as expected. Qutoutiao obviously needs to have its own distribution mechanism for content and keep users happy all the time. It is reported that Qutoutiao currently adopts a “dual-track” mechanism of personalized recommendation and manual review, and is equipped with a strong data team (domestic experts and Silicon Valley scientists).

Qutoutiao now has more than 230,000 “we media”, with hundreds of thousands of articles published daily. Under the mass of content, qutoutiao can only be safest by adopting the safest review mechanism. Of course, in order to maximize audit efficiency, Qutoutiao’s human audit is based on intelligent algorithms.

In this sense, Qutoutiao’s retention of users depends on the points system and the “dual-track” content distribution mechanism. Of course, this is also inseparable from the technology team created by Qutoutiao. Besides, big data and AI technology have become the standard of all mobile information platforms.

Third, a healthy business model. Why to separate out the model, because in the mobile information industry, giants and entrepreneurs start in different ways, many mobile information apps like to burn money in the early stage, and then sell quantity, but the final effect is not very satisfactory. In the final analysis, or the model is not good, because if you can catch the user to watch the news this just need, but also burn money all the time?

Qutoutiao has a very interesting data: so far, the operating cash flow is still positive. A lot of peers can’t do this, because they were trapped by the thinking of burning money to pull new and retain users, thinking that money can smooth everything. But when business competition comes to the end, isn’t it still about the seriousness of users?

The fact that Qutoutiao did not spend money to retain users in its initial stage is undoubtedly due to its own model, which is mentioned in the second point.

The above three points are the growth logic behind qutoutiao’s flow business. To sum up, it is differentiation in direction, mode and operation.

Listing interesting headlines, to become “capital darling”

Listing is a milestone. How will Qutoutiao, a two-year-old unicorn, be treated by the capital market?

Capital market usually likes to use growth thinking and future thinking to see an enterprise, so let’s talk about the growth space of interesting headlines. Interestingly, if you look at the unicorn of Qutoutiao from a global perspective, you will find that Qutoutiao is born at the right time and faces many good things. And, these good news, others may not have.

External advantages include two points. One is 1 billion sunken users, a group that can be boldly explored by any interesting headlines. Currently, the number of installed users of Qutoutiao APP is close to 200 million. It is safe to say that it will not be difficult to double the number of users of Qutoutiao APP in two or three years if it continues to develop at the original speed due to its high user growth rate. Besides, the fission method has been proved effective, and a certain percentage of the external purchase flow has been successfully converted.

The other is that the mobile content industry is on the rise, and the valuation growth of Toutiao, Yixin and other platforms is obvious to all. For this point, Qutoutiao itself has a great say, because Qutoutiao has been on the rise since it was invested by Tencent and became a unicorn. Look at today’s headlines, now a lot of business, where there is quite a closed ten thousand men mo open the potential. If take today toutiao as the landmark, the rise space of interesting toutiao is obviously very big. And toutiao is still growing up?

There are three internal benefits. First, Qutoutiao is constantly improving its content ecology. For example, it plans to develop light entertainment content such as mini-games, novels and comics. The improvement of content ecology is not only beneficial to users, but also can increase its channels of cash. Second, the loss keeps narrowing. It is reported that from the first quarter to the second quarter, its loss amount decreased from 220 million yuan to 110 million yuan, down by half quarter-on-quarter, while its income increased from 240 million yuan to 480 million yuan in the same period. The loss continues to narrow and the revenue continues to rise, which means that Qutoutiao will soon become profitable, which is what the capital market is happy to see. Third, the improvement of technology (big data, AI) will enable the platform to achieve cost reduction and efficiency, which will have a continuous positive effect on customer acquisition and operation.

In the long term, the inside and outside good blessings, the interesting headline as long as the step-by-step, a guest at a constant speed, to established goals to improve the ecology of the whole platform, then the value of his as content distribution platform will be more and more high, cashability will also improve, capital market to throw out the olive branch will be more and more.

Article/Liu Kuang public account, ID: Liukuang110