Eric column

from 1998, the first year known as China internet, to 22, the internet has quietly developed in China business circles for more than 2 years. "This is the best time and the worst time. This is an era of wisdom and an era of stupidity. " Many forward-looking enterprises have already actively laid out the Internet, groped for e-commerce, new media marketing, developed online brands and fan communities, and earned a lot of money on the Internet. At the same time, many traditional small and medium-sized enterprises are still complacent and struggling to survive.

I often hear some bosses of small and medium-sized traditional industries lament their development difficulties:

It is really difficult for people to earn money beyond their cognitive structure. The only certainty in this world is uncertainty. Starting from instinct, it is easy to think with linear thinking. An obvious subjective assumption is that development will get better and better over time. But this is never the case. If we say that those who open department stores are always getting better and better, they will all become Wal-Mart in the later stage. Small restaurants, if getting better and better, will become McDonald's in the later stage. But the fact is that Nokia can also go bankrupt, and Huawei will be suppressed by the United States. Being good now doesn't mean being good in the future. With the change of business environment, consumption habits and trends have obviously changed, and the profit model of enterprises should be optimized and adjusted with the times. In the future, people who don't know the Internet may even have difficulty surviving, let alone making money by doing business.

the internet has become one of the infrastructures for building a future business society, and future enterprises will no longer distinguish between traditional enterprises and internet enterprises. Enterprises that can fully understand Internet thinking and make good use of Internet tools to optimize the value creation chain of enterprises can win brutal business competition and be eliminated anyway.

Digital survival is a social form brought by the development of technology, which will become a part of the main lifestyle in the future. Internet thinking is naturally one of the most effective ways to make money. Internet thinking first brings about a re-examination of the value creation link of traditional enterprises, which is reflected in development strategy, business model, operation strategy and organizational structure, and transforms the "value chain" of traditional business links into an innovative "value ring" that adapts to the structure of the Internet era. The meaning of the word "internet thinking" is becoming wider and wider, such as "user first, fan economy, experience is king, single-point focus, subversive innovation, quick trial and error, lowest cost, smallest scale, concentration and extreme" and so on. What is the real driving force of "Internet thinking" for business?

the ultimate goal of all business activities is to make a profit. No matter what kind of company it is, an enterprise that can't finally make a profit will have no long-term vitality. What does the profit model mean by making money? Selling products, selling services, buying business opportunities to make money (investment), selling equity, etc. are all profitable ways. In the past many years' development, traditional enterprises are more accustomed to straightforward profit-making methods. Behind the seemingly brainless burning of money by internet companies, there is also great rationality. The core essence of business competition has always been eternal, grabbing customers, driving away competitors, building competition barriers to form a moat, controlling pricing power and making profits.

Internet technology has helped enterprises break through the geographical boundaries of development, and directly pulled business wars into the borderless competition situation. Therefore, the model incorporating Internet genes has explosive growth in the implementation process. In the early stage of the development of Internet enterprises, in order to pursue the ultimate land grab, grab users, build a traffic pool, and quickly form an ecological network, it gives people the impression of "barbaric play". Traditional enterprises often hold back when they don't have enough time to adapt step by step. Market competition is like sailing against the current. If you don't advance, you will retreat. If you meet competitors in the local market, you must have the comparative advantage of resource investment if you want to win.

Internet companies want to survive in the market for a long time, and there are only two choices: to build a business ecosystem with huge value space in the future, or to join this business ecosystem and make their own contributions. Internet giants such as Ali, Tencent, Xiaomi and Meituan are all doing ecology. The survival of small and medium-sized enterprises should rely on the development of the situation, build their own core competitiveness, join a certain ecological circle, and play an indispensable role in that ecology. Or divide a certain subdivision, not only attach to the big platform, but also maintain relative independence, and make full use of the rules of the big platform to improve their operational efficiency.

in the process of business model design, Internet companies often need to build a two-wheel drive between product market and capital market. In the product market, it is recognized by users; In the capital market, it is sought after by investors. The new business model of future enterprises needs to win two wars at the same time. In the process of rebuilding the Internet business model by the Haiqin Industry Accelerator, we found that many traditional business owners are relatively familiar with debt financing, but unfamiliar with new ways to improve the capital and cash flow structure, such as equity financing, ABS, financial leasing, factoring, crowdfunding and supply chain finance. Financing is not only financing money, but also financing resources. More eco-conglomeration after collaborative aggregation will help to conquer the world, reduce the cost of internal transaction structure and enhance the overall competitiveness of the upstream and downstream of the industrial chain. I am very familiar with the optimization of product manufacturing process, but I lack sufficient control over the overall situation and implementation details for the brand building of new media channels, the marketing communication strategy of enterprise owners' personal IP empowering brand IP, and the collaborative transformation from public domain traffic platform to private domain traffic operation. I am used to staying in the psychological comfort zone, following the old road, and desperately trying to get a dead end, but I am not used to opening my mind and will, looking at the changes in sexual consumption trends objectively and rationally, and filling the development bottleneck with external forces.

after all, doing business must be implemented in terms of traffic, and the Internet is no exception. Whether it is big data, cloud computing, Internet of Things, AI, virtual reality, 3D printing or content innovation, traffic is the foundation, and it is possible to realize profit with traffic. The most common core profit models of the Internet are e-commerce, online advertising and value-added services. In the process of platform development, the visible income models can be generally classified into these three categories, and the hidden dark side behind it is the capital appreciation profit model. VC always invests in Internet companies without profit because they think that the company will be profitable in the future, and it is a huge profit. VC will become rational, burn money efficiently, and form a network structure of competitive barriers. With the expansion of scale, transaction costs can be significantly reduced to get more financing.