Produced by Radar Finance and | Zhang Kaijing, editor| deep sea
"Mushroom Street is still there!" This is the first reaction of many netizens to see Mushroom Street.
Recently, some pulse users broke the news that the mushroom street technical department will lay off 80% of employees, and the overall layoff is about 30%.
As the first generation of Internet celebrities with goods, Mushroom Street was also very popular. The four members of its founding team were once known as "Taobao's best product manager + strongest technical expert + best marketing plan" plus an iron-blooded BD, but in the long e-commerce race, Mushroom Street has missed multiple outlets such as Sea Amoy, brand sale, e-commerce community and social e-commerce, and watched Yang Wharf, Vipshop, Little Red Book and Pinduoduo grow up from their side.
In 2018, Mushroom Street was listed bloodily, but since then, the company has not only failed to turn a loss into a profit, since 2017, the cumulative net loss attributable to the mother has exceeded 6.8 billion yuan; the stock price has also fallen year after year, as of now, the company's market value has evaporated by more than 98% compared with the high point at the beginning of the listing.
How did Mushroom Street "fall behind" step by step?
Mushroom Street was exposed to a large layoff, and the number of employees shrank by 70% in five years
This is already mushroom street's second layoff storm in two years.
In April 2020, it was reported that Mushroom Street was undergoing a new round of layoffs, with 140 layoffs, a proportion of about 14%.
At that time, Mushroom Street's response to this was that in the first quarter of 2020, the company adjusted its business model, and Mushroom Street strengthened its determination to focus on the live e-commerce industry, so it optimized some non-strong related businesses, resulting in the occurrence of this layoff.
And this time the layoffs are obviously more violent. According to the revelations of Mushroom Street employees on the pulse, Mushroom Street laid off employees this time, the proportion of layoffs in the technical department was as high as 80%, and only more than 30 people were left after the adjustment (including all technical personnel such as front-end, back-end, client, algorithm), etc.; the overall layoff was about 30%, the operation and maintenance department was only 3 people, and the product post was only 2 people.
In the eyes of industry insiders, the background of this layoff may be similar to that of April 2020.
"The existing system infrastructure of Mushroom Street is too complex and needs to be streamlined, which can focus more on the core business and reduce maintenance costs." The colleagues who were laid off also expressed their understanding, and the compensation received was 'N+1.5'. Some Mushroom Street employees said in an interview.
Some netizens also concluded: "The reason why the research and development focus has been cut is to consider the overall cloud of Mushroom Street, the core technology is basically no outsourcing, and the research and development cost is high and no longer continues to raise idle people, from more than 500 people to only a few dozen people to maintain the system." ”
Radar Finance found that in the 2017 fiscal year annual report, there were still 1311 employees in Mushroom Street, but since then, the number of employees in the company has declined year by year. As of March 31, 2021, there were only 605 employees left in Mushroom Street. According to the proportion of layoffs revealed by the outside world, the number of employees in Mushroom Street will be further reduced to more than 400 after the layoffs.
This means that in less than five years, mushroom street has shrunk the number of employees by 70%.
All in live e-commerce, it is still difficult to get rid of the quagmire of losses
Whether it is the internal letter published by founder Chen Qi at the time of the layoffs in 2020, or the views of some employees after the layoffs, the spearhead behind the layoffs is the company's efforts to streamline its business in order to focus on live streaming.
In fact, Mushroom Street was one of the earliest e-commerce platforms to lay out live broadcasts, and when the mushroom street live broadcast function was launched in March 2016, Taobao had not yet touched this field.
In the past two years, as the scale of the live e-commerce market is approaching trillions, Mushroom Street's attitude towards live e-commerce has gradually changed from "testing the waters" to "All in".
In 2019, Mushroom Street proposed the "Double Hundred Plan", "Migratory Bird Plan", "Baijia Plan", etc., focusing on the development of live broadcast business, recruiting anchors with wear and beauty experience for the whole network, and encouraging institutions or supply chains with high-quality anchor resources to settle in, hoping to take live e-commerce as a breakthrough and break the bottleneck of the company's development; in 2021, Mushroom Street also launched a new business form - short broadcast, looking forward to using short videos to let the goods of each live broadcast precipitate down so that users can consume in a longer cycle.
Mushroom Street has indeed eaten some of the dividends of the rise of live e-commerce. According to the financial report, in fiscal 2021, the total GMV of the Mushroom Street platform was 13.855 billion yuan, of which the live GMV reached 10.878 billion yuan, an increase of 38.1% year-on-year, and the proportion of live GMV in the total GMV of the platform reached 78.5%.
Through the first quarter of fiscal 2022, the mushroom street platform live GMV continued to grow, and its proportion of the total GMV of the platform has increased to 90.8%.
According to the 2022 fiscal interim report just released by Mushroom Street on December 23, the GMV related to the company's live broadcasting business increased by 8.5% year-on-year to 4.972 billion yuan, and the proportion of total GMV further rose to 91.2%.
In the view of He Cong, a former investor in Beijing Cornerstone Capital and founder of Seven Tails, Mushroom Street has essentially become a live e-commerce company.
However, the transformation of the live e-commerce platform has not been able to reverse the sluggish performance of Mushroom Street.
According to iFind data, since 2018, Mushroom Street has never had a single quarter of net profit attributable to the mother to turn positive, since then, the company's net loss attributable to the mother has exceeded 5.2 billion yuan; revenue is also declining year by year, and the revenue of 1.066 billion yuan in 2017 has been the peak of nearly five years.
In the first half of fiscal 2022, Mushroom Street achieved revenue of 151 million yuan, a year-on-year decrease of 31.27%, and a net loss attributable to the mother of 412 million yuan, down 125.53% year-on-year.
Industry insiders pointed out that the current form of competition faced by Mushroom Street is more severe. On the one hand, the Mushroom Street live GMV can achieve continuous improvement, which relies heavily on kol's cargo. In fiscal 2021, the top ten KOLs of Mushroom Street contributed 43.7% of the total GMV; but whether it is the gold absorption ability of the head anchor or the total GMV of the platform, there is no small gap between Mushroom Street and the current first echelon - Taojiao Fast, and when kols leave, there will be no room for recovery from the loss of users.
On the other hand, with the continuous penalties of Sydney and Via, the live e-commerce industry has entered the "reshuffle stage", and brand self-broadcasting is becoming a new trend. However, the category of Mushroom Street is dominated by women's clothing at low unit prices, and there is also a lack of head brands with brand effects, which further enhances the difficulty of Mushroom Street to become bigger and stronger in the field of live e-commerce.
Li Chengdong, an e-commerce expert and founder of Dolphin Society, pointed out that live e-commerce is still a traffic model after all, and the impact of traffic is very large, even if it is Taobao live broadcast, it is not easy to not rely on Taobao and develop completely independently, which is obviously more difficult for a vertical e-commerce platform such as Mushroom Street.
Under pessimistic expectations, Mushroom Street has been reduced to a "fairy stock" in the secondary market. In 2021 alone, its stock price has fallen by nearly 80%, and as of December 24, Mushroom Street's market value is only $43.51 million.
As a result, Mushroom Street has received a notification letter from the New York Stock Exchange saying that its American Depositary Shares (ADS) are trading below the compliance standard. That is, the company has an average closing price of less than $1 for 30 consecutive trading days.
It is understood that under normal circumstances, companies that receive notification letters need to raise their share price and average share price to more than $1 within the next 6 months. If the 6-month buffer period expires, the closing price on the last trading day of the period does not reach $1 per share, and the average closing price does not reach $1 per share in the 30 trading days ending on the last trading day of the buffer period, the New York Stock Exchange will initiate suspension and delisting procedures.
Banned Taobao shopping guide platform
Radar Finance found that the starting point of Mushroom Street is not low.
Chen Qi, the founder of Mushroom Street, graduated from Zhejiang University and is the No. 51 employee of Taobao. According to him, the reason why he entered Taobao is very simple: "I like to do something that combines sensibility and rationality, and Taobao's web design work is in line with these two requirements of mine." ”
During the period when Taobao was founded, Chen Qi met her later entrepreneurial partners Yue Xuqiang and Li Yanzhu. It is understood that Yue Xuqiang was the chief architect of Taobao before joining Chen Qi's entrepreneurial team, and in order to start a business, he gave up tens of millions of options; Li Yanzhu is also a senior employee of Taobao, with the name Hu Fei, good at network marketing.
The last of the four founders of Mushroom Street is Chen Qi's college classmate Wei Yibo, who briefly joined ZTE after graduation, and Li Yanzhu's evaluation of Wei Yibo is: "There is no customer that he can't figure out." ”
At first, Chen Qi and his team just wanted to be a community about women: "In this community, women can get together to chat, shop, and share fashion tips..." With the efforts of four people, on Valentine's Day in 2011, Mushroom Street was officially launched and quickly spread among female consumers.
With the deepening of the topic discussion, the user's purchase demand is about to come out, sharing links has become the norm, and Mushroom Street has transformed into a shopping guide, which has accumulated a large number of users and merchants for the company.
In just 13 months, Mushroom Street has attracted more than 6 million registered users. According to a report in April 2012, Mushroom Street was visited by about 1.6 million people and 80 million views a day, and nearly 10,000 products were posted every day, bringing 40,000 orders to Taobao.
At this time, the main source of income of Mushroom Street is the commission brought by the matchmaking transaction, and Chen Qi's positioning of Mushroom Street is an active and important participant in the Taobao ecosystem.
A senior employee who joined Mushroom Street in 2012 once recalled that at that time, Taobao did not have personalized algorithm recommendations, but Mushroom Street would use crawler technology or users to upload their own human flesh algorithm recommendations. This leads to the more people like a product, the higher its order will be, and it will become a hit.
Relying on this "stunt", Mushroom Street got a lot of Taobao commissions during the period of 12 to 13 years, and at its peak, Mushroom Street and Beauty Said provided 10% of the traffic for the entire Taobao, but this also laid hidden dangers for the subsequent Taobao blocking.
Around 2013, Taobao realized the crisis of traffic division by third-party platforms, so it began to block external shopping guide websites on the grounds of quality control and so on, which made Mushroom Street seriously hurt. The company had to transform into an e-commerce platform, and this was the beginning of mushroom street's step-by-step fall.
There is still a view that Mushroom Street has not been able to find a positioning that is in line with its own development after being cut off by Taobao.
I have rubbed shoulders with the wind outlet many times and missed the best opportunity for development
In fact, even if it is abandoned by Taobao, Mushroom Street has caught up with many opportunities in the process of subsequent development, but the company has not been able to seize it, but gradually sinks in the continuous swing.
"As the saying goes, pigs can fly when they stand on the wind outlet, but in fact, sometimes when the wind outlet is stepped on, you may not be able to fly." A veteran Mushroom Street employee said this when evaluating his company.
In 2014, Mushroom Street tested the waters of Haitao, after users placed an order on the Mushroom Street website, the company's system would help users automatically place orders overseas and mail them over. But after trying for a few months, Mushroom Street failed to open up the entire chain and cut the business. Subsequently, the Haitao App mushroomed, and the Haitao Network, including Yang Wharf, prevailed.
Since then, the owner of Mushroom Street has also considered whether to help the big brands deal with some tail goods, but the company's attempts on this are limited to the discussion level. Until the Vipshop fire, some Mushroom Street employees revealed that the management has some regrets, because Mushroom Street itself is very suitable for brand sales.
And the most unfortunate outlet is the community. Mushroom Street started as a community, and during the transition, it has repeatedly emphasized the concept of social e-commerce, and has also received more than $200 million in financing in 2014.
In 2016, after Mushroom Street merged with Beauty Talk and Tao World to establish a new company, Beauty United Group, the main concept was also the model of "community + content + e-commerce".
However, the company has not been able to continue to focus on building communities, and instead has chosen to bet on e-commerce in a left-right swing. In the same period, Little Red Book, which started as a sea amoy raider and a shopping share, has continued to accumulate and grow in terms of community content, and its valuation has reached $20 billion after completing the latest round of financing of $500 million in November.
It is worth mentioning that Mushroom Street has also been widely deployed in the financial field, around 2016, coinciding with the hot P2P market, Mushroom Street has included a variety of financial products such as "White Payment Beauty", "Seed Bean Bao", "Beautiful Loan", "Loan Supermarket" and so on, covering consumer credit, P2P and other fields. But after the P2P thunderstorm, Mushroom Street's attempts at the financial sector have degenerated into "chicken feathers in one place."
Mushroom Street also hugged Tencent's thigh, which once became the first batch of companies cooperating with WeChat Mini Programs. In the six months to September 30, 2018, WeChat Mini Programs accounted for 31.1% of Total Mushroom Street sales, significantly higher than 14.4% a year ago. Mushroom Street even directly set up a team to rent a room on the edge of the WeChat building, studying how to make small programs and make good use of WeChat resources.
As a result, it was Pinduoduo, who invented the group, and Jingdong also hatched Jingxi. At this time, on the stage, there is no longer a place for Mushroom Street.
Industry insiders believe that the current common business model is a user-centered user mindset, or a traffic-centric traffic mindset. The choice of these two kinds of thinking determines the company's strategy and resource investment. An app that has both goods and content is not as experienced as a product-based or content-based app.
For Mushroom Street, which has chosen the trading platform, unfortunately, the category of women's clothing shopping has been basically occupied by Taobao. In contrast, Xiaohongshu, which chooses the content community, has won a position because of the staggered competition with Taobao.
Where will Mushroom Street, which missed a series of opportunities, go? Radar Finance will continue to pay attention.
Note: This article is the original of Radar Finance (ID: leidacj). Unauthorized reproduction is prohibited.