Source: 36 Kr Wen | Qiu Xiaofen Deng Yongyi
The early millet ecological chain experienced a period of explosive high-speed growth. During this period, there are more "small millets" that have grown up rapidly by relying on a blockbuster, including many Yunmi and Huami that have been successfully listed at that time, and of course, there are more ecological chain companies, which form the iron army of Xiaomi's ecological chain.
The Xiaomi ecological chain has given the greatest support to the cooperative companies, and if you look at the success rate of incubation, Xiaomi is undoubtedly one of the most successful early company investment institutions. In the case of the ecological chain, star companies with revenue scale from zero to hundreds of millions in three years are the norm, and the camp of the "billion club" has rapidly expanded in the cooperation between the two sides and gone to the front.
However, behind the fast-growing, millet ecological chain in the jungle began to appear some games, millet ecological chain company in order to win more resources, began horizontal competition, price pressure, inner volume, millet based on its own development considerations, put forward more requirements for the ecological chain company, the entire ecology has changed...
Since 2019, how does the Xiaomi ecological chain carry out vigorous self-regulation, and the xiaomi ecological chain has been running wildly for eight years, what is Xiaomi's new thinking?
01 Self-regulation of ecology
A complete ecosystem, nature has a strong ability to self-regulate. Soon, the Xiaomi ecological chain stepped on an emergency brake.
"Is 'ecological chain head enterprise' a good word or a bad word?" In the second half of 2020, at an annual meeting of the Xiaomi ecological chain, Qu Heng, the current head of the ecological chain, threw questions to the ecological chain CEO present at the opening.
The CEOs at the bottom have made a muttering, and few have ever questioned this issue. Generally speaking, the annual revenue of more than 1 billion yuan has been listed, which is a well-deserved benchmark and head enterprise.
"According to the revenue ranking of seniors, tear each other down, beware, this is not what we want." Qu Heng said.
What does Xiaomi want? With the growing ecological chain, Xiaomi realizes the seriousness of internal friction between enterprises, and the ecological chain company has gradually evolved from the previous frontier to waiting for Xiaomi to divide the cake. At the conference, Qu Heng repeatedly stressed that the "bamboo forest culture" of the ecological chain, the "brother enterprise" in Lei Jun's mouth, and the "Shangbang" of Liu De can have moderate competition, but they cannot compete in disorder. The purpose of clear competition is to improve efficiency.
The problems of the ecological chain have also been pointed out one by one: lack of explosive products and malicious competition. The ecological chain needs to return to the three iron laws: "technology-oriented, cost-effective, and the coolest products."
This action can be seen from the previous strategy.
The ecological chain has not produced too many so-called explosive products, and this indisputable fact has been discussed many times internally. Lack of focus is the reason why everyone agrees.
Therefore, from the end of 2019 to the beginning of 2020, Xiaomi has reorganized the product categories internally. Finally, it was concluded that the things that the ecological chain must do in the future include several directions:
First, it is related to the main business of mobile phones, such as charging treasures and wearable devices: these categories can further enhance the differentiated competitiveness of the core business of mobile phones.
The second is around the whole house intelligence, which is helpful for xiaomi's IoT layout: xiaomi has become the world's largest consumer-grade IoT platform, and it must maintain and continue the first-mover advantage on this front.
The third is Coldplay, which may not make money at the moment, but they are integrated products of all the core technologies of Xiaomi. For example, the Xiaomi robot iron egg is the product of the cooperation of xiaomi mobile phone department, ecological chain department, artificial intelligence department and other departments, and the CyberFocus algorithm developed to achieve the tracking of the owner of the iron egg has also been applied to the latest Xiaomi 12 series mobile phones, making it the smart phone with the strongest focusing experience on the market.
Soon, the SKUs of the Xiaomi ecological chain were cut from more than 1500 to more than 600, and cutting so many SKUs did not have much impact on Xiaomi's large market.
In addition to cutting SKUs, product quality has also been put back on the agenda. Xiaomi began to classify the company into ABCD and other levels based on product quality, and whether the company took the project - encouraged to give the project to the enterprise with a rating of A, but when the enterprise is rated C, D or below, the company may no longer be allowed to develop new products, and when the company is found to have quality problems, it may also be fined heavily.
Various adjustments show that the millet ecological chain has gradually moved from the original free range to a systematic model with management and mechanism.
In the early ecological chain model, in Qu Heng's view, there were some imperfections. For example, the early flow of the ecological chain is very large, and there are many phenomenon-level products, but in the outside world, Xiaomi seems to be always out of stock. Qu Heng said that this reflects that the ecological chain has not really opened up the "production, supply and marketing" of some big explosive products. In addition, the product manager who holds the power and the paranoid pursuit of the product has also led to the landing of some projects far away, wasting manpower and material resources.
Therefore, in 2018, the ecological chain reorganized the supply chain and project teams with "improving efficiency and solving supply" as the core, and redefined the division of labor: who is responsible for project time, who is responsible for delivery, and who is responsible for quality.
There are special operations that are being carried out vigorously. For example, let the ecological chain company sign a convention and not allow malicious poaching; formulate a quality and supply chain convention, such as requiring suppliers not to abuse each other's core and exclusive resources, so that the ecological chain company can refocus the focus back on efficiency improvement and product innovation. "Reducing costs through real efficiency, or finding new markets through product innovation, is healthy competition and real skill," Qu Heng said.
After this conference, everything is going to be messed up. A CEO of an ecological chain company said that the number of cases of malicious competition is gradually decreasing. The ecological chain company can no longer pursue the project cost too much, but re-emphasize product polishing and respect the normal growth of the project.
02 From explosive to new explosives
In 2020, Lei Jun clarified in a letter from all Xiaomi that the original "mobile phone + AIoT" strategy was upgraded to the "mobile phone X AIoT" strategy, and this strategy was determined as Xiaomi's development strategy for the next 10 years. In a word, the responsibility of the Xiaomi ecological chain department as the vanguard of Xiaomi AIoT has undergone a huge change.
The ecological chain is understood in this way to understand the change from "+" to "X", in the past, mobile phones and AIoT for Xiaomi did not put eggs in a basket, it was the East that was not bright in the West, and history also confirmed the significance of this "diversified investment". When Xiaomi's mobile phone business encountered difficulties in 15-16 years, although the ecological chain business contributed limited to actual revenue, it retained the recognition of the Xiaomi brand and allowed the mobile phone business to develop for a second time after breathing. The meaning of multiplication represents that mobile phones and AIoT are amplifiers of each other, one is prosperous and one is lost. If the ecological chain as a multiplier cannot reflect the role of greater than one, Xiaomi's overall business will suffer huge losses.
Since the beginning of Xiaomi's founding, Lei Jun has repeatedly mentioned in various occasions that one of the core competitiveness of the "Xiaomi model" relative to traditional brands is efficiency. At that time, few people could really understand the meaning of "efficiency". Compared with traditional enterprises, Xiaomi has constructed a "hybrid flow rate" business model, in which there are both high-flow lifestyle products, medium-flow mobile phones, smart small household appliances, and high-value products with low flow rates. Traffic between different flow rate products is shared between all Xiaomi products.
When traditional brand goods fall into a vicious circle where the more expensive the product, the less users the less the product is more expensive, Xiaomi's hybrid flow rate model can ensure that Xiaomi can apply the latest and most competitive technology to the product at the fastest speed, and the price can be half or even lower than that of the competitors. In this mixed flow rate model, the role of the ecological chain is becoming more and more important. When the mobile phone business is affected by the market, the overall replacement cycle is lengthened, and the flow rate is slowing down, the ecological chain not only provides high-flow products for this model, but also needs to get involved in the low-flow market with heavier costs. At this time, whether the ecological chain can find new explosive products has been put on the agenda, and Xiaomi has begun to use a new vision to create explosive products.
Prior to this, the internal definition of explosive products was more from the market share and sales situation. And now what Xiaomi wants to do is "new explosive products".
Xiaomi's many "old explosives" have achieved a one-third or even higher share of the domestic market, and the domestic market space is limited, and the Xiaomi ecological chain actively explores the increment of overseas markets. It is understood that the annual sales growth rate of Mijia sweeping robots in overseas markets is more than 100%, the overseas sales of air purifiers have steadily increased to the same level as those in China, and the total overseas sales of scooters are several times that of the domestic market - various explosive products in China are replicating their "successful experience" in many overseas markets.
Xiaomi has also gradually extended its category to the most traditional small household appliances, which is often occupied by the united States and the Soviet Union. An obvious change in the Xiaomi ecological chain is that the newly entered ecological chain enterprises are more of the upstream veteran supply chain enterprises. This means that the Xiaomi ecological chain has gradually begun to lay out many core components from incubation of start-ups to cooperation with factories, such as chips, motors, heating materials and so on.
DC electric fans are Xiaomi's first category to be laid out from the factory side. According to Qu Heng, this category was previously priced at about 800 yuan. After cooperating with Xingyue Electric Appliances, the two sides studied for a long time, from the core fan, to injection molding, parts, re-production of the line, and even built an injection molding workshop next to the factory, which can reduce the injection molding cost by 10% - and finally for the first time to hit the price to less than 300 pieces.
The Xiaomi DC electric fan has also become one of the new explosive products in line with the ecological chain model at this stage. "With this single product, we not only occupied the high-end electric fan category in one fell swoop, but also broadened the original relatively quiet fan market and increased the average unit price of products in the entire market." This gives us hope of surpassing the faucet. Qu Heng said.
However, Qu Heng said that now Xiaomi divides products into two categories, one is a more conventional product, and the efficiency reform is more for this part of the product, accounting for 80%. For this part of the project, Xiaomi will strictly follow the process, and each project is an investment and must be calculated as a rate of return.
However, for the remaining 20% of phenomenal explosives or innovative products, Xiaomi can have no income statement and no sales estimate, which is convenient to give it a full range of traffic attributes.
03 A survival question
After the xiaomi ecological chain has undergone some self-regulation, a mandatory question in front of each ecological chain enterprise is: How far do you want to run with xiaomi?
Within the ecological chain, the company's CEOs have a set of conventional ranking standards: annual revenue of 1 billion, reaching the listing standard, is considered to borrow xiaomi's development potential to survive the head; 700 million, it is still one foot away from the positive results; 100 million and less than 100 million, either just joined the ecological chain, or have been verified that there is not much development potential; 100 million and less than 100 million, either just joined the ecological chain, or have been verified that there is not much development potential;
The annual revenue of 300 million to 500 million yuan is the largest number in the current ecological chain, and it is also at the most critical fork in the road. To the left, the business of the ecological chain is to practice internal skills and make hard money, while after the adjustment of millet, how long the plate can be served in the hand is a problem; while to the right, leaving the giant comfort zone and developing its own brand is destined to be a difficult road.
Su Jun experienced a period of lows of two or three years. Learning xiaomi's ideas, Zhimi has also put the design of its own brand air purifier close to Xiaomi, and the pricing is also close to the cost. But then he discovered that the company could barely find a complete commercial closed loop.
"We used to think that good goods could produce explosive products cheaply, but we ignored the xiaomi platform traffic, the ability of direct sales channels, and the complementary ability of other flow rate products," Su Jun said, this feeling is like, "A primary school student thought he would do anything, but later found out that it was the teachers and classmates around him who helped." ”
After two years of encountering a wall, Su Jun realized that in the Xiaomi ecological chain system, the ecological chain companies have their own strengths, and complementary can form ecological forces, but when the company really grows up, it needs to think about how to make up for the original shortcomings and how to become a more independent company. "Whether or not you can build a second-stage rocket is your own business."
Simply going to millet, or not going to millet, will not let the company be favored by capital. Qu Heng also believes that a best state must be to achieve a perfect balance between its own business and Xiaomi's business, and the process of this balance is dynamic.
But from another point of view, no matter how the ecological chain company and Xiaomi game, the ecological chain is not only a commercial experiment, but also an investment behavior in essence. For Xiaomi, as long as the ecological chain company makes money, the xiaomi that holds the shares is a winner. If you think of Millet as an incubator, Qu Heng said that Xiaomi's investment failure rate in the ecological chain is less than 1%-2%, and basically one hand can be counted. Compared to any VC, this is an enviable achievement.
In 2015, Liu De responded in an interview on how to view the choice of ecological chain enterprises to develop their own brands: "We do not interfere, do not obstruct or encourage, as long as they can survive, it is all good for us." He used "marriage" as a guide: ecological chain enterprises and Xiaomi "bedside quarrels and bedside peace", but the relationship is "not enough for outsiders to be humane".
So, in the plate of Xiaomi ecological chain, is there still a chance?
Many ecological chain people believe that the current and future dividend period has indeed passed, but the window of opportunity has not been completely closed. The Xiaomi ecological chain is still incorporating new companies, but the speed has slowed down visibly with the naked eye. Moreover, as the millet brand needs to run upwards, it is considered that either only companies with unique products are sufficient, or companies that no longer need to rely on millet to eat.
In fact, back to the beginning of the Xiaomi ecological chain, this wonderful model has always been an important pole supporting the valuation story of Xiaomi - in 2015, xiaomi mobile phone sales did not reach the standard, shipments fell to the bottom of history, and at that time, the sales of ecological chain products increased by 220% year-on-year, which returned a part of the revenue for xiaomi. In addition, the significance of the ecological chain is that it can help Xiaomi precipitate the next part of non-Xiaomi mobile phone users, expand the number of terminals, and drive Internet revenue.
Today, Xiaomi's business story ballast stone has changed from Xiaomi's ecological chain to car building, and the focus of the story has shifted. Xiaomi ecological chain was first built with mobile phones as the center, Qu Heng said, after announcing the car, Lei also raised a new problem to the inside: "how to build a car-centered ecological chain."
Ecological chain enterprises have also identified new dividends. In Lei Jun's new cause of "gambling on all glory", there are ecological chain enterprises that are moving. For these "shrimp soldiers and crab generals", helping Xiaomi build a car may not be the next opportunity point.
Some insiders told 36Kr that a small team had been put together before Officer Lei announced the car, saying that it would "support Xiaomi to build cars" and did not rule out supporting Xiaomi's motor research and development. In addition, some ecological chain enterprises, including No. 9 and Zhimi, are also beginning to consider the entry point and feasibility of cooperation.
Qu Heng also made a prediction for the future ecological chain, he believes that the future will be composed of a number of tens of billions of market business, plus some billions of plates. Overall, the market size of the ecological chain will be several times that of the present, "I am confident that in the next 3-5 years, the sales of the ecological chain will exceed 100 billion yuan."
Is it difficult for Xiaomi's ecological chain to achieve 100 billion revenue? According to Xiaomi's current revenue, the Xiaomi ecological chain needs to achieve the goal of 100 billion marketing with an annual compound growth rate of about 30%, which can break through 100 billion in 3-5 years. The difficulty is left to the officials to judge.
Is it important for Xiaomi's ecological chain to achieve 100 billion revenue? If in 2018, when Qu Heng took over the ecological chain, the plate of 20 to 30 billion yuan could be called the leader in the small household appliance brand, and the annual revenue of 100 billion yuan was the current entry ticket for the domestic head home appliance brand. What needs to be highlighted here is that Xiaomi major appliances and Xiaomi TV are two businesses parallel to the Xiaomi ecological chain within Xiaomi. If Xiaomi can enter the home appliance 100 billion club in addition to major appliances and television, it can be said to be of great importance to xiaomi's strategic significance. If you don't have a concept of 100 billion, then Xiaomi AIoT will become a platform with more than 700 million devices on the network and more than 100 million monthly active families. If you sit on such a large family base, this may be the biggest confidence for Lei Jun to launch cars in 2024.
After eight years, the next step in xiaomi's ecological chain seems to have become obvious. Xiaomi will join hands with ecological chain companies to achieve the goal of "either millet is the first, or the ecological chain company is the first" in more key areas; those who cannot help complete this goal will also be gradually eliminated by this ecology; of course, after the emergence of the science and technology innovation board system, there are more companies that have eaten dividends in preparation for the jump, expecting to become the next "number nine" and "stone".
It is undeniable that the allure of the giant ecology is that it is the most powerful springboard for startups, and the key to obtaining traffic, funds, industrial support and orders quickly. But behind the "back to the trees to cool off", it tests the balance of rights between the giants in the ecology and the confederation. The giants in the jungle ecology may not be gods, and this wild past continues.