Sequoia China SuKai: New consumer brands should boldly imagine the future and carefully feel the life | investors said

In mid-January this year, the "11th China Innovation Capital Annual Conference and the 4th China Venture Capital Responsible Investment Summit" was held in Nanjing. In the summit "Super Dialogue: Optimism and Trend of Consumer Investment", Su Kai, a partner at Sequoia China, said when talking about the future of consumer investment that changes in variables such as economic growth, demographic structure and new economic infrastructure can give birth to some new industries, and good companies can be found from the three different dimensions of people, goods and fields.

The following is the transcript of the interview dialogue in this session, slightly deleted, and released after collation.

Q

In your opinion, bubble mart, Wen and You and other consumer items

What are the common traits?

Su Kai: Bubble Mart and Wen Heyou have both differences and commonalities. Bubble Mart is a company driven by product innovation and category innovation, which is a supplementary plate after economic development to a certain extent and demographic changes, which is also due to the improvement of GDP level and the rejuvenation of the population, and the embodiment of the concentrated release of spiritual consumption and young consumers' collection needs after the upgrading of eating, living and traveling. It's a lot like when we collected stamps and cigarette cases when we were kids, and Bubble Mart today has both IP issuance and retail capabilities, thus becoming an innovative addition to the new consumer product segment.

Wenheyou is essentially a new consumer retail field with channel advantages. From the perspective of the three basic elements of "people, goods and fields", Bubble Mart has the advantage of goods, and Wen Heyou is the representative of the field. Wen Heyou has created a new and strange experience space, providing young people and consumers with a different experience. It is equivalent to the first batch of department stores in China twenty years ago, when the economy rose, more and more people showed their beauty and self-confidence through the consumption of clothing, beauty and jewelry, which was also the mainstream of consumption in that era. However, today's young people are no longer satisfied with simple material consumption, but constantly look for small blessings in life. Therefore, the creation of commercial space, moving forward from traditional to new and exotic categories, has become a new trend of consumption.

At the same time, they also have commonalities, mainly in two aspects: one is the environmental factors brought about by "GDP development, demographic structure, and new infrastructure construction". The increase in GDP level allows consumers to have higher interests and spiritual consumption needs. At the same time, demographic changes have made young people a new mainstream group in the consumer market, and statistics show that China's population under the age of 40 is about 700 million. These huge young consumer groups have bred new consumption opportunities and good companies. Mobile payments and self-media communication allow novel products and content to spread quickly on social media, bringing more traffic.

Second, both companies have very good young founders. Consumer companies have very high demands on founders. Both founders were born in 1987, and they have a long board and a determined inner world among their peers, believing in creating the value that society needs and are willing to go all out for it. They run in the right direction, giving their businesses a chance to stand out.

In your opinion, what kind of consumer brands in the context of the epidemic

The most vital?

Su Kai: The epidemic is a common environmental variable, not one company is facing it alone, so it is running faster than other companies, which is more important at this stage. We have observed industries affected by the epidemic, and also seen industries that have grown due to the epidemic, and through the phenomenon to see the essence, the sustainable development ability and long-term value of enterprises are more important.

Consumption includes people, goods and fields, and at present, new brands and new channels mainly emerge with young customers. At the heart of the new brand is an attractive and good product. Secondly, it is necessary to have a strong category mentality and become a category spokesperson. For example, mentioning tide play is bubble Mart, and mentioning milk tea is hi tea. When there is brand potential, the epidemic is only a local impact, does not affect the essence of good products, so it is still necessary to look at it positively.

Also important is the channel, and good companies with super experiences and super efficiencies continue to emerge. Wen Heyou and Dingdong Buy Vegetables are representatives of the channel to win. One is to create a super experience, so that consumers are unforgettable and willing to send a circle of friends to actively spread; the other is super efficiency, how fast and good to meet consumer demand, such as Dingdong to buy vegetables efficiency is much higher than the industry level, online orders 30 minutes to home, greatly saving time to improve efficiency, with natural vitality.

For example, medical health is to prolong life time, e-commerce is to save time... Consumption is mainly based on where the time is spent, which has a better chance of good companies. Today's consumer companies with high market capitalization, fast-growing consumer companies, either consumers stay on it for a large amount of time, or consumers continue to interact with each other with a very high frequency.

You'll take a fancy to your next investment choice

What kind of brand?

Su Kai: There are two biggest difficulties in the consumer industry. One is the judgment of the founders. It's hard to judge the entrepreneur's label with the naked eye, so you have to spend a lot of time dealing with him, to perceive him deeply, to understand this person deeply, to judge whether he is a great founder, whether he can create a great company; the second difficulty is that the time window is very short. Consumption is a for-profit business, and once you verify this demand, it is very profitable, and the founder may not need money so much at this time.

Therefore, we must be very sensitive to the small fortune in life, it is likely that there will be changes in life, we must first understand it, to think about it, in order to find investment opportunities. In addition, you must boldly imagine the future, today's good companies are some kind of projection of the future lifestyle, you boldly imagine the future, you can find some good enterprises of long-term value.

First, from the perspective of trends and directions, it is still necessary to revolve around three major variables: GDP, demographic structure and new economic infrastructure. The change of these variables can give birth to some new industries, and good companies can be found from three different dimensions of the human goods yard. In the next few years, the increase in brand innovation angles still exists, and there are still incremental opportunities in some category sectors.

Second, stock consolidation is a place to focus on. Some industries, in the past few years, there have been many companies, brands, channels, but from the quantitative era to the quality era of development, it is necessary to integrate to promote the further growth of excellent enterprises into larger companies, which is also an opportunity for investment.

Third, supply-side reform is a very valuable direction of attention. The entire market still needs good goods, not only retailers in the consumer and consumption scenario changes, but also need suppliers from the supply side of the goods to support, so the super supply chain has the opportunity to appear very great companies. In China, there is such an opportunity to form supply-side innovation, supporting the fiery channel innovation and the continuous upgrading of the consumer experience. In the evolution from the era of quantity to the era of quality, new brands, new channels, and super supply chains will emerge a number of good companies.

From my current point of view, it is recommended that the investment at this time should be judged and sized up, in accordance with today's market laws, and quickly adjust their financing plans, valuation levels and development rhythms according to the needs of enterprise development.

In addition, in the new investment environment, it is necessary to be psychologically prepared for long-term holding and return to value investment. Sequoia invests in a lot of good companies and holds them for a long time, because we believe that it represents the needs of the future and some core value that the world needs, and we dare to hold them for a long time, and there are many good companies that may continue to grow after they go public. Such a company, on the one hand, the risk will be better controlled, on the other hand, the return will be more benign.