Wang Ruchen/Wen
Kuaishou (HK1024) in 2022 is standing at a critical turning point.
For more than half a month, from content expansion, traffic cooperation, brand entry to scene penetration, from platform governance to organizational incentives, etc., the company's actions are dizzying.
What is the intention of this scene?
Viewed in isolation, it is similar to the marketing strategy of the past few years. However, when we combine the financial report information and put them on the same plane, we will find that the various actions are not isolated, but a set of growth methodologies that coordinate multiple factors.
In the short term, it will point to a key node after the IPO, that is, "the adjusted profit of domestic business in the quarter of the year is positive". In the long run, it will precipitate future-oriented full-link digital service capabilities.
How to understand the new fiscal year growth methodology and its impact on short- and long-term goals?
First, based on the annual report, we will examine the fundamentals of Kuaishou as of this point and look at the opportunities and challenges.
First, the revenue structure has changed significantly, and online marketing has been super live.
This reversed the impression of years of over-reliance on live streaming. At the same time, it further eliminates the doubts raised by the supervision of the industry. In addition, e-commerce and other businesses have also grown steadily.
Second, the private domain is strong, and it continues to crack the test of user increment and traffic peaking.
Q4, DAU and MAU reached 323.3 million and 578 million respectively. But the more convincing indicator is: by the end of 2021, the cumulative number of user pairs of Kuaishou app mutual shutdown will exceed 16.3 billion pairs; the user time is as long as 119 minutes; and the e-commerce repurchase rate is higher than 70%. The last three indicators reveal the secret of the Kuaishou platform to crack the test of user increment and traffic peaking.
Third, the community attributes have been strengthened, the categories have continued to expand, the merchants have become increasingly diversified, and the operating mechanism and business model have entered a period of upgrading.
The increasingly complete category, coupled with community attributes and grass planting mechanism, is driving Kuaishou to upgrade the entire business model, forming a complete closed loop of "planting grass to pulling grass", and promoting Kuaishou to become a rare digital marketing platform for true "product and effect integration" in the industry, thus further expanding the transaction business and advertising territory. It is said that in 2022, Kuaishou's online marketing target is 59 billion. This figure should be in the top five of China's Internet industry. That is, it ranks behind Alibaba, Byte, Tencent, and Baidu.
These are the three deepest impressions that Kuaishou left on me in 2021.
But there are also passive sides. It is mainly reflected in heavy marketing costs, user growth, and operational efficiency.
Among them, user growth has always been a major challenge. This is also what was emphasized in the prospectus at the time of the initial IPO. Kuaishou can't ignore this indicator every season (overall size, daily active, monthly active).
One reason is that this is the core dimension of the valuation of Internet companies; another, compared with Douyin, Kuaishou users have been more distributed in the sinking market in the past, to some extent, and Pinduoduo overlap more, and the challenge of upward penetration is also similar.
But Lassin is not an isolated operation. If the supply side cannot be matched, it is difficult to retain and convert. In the same period, we have seen that in addition to strengthening grass planting, Kuaishou is very active in expanding categories such as content, e-commerce, and local life. In fact, Laxin involves system capacity building at both ends of B and C, and various costs are relatively high. This is also the core reason for Kuaishou's huge loss in 2021 (the other part is due to changes in fair value).
It also reflects the challenges of data, technology, operations, and organizational synergy.
When the scale of users is up, grass planting, content construction, and category expansion are effective, one of the biggest challenges is that the platform is bloated, complex, and inefficient, and the user experience is tested. This is also the overall challenge of key entrances such as Taobao, Meituan, Baidu, Byte and even WeChat and Alipay.
It is reflected in the micro aspect, which is related to the fact that the underlying data is not really connected, and the middle aspect is the lack of agility of the entire organization. Ultimately, they will all be reflected in operational efficiency and gross profit.
This is actually a challenge after the expansion of a company and the complexity of the organization. The outside world will only look at marketing expenses and think that it is burning money, which is actually a growing pain. Over the past year, the company has undergone a high-frequency organizational upgrade to address this challenge.
Another major challenge is that the digital trend has been established, and as of now, in addition to the digital marketing field has become an army, Kuaishou has not yet established differentiated competitiveness in the in-depth industry scenario, nor does it have a relatively clear 2B base and industry digital territory.
It can be said that in the past, the path of pulling new to drive the entire supply-side expansion to achieve transformation, and then improve the capacity building of the system, reached the moment of upgrading. Kuaishou must take into account the whole, move towards total factor productivity, strengthen refined operations, improve operational efficiency and organizational coordination, and thus precipitate complete full-link digital service capabilities. In this way, various transaction costs can be minimized.
So, in order to resolve losses and the above system challenges, what is the methodology of Kuaishou's new fiscal year?
Kuaishou does answer the following two big questions:
First, on how short-term losses narrowed;
Second, the overall strategy implies medium- and long-term goals.
The first topic is urgent, and it is indeed time to answer.
Jin Bing, the CFO of Kuaishou, who took office at the beginning of the year, stressed at the earnings analyst meeting that he was very confident in achieving a positive net profit after the domestic business adjustment in the quarter of the year, and the path was also "very clear".
Basically, you can use the "open source throttling" description.
"Throttling" is mainly reflected in cost and cost control.
For example, on the basis of last year's Q3, the cost of customer acquisition per user will be further optimized to reduce the cost of DAU maintenance. At the same time, the sales and marketing expenditure in 2022 will be reduced, which is absolutely not higher than last year. In addition, costs such as bandwidth, servers, depreciation amortization, etc. will be optimized. He also referred to content input, using the term "slight increase" to emphasize that ROI would be carefully evaluated.
"Open source" is mainly reflected in the increase in the proportion of high-margin businesses such as advertising and e-commerce.
The second topic, Kuaishou, does not clearly define the "methodology". But the whole logic is in the earnings report, and that is the "business outlook" section.
Kuaishou clearly emphasized its vision, that is, "with the help of unique business propositions and capabilities, it is committed to creating social value by promoting the development of the digital economy and industrial upgrading", while the role positioning is "to provide a high-quality, efficient and convenient service and solution for more users and industry participants with short video and live broadcasting as infrastructure".
It is clear that the focus is on the entire digital economy service position. Although short video and live broadcasting are defined as "infrastructure", they can no longer fully cover the entire business map and overall value of Kuaishou.
Of course, we pay more attention to the landing strategy it adopts at this moment. It is hidden in four areas of focus and investment described in the earnings report.
First, inclusive traffic distribution and private domain advantages;
Second, differentiated content and content operation capabilities;
Third, optimize the algorithm, continue to increase platform user consumption, and strengthen the recommendation mechanism;
Fourth, expand new application scenarios.
You may find this description not new, having been emphasized many times before.
But Quark argues that at the moment, they are not isolated modules, but a complete set of strategies and a set of growth flywheels.
It not only answers the key questions of Kuaishou's fiscal year 2022, but also sows new seeds for the future. In the next few years, The business map of Kuaishou will undergo key changes.
Let's look at the inner logic of this set of flywheels:
First, the multi-dimensional growth mechanism.
Let's start with the private domain.
As mentioned above, in 2022, in order to achieve a turnaround after the domestic business adjustment in the quarter of the year, Kuaishou will reduce marketing expenses. If there is no other support, pull new power or weaken. Strengthening the traffic operation of private domain and inclusiveness can resolve the so-called demographic dividend and traffic peaking challenges, and move towards the stock intensive cultivation on the basis of steady increment.
This effect is not only focused on users, but also related to the growth of e-commerce, live broadcasting and advertising business. The biggest value of Kuaishou private domain is that under the same user scale, its community attributes and mutual attention to logarithm can create higher and more stable conversions, and with the increase of categories, in the future, it will bring more cross-selling opportunities.
The same is true for the content dimension. In the past half a month, there have been new trends in the construction of Kuaishou content: the phenomenon-level two-dimensional topic activated by Uncle Yu Liang implies a new content generation and summons generation Z; the star IP theater "30+ Of Us" created by Kuaishou Entertainment has an original, long-tail IP excavation, which is different from traditional copyright procurement. This will not only help to pull new and reduce costs, but also help the advertising business to improve. Because, innovative content will further increase user time.
And of course, there are algorithmic optimizations. It will accurately match the supply and demand ends, strengthen e-commerce transactions, and promote the platform to move towards global, product-effective digital marketing, and expand the scale of advertising business.
In this way, you should be able to appreciate that it is actually a comprehensive growth mechanism, which answers key questions such as how users, core businesses grow, and how to improve gross profit margins.
These are the short-term indicators that investors pay the most attention to.
Second, the algorithm drives the upgrading of business models, moves towards a complete and native business closed loop, and improves operational efficiency.
It is said above that the four directions of private domain, content, algorithm, and scene are not isolated, but a complete set of flywheels. The focus is on the underlying collaborative logic of the algorithm.
It is based on data, technology and business access, which can not only realize the C-end of thousands of faces, but also accurately match transactions, promote consumption, and truly realize the complete commercial closed loop of Kuaishou's "planting grass - raising grass - pulling grass".
Kuaishou also emphasizes the closed loop before. However, we believe that in the past two years, especially after the IPO, with the significant expansion of content, goods, services categories/SKUs, the number and diversity of merchants have increased, and without the continuous upgrading of algorithms, it will be difficult to cope with the user experience challenges brought about by the complexity of the platform. In this way, it is difficult to call it a true closed loop, and the "product-effect" digital marketing service will also encounter confusion.
This is one of the focus issues for investors. In the past few months, Alimama, Huge Engine, Baidu, Meituan and many other platforms have continued to upgrade their algorithms, from online marketing to concepts such as marketing power and business power, which focuses on full-link digital services behind it, and algorithms and accurate recommendations are the core capabilities.
Kuaishou online marketing has become the first major business. We judge that with the upgrading of the algorithm, in fiscal 2022, it is very likely to implement organizational upgrades around the existing magnetic engine, and it is expected to give birth to a stronger digital marketing platform to empower brand merchants and advertisers.
Undoubtedly, this will also drive Kuaishou to improve decision-making and operational efficiency, and promote the upgrading of the entire business model.
Third, the full-link digital exploration in the new scenario is profound.
The expression of expanding the application scenario does not seem to be new. The dimensions of e-commerce and local life are themselves scene expansion. And both tracks are huge.
In the financial report, Kuaishou has high expectations for live e-commerce. Co-founder and CEO Cheng Yixiao stressed that in the long run, the industry's GMV is expected to reach 6 trillion. The value of trusted e-commerce based on private domains is irreplaceable. As of the last fiscal year, in terms of revenue proportion, Kuaishou e-commerce cannot be called the main business. In 2022, with the help of private domain, algorithm and category expansion, its scale is expected to further grow.
However, the scale of Kuaishou e-commerce is also a cautious topic. Because short-term scaling implies higher costs. Kuaishou is facing the problem of mode selection, and open operation is conducive to improving GMV, but many categories have higher performance requirements and experience requirements. Self-employment, on the other hand, makes it difficult to avoid infrastructure investment. Amazon and JD.com have been losing money for many years. At this moment, the huge loss under the "retail + technology" strategy of the US group is also related to warehousing investment.
Kuaishou defines short videos and live broadcasts as infrastructure. The industry space carried by the latter has just opened. Kuaishou is unlikely to replicate the development path of traditional e-commerce: first, the investment is heavier; second, it needs to continue to explore the native trust e-commerce model that integrates with private domain and content collaboration.
In this way, kuaishou's business layout and development quadrant lack more imaginative space.
Live broadcasting will still grow, but it has entered maturity; online marketing has great potential, will continue to optimize the overall gross profit, playing the core of market value management in the next few years; e-commerce business is currently growing rapidly, and Kuaishou small stores will perform well in 2021, but the entire trust e-commerce still needs to be further explored. To be honest, all three quadrants are close to open fire, and investors are more concerned about the smoke and new imagination space.
When many platforms have strengthened cloud computing, industry digitalization and landed 2B services in an independent organizational structure, Kuaishou has also reached the moment to build a full-link digital service system.
Cutting into 2B services, especially industry digitalization, a condition that cannot be ignored is that you must have an advantageous scenario, so as to penetrate the depth, precipitate complete capabilities, and then empower more industries.
What did Kuaishou choose?
We were delighted to find that instead of leaning out, it was back in the basic soil.
That's the Kuaishou blue-collar recruitment upgrade program we've seen recently. The official description is like this: based on Kuaishou's original live broadcast recruitment platform "Quick Recruitment", through the introduction of agency operators, service providers, guilds, live broadcasters, labor dispatch agencies, labor intermediary companies, enterprises, etc. to build a recruitment ecosystem, to promote blue-collar recruitment from the agency settlement, position listing, content operation, lead conversion, employee onboarding, performance guarantee and other full-link digitization.
Some people may find it not sexy enough. Because many peers are accustomed to choosing the kind of life services that are highly needed. For example, the "eating" scene of the US group is very typical.
But in my opinion, blue-collar recruitment is the core advantage scenario of Kuaishou:
1. This group has more overlap with Kuaishou users, and can smoothly and naturally accept live recruitment services.
In fact, when the "quick recruitment" platform was launched at the beginning of the year, it quickly attracted a large number of enterprises, including Ningde Times, Ideal Automobile, Xiaoniu Electric and other famous enterprises.
2, a huge blue ocean that has not yet been digitized.
For a long time, almost all the main recruitment platforms have focused on white-collar workers, especially talents with high education and internationalization. In the larger blue-collar market, recruitment is fragmented and lacks a platform for a wider range of people and more efficient matching.
Due to the adjustment of China's industrial structure in recent years, especially the accelerated migration of the manufacturing industry, the dilemma of "labor shortage" has been aggravated.
The rise of short video and live broadcast platforms has created an inclusive digital service mechanism for this huge group. The characteristics of Kuaishou's rise in the sinking market, coupled with the universal traffic generation ability, it is highly compatible with this huge demand.
The user scale of many platforms is much larger than that of Kuaishou, but in this dimension, Kuaishou's position, basic user base, brand image, and strategic positioning are clearer.
3. The policy outlet that has been blown.
No need to expand. As long as we combine the past period of consolidation of China's online education/education and training industry, and the reform reality that China's basic education has begun to tilt toward vocational education, we can realize the size of China's blue-collar talent employment force in the coming years.
Kuaishou was already standing on top of a huge wind outlet.
However, we are more concerned about the precipitated value of this field for Kuaishou's future digital capabilities.
This area covers many sub-sectors, with long chains and wide rivers. It can almost integrate the existing capability elements of Kuaishou, penetrate the depth, and establish a full-link service mechanism. With the growth of users, as well as the settlement of merchants/brand enterprises, platform TPs and partners, Kuaishou should further expand its boundaries and establish a more open blue-collar economic ecology.
Once it enters a continuous and stable operation, it will precipitate a complete digital capability for Kuaishou, which will be exported to more industries.
It can be said that the "blue-collar economy" is to Kuaishou, just as "eating" is to the US group. It determines the resilience, safety and long-tail effect of the Meituan ecology. Similarly, blue-collar workers are the basic soil for The development of China's entire society, serving this group well, not only in line with commercial demands, but also conducive to the sustainability, stability and innovation of the national economies of large countries.
This industry scenario is expected to open a new round of growth momentum conversion hub for Kuaishou. This will of course become one of the focuses of attention for investors and capital markets.
In the entire business map, in view of the full-link service and ecological value of this scenario, in the future, Kuaishou should not rule out promoting it to independence, and even seek monetization. Compared with the previous online education, the blue-collar economy has more room for imagination in terms of commercial value and social value. With the continuous opening of the ecosystem, the Kuaishou platform should incubate more vertical track business opportunities.
In this way, the Kuaishou business quadrant is more complete and has a richer rhythm of long-term and short-term development.
However, the more imaginative a platform is, the less likely it is that the commercialization process will be smooth.
The challenge of the first stage of Kuaishou focuses on user growth and conversion, revenue structure conversion and scale, and the closed loop of the platform business model, at this moment, it needs to take into account the long-term and short-term goals, and move towards a structural, endogenous and high-quality growth cycle.
Users, revenue, and gross profit are of course important. But Kuaishou growth momentum is not a single link. It places more emphasis on total factor productivity. The challenges of the future will focus on technology, data intelligence, business models, strategic focus, talent, organization, leadership and even culture.
Among the challenges, to choose the most fundamental dimension, Quark believes that there are twofold:
1. Strategic determination;
2. Organization and leadership.
The two determine whether a company can truly balance the long-term and short-term goals, in a complex and uncertain cycle, firm direction, active innovation, dare to invest, without being wrapped up in short-term performance, capital markets, and losing long-term strategic goals.
Since 2021, Kuaishou has undergone several rounds of organizational structure upgrades.
First of all, at the end of June last year, the original growth business was centralized and coordinated, opened up user and product data, recommended more accurately, and the retention rate and user experience were continuously improved; in September, Kuaishou moved from a functional architecture to a business unit structure, forming a structure of "main station + four major business units + four functional lines + a business planning center", which can not only release the vitality and autonomy of each unit, help to grow and discover new people, but also accelerate the business closed loop and improve operational efficiency. Then, in October, the two founders divided their roles, Su Hua as chairman and Cheng Yixiao as CEO, which was conducive to improving organizational efficiency and management efficiency, promoting overall development, and improving corporate governance and transparency.
In January, Kim took up his new CFO role. This role is conducive to promoting Kuaishou to control costs, strengthen internal control, move towards refined operation, and discover new investment and financing opportunities; in March, the International Business Department set up a commercialization department to match the BU of Kuaishou's overall organizational structure, which is conducive to improving organizational efficiency.
Kuaishou may be the company with the most intensive organizational upgrade of Chinese Internet enterprises in the same period.
Emphasizing this aspect is to let you see the competitiveness brought about by the upgrading of the organizational structure.
You know, some people often compare Kuaishou with TikTok.
In terms of morphology, they are indeed similar. Due to the scale of Douyin users, the volume of e-commerce is leading. Coupled with the rich father behind it, the outside world is full of doubts about the future of Kuaishou.
It's actually a false proposition. The basic business logic of Kuaishou and Douyin is not the same. In particular, the distribution mechanism of private domain and inclusive traffic has enabled both sides to move towards the road of differentiation.
We pay more attention to the independence of organizational decision-making on a platform.
Although TikTok is large and full of ecological charm, at least in the foreseeable future, it cannot surpass or be independent of the byte ecology, and it must first serve the ecological appeal of the mother. In this way, its growth, decision-making links and efficiency, it is difficult to ensure true independence.
Kuaishou doesn't have a rich dad. However, it maintains a higher independent form, rather than embedding a functional module of a parent. In terms of long-term strategy, organization, leadership, and decision-making efficiency, it will have higher independence and autonomy than Douyin.
This topic often reminds me of the game between the US group and Hungry. The latter also has rich fathers, but must obey the overall strategy, a moment of change, it is difficult to maintain an independent development path. Eventually it formed a huge division from the US group. As of now, the US group may no longer regard Ele.me as an overall benchmarking peer. Wang Xing focuses on the digital economy giant with a global vision.
Kuaishou and Douyin's game logic are similar. Although it does not dare to predict the future pattern, at least for now, Kuaishou has demonstrated innovation, ecological openness, strategic determination, long-termism and huge imagination space.
The Fast Hand of 2022 is indeed standing at a critical turning point.
Compared with the value of this node, the goal of "turning the profit of the domestic business adjusted in the quarter of the year" is just a small episode. It is more like the smile and comfort that Kuaishou gave to investors after the IPO. The voice-over is: I have the ability to make a profit at any time, but I have to push forward. From this perspective, looking back at the series of organizational upgrades since last year, it can be said that Kuaishou should have also experienced a process of continuous strengthening of long-term beliefs.