In the face of the upheavals that are coming, I know that everything is prepared in advance. So, what's the reason to panic?
From the US stock IPO on March 26 last year to the completion of the double listing on the Hong Kong stock market on April 22 this year, Zhihu (ZH.US, 02390.HK) as a listed company has gone through 396 days.
For nearly 400 days, Zhihu's management has been facing three problems:
First, how to resolve the imminent risk of delisting of Chinese stocks?
Second, how to further enhance Zhihu's commercialization and monetization ability?
Third, how to further enhance the core competitiveness of Zhihu after listing?
Over the past year, the stock price has not performed as well as it should have been. Due to the existence of a systematic risk of Delisting, it is indeed difficult for Zhihu's stock price to stand alone.
However, unlike the downturn in stock prices, in the face of the above three questions, the management of Zhihu seems to be light-hearted and confident, and they have spent more than a year giving the answers to each question, neat and rigorous, quite a bit of calmness in the examination.
No matter what kind of doubts the outside world has, I know it, and I have a number in my heart.
The hardest road to take
In all fairness. On the eve of the listing of Zhihu Hong Kong stocks, on April 21, Eastern Time, the US Securities and Exchange Commission (SEC) officially included 17 Chinese stocks such as Zhihu in the pre-delisting list.
However, unlike the panic of most Chinese companies, Zhihu's reaction to this matter was very calm. The official publicly said that the impact of this matter on Zhihu is limited, and it will continue to pay attention to the follow-up progress.
So, where does this confidence of Zhihu come from?
In fact, most people do not realize that Zhihu has become the first Chinese-listed company in China's Internet industry to complete the dual major listing of US stocks and Hong Kong stocks.
There are many large companies listed in the United States and Hong Kong, such as Ali, Baidu, JD.com, etc., but their listing methods have basically adopted the mode of secondary listing.
Compared with the dual main listing, the procedures for secondary listing are much simpler, and the regulatory requirements of Hong Kong stocks are relatively relaxed, which can easily obtain the liquidity support of the capital markets of the two places.
But this shortcut is not without cost.
The essence of the secondary listing is to enable the stocks that have been listed on the US stock market to achieve disguised circulation and trading in the Hong Kong market, to put it bluntly, it is still based on the us stock listing as the underlying basis, and the stocks can be mutually circulating arbitrage. Considering the difference in trading volume, the stock price of the second-listed company is actually unilaterally determined by the US stock market venue, and the Hong Kong stock market does not have a separate pricing power over it.
Similarly, due to the existence of this interoperability, the risk of DElisting of US stocks cannot be completely isolated through the secondary listing of Hong Kong stocks. Once the US stock market changes, the risk of the Hong Kong stock side cannot be completely isolated, and it will inevitably be implicated, just like the water in the cabin on one side, which will lead to the sinking of the entire ship.
The dual main listing, in the final analysis, requires listed companies to re-go through the listing process in accordance with the regulatory requirements of Hong Kong stock IPOs, and its complexity and cost are actually completely consistent with the IPO, and the whole process is much more complicated than the secondary listing, and the price paid is also greater.
But this most difficult road can bring benefits to Zhihu that the secondary listing cannot give:
First, completely resolve the risks and uncertainties brought about by the delisting of US stocks. Since the stocks of the two places cannot be circulated between each other, in theory, no matter what kind of fluctuations or even delisting risks occur in the US stocks, the trading and pricing of Hong Kong stocks will not be significantly affected, and it can be said that the problem of delisting risk is more completely solved.
In fact, in addition to Zhihu, another Internet community company, Station B, has also recently submitted an application to convert Hong Kong stocks into dual main listings, which also confirms Zhihu's foresight from another perspective. I believe that in the near future, there will be more Chinese companies on this road.
Second, dual major listed companies enjoy the same treatment as listed companies on the main board of Hong Kong stocks and are eligible to be included in the trading targets of the Hong Kong Stock Connect, while secondary listed companies are difficult to enjoy such preferential treatment due to regulatory caliber problems.
This means that once it is included in the list in the future, a large number of mainland Hong Kong Stock Connect funds can take Zhihu as an investment target. Considering that the user base of Zhihu is mainly concentrated in the Greater China region, this means that the investor group and the user group are further unified, so that the hardcore users who are most familiar with Zhihu can also become shareholders of Zhihu, and the information asymmetry problem brought about by overseas listings has been fundamentally solved.
In the website letter released before the Hong Kong listing, founder Zhou Yuan said that in the past year, he and hundreds of investors in the secondary market have exchanged thoughts through the cycle.
Now it seems that in the face of the uncertainty brought by Sino-US relations to the capital market, Zhou Yuan has chosen the most difficult but also the most long-term response plan.
To be honest, this is not like the style of Internet companies that are accustomed to taking shortcuts, but it is in line with the rational and independent thinking spirit that Zhihu has always advocated.
Farewell, online advertising
Since the birth of Zhihu, online advertising has been described as an obvious means of traffic monetization. After all, traffic and advertising, like light and shadow, black and white, seem to be the day the Internet industry was born, it was regarded as a natural existence.
But few people realize that Zhihu's entire content community model is actually inherently anti-advertising.
A typical Zhihu user is often dissatisfied with the uneven search results in the search engine, and will turn to a more elite source of information such as Zhihu. Such users are born with a relatively low degree of trust in the advertisement, otherwise they will not know at all.
A simple fact is that in the past three years, Zhihu's advertising revenue has basically shown a clear and positive proportional relationship with MAU, and the contribution of advertising revenue brought by each month of living has hardly increased at all.
Frankly speaking, such online advertising monetization efficiency is a very atypical existence among traffic-driven Internet companies. In most cases, with the gradual accuracy of user portraits, the monetization efficiency of ads per user should show a stable growth trend.
Moreover, with the scale of nearly 100 million MAU users, creating less than 1.2 billion advertising revenue a year, such a monetization efficiency is really not optimistic. It seems that there is always some subtle incompatibility between Zhihu and the classic traffic monetization model of online advertising.
Fortunately, this is changing.
In the past two years, Zhihu has incubated a set of "content commercialization solutions" business that seems to be similar to online advertising and has a completely different underlying logic, which basically did not exist two years ago, creating a revenue scale of nearly 1 billion yuan last year, and its annualized growth rate is a jaw-dropping 617.2%.
If there are no surprises, this year's commercial content solutions will properly surpass online advertising as the most important source of revenue.
The internal logic of this business model is actually very simple because it shows the growth potential of far stronger than online advertising:
If we make a comparison with search engines, we will find that the typical search engine is actually a connection from content/information to people, and the form of the content that users can search for is an open state, and bidding ranking ads can be easily integrated into the search results.
However, in the business model of Zhihu, the original content/information must first be translated and reprocessed by the Zhihu creators (that is, the so-called big Vs), and then the selected processed content is presented to the end user, in this process, the audience is only willing to accept the information provided by the content translation/creator, and will not be interested in the raw information that is not processed.
In the final analysis, Zhihu's commercial content solutions only do one thing: let commercial content, that is, advertising, like normal Q&A content, first undergo secondary processing by creators, and then provide it to the audience of the content in the same form as non-commercial content.
The increase of such a link has enabled the original cold commercial content to be endorsed by the trust of the creator's personality IP, and has suddenly penetrated the psychological defense of the audience, and its effect is naturally not comparable to hard advertising.
It is conceivable that just as bidding rankings quickly became the most important source of revenue for search engines after its birth, in the next few years, commercial content solutions will inevitably become the largest source of revenue and become the driving engine for rapid revenue growth.
At the same time, Zhihu's paid content business still showed a healthy growth trend, with annual revenue of 669 million yuan, a growth rate of 108.6%. As the standard-bearer of the knowledge payment trend, Zhihu obviously will not miss this source of income.
After a long period of trial and error and adjustment, zhihu's business monetization framework has become very clear:
Based on the two-wheel drive of commercial content solutions and paid memberships, the trinity of traffic monetization system supplemented by online advertising has created a triple-digit annual revenue growth rate in the past two years.
In the next three to five years, Zhihu will still maintain a revenue growth rate that is much higher than the industry average, and eventually become an Internet company with a revenue of tens of billions. This trend, at present, does not see the possibility of being interrupted.
Knowing the first principles of nature
As an Internet company founded in 2010, from any point of view, Zhihu is no longer a start-up: more than 2,000 employees, more than 100 million users, nearly 3 billion annual revenue, more than 7 billion cash reserves, not to mention that this is a public company listed on both the US stock market and the Hong Kong stock market.
However, in Zhou Yuan's website letter, it is not more about the measurement of the company's size and wealth, but about some seemingly more basic (and therefore more profound) issues.
For example, in the next thirty years, how can we live healthily?
There is no need to deny that since the US stock market was listed, the past year was indeed "black swans flying in the sky and gray rhinos running around on the ground", and no one can deny Zhou Yuan's good luck at the valuation at that time.
Of course, many times luck is also part of strength, but since the road ahead is still long, we can't always count on luck to turn the danger into a disaster.
If you want to become a great company with an evergreen foundation, it is not enough to become a pig on the wind outlet, a good company must have the ability to cross the cycle, and if you want to discover the next new continent, you must have the ability to sail against the wind in the wind and waves.
In this regard, Zhou Yuan gave four words: ecology first.
"In essence, community ecology is the way to produce and consume content, and it is also a model for building business. We see that good content continues to emerge in a good community ecology, and we also see that business activities can continue to be carried out under the impetus of good content. Because, a good ecology brings good content, and good content is a good business. ”
I have to say that this is indeed a cognition that only founders can have: simple and powerful, pointing directly to the source.
If analyzed according to the first principles that have been popular in recent years, all content communities must first have a creator-friendly ecology.
When creators come to a comfortable ecosystem, they will continue to produce content, and content will attract other creators and more consumers to gather, and this process of gathering will spawn more and more business opportunities.
The management of a content community has a thousand and one problems, but according to the first principle, ecology is the root of all this, ecology is good, everything is reborn, and commercial profits are only the result output of this process.
Whether it is from the creator's experience, the community atmosphere or the commercial form that matches the rhythm of community development, I know that there are too many things to do. Fortunately, while all this is already underway, we will soon see some of the results.
As far as zhihu is concerned, the investment in its own content ecology may be the investment with the best return rate in the next thirty years.
Don't panic
Needless to say, the current knowledge is facing a test.
For a listed company whose stock price is not yet high in cash, it is difficult to find a correct angle of judgment. After all, any prediction of a further movement of the stock price has the potential to be punched in the face.
Let's put it another way. If you send you a company now, the user scale is over 100 million, the annual revenue growth rate is three digits, there is a professional team and a good reputation, and just found an effective revenue model.
Such a company, 1 dollar to sell you, do you want?
This seems like an extremely absurd question. But in extraordinary times, such absurd problems are played out in the capital market every day.
Admittedly, Zhihu is still a loss-making company, and at least in the next year or two, this loss will show no signs of ending. At all times, however, we must carefully distinguish between aimless money burning and bold investments for the future.
For Zhihu, it seems that it can be clearly seen at a glance.
A company is powerless to change the course of the global economy and financial markets. If winter is really approaching, then the most rational choice is nothing more than to store enough grain and firewood, repair the holes and damage in the house, keep the body strong and healthy, and then, wait for the snowstorm to come.
In the face of the upheavals that are coming, I know that everything is prepared in advance. So, what's the reason to panic?
Wait for the winter to pass, wait for the hysteria of the market to end. When spring comes, there is money, a team, a user, a good monetization model, and a beautiful performance growth curve.
At that time, do you need to worry about your stock price?
I don't think so.