NetEase Youdao CEO Zhou Feng, courtesy of the interviewee
It's hard for everyone this year, it's hard, it's hard, it's not three years ago.
But no other industry can appreciate the difficult situation of online education for U.S. stock listed companies – education and training, the Internet, U.S. stocks in China - this track almost gathers all the keywords of the "black swan" event.
The same is true for NetEase Youdao. "Life is full of flowers and roses." After NetEase Youdao was listed on the New York Stock Exchange in 2019, CEO Zhou Feng described his feelings to the Titanium Media APP at that time.
Even in 2020, after the outbreak of the epidemic, the entire industry is very optimistic about the future. Under the East Asian cultural system that emphasizes education, what is more promising than using technology to redo education?
However, with the implementation of the "double reduction" policy in July 2021, overnight, all companies whose main business is education and training have been forced to transform, and their business models must be reshaped.
The industry almost tacitly responded with a "lying flat" posture, but Zhou Feng was willing to take the risk to go to the front of the stage, accept media interviews, and landed a new business that is more "heavy" than Internet products - a new hardware product "intelligent learning lamp" that is extremely challenging for the current logistics and supply chain.
At the helm of NetEase's first independent listing business, Zhou Feng, together with many peers of education and training companies, has turned the bow and sailed away from the K12 route, he defines the company as a "technology + consumption" company, however, according to the long-term observation of titanium media APP, as a newly emerging young entrepreneur in the education industry, Zhou Feng still has many differences compared with the founders of the previous generation of traditional education and training companies.
When the entire public opinion field is now immersed in a pessimistic and anxious tone, the content that Zhou Feng has shared in the circle of friends recently is mostly related to the hardware industry, as well as the content of the scientific direction related to the virus, calm, rational and enterprising, which seems to be slightly out of place.
Similarly, last year, in the face of the great changes in the industry under the "double reduction", you did not see Youdao playing any warm cards and selling miserable cards in the field of public opinion. The release of the first intelligent learning desk lamp a few days ago is the most important action after its "double subtraction".
However, smart learning lights are not a new species in the education hardware track. Previously, ByteDance's first independent split brand Vigorous Education, the first brand debut released a vigorous intelligent learning lamp, which became a hit and quickly occupied an important role in the market. As a veteran enterprise of the education track, the launch of NetEase Youdao Intelligent Lamp is also their first positive "counterattack" on the education and training of large factories.
Recently, Zhou Feng accepted an exclusive interview with the Titanium Media APP and talked about the current transformation of the education and training industry, the challenges under the epidemic, and the turmoil of Chinese stocks in the capital market.
The following is the titanium media APP dialogue with NetEase Youdao CEO Zhou Fengshi, with abridgements:
The learning product that existed 20 years ago is worth redoing
Titanium media APP: Intelligent learning desk lamps are not a new product in the industry, why did you not do it before, and it was officially released this year?
Zhou Feng: Actually, we have been preparing for a long time, for two years. We usually run multiple projects at the same time. In the middle of the running process, there are some projects to be accelerated out, and there will be a different order before and after. In the process of making the lamp project, we found that our user needs are relatively large, and our product strength has reached a good state, which is why we took it out at this time.
My smart learning hardware category is more numerous. This year, the dictionary pen will also be updated, which is a relatively large project. Including the recent listening treasure, an artificial intelligence repeating machine, it also sells very well. Our current idea is to position ourselves as "technology and consumption", through intelligent hardware empowered by artificial intelligence, it should be of great value to consumers.
There are several aspects of the product to consider, first, whether there is value to the user, second, the user is willing to pay for the product, and the third material cost and research and development cost. Three aspects together, many times it is negative, can only dispel the idea of this thing do not do. I think the lights are now put together and found to be very good, the actual situation depends on the situation of the product running down.
Titanium Media APP: How is it considered commercially?
Zhou Feng: Hardware is a good business model, and most of the hardware is a tool. Like, what is a car? A lot of people say they want to sell things in the car, which I think is a bit ridiculous. The core attribute of the car is a transfer tool from point A to point B, which is the car. Of course, it can be more environmentally friendly in the middle of this, and the driving experience is better.
From our point of view, because when we were doing Internet tools before, it was more difficult to have a large number of users, but it was difficult to monetize. Now it is equivalent to taking out the ability to become a useful product, this product can also attract the attention of users, after reading it he feels good, willing to pay for the product function itself, the business model is more direct.
I think that many of China's business models should be more and more direct, because in the past, when our economy was not so developed, the Internet was to do traffic first and then monetize, and now many do not need it, most users are willing to pay for good products and experiences
Titanium Media APP: You just mentioned that you want the product to be as simple as possible, in fact, it is not easy for Internet companies to do this. Last year, Youdao also had another initiative to make tool products such as Youdao Dictionary into a traffic platform based on graphics and videos like Xiaohongshu.
Zhou Feng: This is because the APP model has limitations, if an APP sells for 100 yuan and everyone is willing to buy it, I don't need to do traffic monetization. But hardware can do that. However, the biggest problem in the hardware field is that some people who have received investment before, or who have mines at home before, want to make money through traffic.
Titanium Media APP: Before I talked to the product development departments of some leading companies in the industry, why didn't they do the learning lights? One of the reasons is that they feel like learning lights now, essentially a flat-level solution, doesn't have a lot of innovative stuff. The so-called eye protection function of the lamp is actually a very popular application in the industry, how do you see such a point of view?
Zhou Feng: I think there is a certain truth in this statement, but we found a way to differentiate, at the beginning we had a lot of ideas, some of them couldn't run, they didn't come out.
Our intelligent learning lamp, the most important thing is from the perspective of interaction, finger interaction and voice interaction Why we did not make the screen so big, is because we think that finger interaction and voice is the most important, we spent a long time optimizing the word search, reached a speed of 0.5s, this is our innovation based on the needs of users and our advantages. We have been doing it for many years, and before that there were mature programs for sale.
Titanium Media APP: What is the basis for pricing your lamps? Have you heard that a friend merchant sells a loss, does the Tao do this?
Zhou Feng: We don't do hardware that loses money, and we can't make ourselves dead. I think that in the matter of education, parents are actually willing to pay for good products. Our dictionary pen has repeatedly proved that we have made a valuable product that the parent feels is worth the money and he does not hesitate. Some parents will try the cheap one, and after trying it, he doesn't feel like he's made a bargain, and after a while he comes back again.
Titanium media APP: But there are also far below the cost price of sales, the product is also good, parents will also choose.
Zhou Feng: That's not sustainable. This has happened before, there are very well-known manufacturers, before the dictionary pen sold very cheap, and finally the price increased, because he did a period of time to find that the loss, the business model can not run.
Titanium Media APP: In the case of the same price, as a consumer, why choose a new product with Youdao?
Zhou Feng: We have done the extreme of the functions that users need and commonly use, and believe that users can feel it in use. For example, 0.5 seconds super fast check, is very impressive to users.
Titanium Media APP: Are you not afraid of price wars?
Zhou Feng: I am not afraid of price wars, if a particularly rich player rushes in to do it, I will not do it. I don't think it's very likely that this will happen now, because everyone has actually done it and ended up finding it uninteresting.
Pricing is very important, the team can not be greedy, can not say that your product is only worth so much money, but you set the price higher, that will be a problem, is to smash the brand. You can't use some vague future business model to set the current price, it is also easy to get into trouble.
Titanium Media APP: If there is no "double reduction" policy, will the intelligent learning lamp be listed at this point in time?
Zhou Feng: It may be a little later, but recently we have definitely increased our hardware investment.
Titanium media APP: After the "double subtraction", you mentioned that Youdao is making efforts in the direction of "technology + consumption". However, the current consumer market changes are too great, and this year's macro environment is also very challenging, and it is generally believed that consumer confidence has been frustrated. What do you think?
Zhou Feng: Let's get through the difficulties together, there are some things I can't say, because the financial report has not yet been issued. It can be said that last year there were some difficulties, and this year there are also some different difficulties. Regarding the consumer market, I have seen some data in the mobile phone industry that has been released, and Q1 has dropped by 20%, which is similar to our somatosensory.
Our field is slightly better, it is itself a period of upswing, equivalent to a rediscovery of learning and home, hardware used by children. In fact, 20 years ago there was this thing, electronic dictionaries these things were there at that time, but the core difference, now there is artificial intelligence, at that time there was no, we are equivalent to these need to use the equipment, with some new models, take out and do it again. This is an upward area that will offset some of the decline in consumer demand, but it is also difficult overall.
If there is difficulty, we must find a way to get out
Titanium media APP: Intelligent learning desk lamp project has also been established for a long time, have you expected such a bad situation this year?
Zhou Feng: We started to do it in 2020, when everyone was still very optimistic, and there were flowers and roses in the middle of life. We went public in 2019, in fact, in 2020, we will have some new directions to try, and then we will find that the pressure is relatively large, but I always feel that if the product is good enough, we should stick to it.
Titanium Media APP: Now it is true that we see a lot of negative news every day, almost all the big factories are laying off employees, shrinking the front, controlling costs overwintering, in order to cope with the uncertainty of the external environment and the uncertainty of supervision, youdao is developing new products at this time, what is the basis for consideration?
Zhou Feng: New products are always coming out, everyone is developing new products, there are difficulties to find ways to get out, companies must do what they can do. For us, it has been a transformation process since last year, and our strategy is relatively clear. Among them, smart hardware is the direction we invest the most, so we still hope that new products can have more consumer attention.
Titanium media APP: After the "double reduction", Youdao has determined four transformation directions (intelligent hardware, adult education, quality education, education informatization), why bet hardware the most?
Zhou Feng: Because in the middle of these four directions, hardware and adult education, the original business scale is relatively large, according to last year's volume, almost 1 billion or so business level. In addition, quality education and education informatization are relatively small, we are very optimistic about quality education for a long time, and quality education we also have advantages. Under the encouragement of policies, education informatization is also optimistic for a long time, and we believe that our technological advantages can empower the high-quality development of education digitalization.
However, because the hardware itself is in a stage of rapid growth, we feel that it is more logical, last year's Q3 and Q4 performance are very good, Q4 is a little more than 300 million.
Titanium Media APP: What is the difference between this year's difficulties and last year's difficulties?
Zhou Feng: Last year's supply chain was particularly difficult, and last year's core was missing. This year it seems that there are some difficulties on the demand side, and I think that if we can solve these problems relatively quickly and get better, plus the policy toolbox is still very strong, I believe there will be a turnaround in the future.
Titanium Media APP: I heard that recently Shanghai has had a big impact on Youdao hardware sales due to the impact of the epidemic.
Zhou Feng: Last month, Shanghai fell out of the top 10 in our sales list, which is still a bit shocking to us and difficult to see. It could also be because of logistics issues.
Titanium Media APP: Now that the epidemic is repeated and repeated, there is pressure on logistics and supply chain, how do you respond?
Zhou Feng: Working together with supply chain partners, we have a group of supply chain partners with strong ability to cooperate for a very long time. Hardware production and software are very different, hardware is divided into many stages, we have done at least seven or eight generations of iterations, in the middle if a factory is sealed, the final product will not come out.
Regarding the crisis of Chinese stocks, there is only a limit to what companies can do
Titanium Media APP: What impact have the changes in the capital market had on you?
Zhou Feng: There will definitely be all kinds of pressure on the business, from last year to this year, we have some projects that have stopped, and some businesses are also changing. Basically, we are more fortunate that we are more optimistic about the direction, originally made a relatively full preparation, basically saved it, and now can also have business growth.
One reason for this is that Youdao's business is already relatively diversified, so no matter which aspect of the pressure, we can cope with it better. For example, like the division of these businesses, K12 education and training accounted for 40% before, and when it was affected by policies, the remaining business was 60%. At the beginning, when we did more business, some shareholders had great opinions on us, thinking that courses were so profitable that they should do all courses.
Titanium Media APP: How did you answer them at that time?
Zhou Feng: Capital is still relatively greedy. In fact, our purpose is quite simple, to tell the truth, I have always believed that education technology is particularly service-oriented, especially heavy on manpower is not the ultimate form. Attending classes is a very human matter, and I have always believed that this is not the ultimate solution. Even when the course business is very good, we are willing to spend some energy to try a less manpower-intensive route and play to the advantages of our technology company, so we have other business layouts.
Titanium Media APP: As a company that was previously mainly engaged in education business, have you ever worried about the current capital environment?
Zhou Feng: The capital market may not be able to give you a lot of ammunition in the short term, which is a more difficult point, my idea is that everyone is the same. But if there is a real opportunity, some opportunities that will be difficult to encounter in the next ten or twenty years, I think investment should be done or done, to do value accumulation.
But it is true to grasp the balance, the overall opportunity is still very good, not only learning, we want to do consumption and technology, the most important thing is artificial intelligence. Where consumption and technology intersect, there can be other opportunities for expansion, and there is a lot of room from this point of view.
Titanium Media APP: Now that Chinese stocks are on the cusp of the storm, as a Chinese company listed on the U.S. stock market, how do you see the current situation?
Zhou Feng: For enterprises, they must do what they can do. We are relatively special, we have major shareholders, And NetEase now holds more than 50% of the shares. On the one hand, I want to communicate Youdao's strategy with the major shareholders, on the other hand, NetEase is still very supportive of Youdao's work in all aspects, and we are also very grateful to get through the difficult transition period together.
Titanium Media APP: Do you care about the rise and fall of stock prices?
Zhou Feng: It's useless to care, we still focus more on products and business.
Titanium Media APP: So who protects the interests of investors?
Zhou Feng: Now the problem is that a lot of factors are intertwined. We are sure to do a good job of communication with the outside world and all aspects, and we must be responsible to shareholders.
Titanium Media APP: Have you adopted some strategies to deal with the risks of the capital market?
Zhou Feng: The things that enterprises can do are relatively limited, and the things we can do will be done seriously, and there is nothing special to talk about at present. I definitely hope to find a good path for future development, and all kinds of methods will be thought of.
Titanium Media APP: Have changes in the external environment affected the adjustment of your decision-making direction?
Zhou Feng: I think it will have an impact on expectations, but it will not affect the current work. When our management makes judgments, there are some things that need to be taken into account.
There are some things that have nothing to do with expectations, is the table lamp going to come out? Absolutely not affected by this. Our responsibility is also to protect the team from external interference. If the team is restless, it will not do a good job.
But it will affect our expectations. For example, when I invest in a new project and have to spend money, I may be more careful. When you want to recruit some very expensive people, you may have to consider it. Including which business direction is more promising, to be honest, a particularly long-term period of things, may have to be cautious. For example, if I put a thing into it, it will take 3 years to get results.
Titanium Media APP: Will there be a gambling mentality to vote?
Zhou Feng: Some companies will. Everyone does not vote for me, there may be more opportunities in the future, but a minority. Entrepreneurs need to manage risk.
Titanium Media APP: There is now a saying that the era of globalization is coming to an end, what do you think?
Zhou Feng: It is difficult to say that there is no end to the end, but I am firmly optimistic about China.
(This article was first published on the Titanium Media APP, interviewed and written by Li Chengcheng |)
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