Image source @ Visual China
Wen 丨 Number Science Society, author 丨 柠溪
As the number one player on the fitness track, under the fiery background of Liu Qihong and Douyin, Wang Ning and his Keep are particularly lonely. Some netizens can't help but sigh that the death knell of "Materia Medica" is sounded for Keep...
On Moscow's New Arbat Street, 4 young girls danced shuttlecock exercises in public with the "Compendium of Materia Medica", and on Nikolai Street at the other end of the city, girls dressed in fiery red clothes have already challenged the dragon fist gymnastics.
Not just Moscow. Under the Pyramids of Egypt, 7 middle-aged men are also jumping shuttlecock exercises despite their slightly uncoordinated limbs; in the United States, the famous musician Steve Oki has begun to take his friends to walk in the trend of challenging key exercises; in South Korea, Uncle Bird even adapted the "Compendium of Materia Medica" and posted it on social platforms.
For a time, it seemed that the whole world was handing over homework to Liu Qihong.
Because of Liu Qihong, Douyin has almost become the winner of this fitness event, the former's Douyin account has almost risen by tens of millions of fans a day, and the latter has earned countless traffic. As the number one player in the fitness track, under the fiery background of Liu Qihong and Douyin, Wang Ning and his Keep are particularly lonely.
Keep's recent hot news in addition to the impact of the IPO, but also because of the running activity virtual medal fee, by the user on the Internet spit on the ugly, black cat complaint platform about Keep has nearly 6,000 complaints, including virtual medals and medal delivery and after-sales problems, directly let Keep be crowned with the label of deceiving customers.
Some netizens can't help but sigh that the death knell of "Materia Medica" is sounded for Keep.
01, I want to be the Nike of the fitness industry
Keep leader Wang Ning is a post-90s, and in the Chinese Internet business chapter, this age is not common, so young, energetic and fresh blood have become his label, but this does not mean that he has no ambition, on the contrary, his ambition is very large, and this seed has been planted very early.
In the early years, when he participated in Tencent Video's self-made column "The CEO is Coming", he revealed that he was not a person who was willing to be under the control of the organizational structure, and when he was in high school, he thought about starting a business.
In 2014, Wang Ning graduated from Beijing University of Science and Technology, because of the excitement of lovelorn, he spent 180 pounds of 180 pounds to shake off 60 pounds of meat on his body in 8 months. This inspirational story is the beginning of Keep, although Wang Ning later said that starting a business to do Keep was an accident without heart, but in fact, he had already drawn a grand blueprint in his mind.
It was when Keep had not yet officially launched, Wang Ning and a few young people wrote code every day, running between the office and home, two points and one line. On the way home from the subway, the subway corridors are full of Nike advertisements, and once he stood in front of the Nike advertisement and told several other people that Keep will make a great brand like Nike in the future.
Later, he also said in public more than once that Keep wants to aim at Nike, and his biggest dream is to become a popular fitness brand like Nike in the digital track in the future.
The key to Nike's success is to take down Jordan. In 1983, Knight came to China to travel, handed Nike to the management of the old employee Wooder, and a few months later, because Wooder did not seize the demand for market changes, Nike's turnover fell directly by 6%. A year later, Knight returned to the company as a fire captain, launched the advertising spokesperson model, and made a five-year contract with Jordan.
This move brought unimaginable returns to Nike, nike's global sales were only about 900 million US dollars in the year of signing, and by 1997, Jordan led the Bulls to win the championship, and Nike's sales rose 10 times to 9.2 billion US dollars.
Knight caught Jordan, but Wang Ning failed to catch Liu Genghong.
After Liu Genghong became popular in Douyin, the industry and outside the industry are hotly discussed, why did Keep fail to take down Liu Genghong? Perhaps this question, Wang Ning himself does not know the answer, but Keep knows how to rub the heat, it will be the explosive Liu Qihong shuttlecock exercises on the home page, fitness exercises placed in the recommended courses for platform users to watch.
But within a few days, users found that Keep had removed all the videos about Liu Genghong on the App overnight, and just two days before the removal, the Beijing Internet Court had just released a typical case of intellectual property rights, and made it clear that short videos involving originality should be protected as audiovisual works.
Due to the risk of infringement, the video about Liu Genghong was removed, and the look of Keep rubbing heat was really not good. Compared with Nike, which is listed and its market value continues to grow, Keep has not even successfully crossed the threshold of listing so far.
In May last year, shortly after Keep completed the F round of financing, it was reported that Wang Ning and other management hoped that Keep would apply for listing in the United States as soon as 2021, and the latest would also occur in 2022.
Two months later, the State Internet Information Office issued the Measures for Network Security Review (Draft Revision for Solicitation of Comments), which states that operators with more than 1 million users' personal information must apply for network security review to the Cyber Security Review Office if they go public abroad. Almost at the same time, the Financial Times reported that both Keep and podcast platform Himalaya had cancelled their IPO plans to go to the United States.
By November, there were rumors that Keep would go public in Hong Kong, until the end of February this year, Keep officially submitted an initial public offering application to the Hong Kong Stock Exchange. In the past year, although the outside world has frequently reported the wind of Keep listing, Keep has not kicked in the door of the capital market from the US stock market to the Hong Kong stock market.
To some extent, this also reveals that the patience of the luxury capital group behind Keep for it is not much.
Tencent, Goldman Sachs, GGV Jiyuan Capital, Wuyuan Capital, Bertelsmann Asia Investment Fund, Son Zhengyi's SoftBank Vision Fund, Gaodu Capital, Times Capital, etc. have been calling for Keep and Wang Ning all these years, and some of them have been chasing investment all the way and accompanying Keep for many years.
But even if it is a marathon, there will be an end, and the people who accompany the runner will not run endlessly.
2, 3 years loss of 5.4 billion
The stories of the Internet are all burned out with money, keep is no exception, and Wang Ning chose the right time.
On the supply side, 2014 is the year of the outbreak of China's fitness industry, a year of time this track has emerged 300 fitness companies, by 2015, this number has doubled, according to incomplete statistics, at that time in the application market in a variety of mobile phone sports App as many as 1500 models.
The demand side is also erupting, Baidu index query yoga, fitness and other keywords of popularity, from 2014 to 2015 the popularity increased by 3 times, and according to the State General Administration of Sports, in 2015 China's participation in physical exercise was 360 million people, and this number is growing year by year, is expected to grow to more than 500 million people by 2025.
This kind of heat has allowed capital to set its sights on this track, so Keep has hardly experienced the financial embarrassment at the beginning of its business, round after round of financing, from its establishment in 2014 to the present, it has completed 8 rounds of financing, and the cumulative amount of financing is about 648 million US dollars.
Keep is not short of money, but it has not yet made a profit, can not escape the strange circle of losses, and the amount of losses is further expanding. Analyzing the Keep prospectus, its loss in 2019 was 735 million yuan, and in 2020, this figure more than doubled year-on-year to 2.2 billion yuan, and by the first three quarters of 2021, it expanded by 67.78% year-on-year to 2.5 billion yuan.
In less than three years, it lost a total of 5.4 billion yuan, and almost all of this money was spent on marketing.
Sales marketing is the bulk of Keep's expenditure, in the summer of 2019 Keep basically has 40 million per month of investment, to the summer of 2020 this record it has been maintained, the most fierce time to burn 200,000 a day, when there were insiders to the relevant media revealed: "According to the balance of high and low peaks Rough estimates, the capital thrown in a year is no less than 200 million." ”
Many people at the time did not expect that it was just the beginning. At the end of 2020, after Keep got the F round of 350 million US dollars in financing, the intensity of burning money directly doubled, from the end of the year Keep began to appear frequently in the live broadcast room of the head anchors Wei Ya and Li Jiaqi at that time, cooperated with the Spit Conference in February last year, did soft and wide implantation in Hunan Satellite TV's "Longing for Life" in April, and won the first post-00 actor Yi Qianxi, who accumulated more than 10 billion box office in August, as a brand spokesperson.
As a result, in its prospectus, its sales and marketing accounted for 70.6% of total revenue from 27.3% in 2020 to 70.6% in the first three quarters of last year. However, the crazy burning power is not proportional to the growth rate of users, and from 2020 to 2021, Keep's monthly active activity has risen by less than 10%.
The logic behind this is that the traffic in the Internet era is rapidly drying up, and the cost of customer acquisition is constantly increasing. At the beginning of the year, Wu Xiaobo mentioned in his speech that the current cost of obtaining customers for Internet companies, such as Kuaishou rose from 31 blocks in 2018 to 177 blocks in 2021, such as JD.com's rise from 112 in 2015 to 316 blocks in 2021.
Obviously, the way to burn money for the market is no longer feasible today, and investors no longer favor the model of burning money with the left hand and losing money with the right hand.
Mike Wilson, Morgan Stanley's chief U.S. equity strategist, made his point when WeWork's initial public offering failed that the days of investors providing generous money to unprofitable businesses are over.
This view also reflects the current situation of domestic Internet startups, including Keep, the most intuitive embodiment is that companies that cannot make a profit for a long time will only become slower and slower.
Wang Ning once said: "Keep has more than a year to complete 5 rounds of financing, which is actually quite difficult. ”
But in the eyes of the outside world, five times a year financing is the capital's optimism about the track it is in, its business model and its future, and it is its highlight moment, and now, Tianyancha information shows that Keep has not received financing for nearly a year and a half, and the most recent round is the F round at the end of 2020.
As star investor Zhu Xiaohu said, the era of financing by burning money to tell stories in the market has ended, and most of the current investors do not love stories, they like data.
03, the uneven road to commercialization
When will it be profitable? This problem is not only of concern to Keep's investors, Wang Ning is also anxious.
As early as 2016, Wang Ning realized that if Keep could not transform into a profitable Internet company, then Keep had no chance and future.
He put the first step of commercialization on the e-commerce business, since this year, Keep has tried to launch the mall plate, helping other brands such as Nike Puma to sell sports peripheral products, but for a long time has not been able to hand over a qualified report card.
In the second half of 2017, keep users exceeded 100 million, and Wang Ning mentioned his thinking about Keep in an internal letter, that is, connecting data, home, city and life through sports. Immediately after March 2018, Wang Ning held the first strategy and new product launch since the establishment of Keep, at which he said that in the future, Keep will create a new sports ecology of science and machine interconnection, and do business for two scenes of cities and families, including offline business Keepland and home intelligent hardware KeepKit.
If the previous two years were small fights, then this conference is the starting point for the official full commercialization of Keep, after which Keep has made free brands such as smart fitness equipment supporting sports products, launched a membership subscription system, and developed from a single online model to offline online coexistence.
But the path of commercialization is tough for Keep.
Keep laid out the offline business for 4 years, almost in place.
In the first year of full commercialization, Keep opened the first Keepland in Beijing Huamao Center, announced that it was profitable half a year later, the next year Keepland entered Shanghai to open the city's first store in Jing'an Joy City, and in two years Keepland opened 15 stores in Beijing and Shanghai. But from the third year onwards, offline business stagnated and fell into the dilemma of closing stores, Keep closed all stores in Shanghai, leaving only 9 in Beijing.
In its prospectus, offline services are only classified as "advertising and other services" that account for only 10% of total revenue.
Keep's online private label sales, on the other hand, stand in stark contrast to the lost offline business.
In October 2017, Wang Ning introduced a fierce general - Liu Dong, who worked as a sales and product manager at BenQ China, an IT company in Taiwan, and founded the smart bicycle company 700Bike with Zhang Xiangdong, president of Jiubang Digital, who can do smart hardware and client experience.
By the end of last year, Keep had sold a total of 1.2 million Keep bracelets and sold 850,000 electronic scales, and its own brand yoga mat was elected as the 2021 sales champion market share of 14.9%, and the sales of smart bicycles also jumped to the first place in China.
But this business line sells well, but Keep doesn't make much because it doesn't have its own supply chain, which means that Keep's own brand has high pricing of consumers' products, and the gross profit margin is low when the consumer reputation is not so good.
Originally, sporting goods is a high-margin industry, such as ANTA, Li Ning, Nike and other brands, the gross profit is about 50%, and Keep's own brand gross profit margin in 2019, 2020 and the first three quarters of 2021 is 35%, 36% and 29%, respectively, even far lower than the gross profit margin of the Xiaomi ecological chain enterprise brand with cost performance as the advantage.
As a fitness content platform, Keep initially rose to take content as the core, output high-quality content to attract users, which is the underlying business value logic of Keep, but in the Keep prospectus, its revenue mainly comes from the sale of private label products, membership subscriptions and online paid content, advertising and other services, of which the contribution of private brands occupies the majority, the proportion of contribution to revenue is 55.1%, and the remaining two are 32.8% and 12.1%.
In terms of the current revenue structure and monetization method of Keep, it is more like a retailer who is addicted to selling goods than a fitness platform.
The development of a company is contrary to its core value logic, is not a good phenomenon, too much reliance on the business that deviates from the core value, will make domestic and foreign investors and analysts question its business model, for today's extreme desire to go public Keep, this is undoubtedly a hidden danger.
While deviating from the company's value logic, the conversion rate of keeping customers who buy goods is not high, and the average monthly active users of Keep last year was 34.4 million, of which the conversion rate of users who bought its products was only 1.06%.
This commercial exploration, which is free from the boundless boundaries of value logic, has intensified the competition that Keep faces today.
On the one hand, in the private brand owners that occupy the bulk of the revenue, it is not only facing intelligent hardware professional brands, but also millet, Huawei and other manufacturers, these large manufacturers compared to Keep, not only have money, but also mature supply chain, strong bargaining power, can reduce the cost to the minimum, and have their own scene application freedom.
Many users have complained about the chicken ribs of Keep's own brand products: "The most incomprehensible thing is that after buying a Keep bracelet, if you want to use the Keep software, you must spend money alone to buy members continuously, and if you don't buy a member's bracelet, it is an ordinary watch." ”
Keep is not strong in the development of products, not long ago Keep announced to the public, from the beginning of the patent application in 2016 to today has applied for more than 400 domestic patents, but in fact, nearly half of these patents are appearance patents, such as in the sky eye check, Keep has 76 patents, of which 60 are appearance patents.
On the other hand, Keep once again re-warehoused offline business this year, in February, Keep released the preferred gym plan to announce cooperation with traditional gyms to provide group class services, a month later, Keep directly announced that it will expand hundreds of stores offline in Beijing, and opened the highest coach salary standard in the industry, digging up opponents.
This makes Keep rival with the Leke Movement and The Super Orangutan, which are already based on the offline battlefield, and neither of them is a good stubble. At present, Leke Sports has opened 665 directly operated stores in 22 cities in 15 provinces such as Shanghai, Beijing, Hangzhou, Shenzhen, Chongqing, Wuhan, Nanjing and Jinan, while Super Orangutan has 250 stores in Shenzhen, Shanghai, Beijing, Guangzhou, Nanjing, Chengdu and other cities.
The two have been deeply engaged in offline fitness for many years, and already have a certain user base and market share, and how to fight the second offline territorial war is a problem.
In terms of core content, Keep is also facing user mental competition on video content platforms such as B Station, Douyin, and Kuaishou, which have rapidly entered the fitness track in the past year under the catalysis of the epidemic and have grown rapidly.
According to the "2021 B Station Creator Ecology Report", the scale of B station sports creators increased by 76%, of which Saturday Wild Zoey, Pamela and other UP masters were popular; and then look at Douyin's "2021 Sports Content Report", last year, the number of sports and fitness videos increased by 134% year-on-year, the number of creators increased by 39% year-on-year, fitness anchors increased by 208% year-on-year, and live broadcast revenue increased by 141% year-on-year.
They are like barbarians at the door, which is bound to pose a great threat to the content ecology of Keep, after all, Liu Qihong is angry at vibrato, and no one can predict whether they will bring out the second and third Liu Qihong.
Wang Ning is naturally also worried, although he takes Nike as keep's future goal, but the capital market is more willing to compare it with Pelonton, after all, Pelonton has 80% of its revenue from the sale of fitness products, which is the same as Keep, but at this moment, the US family fitness platform Pelonton is not good.
In February, Peloton's shareholders submitted a 65-page letter to the company's board of directors asking to fire executive John Foley because Peloton's benefits from the pandemic experienced a peak in its share price, but its market value evaporated nearly $40 billion in the past year, and its performance plummeted, causing strong shareholder dissatisfaction.
Wang Ning worries that Keep will follow the same path, and when others put "post-90s entrepreneurs" as a kind of glory label on him, he does not like this label the most.
In an interview with the media, he said that the most worrying thing is the label of "post-90s entrepreneur" on his body, worried that he is too young, not enough ability, can not keep up with the growth of the company, do not want to become the ceiling of this company, need to constantly break through themselves, with the company to create new possibilities.
But it is often difficult to say that it is simple to do, after all, the mountain that is currently in front of Keep is far more than just the listing.