"Whether it is the previous Feishu Office or today's business three-piece, the core lies in "collaboration with a smaller friction coefficient""
Written by|Shi Shengyuan
On the 11th anniversary of ByteDance, Liang Rubo said in an internal speech, "Our lead in the last year or two is not obvious."
This is an invisible pressure for Feishu, which focuses on advanced concepts. The recent Feishu Spring Future Infinity Conference may provide arguments on the side.
In the 3-hour press conference, Feishu mainly told the story of the "business three-piece set", which should be expanded from collaborative office, organization and management to business tools. But for the recent hot AI, almost nothing is mentioned.
Integrating AI capabilities is the ticket to the new arena of enterprise services; Only by going deep into the business scenario can we get a more share of the stock.
Feishu, which is known for its user experience, can it usher in the growth it wants after releasing business tools?
"Now, we want to further position Feishu and help companies transform the way they do business. Let the business be agile and grow rapidly in the face of various uncertainties." Feishu CEO Xie Xin said.
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The current reality is that the payment habits of small and medium-sized enterprises have yet to be cultivated, and the vast majority of enterprises still use Feishu relatively shallowly - in other words, the needs that can be met by the "WeChat + Office three-piece set".
Whether it is the former Feishu Office or today's business three-piece set, the core lies in "collaboration with a smaller friction coefficient".
Feishu Office is a production tool that serves collaboration; The business trio starts from data, hoping to hold data as a factor of production firmly in hand. In this way, Feishu becomes a complete productivity in the "collaboration" scenario.
However, how many companies have strong collaboration needs, how many companies have advanced collaboration needs, and how many shallow collaboration needs can be met through WeChat groups and phone calls, these data are the decisive factors for Feishu's revenue fundamentals.
The old world needs to be compatible
At the press conference, invited major customers in the fields of manufacturing, catering, finance, and medical care told the story of Feishu three-piece set to accelerate business processes.
The three sets of business refer to "multi-dimensional tables", "application engines" and "integration platforms".
Multidimensional Table, is a no-code tabular database, which aims to "help everyone build their own business applications". In Xie Xin's speech, he gave examples such as: Li Auto used multi-dimensional forms for supply chain material shortage management, Xibei used multi-dimensional forms to build an agile invoicing system, and B&Q used multi-dimensional forms to build a real-time customer management system.
Multidimensional tables flow with bytes of genes, doing the job of information distribution. It wants the information to find the corresponding responsible person by itself, reducing the noise and loss of information in the circulation link. This is a good thing for the efficiency improvement of the enterprise.
But the ideal is beautiful, the reality is very skinny. Most companies still vote with their feet, choosing Excel to manage data and WeChat to collaborate – why learn an advanced tool that painfully transforms business processes when you get started with a very low-cost tool that solves most problems? This is also the reason why Feishu's monthly activity in the domestic market has always been difficult to exceed 10 million.
"For emerging startups, especially post-90s entrepreneurs like us, everyone has a high acceptance of digitalization, and we all like to use Feishu for internal collaboration. But when it comes to communicating with all kinds of Party A enterprises, no one can escape WeChat + Excel." Kevin, founder of a creative planning agency, says the "generational difference" he feels is particularly pronounced.
The Feishu application engine in the business trio is an aPaaS product (application platform as a service) that has not yet been officially launched. It can greatly reduce development costs and quickly build business systems. The aPaaS product abstracts the permissions, interfaces, data, interactions, and processes required in the development process to form a visual configuration page, which business personnel can also get started.
Feishu integration platform is an iPaaS product, mainly to solve the problem of "data islands" within the enterprise, which can dock more than 100 systems, including the mainstream Yonyou, Kingdee, SAP, Salesforce, JIRA, MySQL and so on.
However, compared with the ecosystem of various foreign SaaS products that support one-click login of Google and Microsoft accounts and can easily exchange data through APIs, even if Feishu has the intention to build a data foundation, it is difficult to change the status quo of data closure between domestic manufacturers' systems. Docking and adapting to each system one by one, and establishing an ecology, such hard work, only large factories can do regardless of the input-output ratio.
Ecological construction is actually not Feishu's historical strength. "We also have some good ecological partners, but not a lot of them. We want to improve the quality a little bit and build up the ecology a little bit healthily." Xie Xin said in a media interview after the press conference.
Since 2019, after the launch of the "Cloud Ding" strategy, DingTalk has opened a large number of applications to ISVs (software vendors) to complete, building an ecosystem in the form of a PaaS base. In 2022, DingTalk's slogan is "Make a digital base and become a scaffolding for ecological partners."
Some people once compared Feishu to self-built business districts and self-operated stores, while DingTalk is an operation model of renting out and collecting commissions.
From SaaS to PaaS, Feishu now also wants to cut into more businesses and scenarios by opening up data and permissions between systems and strengthening base capabilities, and share more cakes in the retail and manufacturing industries. However, if you want to snatch customers from DingTalk, the real base ability, delivery ability, and ecological richness of Feishu products need real user inspection.
New worlds need to be created
Striving for the stock market is a regular action, and for latecomers, sometimes it is more important to create increments. Feishu, which "maintains the largest investment among peers", is "asking for increments overseas".
In an interview with the media, Xie Xin said that foreign SaaS market users are more mature, more willing to spend money, and more willing to try new products, but at the same time have higher requirements for software suppliers.
However, in the overseas SaaS market, "business tools" are already a less attractive old story: large factories and small factories, all around "AI" began to fight fairies.
Data.ai's data shows that Bing downloads increased by 7 times after integrating ChatGPT; Meanwhile, Google's downloads fell 2% over the same period.
On March 15, in response to the popularity of OpenAI and Microsoft's New Bing, Google announced the integration of generative AI capabilities into Gmail and Google Docs.
Two days later, at the same "future" themed conference, Microsoft also announced that Microsoft 365 services fully access AI functions and released Copilot. This action once again set off a new wave.
"You are already a mature Word, learn to write on your own." What was ridiculed not long ago has become a reality today.
You can use the content in Word to automatically generate PPT; Let Excel automatically generate analytical reports to discover the relevance of data; Talk directly with PPT, adjust the layout and make animation effects in the language of daily life communication; Let Outlook quickly generate and reply to messages when prompted.
A revolution in productivity tools centered on Microsoft and Google has begun, and everyone is looking forward to the opening of a new world.
Even SaaS companies that don't have their own Big Language Model (LLM) are scrambling to plug in APIs and develop application-layer products.
Notion, which has a high degree of overlap with the Feishu document function, began to test the function of AI-assisted writing as early as before ChatGPT became popular; Recently, AI capabilities have been generally available and integrated into subscription services.
Feishu's main overseas competitor, Slack, also announced its access to ChatGPT in March, launching new features such as intelligently generating chat conversation summaries, AI-assisted writing, and AI intelligent search. These are all things that Lark (Feishu Overseas Edition) cannot do for the time being.
After the release of the GPT-4 multimodal large model, the interaction between humans and AI has expanded from text to images, and the market is enough to glimpse the ambition of OpenAI and Microsoft to lead further changes in productivity.
If you want to "increase overseas", AI and related applications are propositions that Feishu cannot avoid. But so far, we have not seen a clear plan or action from Feishu in this direction.
How far from breakeven
At the internal meeting, Feishu announced that ARR (annual recurring revenue) in 2022 has reached 100 million US dollars, a rapid increase of 2.7 times compared with 2021. Xie Xin called it a "milestone moment".
When a corporate services company reaches $100 million ARR, it is considered a "centaur" company by the capital markets. In the United States, there are more than 1,000 Unicorn companies in the enterprise services sector, while there are only about 150 centaur companies.
Generally speaking, after a company reaches a $100 million ARR, almost all of them go public, and rarely go out of business. Therefore, it is a proof that the company has found PMF (Product-Market Fit) data metrics and has a sustainable way to grow.
According to Bessemer Venture Partners, the top 25% of publicly traded SaaS companies take an average of 5.3 years to reach $100 million in ARR. Feishu is not slow, it only took 3 years.
But ARR needs to be combined with cost and net profit to be more convincing. Burning money to achieve this target is not a respectable way. In addition to growth, the efficiency and quality of growth are equally important.
According to Leifeng.com's previous data, the total cost of Feishu in a year is as high as 10 billion yuan. If this data is true, then $100 million is only about enough to cover Feishu's 1 month's cost, which is still far from breakeven.
Liang Rubo once revealed that Byte's R&D investment in Feishu is not lower than that of Douyin, and the current ROI is not very cost-effective. But he believes that doing a good job of corporate services is important for a good technology company.
"The next indicator is probably 1 billion ARR. In the next few years, controlling losses is within the company's tolerance." In an interview with Titanium Media, Xie Xin defined "healthy growth".
To control losses, we must open source and reduce costs.
In February this year, Feishu quietly released a new charging standard, reducing the free version of the license across the board. The free version of cloud space is reduced from 300G to 50G; Chat history from free storage forever, to only 180 days; Widely acclaimed products such as Multidimensional Forms and Feishu Miaoji have also reduced their permissions accordingly.
This move is clearly aimed at increasing the payment rate of small and medium-sized enterprises. "Since January, I have received frequent calls from Feishu sales indicating that my authority is being reduced. In addition to Feishu's own sales classmates, there are also many sales from external channels. I now have at least 5 Feishu sales on my WeChat list." Kevin said.
The new fee is quite unfriendly for small and medium-sized enterprises. Xie Xin believes that "if the user is not willing to pay, then DAU is a cost indicator."
"China doesn't need to innovate the SaaS business model," Xie said. He believes that product power is the biggest determining factor. If it is only silky, easy to use, and the experience is good, the problem solved is not so critical, and it is also a manifestation of the product's strength.
Feishu is coming out of the narrative of the "advanced team", bending down to explore the real business pain points. Only if you find the right one, then the cultivation of the user's payment habit can be safely and boldly handed over time.