But when you finish reading this article, you will feel that the title is completely self-consistent.
Recently, Alibaba's Hema was rumored to have sold to COFCO, and then Ali refuted the rumors. But the rumors don't seem to be groundless. Soon, Alibaba's internal meeting came out that Hou Yi, the founder of Freshippo, would step down as CEO. This also makes the rumors of Hema selling to COFCO more and more real.
At the same time, Li Xiang, CEO of Li Auto, who has been silent for two weeks, sent an internal letter, no longer holding the previous view that "MEGA was hacked", but reflecting on his mistakes.
So, what is the relationship between the collapse of Hema and Li Xiang's admission of mistakes?
Both Hema and Ideal MEGA were born out of entrepreneurial arrogance
In 2016, the first Hema store opened in Jinqiao, Shanghai. This is one of the first major decisions made by Daniel Zhang after succeeding Jack Ma as CEO of Alibaba. And the creation of Hema also seems to be to prove his ability to Jack Ma, and at the same time realize the concept of "new retail" proposed by Jack Ma.
In 2017, under the leadership of Daniel Zhang, Alibaba achieved sales of 168.2 billion yuan, which was the beginning of Alibaba's rapid rush to the peak. From 2017 to 2020, Alibaba had its most glorious four years. Alibaba's share price also rose fivefold from an average price of $60 to a maximum of $315.
At the height of a business, entrepreneurs have a very strong self-identity, they think they are omnipotent, they can do anything. At this time, companies begin to let go of humility, forget about risks, and begin to invest and expand frantically, and eventually bury hidden dangers.
Hema opened 18 stores in a row in 2017, when Alibaba took off, and will open more than 350 stores by 2023. Walmart's Sam's Club opened its first store in Shenzhen in 1996 and opened less than 10 stores in the following 10 years. Since Costco opened its first store in China in Shanghai in 2019, it has only opened 2 stores in more than 2 years.
If we look back at Alibaba's frenzied expansion over the past four years, you'll find that most of it was wrong. The huge investments in Suning Tesco, Freshippo, Yintai, RT-Mart, Meow Fresh, Yiguo Fresh and other projects have basically been wasted.
In 2020, when the epidemic hit, Freshippo's business situation became even worse. In 2022, Hema will close stores nationwide, and at the same time, it will significantly reduce product SKUs. From expansion to contraction, Hema took only 4 years.
Then in October 2023, Daniel Zhang suddenly stepped down, entrepreneurial veterans Tsai Chongxin and Wu Yongming took over Ali, and Hema is no longer an independent business, but is classified into the N of "1+6+N".
To sum up, the concept of "new retail" is a road that does not work, but in the most brilliant time of Alibaba, Ma Yun and Daniel Zhang thought they had superpowers. As a result of the frenzied expansion, profits declined, the main business was seriously eroded by Pinduoduo, the stock price fell from $315 to more than $60, and the morale of the employees who held the shares was damaged.
The birth of Ideal MEGA, like Freshippo, was the pinnacle of Ideal Automobile. In 2023, the ideal will become the only new energy vehicle company with a profit of 10 billion yuan outside of BYD, and compared with Li Bin's NIO and Xiaopeng Motors, which continue to suffer huge losses, Li Xiang really has enough confidence to look down on his peers.
When Li Auto has always ranked first in new energy sales, and L7 and L9 are selling well, Li Xiang, like Ma Yun and Daniel Zhang back then, is also a little floating. At this time, the first electric car, the MEGA, was launched.
The designer of this car is a foreigner, and the main thing is "special", and it is immediately recognizable as MEGA, and not other models. To be honest, as soon as this car was unveiled, many people thought it was alternative and eccentric.
But Li Xiang, who has rushed to the No.2 new energy vehicle, seems to be carried away by the victory, thinking that this is "personality". So when MEGA's negative outburst occurred, Li Xiang's first feeling was that he was "hacked". As a result, Ideal began to sue the person who created the negative picture, and at the same time shouted "to fight back".
We don't know if there is an opponent "black PR" behind the fermentation of the whole network in this PS picture, but Li Xiang thinks: There must be!
This is like a student who consistently ranks first in the class, and suddenly fails the exam, at this time he will put the blame on his classmates, teachers, the environment of the examination room, and even the questions that have problems. This is a normal psychological reaction.
Li Xiang admitted his mistake in time
In the more than two weeks that the public opinion of the MEGA new car has fermented, Li Xiang, who has always been controlled by Weibo, has stopped changing. And the weekly sales of Li Auto began to be surpassed by the question. At the electric vehicle 100 meeting held on March 17, Li Bin, He Xiaopeng, Yu Chengdong, and Wang Chuanfu were all present, and Li Bin and He Xiaopeng also showed off their brothers together in a live broadcast, but Li Xiang did not show up.
On March 21, it was reported that Li Xiang released a letter to all employees, and this time Li Xiang was no longer "self-righteous", but reflected on his own mistakes, reflected on Mega's strategic problems, and proposed solutions.
His general reflections are as follows:
First, there is a bias in the positioning of the ideal MEGA. We mistakenly mistook the operation of Ideal MEGA from the 0 to 1 stage (commercial verification period) as the 1 to 10 stage (the high-speed development period). This is exactly what I said above, when the company is in its glory, the entrepreneur is overconfident, which leads to strategic mistakes.
Second, the pursuit of sales and competition is excessive, resulting in desire exceeding value, and harming the user value and management efficiency that they are good at. He emphasized that this pursuit of desire has caused the company to deviate from its original intention and become no longer what it expects it to be.
Li Xiang's error correction method is: seek truth from facts, correct mistakes, and focus on user value and operational efficiency with joint efforts, patiently control the rhythm, and solve problems in a down-to-earth manner.
I think that after more than a month of painful reflection, Li Xiang finally stepped down from the altar and began to face up to the problems existing in products and strategies. Because these strategies were formulated when they were carried away by victory, they were contrary to seeking truth from facts. Just as Alibaba launched the impossible profitable Hema at its most glorious time.
However, Li Xiang's correction is timely enough and the reflection is deep enough, I believe that the follow-up Li Auto can still get out of the quagmire, make better cars, and occupy more markets, because Li Xiang has the genes of successful entrepreneurship than Li Bin and He Xiaopeng.
Write at the end:
To be an enterprise, we must focus on the main channel and continue to return to the essence of operation.
Why does Alibaba forget about the risk of crazy expansion? Because it is carried away by victory, because it has a monopoly mentality, a scale mentality, and a large valuation mentality.
A similar case is Luckin Coffee at the beginning of its business, the purpose of making coffee is not to make money with coffee, but to make money in the capital market. Gree does not work the diversification, globalization and intelligence of home appliances, but invests in mobile phones, chips, and automobiles, resulting in weak competition in the main business.
In the same way, the mistakes of Ideal MEGA are also due to arrogance and eagerness to pursue success, ignoring the product and the user itself, which leads to serious business accidents.
Any enterprise must focus on its main track and reduce indiscriminate investment behavior. Here, we strongly support Tencent's reduction of unprofitable businesses, and Pinduoduo's focus on the main track of e-commerce and not engaging in any AI investment.
It's harder to make money than to save it! It's easier to burn money than to make money!