burned out 1.3 billion, the founder said that selling sweet potatoes to pay off debts, how did Zhong Xuegao, the first Internet celebrity in new consumption, fall?

People of the Day

2024-04-25 11:08Posted on the official account of Beijing Daily People

▲ Middle Street 1946 ice cream. Photo / Middle Street 1946 flagship store

In the past, Lin Sheng was good at casting "magic" and changing the situation. He used a set of marketing techniques that industry insiders couldn't understand to create Zhongxuegao, harvested a vote of investors and consumers, and enjoyed a dizzying high growth.

Now, the "magic" has failed, and Zhong Xuegao, who has lost his aura, has been beaten back to his original form. We found several middle and high-level employees of Zhongxuegao and investors who are familiar with the consumption track, trying to restore: where did the billions of dollars spent and how did the first Internet celebrity in this new consumer field fall?

Text: Chang Fangfei

Edited by Xin Ye

Killer whales

A helping hand that reaches out and withdraws

After joining Zhong Xuegao for four years, the last time Chen Ran "met" his boss Lin Sheng was on the hot search a few days ago.

"Don't be afraid to take a green train to Beijing overnight", "Even if you sell sweet potatoes, you have to pay off your debts", "Don't run, don't run or coward", a few words of expression, trying to outline the image of a "tenacious" entrepreneur.

▲ Lin Sheng, the founder of Zhongxuegao, was limited to be on Weibo's hot search. Picture / Weibo screenshot

But at that moment, all Chen Ran could think of was Lin Sheng's silence two months ago. At that time, she took the new version of the layoff compensation plan to Lin Sheng. Hearing the boss's promise, "Arrange someone to follow up immediately", Chen Ran breathed a sigh of relief for his former partners. But when it came to the agreed payment time, Lin Sheng suddenly disappeared, and he didn't reply to WeChat or answer the phone.

The act of letting employees go doesn't stop because of the boss's silence. A number of former employees revealed that Zhong Xuegao actually had only more than 20 employees left, and at its peak, the star consumer company had nearly 2,000 employees. Either voluntarily or forcedly, 99% of employees have already left.

Of course, there are also those who "failed to lay off". The labor relations of female employees during pregnancy, childbirth, and lactation were transferred to the name of Zhongmao Food, a wholly-owned subsidiary, and the amount of execution involved in this company was as high as 22.65 million yuan. Chen Ran worries about them, "(this) company has no money left in its account, and if it can't issue five insurances and one housing fund, the maternity allowance for female employees will be affected in the future."

The last time the alarm for money gone went off was more than a year ago.

In March 2023, Lin Sheng received a data report from Zhongxuegao's finance department. It clearly states that there is a problem with the company's operations and that cash flow is about to break. At that time, the peak season for ice cream sales in the new year was coming, and every expenditure could be problematic, from the cost of raw material suppliers, foundries, logistics to employee salaries.

Chen Ran witnessed the report. In her view, cash flow is the lifeline of a business, "which is the number one priority". But this does not seem to have attracted enough attention from Lin Sheng, the launch of the new product line Sa'Saa was held as usual at the end of the month, and the money has been spent, "He is probably too confident in the second half of the year". At that time, there were at least three ways in front of Lin Sheng - quickly start a new round of financing, get the agent's advance payment for the next year, and sell the ice cream and get sales.

Lin Sheng has reason to believe that things have not yet reached the point of exhaustion. After all, Zhong Xuegao has been the object of capital competition since his birth, and he has hardly experienced the taste of lack of money before 2023.

▲ Zhongxue's high price list. Photo / Visual China

According to a number of insiders, unlike the A round of public external financing, which only disclosed to May 2021, in fact, Zhong Xuegao completed the B and C rounds of financing one after another within a year after that. The final round of investors included Boyu Capital, Middle East sovereign wealth fund Mubadala and many others.

The three rounds of financing previously disclosed by Zhong Xuegao also have first-line investment institutions standing behind them. In July 2018, Zhong Xuegao, which was established less than four months ago, won the angel round led by Jingwei Venture Capital, Zhen Fund, and Frees Capital, and the negotiations were very smooth, "almost decided after meeting". The A round of financing of 200 million yuan was led by Yuansheng Capital, followed by H Capital and Wanwu Capital. Counting the subsequent rounds of financing, Zhong Xuegao has raised nearly 1.3 billion yuan from the primary market since its establishment, and its valuation once approached 4 billion yuan.

But it is such a former darling of the capital market, but in the middle of 2023, it will become an "outcast" and be isolated. Chen Ran has participated in multiple rounds of negotiations with multiple investors, and as time went on, her and Lin Sheng's confidence has dipped little by little.

The first stop for help was the old shareholders who had invested the most money, and Lin Sheng naturally thought that they "would not watch and not save". But the "white knight" did not come forward, and as the due diligence deepened, a fact was put in front of investors - Zhong Xuegao not only never made a profit, but the scale of arrears was far beyond imagination, "close to 900 million". Chen Ran knew that this was "a number that could not be paid off" for Lin Sheng and his team.

The rest of the investors have changed their previous enthusiasm. Being able to get Zhong Xuegao's share in his heyday is evidence that investors are "deeply rooted in the circle". And at the moment, it becomes a hot potato. Lin Sheng had no room for bargaining, and the management listed what now seems to be quite harsh terms, including that once the performance gambling fails, Lin Sheng and the core team will give up equity and control, and even Zhong Xuegao's registered trademark will be pledged to the employer, "which is equivalent to an unconditional withdrawal, and the company has nothing to do with him in the future."

In June 2023, Shanghai enters summer, and Zhong Xuegao's situation is more anxious than the temperature. After gritting his teeth and agreeing to the above terms, Lin Sheng finally waited for the nod of the old shareholder - he planned to invest up to 350 million yuan in Zhongxuegao.

However, the imagination of a safe landing only lasted three months. At the threshold of the final signing and payment, the investor decided to withdraw the help, and the reason given was very official, "I have not passed the investment committee, and I feel that (post-investment) is too risky".

Chen Ran soon realized that Zhong Xuegao at that time was "no longer valuable to investment institutions". Many respondents expressed similar views to us. In their view, debt is not the most fatal problem, "if a company needs to replace its core management in addition to money, then there is no need to save it".

Lin Sheng in the storm didn't have time to be depressed, and immediately ordered his employees to go to a commercial bank to apply for loans, "a little bit can be a little bit." In the end, Chen Ran even walked into the door of a private loan company. But in the end, she couldn't find a penny for Zhong Xuegao.

The Founder's "Magic"

Completely different from the current desire to replace Lin Sheng and the core team, the early investors firmly stood behind Zhong Xuegao, and Lin Sheng was the most important reason.

Hong Hao, an investor who has been deeply involved in the consumer field for many years, recalled to the Daily People that Lin Sheng on the cusp is by no means something that investment managers of ordinary institutions can come into contact with, and his project is the target of everyone's competition, "To be fair, if I can have this opportunity, I will also shoot."

At that time, the person who grasped this opportunity was Gu Minman, managing director of Zhen Fund. The first time we met, she decided to invest in Lin Sheng, "Seeing that he was in a café in Shanghai Joy City, we confirmed our intention on the spot, and later we became the first angel investor to confirm our intention."

Early-stage investment is often based on people and things. Yao Zhen, a partner of Toutou Yesdao Fund, also publicly stated that one of the most critical factors in investing in Zhong Xuegao is the founder Lin Sheng. He believes that investment is essentially to invest in the best players in the track, "if the runners can't run, it doesn't matter how good the track is."

The track Lin Sheng chose was not without questioning. The angel round of investment Fang Fengrui Capital was once worried about the imagination of the ice track. When the project arrived at the investment committee, the opposing party asked again and again, why did Zhong Xuegao only want to sell ice cream on Tmall? The annual sales of this category on Tmall are only 300 million yuan, will it be too small?

However, Lin Sheng's previous successful experience in ice trading persuaded investors to come up with real money. From 2015 to 2016, Lin Sheng, who was born in advertising consulting, single-handedly promoted Modern and Middle Street 1946 in the small shops on Northeast Street to the core business districts of Beijing and Shanghai. He knows too well how to give a regular ice cream a highlighter and a soft light at the same time.

To make a mediocre ice cream an Internet celebrity, Lin Sheng only needs three steps.

The first step is to make the ice cream look eye-catching. Immediately after leaving the Northeast, Modern invited the Milan Business School to redesign the logo and packaging, and the top of each 1946 in the middle street was engraved with a special embossed pattern of "1946". Next, it's time to give the product a sense of history. From "Little Paris of the East" to Zhang Zuolin, they have become the embellishment of a small ice cream in the Northeast.

In the end, these designs and stories have naturally become the weight to pull up the price. After Lin Sheng's transformation, the prices of Modern and Zhongjie 1946 quickly rose to 5 yuan to 20 yuan, turning them into high-end desserts.

The same steps were also reused in the development of Zhongxuegao's products, this time, the unique design became a tile-like appearance, a hollow-shaped pattern, and the story he wanted to tell became a wooden stick filled with advertising copy.

No one will forget the moment when Zhongxuegao's online sales surpassed Häagen-Dazs. But few people know that this is not the first time Lin Sheng has defeated this ice giant. As early as 2016, Midstreet 1946 participated in Double 11 for the first time and became the champion, with sales of 500% of Häagen-Dazs.

Lin Sheng, who is good at dancing with long sleeves and is invincible, once summed up his experience of using "magic" - ice products are not high-tech products, "everyone compares the problem of communication ability".

From a trader to a soul figure, Zhong Xuegao's first battle of communication led by Lin Sheng started on Double 11 in 2018. He still tells an expensive story. He decided to take three of the pink cocoa that Ecuador was made from pink cocoa, which he said had only imported into China at the time. The raw material with pink cocoa is known as "Japanese lemon pomelo that bears fruit once in 20 years". Of course, such a rare raw material costs a lot, but Lin Sheng once said that the price per ton was as high as 700,000 tons, and once changed his words to 1.2 million, which is quite unstable.

The final product is priced at 66 yuan. Its unique shape and extremely high unit price made it an instant hit, and in less than 15 hours, 20,000 pieces were sold out in stock. Zhong Xuegao transformed into the "Hermes of the ice cream industry". Not only the raw materials, but every bit of the little ice cream can become a part of the story - origin, technology, quality control, Lin Sheng uses a set of words and techniques to make people believe that there is a truth that is expensive.

▲ 66 yuan of Ecuador pink diamond ice cream has become one of the most prominent labels on Zhong Xuegao. Photo / Zhong Xuegao's official WeChat

This style of play quickly attracted curious consumers. Since then, Zhong Xuegao's development speed has been like riding a rocket. In 2019, sales exceeded 100 million yuan, and in 2020, online sales once overtook Häagen-Dazs and swept the major sales lists.

And the growth rate is the metric that investors care about the most. Since 2020, there have been more and more consumer product BPs (investment proposals) in investment institutions, and the number of new brands has exceeded 2,000. In the first six months of 2021, more than 300 financings were disclosed in the new consumption track, with more than 50 billion yuan of hot money surging in it, and almost no investment institution did not look at consumption. It was also since then that Zhong Xuegao once regarded listing in Hong Kong as the highest goal.

The days when there was money everywhere made the "magician" Lin Sheng relax. He even feels that the elevator for consumption upgrading has just begun to operate - "Historically, none of the brands that can go through different economic cycles and go all the way down are cost-effective." I do my best, I stand here and don't move, and the standard of living of consumers will slowly rise. ”

The price of being different

Since the establishment of Zhongxuegao, Lin Sheng has been talking about being different.

Judging from the results, the results of the online killing of all sides have given him the confidence to perform "magic" and maintain his personality. But when he leaves his online "domination" and kills in an unfamiliar battlefield, he quickly discovers that staying different is quite costly.

There are generally two production modes in the traditional ice cream industry, ODM is direct OEM production, and OEM is designed by the brand and commissioned by the factory to produce. Zhongxuegao belongs to the third type - only borrows the production workshop of the factory, and the production line is completely independent research and development and independent operation.

Much of this distinction is due to the appearance of Zhongxuegao: tile-like with a paper pattern printed on it. For this "innovation", Zhong Xuegao paid a huge cost.

From blanking, filling filling, shell addition, to the demolding and packaging of ice cream, the production equipment of Zhongxuegao's entire production line is independently designed and purchased. The founding team revealed in a previous interview that Zhong Xuegao spent more money on equipment, technology, and innovation was included in the cost of the supply chain, "and has invested hundreds of millions of dollars in recent years."

For an industry giant, the money may not be a lot, but when it comes to the financial statements of a startup, it means sky-high expenses. Chen Ran compared it with consumer brands that also built their own supply chains, "Yuanqi Forest invested five or six billion yuan in building a factory by itself, and (we) are almost of this magnitude." But at the same price, Yuanqi Forest held the supply chain tightly in its hands, but when it came to Zhongxuegao's side, in principle, these equipment were the assets of the foundry.

Chen Ran was very confused for a while: "If these things don't belong to you, then why invest so much money, or why don't you just build your own factory?" Lin Sheng did not answer this question.

Xu Yifan, a former production employee of Zhongxuegao, believes that this investment is more because of "forced avoidance". In the face of mature foundries, the new brand is destined to be the weak party, and "not being trusted is certain".

When many people in charge of mold factories saw Zhong Xuegao's drawings for the first time, they expressed their doubts - no brand had chosen this appearance before, and the slope and smoothness of the ice cream itself also exceeded the standard of ordinary molds. The problem is from one to the other, the traditional carving and cutting methods make the paper pattern on the top of the ice cream not only unsightly, but also easy to break, for this reason, the R&D department has to choose a new process, "new means another price".

▲ Zhongxuegao's paper-back design. Photo / Zhong Xuegao's official WeChat

Many factories feel that what Zhong Xuegao is doing is like a "fantasy". Naturally, they are reluctant to spend a lot of money on equipment for a small customer, "people say very bluntly, (your) the quantity is too small, not worth it".

In addition to the unique equipment, Zhongxuegao also chose a very special production process - put its own production and quality inspection teams in the foundry. This means that Zhongxuegao's production employees have to dock with the factory director and squad leader of the foundry every day.

In Xu Yifan's memory, this complex production process began with a food safety accident in the early days of the company's establishment - a fly fell into the ice cream produced by the foundry team. After Lin Sheng learned the news, he immediately found the quality director and asked to absolutely eliminate this hidden danger. After communication, Lin Sheng decided to send a special production and quality inspection team, which he believes is "the only way to completely avoid food hygiene problems".

In the adventure of rushing offline, Lin Sheng's "magic" failed to work somewhat. Zhong Xuegao also has to stumble through the roads and pits that traditional ice cream giants have walked, and a consumer brand that started online wants to gain more consumers, and it has to fight in a broader offline market.

In Chen Ran's impression, the difficulty of supply chain transformation is the laying of its own freezers. Up to now, Zhongxuegao has put more than 50,000 freezers into the offline market, and more than 360 million has been spent on laying 60,000 freezers with reference to competitors and Luxue, which will not be a small investment.

▲ Zhongxuegao freezer in the supermarket. Photo / Visual China

What's more, in order to cooperate with the company's sinking strategy, these 50,000 freezers have been put into lower-tier cities, "husband and wife stores". This went directly into the range of Yili, Mengniu, and Luxue, and encountered dense resistance fire.

According to reports, Zhongxuegao dealers in many cities have to face the problem of "choosing one of the two". An ice-cream giant salesman who has been working in the northern provinces for decades made a request to the distributor: "If you sign Zhongxuegao, you won't be us", "Where we have put the freezer, Zhongxuegao is not allowed".

The money is spent like flowing water to the sinking market, but there is little input. Chen Ran felt the anxiety of the management, but she was not surprised by this result. "Can a 13 yuan ice cream really find new users in lower-tier cities?"

Wang Lingrui, who is in charge of Zhongxue's high production business, once felt that many of the company's decisions had increased costs for no reason. But soon, the matter was left behind him. When the epidemic hit in 2020, Zhongxuegao's annual sales increased by 100%, and for Wang Lingrui, the more urgent thing is to recruit people and keep up with the pace of business expansion. At that time, "the new employee had to start working on the day he started, and the workload was immediately saturated."

Silicon Valley, which has given birth to many great companies, believes in an iron law – growth above all else. For startups, a sexy business growth curve can to some extent mask all corporate governance problems. Zhong Xuegao is no exception.

Until the real crisis erupts and everyone has to face reality.

Crisis, disenchantment and backlash

Before the building topples, someone can always detect the faint shaking.

For Xu Yifan, a former production employee of Zhongxuegao, the first suspicion of this company was because the direct leader was fired.

Perhaps because he is used to playing tailwind, or maybe he is too optimistic about the consumption power of users, Zhongxuegao will continue to set a 100% sales growth target in 2022 and issue production tasks based on this standard. However, it was not until August of that year that "the previous year's sales would be sold." To make matters worse, autumn is already waiting at the door, and the off-season for ice cream is here. In the end, official data shows that sales growth in 2022 for the whole year will be less than 50%.

The ice cream that has not been sold can only be scrapped as raw material loss, "in Lin Sheng's view, it is a lot of money." What puzzled Xu Yifan was that the only person who needed to be responsible for this matter turned out to be the direct leader in charge of production, and this goal was obviously set by the sales department. He quickly convinced himself that "the big bosses are not happy, and someone has to take the blame".

However, the important reason for the sluggish sales is inseparable from a crisis of "burning Zhongxuegao" that swept the whole network. In this crisis, which has lasted for many days, consumers have completed a full range of disenchantment to Zhong Xuegao.

At the beginning, the focus of everyone's questioning was on Zhong Xuegao's "why can't it be burned", Lin Sheng was so angry that he angrily called this a black public relations in the circle of friends, "It turns out that there is no money in the hot search of the opponent" and "the traces of the water army are obvious". This statement did not win much understanding or sympathy for him, but made netizens turn over the old accounts - it turned out that the boss of Zhong Xuegao who said "It's so expensive, do you love it" is him, even if this sentence is actually about the attitude of raw material suppliers.

But later, the firepower of public opinion quickly focused on "why is Zhong Xuegao so expensive", which is also a more fatal accusation. Some dairy analysts dismantled the cost composition of each piece of Zhongxuegao basic ice cream, "the average is 3 yuan to 5 yuan", even if you add transportation, cold chain, distributors, retailers' rebates, "it is between 8 yuan and 13 yuan". Compared with Zhong Xuegao's price of 13 yuan to 22 yuan in convenience stores, there is a big gap.

Overnight, Zhong Xuegao became the "ice cream assassin" in the mouth of young people, specializing in lurking in the freezers of other brands to ambush consumers. Although Zhong Xuegao had accelerated the promotion of independent freezers before public opinion surged, the overwhelming scolding still flocked to the four-year-old start-up.

▲ Zhong Xuegao, known as the "Ice Cream Assassin". Photo / Visual China

Lin Sheng had painstakingly played layers of highlights and soft light for Zhong Xuegao before, and he was also slapped in the face and backlashed one by one, and people found that Zhong Xuegao, who was extremely good at marketing, was punished twice before for stepping on the thunder of false propaganda. The said premium red grapes in the core grape growing areas of the Turpan Basin are actually bulk first-grade, and the specially selected Japanese Yabubei tea is actually mixed tea. Even the advertising slogan "without adding a drop of water, pure bovine frankincense" was hammered, and the ingredients of its own products clearly stated that it contained drinking water ingredients.

The huge public opinion took away the hearts of the vast majority of consumers, and also made the dealers who once chased Zhongxuegao frantically brake urgently.

In the second half of 2022, the agent's payment did not come on time as expected. Advance payments are an important part of keeping your company running. According to a number of insiders, starting in 2022, Zhongxuegao's offline revenue will officially exceed online, accounting for about 70% of the total revenue. Like all consumer goods, in order to achieve the sales target, Zhong Xuegao also "presses goods" to the channel through gifts, rebates, etc.

This is an important way for Zhongxuegao to motivate dealers. In principle, the more advance you make, the higher the discount you can get on your products, and the more gifts you can redeem.

When the consumer market is hot, this kind of suppression method is quite effective. Chen Ran has the impression that from 2020 to 2022, "this model has helped Zhong Xuegao draw a beautiful growth curve". Wang Rui, a dealer in Beijing, revealed that during the peak period, he could sell two or three hundred boxes per month, with a gross profit margin of more than 50%, and "the profit of selling a Zhongxuegao is worth selling a hundred small puddings."

But all this has a premise - Zhongxue High Energy has always maintained a very high popularity and dynamic sales rate. Unfortunately, the "Burning Zhong Xuegao" incident in the summer of 2022 became the force to topple this domino deck. Since then, Zhong Xuegao's sales have plummeted. However, because of the advance payment system, the pressure was not directly transmitted to the company's side, and the revenue of that year exceeded the 1 billion mark for the first time.

The building overturned

In everyone's memory, 2022 is the beginning of everything that has taken a turn for the worse.

That's when the affordable product line Sa'Saa was put on the agenda. At the end of 2022, Lin Sheng plans to launch this affordable product of 3.5 yuan a piece, which is the hottest AI concept at the moment. The internal code name "Zhong Xue is not high", was pinned on by Lin Sheng, "thinking that he could use this to make a comeback".

But hopes were quickly dashed. Xu Yifan received instructions to purchase raw materials according to seasonal new products, "only bought a few hundred tons". After that, he never received any orders for additional purchases and production, and "life and death were decided".

Also losing money is the sub-brand Li Da Tang series launched in 2019. Like Zhong Xuegao, Li Datang's path out of the circle also relies on a distinctive appearance, the earliest cat's paw cup, with an orange cat lying lazily on the cup on the packaging. But its sales are just as lazy and not improving. Hundreds of tons of raw materials are purchased every year, and they can't be sold every year.

▲ Li Da orange cat's paw cup. Photo / Li Dacheng's official website WeChat

Many employees believe that since the sales data is so poor, this sub-brand should be closed immediately to stop losses. However, time passed day by day, and Lin Sheng still did not make a decision. In part, this is because no one within the company can really change the founders.

Zhong Xuegao's two co-founders are Lin Sheng's old subordinates when he first started his business in 2004, and they control the core departments - Zhou Bing is responsible for online channels and brand promotion, and Zhuang Yi is responsible for offline channels.

And an employee who is trusted by Lin Sheng is probably like this, the academic background does not have to be outstanding, but to be able to complete the business indicators that Lin Sheng likes, the most important thing is to be 100% recognized and loyal to what Lin Sheng does.

In the documentary "Randian", Lin Sheng told a story that must be achieved. At the beginning of Zhongxuegao's establishment, cash flow was stretched, and "every customer was the father of the gold owner". At that time, the customer suddenly asked the team members to go to Jiaxing, Zhejiang Province for a face-to-face meeting immediately, and the time was limited, so they could only choose to take a taxi. When I finally arrived at the place, I told the driver, "I don't have so much money on me, give me two days, and I will definitely give it to you." ”

Lin Sheng said emotionally that he only learned about this matter after a long time, "He didn't say that he couldn't go because he didn't have any money on him, and he didn't complain (about doing this)."

As a result, most of the time, employees have no choice but to carry out orders. For three or four months every year, the refrigerator in the office will be full of "scrapped" Li Datang, and in order to consume it in time, the employees have to come to one before and after meals.

But the really strong recoil will not gradually become apparent until 2023.

Douyin's best-selling list of ice cream brands in the second quarter of 2023 shows that the market accounts for 13% of the cute market, and Yili and Qiaolezi account for 9% and 7% respectively. Zhong Xuegao accounted for 4%, ranking only seventh. In the same period in 2022, Zhong Xuegao was also the first in the self-broadcast sales and popular list of Douyin ice cream brands.

Offline channels are also not selling, Wang Rui's hoarding of goods can only be piled up in cold storage, and finally lost tens of thousands of dollars before they were all cleared. The data proves this, in the past year, Zhongxue's high market share has experienced a cliff-like decline of more than 50%, "big dealers can't even sell the gifts in their accounts, who will pay and get the goods?" Chen Ran said.

In fact, not only Zhong Xuegao, but many giants also suffered the same blow, and the entire industry fell into a sinking channel. Unilever, which owns the high-end ice cream brand of Cute Duo and Menglong, also described 2023 as "full of challenges" - expensive ice cream will not sell. May to September is the peak sales season for ice cream, and only one-fifth of the top 20 products with sales volume are above 6 yuan, while in 2022, they accounted for nearly half.

The pressure from all sides was finally transmitted to the production process.

Xu Yifan felt that he was the last person to feel the chill. He worked in Zhongxuegao for four years and was in charge of the production of ice cream. Since the beginning of 2023, he has felt that he has become an "idler", and the number of raw materials scheduled has decreased from hundreds to dozens of tons one time at a time, and after September last year, the production line has not moved at all. The factory was also shut down at the same time, and the ice cream factory invested in Shucheng, Anhui Province, only operated for less than half a year, and "it was all yellow".

At this point, all of Zhong Xuegao's ways to save himself seemed to be blocked. Raw material suppliers and foundry owners began to pull banners and "chat with people" at the headquarters, and employees who were owed wages and compensation poured onto social platforms, posting slogans in black on a white background, shouting "Zhong Xuegao pays back".

This is not the first time Zhong Xuegao has been in a dangerous situation. The last time the funding chain was on the verge of breaking was in 2019.

At that time, Lin Sheng made the worst plan in order to ensure cash flow, on the one hand, in order to open source, he went to the primary market to find money, and "met 80 investment companies and listened to 80 NO" in one go. On the other hand, at the beginning of the epidemic, all senior management teams did not pay salaries for four months, "at the worst time, there was only 1 million left in the account".

After the last crisis, Lin Sheng was able to speak calmly about this, proving that he and the company could withstand the pressure. At this point, he can no longer wait for investors who can turn the tide.

A veteran investor in the consumer sector was originally quite modest and polite, but when I asked to talk about Zhong Xuegao, he briefly and firmly expressed his refusal. In the past, a number of investment institutions put it on the company's website as a classic case, and talked about how it will lead to a new era of consumption in various forums. Now, they kept silent about Zhong Xuegao.

In the eyes of one investor, this attitude is not surprising: "After all, who wants to talk about their failed portfolios." ”

▲ Lin Sheng's "Randian" documentary. Picture / Screenshot

disappear

Just a few days ago, we tried to find Lin Sheng.

He replied in the WeChat dialog box that he came to Beijing on a business trip. In response to our request to meet, at first he expressed his willingness to have a conversation, "make an appointment next week" and "contact the day after tomorrow", but when the appointed time came, he disappeared again, did not reply to messages, and the phone was not answered.

Those who know him well are not surprised. "It's not the first time he's probably trying to get away from a situation that's not good for him. But Zhongxuegao's employees and dealers are still trapped in the aftermath of this storm, and they have no escape option.

"The company is no longer good", at the beginning of 2023, Chen Ran came to this conclusion. In her opinion, even if Lin Sheng is sluggish, "I can guess this ending in June (last year)." ”

In an interview with the media a year ago, Lin Sheng mentioned that after experiencing rapid expansion, Zhong Xuegao's organization is becoming more and more bloated. "What was done by one person in three days in 2018 has evolved into three people in 2021, and it may not be possible to do it in five days. ”

Wang Lingrui now thinks back and believes that this is Lin Sheng's "blowing" for layoffs in advance. And the real reason behind it is that the capital chain is broken. Sure enough, almost at the same time, Zhong Xuegao started the largest layoff and the largest number of departments involved since its establishment. In most people's minds, the proportion of layoffs this time was "at least 40%", and at that time, including the offline sales team, the number of employees in Zhongxuegao was close to 2,000.

And since then, the layoffs have not stopped, "not at all the first batch". In September last year, seeing that the sales season had passed and sales had not improved, the boss said that the next round of financing "didn't even see a shadow". Xu Yifan originally planned to leave his job himself, but his direct supervisor told him to wait a few more days, and the next round of layoffs would begin immediately. What surprised him even more was that the name of the leader was also written on the layoff list, "He said, just take the compensation and go together."

But this plan ultimately fell through. Those employees who asked for wages on social platforms claimed that they were laid off by Zhong Xuegao in July last year, and that the compensation and wages agreed to be paid at the end of the year have not been received until now. Many employees are already applying for labor arbitration. Xu Yifan and his leaders naturally didn't get a penny. He revealed that after the largest layoff in April, the rest of the employees basically did not compensate, "the company really has no money."

By this year, there was no false hope. HR will tell employees directly in layoff conversations that there is no compensation. Employees don't have any bargaining chips because HR doesn't need them to sign the termination agreement. "It has reached the point where there are too many lice and you don't have to bite, and you don't have to worry about debts too much. Chen Ran said.

Along with the employees, offline dealers have also experienced drastic changes. At one time, at its peak, Zhongxuegao had a total of nearly 600 dealers across the country, covering more than 200 cities across the country. And in 2024, the theme of the dealer conference has quietly become: the darkest hour, walking towards the light.

At the conference, Lin Sheng admitted Zhong Xuegao's difficulties at this stage, and at the same time announced that he would "only do business of 300 million yuan" this year. In the face of headwinds, Lin Sheng's speech is still full of blood. "In fact, when we have money, we have no experience in doing business, and we have indeed taken some detours, but when we have no money, we are particularly experienced. ”

He also emphasized the appeal of Zhongxue's new products, "The new ice cream products in 2024 are the best in my heart, they are flesh and blood, and the competitiveness is strong. But in fact, until this moment, the fourth apple popsicle, apple maple cinnamon ice cream, and pink coconut ice cream are still only in the PR press release.

There are still many people who want to believe that Lin Sheng is a "person who wants to get things done". At the meeting, a distributor repeatedly expressed his trust in Zhongxuegao's team, "First of all, no matter how to save money and reduce costs, they will resolutely not cut the cost of quality control and product research and development." You can see in them the dedication of a team to do things. He believes the team has a deep "genuine affection" for the brand.

In the entrepreneurial circle for many years, Chen Ran has seen many "entrepreneurial actors" who aim to maximize personal interests, and she once judged that Lin Sheng is different from them, "he should have a bigger vision".

When the consumer market was hot, Lin Sheng said with a smile in an interview with Ai Wen, "God willing, let Zhong Xuegao live until 10 years later, so that a generation of people can say that I grew up eating Zhong Xuegao."

In Lin Sheng's previous plan, he also hoped that he would retire within ten years, and Zhong Xuegao would be able to operate well even if he left him. But in the end, it backfired, Lin Sheng's "magic" disappeared, Zhong Xuegao was beaten back to his original shape, and consumption upgrades and hot money on the track have become a page in history. Such a story is not the first, and it must not be the last.

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