The end of entrepreneurship has become "height limit", especially for some new consumer brand founders.
"Selling sweet potatoes also has to pay off the debt of selling ice cream!" This sentence is quite sad, but the person who said it has also been beautiful. He is Lin Sheng, the founder of Zhongxuegao. Recently, Zhong Xuegao has been on the hot search again. Lin Sheng, the founder of Zhongxuegao, took a green train to Beijing overnight after being restricted from high consumption. Subsequently, #钟薛高创始人称卖红薯也要把债还上#的话题冲上微博等社交媒体的热搜. Lin Sheng posted a response: "Unexpectedly, a promise between my friends appeared on Weibo's hot search. Although Zhong Xuegao is currently facing many difficulties, our determination to strive for change and take responsibility has not changed. Make every effort to shoulder the responsibility of employees, partners and society!"
In fact, the founders of consumer brands are restricted from high consumption, and Zhong Xuegao is just the tip of the iceberg. As the earliest founder of UCAR and the originator of Luckin Coffee, Lu Zhengyao was listed as the person to be executed due to financial problems, etc., which once caused heated discussions and was "restricted".
Behind the "height limit" of these new consumer entrepreneurs, most of them are due to the fact that the founders were more aggressive in the early days and ran too "fast" with the team, and they were also inseparable from the "natural disaster" - the so-called general trend of the industry and the influence of the ebb and flow of the track. Some of the founders and consumer companies that have been "limited in height" are also being beaten back to their "original shape".
Those consumer brand entrepreneurs who are "limited in height".
The new No. 1 Internet celebrity and ice cream Hermes Zhong Xuegao, who was once labeled with a high-priced Ecuadorian pink diamond ice cream of 66 yuan, still ushered in the darkest moment. Lin Sheng, the founder of Zhongxuegao, took a green train to Beijing overnight after being restricted from high consumption, and still came to the point of "selling sweet potatoes also has to pay off debts".
Tianyancha shows that recently, Zhongxuegao Food (Shanghai) Co., Ltd. has added information on the person subject to execution, with an enforcement target of more than 9.01 million yuan, and the enforcement court is the People's Court of Danyang City, Zhenjiang City, Jiangsu Province.
In March 2024, Zhongxuegao Food (Shanghai) Co., Ltd. and its legal representative, Lin Sheng, were restricted from high consumption due to failure to fulfill the payment obligations determined by the effective legal documents. Among them, the arbitration case involves Zhou, Pei, etc., and the enforcement court is the People's Court of Jiading District, Shanghai. The related case process shows that the company has previously become the person subject to execution, and the execution target is 818,100 yuan.
Zhongxuegao Food (Shanghai) Co., Ltd. also added 3 new equity freezing information, involving three of its companies, with equity freezing amounts of 20 million yuan, 10 million yuan and 5 million yuan respectively, and the freezing period of the equity will be until February 5, 2027, and the enforcement court is the Xiuzhou District People's Court of Jiaxing City, Zhejiang. In January this year, the Tianyancha APP showed that Zhongxuegao Food (Shanghai) Co., Ltd. added a new freezing information with an equity amount of 1 million yuan. In December 2022, Zhong Xuegao has added 4 new equity freezes, with a cumulative amount of nearly 5 million yuan.
In March 2018, Zhongxuegao was established in Shanghai. Within one year, it has successively received angel round financing with the participation of Zhen Fund and Frees Capital, as well as Pre-A round of financing with the participation of Tiantu Capital and Toutou Shidao. However, after entering 2023, there are controversies about ice cream assassins and high temperatures. According to public reports, at the "2024 Zhongxuegao National Dealer Conference" held at the end of 2023, the eight characters "Darkest Moment, Walking to the Light" appeared on the background board. Lin Sheng, who has entered 2024, is full of confidence in Zhong Xuegao's future, but he is indeed welcoming the arrival of the darkest moment.
Similarly, coincidentally, another popular player in the new consumption track, Lu Zhengyao, the largest angel investor of Luckin Coffee, is also experiencing "being restricted".
Tianyancha APP shows that due to the failure to fulfill the payment obligations determined by effective legal documents, a new consumption restriction order has recently been added under Lu Zhengyao's name, involving domestic non-foreign-related arbitration award cases, and the enforcement court is Beijing No. 3 Intermediate People's Court. The case process information shows that in January this year, Lu Zhengyao was forced to pay more than 7.81 million yuan for this case. Tianyancha risk information shows that Lu Zhengyao also has a number of case information related to many companies such as Shenzhou Youche, and the unfulfilled amount exceeds 2.5 billion yuan. And there are also multiple spending restriction orders under his name.
And in April 2024, it was also reported that Lu Zhengyao and his partners were forced to pay nearly 1.9 billion yuan. Regarding the above enforcement information, Cudi Coffee responded that the founder Lu Zhengyao was forced to hold on to 1.89 billion: there is no impact, everything is normal. And on April 7, Cudi Coffee's first store in the United States just opened in Hawaii.
However, judging from the public execution information, a series of previous cases against Lu Zhengyao were mostly related to UCAR. On June 22, 2020, a bank led by Credit Suisse Group AG won a court order to dissolve an entity controlled by Luk's family to recover more than $300 million in outstanding debt. In March 2021, Lu Zhengyao was frozen by the Beijing First Intermediate People's Court for 270 million yuan of UCAR's equity in his name, and the freezing period is March 2024.
Since then, there has been news that Lu Zhengyao has been executed by the court every year. From June 2021 to the recently exposed execution information, Lu Zhengyao's execution money is about 3 billion yuan, and the subject cases are basically related to Shenzhou Youche and the later entrepreneurial projects Quxiaomian and Tongue Technology. From more than 3 billion applications at the peak to less than 1.1 billion today. However, Lu's total debt is decreasing.
Similarly, as the founder of a young new consumer brand, there is also a new Chinese baking brand Hutou Bureau.
Shanghai Wanwu Youxiang Catering Management Co., Ltd., the operating entity of Hutou Bureau, was executed three times in 10 days this year, with a total amount of more than 3.32 million yuan. It is understood that Hutou Bureau was involved in a total of 125 cases as a defendant, with a total amount of frozen equity of about 30.95 million yuan. The company and its founder, Hu Ting, have been included in the list of dishonest persons subject to execution due to their failure to fulfill the execution amount, and high consumption has been restricted.
At the same time, Tiger Head is now lacking liquidity, defaulting on supplier payments and employee salaries, and closing a large number of stores. It is even more difficult for the Tiger Head Bureau to obtain equity or debt financing.
Hu Ting, the founder and CEO of Hutou Bureau, used to work for 21Cake, a baking brand in Shanghai, and participated in the establishment of a chain of dessert stores. In 2019, Hu Ting founded Hutou Bureau in Shanghai, setting a record of the highest single-store revenue of 1.27 million yuan in a single month, and its investors include GGV Jiyuan Capital, Tiger Global Fund, Sequoia China, IDG Capital These star camps, and its valuation was once as high as 1.5 billion yuan.
A few years earlier, in the field of large consumption, many entrepreneurs were issued a "consumption restriction order" by the court because their debts were not repaid, or they were included in the list of dishonest judgment debtors of the court.
For example, Huang Taiji, the earliest representative of Internet celebrity catering, has raised more than 300 million yuan before and after, with a valuation of 2.5 billion. As the first generation of phenomenal "Internet celebrity catering" founder He Chang, he integrated Internet thinking into catering and created a high-priced "Hermes in the pancake industry", and then also made an e-cigarette brand Laimi, but failed successively. According to media reports, in March this year, He Chang posted a comment on the circle of friends that he was limited in height and could not fly to Changsha to teach, so he could only choose to drive 1,500 kilometers from Beijing to Changsha.
Founded in 1992, Zhu Xinli, the founder of Huiyuan Juice, has been listed by relevant courts as a list of restricted high consumption and dishonest executors many times since 2019, and China Deyuan Capital (Hong Kong) Co., Ltd. (hereinafter referred to as Deyuan Capital), which is the authorized representative, has been seized by the court, and 4.1 billion yuan of assets have been frozen. Zhu Yantong, the legal representative of Huiyuan Juice, was even restricted 130 times.
In 2007, Huiyuan Juice was listed on the Hong Kong Stock Exchange, setting a record for the largest IPO on the Hong Kong Stock Exchange that year.
In addition, Dai Wei, CEO of OFO, who defaulted on the deposit, was issued a "consumption restriction order". Luo Yonghao of Hammer Technology was issued a "consumption restriction order" by the court, and Luo Yonghao published "Confessions of an "old Lai" CEO", saying that "you have to pay back the money for performing arts". Jiang Peizhen, the founder of Golden Throat Throat, has also been on the list of dishonest judgment debtors because of tens of millions of yuan in arrears in advertising fees.
Is it a "natural disaster" or a "man-made disaster"?
Real business stories have shown that the reason why the founders of these consumer brands have come to the point of "being limited in height" is, on the one hand, due to the "man-made disaster" that the founders led the team to run too "fast".
Lin Sheng, the founder of Zhongxuegao, once reflected that many problems are caused by "fast", and these problems could have been solved little by little, waiting for the market and waiting for consumers......
Lin Sheng, the founder of Zhongxuegao, said in an interview in 2023, "We reflect on the reason why Zhongxuegao runs too fast and sinks too fast. Sinking quickly is actually a double-edged sword. Normally, a product in the first-line market to a lot of people like, and then slowly go to the second-line, the second-line information comes from the first-line, the acceptance process is relatively smooth, and then step by step down, to the third, fourth and fifth lines. ”
He realized, "Zhong Xuegao has only been offline for about three years, and almost all prefecture-level cities in the country have Zhong Xuegao. This means that there is distribution, and the distribution network of dealers in prefecture-level cities will involve the county, which is too fast, and the entire fourth- and fifth-tier market is actually not ready to undertake. When the market is not fully prepared, it amplifies this incomprehension. Taken together, controversy is inevitable. Without proper communication, the larger market is not fully prepared. ”
For the founder of Zhongxuegao to be "limited in height" and frozen in equity, the most direct reason behind it is also that the high-priced ice cream products that focus on marketing and pursue brand premiums cannot be sold, and Zhongxuegao's factory is even suspended, cash flow problems occur, and the capital chain begins to break. dropped from 60 yuan to 2.5 yuan, and the topic of Zhong Xue's high price also rushed to the hot search some time ago.
Coincidentally, another popular player in the new consumption track, Luckin Coffee, was also "too fast" in the early days, and after the business of high financing, rapid expansion, and capital operation, Lu Zhengyao was controversial for financial fraud.
The current defeat of the Tiger Head Game also has the reason that it is "too fast". In 2019, the Tiger Head Bureau was established. In 2021, it will be blessed by capital one after another, so it will accelerate the "horse race" and expand against the trend. In July 2021, Hutou Bureau only had less than 10 stores in Changsha and Guangzhou, and by 2022, the number of stores once exceeded 80.
2022 is the fastest year for Hutou Bureau to open a store, but at the end of that year, Hutou Bureau was exposed to wage arrears, and in the spring of the next year, there was news of closure and layoffs. In the early stage of capital support, Hutou Bureau did not pay attention to the construction of the store model, which also implied that it would eventually be in trouble.
He Chang, the founder of Huang Taiji, publicly said in a recent interview with the media, "Looking back today, I may have made the mistake of making a strategic rash, which is a bit of an afterthought." ”
Although he still doesn't think that diversity is Huang Taiji's fatal wound, where did he lose? He admits that the problem is still in himself, the cognitive level is not enough, he sees the short-term benefits, but ignores the future space, so to do business to seek big, but also to seek a long time, and the long-term relationship lies in the coupling relationship with others.
On the other hand, after experiencing a crazy expansion of the horse race, the new consumption track is no longer hot, and the founders of these companies are also in the overall industry downturn to test the impact of this "natural disaster".
As we all know, in 2021, new consumption tracks such as ramen, coffee, new roasting, and low-alcohol liquor are all popular areas where capital is crazy to enter the game and startups are piling up. But after 2022, this outlet will be shattered and capital will leave the market.
For brands, the most direct impact of the cooling of the track is that if the head brand is in a state of accelerated expansion, most of the brand founders will not be able to wait for investors to turn the tide after the funds are broken. At that time, the investment community had already fled the new consumption track, and large-scale financing was almost extinct. With consumers becoming more rational in their pursuit of cost performance, the marketing routines that new consumer brands once made a fortune are no longer king.
To make a new brand, it is to open up the imagination space for the future, at least 3-5 years of long-term investment, do not look at the short-term effect, it is easy to say, but the actual operation is difficult, and if you are not careful, you will be "limited in height", become the person to be executed, and be beaten back to the "original shape".
Some founders have also said that in order to start a business, they have all their belongings and are restricted from consumption, and the failure of entrepreneurship is even worse. In other words, the outside world should probably be more tolerant of entrepreneurial failures.
After the excitement, entrepreneurs enter the stage of rational development. When the tide goes out, you can see who's swimming naked. It seems that the 2024 consumer market is a bit depressed, but in fact, many companies still want to play new cards. For the new brand, it has to have both strength and determination to persist to the end. (This article was first published on Titanium Media APP, author | Liu Dafang, editor - Fang Yu)