Kuaishou Story: Behind the New Normal of Loss

Economic Observer reporter Feng Qingyan Qian Yujuan Zeng Luyao A few days later, on February 5, Kuaishou will be officially listed on the Hong Kong Stock Exchange.

This is an unfinished story to be continued, two founders of post-80s private housing entrepreneurship, after ten years, to create a short video outlet to go public with a market value of more than 400 billion Hong Kong dollars. Under the label of "short video first share", the oversubscription of hundreds of times the enthusiasm of capital, Kuaishou itself deduced a drama of grassroots anchors turning into local tycoons on the platform.

Five years ago, the boring harvest of the five rings outside the sinking user's Kuaishou, was pushed into the spotlight by a "cruel story at the bottom", before the low-key to almost no media interviews of Kuaishou founder and CEO Su Hua, had to open frequent public appearances, interviews to deal with, he had a prediction at the time, five years later, video will replace the text, because it is only a way to carry information.

Five years later, a few days ago, on WeChat night, Zhang Xiaolong, who spoke for a total of 1 hour and 40 minutes and spent more than an hour talking about video numbers, also had a prediction, he believes that video expression will be the main body of the next 10 years.

As a result, the Internet has changed so far, a landmark event has occurred, Douyin and Kuaishou have become the protagonists of the competition for the partners of the 2021 Spring Festival Gala, since 2015 WeChat shake a successful "sneak attack on Alipay's Pearl Harbor", the Spring Festival Gala has become a battlefield for the change of new and old formats of the Internet and the competition of giant strength. On January 27, the exclusive interactive partner of the 2021 CCTV Spring Festival Gala was Hualuo Douyin. Kuaishou did not show weakness, and a marketing war continued beyond the Spring Festival Gala.

Red Packet Wars

TikTok: I'm 2 billion

Kuaishou: I'm with 2.1 billion

Baidu: Crushed to death, 2.2 billion

……

The question is, who's next at the table? The answer is to let the bullets fly first for a while.

Approaching the Spring Festival, the cold winter, the APP in the mobile phone screen, you sing I appeared, is carrying out a smoke-filled conquest, they are aimed at the people holding the mobile phone, with the way of throwing money, summoning new users and traffic.

Anjie is a first-tier city white-collar worker, before not any short video APP user of her, under the publicity of friends, on the evening of January 27, successively downloaded Kuaishou and Douyin two short video APP, she found that, as her friend said, on her mobile phone screen, next to each other Kuaishou and Douyin APP, but because of the "2.1 billion points" and "2 billion points" marked below, it seems that the two are in opposition and smoke.

The local tycoon labels of "2.1 billion points" and "2 billion points" made Anjie can't help but communicate with a friend of ByteDance, who sent Anjie a screenshot of "Douyin became the exclusive red envelope interactive partner of the 2021 Spring Festival Gala" with a special background emphasis, but the amount of red envelopes distributed by Douyin during the live broadcast of the Chinese New Year's Eve Night Spring Festival Gala was 1.2 billion yuan, and obviously in addition, Douyin added 800 million yuan around the Spring Festival marketing, and Kuaishou decisively followed up with 2.1 billion yuan, in order to escort the number of users after the listing. A kuaishou friend said to Anjie, "When the time comes, grab more red envelopes."

Just a day later, Anjie, as a melon eater, "the old melon has not yet been eaten", and the "new melon" has arrived. Under the friend's rush to tell, Anjie downloaded the Baidu APP, and to her surprise, the Baidu APP was marked with "2.2 billion points", just as the above question, Anjie also wanted to know, who else will be next on the table?

Regardless of whether there are people on the table, Baidu's killing is somewhat surprising, in 2019, Baidu once served as an exclusive interactive partner of the Spring Festival Gala, that year came up with 900 million yuan to send red envelopes to Baidu, in the first quarter of 2019 after the Spring Festival, due to the cost expenditure increased nearly double year-on-year, there was the first quarterly loss financial report since the listing, and the retention of new APP users monitored by the International Finance Research and Innovation Center showed that although mobile phone Baidu harvested more than 100 million new users, But by February 9, 2019, the retention rate was only 2%. It can be said that most of the 900 million red envelopes have been adrift.

Similar to Baidu, in 2020, Kuaishou got the exclusive red envelope interaction right of the Spring Festival Gala, distributed 1 billion yuan of red envelopes, 100 million yuan of bonuses, and the Kuaishou DAU (number of daily active users) of the Spring Festival Gala node rushed to more than 300 million, successfully completing the "3K Campaign" goal of Su Huading earlier. However, on January 24, Kuaishou updated the prospectus, and the latest prospectus shows that as of November 2020, Kuaishou's daily active has dropped to 263 million, and its monthly active activity has dropped to 481 million.

In contrast, Douyin's daily active users have exceeded 600 million in August last year. The video number born in early 2020, born on WeChat, in less than a year, has quietly won the score of 200 million + daily active, to achieve this data vibrato used for two years, and Kuaishou used 8 years, more worrying to Su Hua is that Kuaishou's current daily active users are only more than 60 million more than the video number.

Different from Tencent's micro-vision, the video number is menacing, and the outside world has a short video close to the "Three Kingdoms Killing" pattern.

Internet analyst Ge Jia perceives that the growth rate of the entire user scale of short videos is slowing down, and most of the fan traffic of the top ten anchors of his recent browsing on Douyin and Kuaishou has shown a downward trend. From this, Ge Jia even judged that the inflection point of short videos from high speed to low speed is coming.

The Economic Observer reporter inquired about the data of the top ten anchors of Douyin and Kuaishou in 7 days on feigua data and found that the mainstream media, self-media and anchors with goods have a high amount of activity, and the works released every day are stable, but the increase in praise and comments shows a downward trend; stars are relatively free, less articles are published, and praise and comments change with works; the top ten fans have begun to lose fans, or do not publish works.

As of October last year, data from QuestMo-bile and the China Online Audiovisual Program Service Association showed that the industry as a whole MAU (monthly active users) had a scale of 901 million online audiovisual users in China, of which 852 million were in the short video field. The growth rate of short video users has gradually peaked.

Before and after the overall user plate entered the stock market, the user overlap of Kuaishou and Douyin also soared, and the data showed that the user overlap of Douyin and Kuaishou reached 46.5% in May 2019, compared with less than 20% a year ago.

User overlap is high, the cost of customer acquisition is high, in addition to the red envelope war, middle-aged and elderly people are becoming kuaishou and vibrato, video number competition "fragrant food".

In recent years, Liu Kuang, who has focused part of his energy on investing in the primary market of listed companies, believes that the capital story that Kuaishou conquers investors to tell is not how much money it can make, but its future expectations and great imagination, "such as growth, such as user acquisition." ”

The Spring Festival coincides with the listing of Kuaishou shortly after the listing, and Kuaishou must tell a good capital story. Originally, Kuaishou used 2.1 billion to press vibrato, but who knew that a Baidu was killed halfway and crushed Kuaishou with 2.2 billion.

Growth comes first

Su Hua and Cheng Yi laughed at the "Long March Division" a year later, in 2014, Su Hua sent a circle of friends: when I was riding a bicycle, others said that the road was too far away, it was impossible to reach the destination, I ignored it, I changed to a car in the middle of the road; when I drove a car, others said, Boy, further ahead is the cliff, there is no road, I ignored it, I continued to drive forward, drove to the cliff cliff I changed planes, and as a result I went to any place I wanted to go.

Cycling, driving a car, and changing planes is just like the development process of Kuaishou, first the bicycle stage of four employees in the house in 2011, then the car stage of 8,000 employees in four office buildings in 2019, and then the plane stage of 6 buildings and 16,000 employees in Xi'erqi, which will knock on the door of the IPO this year. "Blindfolded and crazy", Ge Jia described today's kuaishou, in his eyes, "technical otaku" Su Hua is very similar to Huang Zheng of Pinduoduo, and belongs to the growth supremacist.

Douyin was born five years later than Kuaishou, but after the Spring Festival in 2018, Douyin online and offline massive delivery, MAU soared rapidly, as of June 2019, the number of monthly active users of Douyin, Kuaishou and B Station reached 486 million, 341 million and 0.98 billion respectively. At that time, Kuaishou proposed the "K3 Campaign" to eliminate Buddhism on June 18 of that year, that is, "to complete 300 million DAUs (daily active users) by 2020". Since then, Kuaishou has started the stage of driving a car from all aspects.

In 2018, the commercialization of Kuaishou achieved from 0 to 1, which made Suhua and other Kuaishou founders have higher expectations, so in early 2019, Kuaishou commercialization put forward the "10 billion goal", as of the middle of 2020, Kuaishou has once again demonstrated its determination to commercialize with a very "big move" organizational structure adjustment.

The reporter saw that Ma Hongbin, the current head of Kuaishou commercialization, was transferred in that adjustment, and the original Yan Qiang became the head of operations. In just over four months after Ma Hongbin arrived, he upgraded the Kuaishou noodles and upgraded the quick orders to magnetic stars to achieve the "circle-breaking" of users' new drainage and public and private domain traffic.

Kuaishou has set more stringent KPIs for employees, and has opened a large-scale spending mode. In August 2019, after launching the Kuaishou Express Edition, getting the exclusive interactive partner of the 2020 Spring Festival Gala, by 2020, reaching a strategic cooperation with JD.com, inviting Jay Chou and other stars to settle in, releasing the creator support plan of the "Kuaishou Cultural Tourism Photosynthetic Plan", investing tens of billions of yuan to build an intelligent cloud big data center, acquiring the YTG e-sports team, and acquiring the licensed payment institution Yilian Payment. By January 2021, 2.8 billion yuan was spent to buy several properties as offices, and 2.1 billion yuan was distributed in Spring Festival red envelopes...

According to the prospectus, sales and marketing expenses were spent 3 billion yuan in the first half of 2019, which increased to nearly 7 billion in the second half of the year, and reached 13.7 billion in the first half of 2020.

This led to a large loss, with An operating profit of 1.1 billion yuan in the first half of 2019 and a loss of 9.4 billion yuan in the first 11 months of 2020.

Kuaishou wrote in the prospectus that its company will continue to increase its investment in sales and marketing expenses and ecosystem in the future, and it expects net losses in 2020 to increase compared with the previous year, and there is no guarantee that it will be profitable in the near future.

Ge Jia was deeply impressed by this sentence, he felt that Kuaishou's too "frank", "few companies directly said that they can not guarantee future profitability", Ge Jia said, Kuaishou said so, one is that the capital market has psychological expectations that it is not profitable, it sees very clearly, and the second is kuaishou's lack of confidence in its future profitability and confidence.

The capital market values a target company in the Internet field, and the primary indicators are the number of active users, the ability to acquire and retain customers, the length and frequency of users, etc., followed by the ability to realize business.

A person involved in playing the new Kuaishou told the Economic Observer that she was looking at the label of Kuaishou's "short video first stock", as well as the relatively large user scale of Kuaishou.

Accustomed to blindfolded fast hands, it is foreseeable that in the future, sales expenses will increase and large and sustained losses will be the norm.

E-commerce stories

Since Kuaishou opened the IPO roadshow, an institutional investor involved in it revealed to reporters that during the institutional roadshow for several days, "the story that Kuaishou told to institutions is still more around e-commerce." ”

The outside world believes that Kuaishou's game business is backed by the big tree of Tencent, which seems to have a more imaginative story to tell, but it has a different understanding from the perspective of investors.

After all, the game is not a short board for Tencent, and there is no need for Kuaishou to supplement, based on this, "what kind of cooperative relationship is between the two sides" in the eyes of this investor, "quite delicate". She also introduced the cooperation between Kuaishou and JD.com during the 618 period in 2020, although it is a combination of their respective advantages, but "as long as it is not a self-built system, there are actually certain risks." ”

Although "e-commerce is not a new story for it (Kuaishou)." But the institutional investor believes that he is already a pioneer in China's short video and live broadcast field, "when telling the story of capital, it is still necessary to tell a story that can be seen." If you talk too early or too far, it will reverse the market value. ”

In the view of Chen Yanlei, the pm3000 manager who focuses on product case analysis, the Kuaishou platform is an equal rights distribution mechanism, that is, every user who arrives at Kuaishou will be assigned equal rights to creators, and any content has a fair exposure opportunity, "that is, 'inclusive policy'".

However, the Kuaishou community, which seems to be equal and inclusive, has produced a large group like Simba because it does not intervene in the process of transferring public domain to private domain traffic. Chen Yanlei explained to reporters that the past Kuaishou equalization mechanism will allow some industrious creators to continuously contact new users, and then win over users through means such as tips, thus saving users into their own "old iron", under the rules and methods, Kuaishou quickly formed a group of head big V with a strong ability to convert platform public domain traffic into their own private domain traffic, "They can even compete with the platform," he said, Simba is one of the typical examples.

Previously, the data obtained by this newspaper when interviewing Simba and his family members was that in 2019, the annual GMV of Kuaishou e-commerce was 40 billion to 45 billion yuan, and the GMV of the Simba family was 13.3 billion yuan, accounting for nearly one-third. In 2020, Kuaishou will impact 250 billion yuan of GMV. In August last year, the top four Kuaishou anchors were all members of the Simba family, and the total number of GMVs was close to half of the Kuaishou TOP30. Simba's target for 2020 is 100 billion. According to the Kuaishou prospectus, as of November last year, the Kuaishou GMV was 332.6 billion.

This also makes the outside world think that Kuaishou cannot do without the Simba family.

At present, the 6 major families of Kuaishou that are widely spread by the outside world are the 818 family of Simba, the Sanda family of Sanda Ge (who was earlier famous for dashan Road), the Zhangmen family of the abbot, the sister-in-law of Zhang Erjie's sister-in-law, the donkey family class of the second donkey, and the 716 family of Pai Pai Qi (the whole network is sealed).

There is a peculiar phenomenon in Kuaishou, the old irons "recognize people do not recognize the platform", the jianghu is strong, before the conflict between Simba and the two donkeys, Simba also called the Board Kuaishou official, "Kuaishou, polish your eyes a little, I can mobilize the resources of the whole country, please use my skills and resources...."..."

The above-mentioned institutional investors also mentioned in an interview with the Economic Observer reporter that the "Simba-style" head anchor and the Simba family live broadcast fake sale that attracted much attention at the end of 2020 brought negative effects to Kuaishou.

"Based on the characteristics of Kuaishou itself, its anchor actually has a little risk, and for the company, this risk is meaningless." The institutional investor said that the reason why Kuaishou wants to build an e-commerce ecosystem is that it does not want to tie the future to one or two head anchors.

In fact, with the emergence of commercial products such as vermicelli and magnetic star, Chen Yanlei believes that Kuaishou is trying to regain control of powder and exposure and redistribute private traffic. In his view, it is precisely this kind of "power grabbing and 'hitting the landlord' behavior that affects the daily life of Kuaishou 'Old Iron'." ”

Even if it brings losses, Chen Yanlei recognizes that Kuaishou "risks high-speed overturning" and the organizational structure adjustments made, in his view, the transformation will inevitably go through a painful period, and Kuaishou "can only do this" in order to achieve the goal of commercialization.

In the Kuaishou updated prospectus, it is also shown that the total amount of e-commerce transactions in the first 11 months of 2020 was 332.68 billion yuan, and the sales of the entire Simba family in the first 11 months of 2020 before being investigated, the cumulative GMV was about 20.8 billion, which also reflected the realization of Kuaishou's e-commerce and could not be tightly bound to one or two head anchors.

De-labeling

Since a "Cruel Story of the Bottom" burst the circle of friends in 2016, kuaishou's earthy label has lingered for a long time.

Chen Yanlei complained, "After the revision of Kuaishou 8.0, the community attributes have been further weakened, and it is more and more like vibrato." However, he feels that through its accurate algorithm and recommendation, Douyin has achieved thousands of faces, and under the premise of content protection, its interaction method is more concise, "The commercialization ability of Douyin is stronger, and there is still a gap in Kuaishou." ”

Compared with Douyin, whether it is the ability to monetize advertising or the ability to obtain traffic to distribution, Kuaishou is relatively weak.

Kuaishou's advertising has become weak. "Whether the data is public or not, the comparison results must be like this." Liu Kuang analyzed, "The overall user scale and user level of Kuaishou are inferior to Douyin, which makes advertisers tend to choose the latter." ”

One of the problems that Kuaishou must solve is that the nearly 300 million sinking market users on the platform cannot receive more ads, so what do they rely on to monetize? "It must be driven by e-commerce." Liu Kuang said that even if Kuaishou's users are mostly in the sinking market, based on the road of e-commerce, it is "impossible to become the second Pinduoduo" in the future, but it may become a "new pole" of short video live e-commerce.

After the revision of Kuaishou 8.0 strengthened the recommendation, invited Jay Chou, Yang Mi and other star lineups to settle in, Ge Jia believes that Kuaishou is trying to break the circle to users in first- and second-tier cities, but this difficulty is obvious, there have been no successful cases before, and Pinduoduo, which is also defined as a sinking user APP, has spent a lot of effort, and still has not faded the inherent impression in the eyes of the outside world, and xiaomi, which previously started by cost performance, has also been blocked from high-end, and the brand premium ability is poor.

Cui Lili, executive director of the E-commerce Research Institute of Shanghai University of Finance and Economics, told the Economic Observer that on the basis of Kuaishou has formed its own core user groups and usage habits, imitating some practices of Douyin is not only more difficult to attract new users, but also may lead to the loss of some users...

Cui Lili believes that this method is not a good policy in the long run. Better should be to adjust the weight of some indicators on the basis of their own existing rules, or try to introduce a multi-pole anchor pk mechanism on the basis of popular content themes, that is, under the same theme, introduce several anchors with similar strength to do horse racing mechanism.

The above-mentioned institutional investors also do not shy away from mentioning that there is a bottleneck in the traffic growth of Kuaishou, but "this problem is not only facing Kuaishou, a group of platform-based Internet and mobile Internet companies in China are facing this problem, even Pinduoduo is no exception, and the speed of customer acquisition is relatively slow." ”

In her view, the next step for each platform to play is "definitely not the growth card of traffic", and the PK contest will be reflected in "how to make better profits on existing traffic and better pass the business model." Therefore, putting aside the common problems, she believes that Kuaishou itself has a lot to do in the construction of the e-commerce ecosystem, such as the supply chain system and the self-construction of the transaction closed loop.

Cui Lili said that there is still a certain space for the market of customers below the third line targeted by Kuaishou, and the earthy taste is not a problem, as long as it is conducive to maintaining the stickiness of the customer group in this part of the market segment. The key lies in how to continue to tap the needs and consumption potential of the customer base.

After the Kuaishou IPO, under the heat of market attention, "its next growth point will certainly not continue to focus on the content and short video business level", from its entire e-commerce ecology, "how to do some acquisitions or investments in the future, to make this ecosystem stronger is the key." The above-mentioned institutional investors said.

Cui Lili sees that the decentralized traffic mechanism of Kuaishou can enhance stickiness to a certain extent, but it will also lack endorsement in the process of e-commerce monetization, which can easily lead to problems. In the future, how to strengthen the construction of capabilities and mechanisms in the construction of e-commerce supply chain should be more important, and how to form a harmonious and symbiotic ecology of empowerment and constraints with anchors is also quite critical.

In addition to the power of capital, Chen Yanlei feels that the key is to see how the core management of Kuaishou thinks and polishes products and services. He said in terms of the current layout of Kuaishou, such as the distribution library (good thing alliance), support anchors, back-end supply chains, services, tools, performance, etc., can see Kuaishou's layout in establishing a healthy e-commerce ecology, plus the traffic foundation, "cooperation with Tencent also has a certain traffic support", which makes him feel that Kuaishou has certain potential.

Different from the previous era of ali, Tencent and other giants, "everyone will often pay attention to how they invest and lay out the ecology", the above investors told reporters, like for unicorns in the second echelon like Kuaishou, if the market performs well after the IPO, "it will have more sufficient funds to extend outward." ”

(At the request of the interviewee, Anjie is a pseudonym)

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