Methodology for Industry Convergence of the Internet
Editor’s Note: This article is from WeChat public account “Old lining (ID: fengqitalk), the author is old.
01 The “Internet Spring” of the Industrial Internet
The biggest difference between Internet companies and traditional enterprises may be the speed of development. From start-up to listing, they have been fighting for 34 months, interesting headlines for 27 months, and Ruixing coffee for 17 months. Such as the unicorn, the company’s valuation speed is also like the rocket is far more than the traditional enterprise.
Behind the blindfolded, most Internet products are actually transplanted from existing foreign models, so those companies that are listed quickly are basically catering to the US IPO rules. Entrepreneurs are very clever, and they have developed a variety of business based on traffic distribution by obtaining huge financing from the standard “storytelling” of foreign countries, then massaging the market with high cost, obtaining monopoly traffic status and pricing power. Mode, this kind of monetization routine has been tried and tested.
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The current active traffic of mobile Internet has begun to grow negatively. In order to create more traffic distribution scenarios, Internet growth hackers have dig deep into the sinking market from the mainstream market, from traditional e-commerce to social e-commerce, and then Coupled with the aunt economy and the new middle class, the value of the flow has been dug up, and now the fathers have no surplus, and the weaning children who did not grab the pricing power began to show up in an endless stream.
Without the support of capital, no matter how many hackers grow, the operational data will drop in minutes, and the myth that the color of the button can grow is the self-deception of the typical fox. The first market in the market with money, in the end is still “scraping”, winning at the starting point does not necessarily win the last, the money-burning model products are facing various aftereffects, and those grassroots products that have been discouraged from the rough mode, habit The harsh living environment of the flow gap, in this cold winter, but a dazzling vitality.
Internet thinking plus industrial hardcore, starting from the new power of the car, the speed is no longer exclusive to Internet companies, and now Internet traffic has also dried up, from new energy to new retail, new manufacturing, new finance, the Internet began to flood into the industry In all aspects, cloud computing has penetrated the Internet + industry, AI has married the industry + Internet, and the two-way integration of technology and industry has become the development path of mainstreamization in the future.
02 Speed trend of economies of scale
All companies are pursuing scale, because scale-up can not only reduce costs, but also enhance competitiveness. The most typical is Amazon’s flywheel cycle. The better the experience – the more traffic – the more sellers – The more SKUs – the better the experience, the bigger the scale, the more advantageous, the economies of scale of the flywheel cycle is not just the Internet, it is suitable for all enterprises.
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1. Internal scale economy, Internet products are mostly similar to Amazon. There are flywheel cycles. In fact, traditional industries are also the same. For example, in manufacturing, the larger the scale of production – the finer the division of labor – the higher the worker proficiency – the lower the cost – the more the quality High-scale, scale-up economies that generate economies of scale have long been a competitive advantage of traditional industries.
2. External scale economy, also called scope economy, related enterprise mergers and acquisitions, multi-product synergy can bring about lower average cost and improved service quality. Mergers and acquisitions can not only reduce costs, but also increase market share, integrated services, taxation, diversification, resource sharing, and centralized procurement. Whether traditional enterprises or Internet companies, as long as they develop to a certain scale, mergers and acquisitions are nothing. Fresh things.
3. Information scale economy, also called network effect. This exclusive information product, especially the Internet, realizes long-distance communication, making information more symmetrical, so the commercial speed is faster than offline. The network effect is the main reason for the burning of money by the major Internet products, and it is also the core logic that has contributed to the rapid development of the current industry Internet.
QuestMobile’s latest report data shows that the number of mobile Internet users in the second quarter of this year has not risen and fallen, and the monthly live growth has increased by 2 million. Even if the traffic has been dug into the sinking market and the aunt economy outside the 5 ring, the Internet big plate is still starting to decline. This is for the application market of 4.5 million apps, which means that the layoffs and bankruptcies are just the beginning.
Traditional industries are still building business models around information asymmetry. Although they have been hit by some technology and capital in recent years, the competitive environment is still opaque, and there is no single industry structure. Many industries have market Large and scattered, the largest company’s share does not exceed single digits, such as the home improvement market, about 4 trillion output value, the market capitalization of the largest home improvement enterprises accounted for less than 1%.
The exhaustion of traffic has caused the growth strategies of Internet giants to shift. The industry side of sea and huge market capacity is the inevitable choice for growth, through cloud computing and IOT strong behavior.The industry has implanted network effects, and the once-famous industry “straight men” were forced to compete with Internet hackers. It is certain that major industries are about to usher in rapid development. The cloud computing infiltration of SaaS and online education has been brutal. Growing, light assets of Ruixun coffee and new forces in the car are also in a strong spoiler, saying that the byte is also ready to sell hammer mobile phones…
03 The value of network effects “original sin”
The network effect brings transparent competition, and it also brings the original sin of the Internet’s overnight riches. The famous Metcalfe’s law, the value of a network system is equal to the square of the number of nodes (users) in the system, so the increase in the number of users, the value of the product will increase exponentially, for those Internet products with network effects , to maximize financial returns, not to buy assets, but to buy users.
Early mobile phones, telephones, media, Internet, the current Internet, retail, manufacturing, health, financial Internet of things, network effect theory supports the core value proposition of the rapid development of major industries, capital boosted, born to burn money This impetuous market competition model, also for traffic growth, also includes hacking strategies such as pornography, manuscripts, counterfeit drugs, fakes, fake brands, fake news, and trafficking anxiety.
The critical mass of the network effect, when the user level has not reached the critical value, the product may not be worth the time, but as long as the user reaches a certain threshold, no matter how unpleasant the product grows, the user value will exceed the customer. cost. The threshold of user volume can be understood as the number of seed users whose products have achieved commercialization ability. For example, social products, the amount of early users is very small, and the data of all aspects of the dating experience cannot even meet the basic needs, but as long as the threshold is reached, each additional user is added. Product experience and value will grow exponentially.
The smaller the threshold, the greater the product network effect, so most of the Internet products start from a small niche market. For example, FaceBook originally started from a school socialization, and now it has developed into a global social network; Amazon was only Selling books, and now it has grown to sell everything; WeChat has only replaced SMS in the early days, and now it has played the role of OS…
Network effects allow product value to grow exponentially as users grow, and can be divided into two categories. One is the platform-based double-sided network effect, such as Amazon’s seller and buyer, Didi’s driver and passenger, one type of user grows, the other type of user experience will be better, the platform side belongs to the typical flywheel cycle; the other Is a direct single-sided network effect, such as KOL and fans,