I, the entrepreneur after 90, the Tencent Department of Zhejiang University, has received investment of tens of millions of yuan from the first-line VC. Two years after starting a business, I ended up shutting down a company that was so painstakingly founded.
Editor’s note: The author of this article Chen Zhuoquan Charge, CEO of Super Energy, author’s personal WeChat ID:zhuo767028.
Write it first:
I, the entrepreneur after 90, the Tencent Department of Zhejiang University, has received investment of tens of millions of yuan from the first-line VC. Two years after starting a business, I ended up shutting down a company that was so painstakingly founded. After a very difficult time, I decided to tell the story of my heart since I started my business. I hope that my story can be used as a guide to help you.
First, develop the least feasible version: verification requirements
In the summer of 2011, I co-founded the first company with several seniors from Zhejiang University, and I have developed a paranoid passion for entrepreneurship. Later, I worked at Tencent and strengthened my belief in starting a business: making products that change the world.
In early 2017, I decided that AR is the future of the world. Observing that an AR camera in the United States is very interesting, I took Tencent’s old colleague and developed a demo on the weekend for two days. I put it on the market and found that the natural growth and the payment rate exceeded expectations. Then all in business!
Two, one day to get the angel round: highly sought after by capital, market and users
In March 2017, I found the investment of Dexun with a demo, and I got the investment intention of Angel Wheel on the same day. At that time, the hot camera app on the market was the main style of cute and beautiful. And we focus on the second, cool two-dimensional special effects style, to differentiate into the AR track.
I quickly recruited the top 5 like-minded colleagues and started crazy overtime. After one month, the 1.0 version was launched, and it was named “Super Energy”. App quickly spread word of mouth in the second-yuan group. After a large number of 00, the excitement indicated that we would like to give us a reward, and even hope to join our company to “change the world.”
In July 2017, Qiming Ventures came to the door, we hit it off, and the company went to the preA round. With the financial blessing of the VC industry, “Super Energy” accelerated the iteration. With good user reputation, we have swept the recommendations and awards of major application markets. I began to receive a large number of first-line VC invitations, spending a few hours a day to communicate with the industry, can not help but be flattered.
This is the highest businessWhen the song rushed forward, although five people crowded the 10-square-meter office all night, they were full of passion and hope. Looking at the praise and encouragement of the users, I once had the illusion and was very close to changing the world.
Three, barely support to the A round: the product meets the ceiling, and the savings are paid for wages
The good times are not long. After reaching 100,000 DAU, “Super Energy” has encountered a growth bottleneck. Due to the technical capabilities of the team, many of the innovative requirements at the time could not be achieved. Not enough exquisite UI interface and special effects, the constant shooting method can only attract young users and cannot expand the audience.
At this time, I faced a bigger challenge: because of the relationship between the VIE (which is a pit, which will be mentioned at the end of the article), the domestic company has no money on the account, and must be merged into the A round as soon as possible. I started to contact VCs that had thrown olive branches before, but they all turned into wait-and-see attitudes because the growth curve was not steep enough and the product shape was single.
Financing lasted for 2 months and Round A was still not completed. In December, the investment institutions have entered the half-year state summarized at the end of the year. Dexun and Qiming encouraged me to wait for the Spring Festival to go to the financing. I hope that in 2018, the super energy industry will be able to break away from the tool form and step out of the circle of the second yuan for the general public.
I realized that the money on the account could not be supported. After the year, I took out all the savings and gave the company the salary and daily operating expenses of the company. After the Spring Festival in 2018, the company completed the A round with difficulty and was able to continue its life. I thought that the winter had passed, but I didn’t expect it to be just the beginning.
Four, fall in front of the B round: pursue high valuation, go to the eternal sorrow
According to previous financing experience, I judge VC to be cautious about telling social stories, and short video community stories led by vibrato are favored by capital. In order to get a higher valuation in the B round, I modified the product strategy: not to do gamification social, to do a short video community in the secondary world.
At the end of May 2018, a community-form App was created called [Flash]. From BIGO, I dig a short video operation master, and quickly set up a short video operation department, subsidized KOL, and guided UGC. The establishment of the community has enabled DAU to finally break through the bottleneck and retain a qualitative leap. In August of the same year, we decided to vigorously promote the market and open the B round of financing.
Because the content of the second wind is easy to catch the eye, and the operation mechanism of user fission is established, [Flash] once broke into the forefront of Appstore, IOur company has once again caused widespread concern in the VC circle.
At this point I made 2 decisions, which now seem fatal:
1. Pursue high valuation, top VC:
Because a number of top VCs expressed good intentions, I refused some of the VC’s verbal offer, and even requested to raise the company’s valuation again in the final stage of the negotiations.
2. Out of marketability:
In order to get the top VC investment, I need to keep the data “long-term good-looking”, so I risked adding millions of promotion fees. At this point, the funds on the account can only support the operation of the company less than half a year.
This triggers a chain reaction:
1. Server error:
The number of users has skyrocketed, and the server has been down for an uninterrupted period of time, up to 24 hours. The front-end display of Caton, the most basic browsing video needs can not be met. When the promotion was most fierce, I took the CTO and tried to change the BUG at home. The technical department’s ability defects are exposed to the utmost.
2. The community is seriously out of control:
A large number of users of different portraits poured in at the same time, causing UGC content (video, comment) to violate the original tonality. Adult users are crazy diss pupils, and the vulgar content on the square has been repeatedly banned. The original core users (after 00) are thus lost a lot.
3. Financing failure:
Because of the team’s technical operation ability and my ability to finance, I was too optimistic, and after the problem occurred, I still did not stop promoting it in time. The decline in the final data made VCs stop following and the company faced bankruptcy.
Five, self-help in the last half year: layoffs, transformation, hematopoiesis
Since November 2018, the company has been laying off and relocating, the team has been reduced from 30 to 10 people, and the office has moved from a few hundred flat-class office buildings to dozens of flats.
The company has been unable to afford the cost of expensive short video community operations. We decided to transform the small program to make money fast, and we hope to first achieve hundreds of thousands of advertising monthly income to support the team. Since the CPA of the third-party ad network is higher than that of Tencent, we have connected to a third party and made nearly 100,000 revenues in the first month. It seems that we have seen hope of living.
Unfortunately, the disaster of entrepreneurship is always coming. It didn’t take long for the ad network to start to lack advertisers, and some even lost the link to settle the advertising fee. The final self-help operation failed.
I used to think about it, or if the team first took out some outsourcing projects to make money, even if it was going to survive, it would be alive. It wasn’t until I talked to several entrepreneurial tutors that I admitted that closing the company was also a good choice. They gave me the same advice – it’s a stupid idea to drag on halfway. After listening to their words, I finally dared to face up to the failure of this venture, and the psychological burden was greatly reduced. For the first time in six months, I could fall asleep safely.
—– I am a dividing line ——
Business Recovery
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For products and operations:
1. Product positioning needs to be differentiated.
Entrepreneurship I originally positioned the second-element video socialization. I started with the shooting tool. The user has various super-powers through AR, gradually builds a parallel world, and uses the immersive experience of the game to socialize online. However, in the frequent communication with VC, I gradually lost my heart, changed the product into a short video community familiar to VCs, and finally lost the features and was eliminated by the market.
2. The product form is not expensive. If it is a tool, please do this tool first.
VC generally believes that the valuation of tool products is not high. It is foolish for many entrepreneurs who are starting the tools to pursue high valuations without brainstorming about community socializing. If you come again, I will first polish the shooting experience of [Ultra-Energy] (soft tool-like app) to the extreme, instead of rushing to transform the community or socialize.
3. The community needs to be raised slowly, but the speed is not up.
The tone and atmosphere of the community can’t be developed overnight. In the early stage of the community, the quality of users should be strictly controlled. Premature promotion will lead to the inflow of non-target users to destroy the community. You should study more excellent communities. If you need an invitation code to register in the early stage, you need to answer a bunch of questions to become a member. These measures are effective in maintaining the purity of the early community.
4.200% Value data
The sooner you build a multi-dimensional data report analysis system, the more you can reduce your decision-making mistakes. For a year and a half, our team only used a basic statistical system such as Union. It was not until the last half of the self-help journey that we were willing to spend human time to build a detailed data analysis system. Only then did we realize that the previous failures were traceable. The data won’t tell you how to do it, but it will tell you how to avoid failure. Companies that value data will not be bad luck. See a beating for details.
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For financing:
1. Don’t care too much about valuation, transfer ratio, and who VC is
Starters are prone to vanity. When they hear the big money from a big-name organization, they will secretly compete. Or worry that the company’s valuation is not high, shareholders’ reputation is not enough, it is difficult to attract talents to join. In fact, before the company develops, you can talk about valuation, talk about proportions, and pick institutions. It is better to get the money first, to develop the business with all your energy, and to have more chips to finance in the future, naturally doing more with less.
If you prematurely count these to cause the company to close down, the valuation is higher, and the shares you hold in your hand are higher, but a string of numbers on the paper.Ps://pic.36krcnd.com/201908/31060642/ks99amc5tse67sft!1200″ data-img-size-val=”720,562″>