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First purpose, live for two years

Due to the epidemic, we made a difficult decision of 3.5% off full-time employees for 5 months, core executives taking the lead in 0 salaries for 5 months, and half of the salary in January, all of which were repaid after the epidemic recovered.

I understand the huge living pressure of everyone ’s mortgage, parents ’and children ’s expenses, but from the perspective of the company, the company ’s monthly expenditure now averages 68 million, and our headquarters’ monthly income is basically 60 million to 70 million. In this case, we are profitable in cash. In addition, we now have 326 million cash at the beginning of this year, which should be very sufficient. But we donated 500 million account fees. On the one hand, it helps children trapped in the epidemic to study for free for three months at home, and also allows the company to gain several times the market share in this online education competition, but it will also bring income. Reduction and rising costs.

As a business veteran, I know that living and living well is the first priority. One principle I always adhere to is that you and me can be assured for a long time, but will not be happy in the short term. Because I do often force everyone to work overtime, work day and night, 996 and even 007. But the reason it lasts is that we have always demanded that the money in the account should always be kept for two years. For example, at the beginning of last year, we began to do some personnel optimization and cost reduction, and also removed some 20 million market cost investment and so on.

Assume that by July of this year, we only have 180 million cash on our account. I want to ensure that we will live with 180 million cash in these 24 months. That is to say, we can only lose 7.5 million each month. We must pay the cost. Compression is at most 7.5 million higher than revenue. If we have only 120 million cash at the end of this year, then the monthly loss is 120 million divided by 24 months, and the average loss of less than 5 million per month can be maintained for 2 years. That is to say, the monthly income of 80 million can only spend 85 million.

This is what I define as being able to live for two years. This is our first purpose and violates it. If our headquarters collapses, all of our schools will collapse, so we must ensure that the headquarters does not collapse anyway, even in our very painful circumstances.

Of course for us WuhanHubei and other front-line employees will appropriately receive more subsidies and subsidies.

The salary reduction due to the epidemic is certainly not understood by many people. This is actually a difficult decision and it is very risky.

I did three surveys on salary cuts in about a day or two. The first survey was to communicate with 8 or 9 people from the core management team. We made a phone call for 5 hours, and then held a senior management meeting with 30 or 40 people.

The third meeting survey was a briefing with employees, and executives asked everyone’s real thoughts and situations. The recovered data is very disturbing for a company-under this salary reduction plan, we expect many employees to leave, and in some departments, even more than half of the employees are unwilling to do it. There is a lot of pressure and the staff don’t understand. Why do you think so? Because employees are not aware of the severity, early on, everyone did not predict that the entire industry would be affected so early.

I also understand that this is really hard for everyone to accept. At that time, the survey predicted that the online department and the technology department would be the easiest to go, because the opportunities in the online field have exploded, and people in these two departments have the opportunity to find higher-paying jobs.

So I just used the live broadcast method. At 5 pm on February 13th, I held a live video conference for more than 1,000 employees for up to 2 hours. I talked frankly to everyone about what we are now. Happening.

I have explained in detail the performance of our last year, our future goals, our current cash flow, and if we want to survive under this stressful moment, our company, each of us, and even the entire education industry, What problems are we facing and how do we go about it?

I also tell you that in fact, in the face of the tightening of education policies in the first half of 2019, we have withheld the pressure and finally achieved breakthrough growth. We also dug up the co-founder of the billion-dollar unicorn Chen Guohuan’s goal of fighting with us is 100 billion. But in the face of this year’s epidemic, I must make a ruthless decision for the company to give everyone a pay cut.

No decision is easy and simple, and it is a very painful trade-off. But now, in order to be responsible to the company and the brand, we can only choose strong men to break their wrists. For employees who are willing to accompany the company, we will openly and frankly sign relevant agreements with you. In this epidemic, most of the 1 billion offline institutions in the 600 billion primary and secondary tutoring market in the primary and secondary schools will fall, and we can take over the market gap in the past to achieve a three-fold to five-fold increase. I believe that our company should have the opportunity to achieve 100 billion US dollars in the future.

As a result of the live broadcast, I found that the attitude of the employees changed in a moment, which was completely unexpected to me.

I think the most important thing is that now you want to make a bet, say that you can bet on this company? Some of our employees said we bet on the company to win, while others volunteered to pay their subordinates to pay wages to their subordinates.He said that it was good at this time, and we bought it at a low point, because we issued options at the price two years ago.

We have a technical leader who directly hit 15,000 yuan to one of his backbones, and other department managers provided 300,000 and 100,000 to support the subsidy team.

The high proportion of the most worrying technical department left before. I found that the people who make technology have several characteristics. First of all, they are very rational people. They think that you have spoken the objective situation very frankly. He can measure the future and risks. He has confidence and respect for your company. He will start to analyze the future more rationally. He thinks that your company should be promising, but he is not so panic. Secondly, technology also knows that our data is skyrocketing every day, and the number of users has increased by 400%. Our students ’class hours The number has increased by 800%, which is one reason for a sudden change.

After the current salary reduction plan was implemented, in fact, 90% of employees continued to work.

The benefit of our briefings is that we fully understand everyone’s situation, and finally produce a combined solution. It also includes our formerly well-earned executives who are willing to take the lead in taking out some of the money and subsidize 15% -20% of colleagues who have financial pressure. There are also some core backbones that need to be stabilized, and we will also send some options. We also gave a very popular promise that if the company reached a US $ 3 billion valuation or went public, it would double the compensation for everyone’s delayed salary.

We hope to achieve 20,000 offline stores within three years. Compared with last year, online users will grow more than 5 times this year. Last year we only had 150 million online users. This year we think that the size of our online users should be around 700 million.

But the education industry now has a particularly painful point. Many national policies have a relatively small relationship with us. The first is a loan. As we have no fixed assets and no profit, we cannot get this loan. The second is the return of unemployment insurance last year, with only a few hundred thousand refunded. Third, social security can be postponed for three or four months. Although it can be postponed by several million, it is still necessary to pay by June. The fourth is rent, which is a very large expenditure for business users, that is, our national schools. The rent for a month at the headquarters is one or two million, and the two months saved account for less than 3% of the total monthly expenses of 68 million, which cannot solve the fundamental problem. The fifth is taxes, because there is almost no income, so many taxes are not waived.

We hope that the state can let state-owned banks postpone all office workers’ mortgages for six months until the loan period expires, as the landlords of state-owned enterprises can rent-free. Last year, the bank made 2 trillion yuan in profits, one-third of which came from mortgages. This delayed payment will not bring too much bad debts, so it is a safe measure, but it can help tens of millions of stressful families, and it also helps a lot. enterprise.

The education industry will be reshuffled, which will obviously show polarization in the future

China has a total of 3 trillion education market, of which 600 billion is the tutoring and tutoring market for primary and secondary school students, while Chinese online education institutions only account for 7% of this 600 billion, or about 40 billion. Of the 560 billion offline market, the top ten educational institutions combined accounted for less than 10% of the market, and the other 90% were divided by 1 million educational institutions. Generally speaking, in an industry field, the top ten brands account for 80% of the market share, and the education industry has not yet completed the concentration.

The education industry reshuffle brought by this epidemic may cause 60% of non-branded educational institutions to fail. Demand in the market will flow into educational institutions that can be sustained and have online and offline amphibious functions.

If the epidemic is over in the next five months and the education market is picking up, the combination of online and offline models will surely usher in an outbreak. The compatibility between offline and online is also the core competence of future education companies.

It is expected that by the end of 2020, the online market share in the education market is expected to increase from 7% to about 20%, bringing a three-fold increase. If offline educational institutions do not switch online, they will be overwhelmed by parental fees, zero income, and fixed expenses.

Despite a lot of positives in the industry, not all companies have acted. The first two days I saw a surprising set of data: 1% of the nation ’s offline schools, 20% of the schools have transferred 50% of their students to online, and another 7% of the schools have 20 More than% of students are online. In other words, 73% of schools remain indifferent, and the proportion of subsequent eliminations will be very high.

The future of education will definitely show polarization. Because small institutions do have a higher mortality rate, larger institutions are more resistant.

To survive in small and medium-sized educational institutions, the first thing to do is to measure your cash flow. Think of the worst case first. How long can you live with zero income? If the second cost cannot be reduced, how many months can you live?

In addition, I also recommend that small and medium-sized educational institutions try to find cooperation with big-name educational institutions. I think there are generally two main forms. One is to use the system provided by a large institution to transfer the offline lessons of the teacher of the institution to the online. The other is to become a partner of a company like ours and transfer products and brands to our squirrel AI system.

The education market under the epidemic situation has ushered in a stage of “crowding bubbles”, and the sooner it can change, the sooner it can spring.