The essence of the Internet winter is the collapse of the loser economy

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After the wave of mass entrepreneurship and innovation, especially since the second half of the year, the industry leaders in many sub-sectors have merged one after another, and the rest have either disappeared silently in the Internet or sought shelter under big trees and become appendages of large companies. Lei Jun (Weibo) once lamented: "The market was crazy hot in the first half of the year and crazy cold in the second half." I think this is also the personal experience of most Internet companies.

If we must connect the domestic Internet world this year with a line, then the bloody plot of enemies falling in love and becoming lovers can be regarded as one end of this line, and the other end is the "capital winter theory". Under the guidance of this line, the Internet seems to have really arrived in winter. This chill, with the impact of the sluggish real economy, began to show signs as early as mid-year this year, and then began to spread to the Internet due to the sharp fluctuations in the stock market.

Only BAT truly masters the "Diaosi economy"

According to incomplete statistics, in the most mainstream O2O industry alone, more than 20 catering delivery projects have been closed, nearly 10 community O2O projects have declared bankruptcy, and nearly 20 entrepreneurial projects in the automotive and travel fields have died. Catering delivery, travel, automobiles, beauty, tourism, and education have become the hardest hit areas. And these failed startups have one thing in common, that is, blindly believing in the Diaosi economy. Free and subsidized services are their main means of acquiring users and markets. This single method often cannot stand the test of the market.

In fact, in the 20 years of the wild growth of the Chinese Internet, the Chinese Internet industry has always relied on free and low-price cards to get started. In recent years, Internet entrepreneurship has become popular, and free services can no longer meet the needs of Internet companies to seize the market, so various subsidy wars are in full swing. Under this circumstance, the Diaosi economy began to explode. Even Xiaomi, a hardware manufacturer, believes in the Diaosi economy, and its success has filled everyone with naive fantasies about the Diaosi economy, but many people have overlooked whether Xiaomi's success is based on strength or luck.

Looking at Internet companies, the real controllers of the Diaosi economy have always been BAT. Because all three companies have risen by relying on low prices and free services. Tencent makes small money from a large number of users, Baidu makes money from a large number of small and medium-sized enterprises, and Taobao makes money from a large number of stores in the early stage and online merchants in the later stage. These three giants not only affect the pattern of the Internet, but also control the economic model of the Internet. In the case that the Internet Diaosi economy has long been controlled by the three companies, it is not difficult to understand why Internet companies with the Diaosi economy model have been frequently acquired by them. Even the giants in the larger subdivided industries cannot escape the fate of being manipulated and merged. Therefore, under the squeeze of the BAT giants, most Internet startups have felt the so-called capital winter. If you want to survive the winter, how to bypass the Diaosi economy has become a crucial link.

The misleading saying “He who wins the diaosi wins the world”

"He who wins the Diaosi wins the world" has always been regarded as a maxim in the industry. But this cold wave is actually a manifestation of the recession or even collapse of the Diaosi economy. Even if many companies win the Diaosi, how to make profits is still a problem. In the Internet world, there are many products that have tens of millions of users but are unprofitable. Most of the companies that are currently feeling the capital winter are deeply trapped in the endless price war caused by serving Diaosi users. Even the most successful Xiaomi model after BAT, although it has achieved great success in the short term because of its belief in Diaosi economy, has also fallen into the quagmire of low prices, lacks successors, and has begun to gradually decline.

The annual data from CNNIC shows that most netizens are young, most netizens have low incomes, and most netizens have low education. And these majority are collectively referred to as Diaosi in a barbaric and crude way. Diaosi are regarded as the basic masses of the Chinese Internet. If all Internet companies want to obtain product traffic, they must lower their status, please them, cater to their preferences, and dance with them. This has almost become the first principle of winning the Internet. Perhaps in the field of games, this decision is not a big problem. But in more fields, the theory that whoever gets the Diaosi will win the world is not valid, because the conversion rate of many products after acquiring these users is often terrible.

At the same time, the prevalence of the world of losers has also led to the fact that Internet products now generally have no personality and are not interesting enough. Because they believe that users are God, they give users whatever they want, regardless of whether it is reasonable or not. If they want a low price, they give a low price, even if it means losing money to gain publicity. Then, although they have users, they are trapped in the problem of racking their brains to reduce costs. And because of the cost problem, the services that the product can provide will inevitably be discounted, which is equivalent to falling into a very bad cycle. Under such circumstances, the risk resistance of enterprises can be imagined. Therefore, once they encounter the so-called capital winter, some companies will not even have time to react and will completely collapse.

The Internet is about to usher in the era of middle-class economy

With the decline of the Diaosi economy, more and more companies are targeting the middle class. Because by 2020, urban middle-income families will account for 45% of all household income. Jack Ma once said that China will accumulate 500 million middle-class people in the next 10 to 20 years. Therefore, more and more middle-class consumers are becoming the new mainstream users of the Internet economy. They are rational and tasteful. Compared with Diaosi consumers who are only obsessed with cost performance, they are fans of performance ratio. For the Internet, these are the most valuable users. At the same time, Internet products targeting the petty bourgeoisie and the middle class have stronger conversion rates and risk resistance, and user targets are easier to be precise.

While Xiaomi and Huawei are still fighting for sales, LeEco has already shifted its focus to compete for the middle class. Compared with comprehensive Internet companies like LeEco, more middle-class economic products are also emerging in the industry. The rise of the middle-class economy has driven demands in many aspects, such as travel, shopping, and improved living environment. For example, Uber, the originator of the shared economy, Haibian, an Internet immigration platform that provides overseas investment immigration for elites, and Xiaohongshu, a female e-commerce platform specifically for white-collar and petty-bourgeois users. These three companies all target middle- and high-end users. Although their sizes are different, they are increasingly favored by capital.

According to the statistics of the top 500 Chinese primary market companies released by 36Kr, UBER China's valuation has reached 48.54 billion yuan. Why is UBER's valuation so high? Because it solves the travel problem of the middle class. And because it catches up with the rise of high-end consumption power of users born in the 1980s and 1990s, Xiaohongshu, which has only been established for more than two years, has a valuation of 860 million. More and more Internet products serving the middle class are growing and developing in the capital winter.

Take the emerging Hai Nabian as an example. As the first Internet immigration platform, Hai Nabian has always attracted much attention from the capital circle. On November 20, it was invited to participate in the 10-day Noah Wealth Diamond Annual Conference, and gave speeches on the introduction of the Internet + immigration industry in 5 sub-venues. During the Diamond Annual Conference, more than 5,000 users who have invested more than 10 million in Nuoyan attended the conference to learn about Internet investment sharing. On the 10th of this month, Hai Nabian was once again invited as a star enterprise to participate in the China-Europe Internet ICHUANG Conference. Most of the users of Noah Wealth and the China-Europe ICHUANG Conference are middle- and high-income people. The reason why Hai Nabian is frequently invited is that with the rise of the middle class, they are beginning to pay more and more attention to the problems of their living environment. Such users urgently need more Internet products for their services, and Hai Nabian just solves their needs to improve their living environment.

It is inevitable that the Internet will move from the Diaosi economy to the new middle-class economy. According to statistics, China has the largest middle-class population in the world, reaching 109 million, surpassing the 92 million in the United States. The reason why the middle-class economy has just risen is that in terms of the current situation, the middle class needs to improve its Internet products, services and information acquisition methods, and needs a batch of new products to match them. Therefore, the commercial value of this group is huge. Whether it is LeTV, UBER, or the new generation of Internet products on the other side of the sea, they have begun to realize this. The scramble for the middle-class economic market is burning fiercely under the night of what seems to be a capital winter.

It can be predicted that whoever seizes the opportunity of the rise of the middle-class economy first will be almost invincible. Therefore, although the so-called capital winter has arrived and the Internet Diaosi economy is declining rapidly, it will not have a negative impact on this type of product with precise target user positioning. It even creates a huge market opportunity. I believe that in the near future, the Internet will usher in a big explosion of the middle-class economy.