Who is the next BAT?

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Indicator 2: Ability to follow trends

BAT is the winner of the PC Internet era. They have leading core competitiveness in search, e-commerce, and social segments. The next BAT will definitely be the king of the mobile Internet era and the Internet of Things era. The more their core competitiveness is consistent with the characteristics of the new development cycle, the greater their core competitiveness will be.

The ongoing second wave of the Internet, characterized by "mobility", "big data" and "millennials", is destined to create the next generation of "BAT" that will catch up.

Trend 1: Mobility

Mobility is considered the biggest theme of the new development cycle of the Internet. Although all Internet companies claim to seize the historical opportunity of "mobility", not all of them have the ability of "creative destruction". For those large companies that have a monopoly in the old era, they face various resistances inside and outside the company to achieve the transformation of business philosophy, which often gives later challengers the opportunity to catch up.

To measure whether an Internet company is sufficiently adaptable to the trend of "mobility", we can analyze it from the following four aspects:

• Is the traffic source "Mobile" or "Desktop"
• Is the product philosophy "mobile" or "desktop"?
• Is the demand scenario "mobile" or "desktop"?
• Is the business model "mobile" or "desktop"?

Although giants such as BAT have already laid out their plans in the mobile Internet field for many years, to this day, the traffic, revenue and demand scenarios from traditional desktop products still constitute an important pillar of the company's business.

At the same time, at the other end of the market, some emerging companies built entirely on the philosophy of mobile Internet are rising rapidly.

Products such as Didi Kuaidi, Toutiao, Meitu Xiuxiu, and Momo have one thing in common: you can’t even remember what their desktop webpages are, and few people use the PC to access them. These products have reduced their reliance on the PC to an unprecedentedly low level, and they don’t care about users coming from the desktop. For these “challengers” of the old order, the resources that the traditional desktop Internet can provide can be said to be insignificant, and may even be regarded as some kind of “negative asset.”

The next generation of "BAT" will most likely emerge from companies that are fully oriented towards the mobile Internet era.

Trend 2: Big Data

Another major trend that accompanies the "mobility" trend is "big data".

This change has raised the importance of "data" and "algorithms" for Internet companies to a very high level. BAT-level companies must establish market barriers, and future market barriers will mainly be built on data ownership and algorithm processing capabilities.

Cheng Wei, CEO of Didi Kuaidi, believes that the most valuable resource accumulated through the taxi war is actually user data, and the taxi business model is destined to be built on the basis of operating big data. They recruited the most outstanding algorithm experts to match vehicles and passengers more accurately based on data. The smart travel platform named "Sky" attempts to analyze and predict the travel patterns and needs of each person and each car from a God's perspective. Didi Kuaidi has gradually shifted its core focus from operational capabilities to the construction of Dimi system, user portrait system, precision marketing, smart matching, demand forecasting system and transportation capacity forecasting system.

Toutiao, which also uses "data mining" as its core competitiveness, announced in May this year that it is recruiting top algorithm architects from around the world with a record-breaking annual salary of one million US dollars. In terms of salary, it has exceeded the standards of top Silicon Valley companies.

Toutiao's ambition is self-evident. For a new company that has accumulated more than 300 million users and more than 30 million daily active users in less than three years, the amount of data generated every day is already considerable. In the context of the continuous migration of users' information portals to mobile terminals, information products such as Toutiao are fully capable of reaching or even exceeding the data volume of traditional "search engine" products, which also gives Toutiao the opportunity to become the next generation of "BAT" - provided that they can quickly build a technical platform to cope with the explosive growth of data and use it creatively, so as to become the global algorithm center they want to be.

In the past two or three years, the companies that have quickly become popular along with Didi Kuaidi and Toutiao also have potential advantages in data volume that cannot be ignored. For example, the products of companies such as Dianping, Meituan, and Momo have been deeply embedded in the user's life scenes and have become an unprecedented high-frequency data source. At the same time, this data is unprecedentedly accurate and personalized, and has inestimable commercial value. These data features are difficult to compare with Internet products in the desktop era.

Trend 3: Millennial users

Due to the difference in the stage of Internet popularization, the next generation group defined as "Millennials" in the United States (born between 1984 and 1995) has characteristics that are more similar to the "post-90s" group shaped by current Chinese public opinion.

This group of people will undoubtedly become the core Internet user group in the future. Unlike earlier Internet users, this generation was born and grew up in sync with the globalization of computers and the Internet.

In the eyes of the previous generation, the Internet and smart terminals are just "a tool for obtaining information as needed." But for the millennials and those born after 1990, terminals and the Internet are the natural extension of their hands and brains, and are innate necessities of life - in the United States, 87% of "millennials" said they have never left their smartphones. This is a decisive factor in describing a millennial youth.

They are technology optimists, and the frequent changes in technology and products do not cause them any trouble.

They are a generation immersed in the electronic world. In the next few years, network-based social relationships may surpass traditional relationships such as friends, classmates, and family members and become a key component of a person's social circle.

They are also a group with strong personalities who enjoy showing them off, as evidenced by social networks filled with selfies and dinner displays.

They are also a generation that values ​​freedom. The rapid development of e-commerce allows them to select products that suit their preferences from around the world anytime and anywhere, pay online, and have them delivered to their doorsteps. This makes a new economic ecology of "production on demand, service on demand" possible.

It is obvious that the next generation of "BAT-level" Internet companies will inevitably emerge from those candidate companies that can understand and fully meet the new needs of the "millennial generation".

It is not difficult to find that among the Internet newcomers that have emerged in recent years, the innovation of their core products and services basically revolves around the consumption pain points of the "millennial generation":

Indicator 3: Ability to survive life and death

When we talk about "BAT", we are not talking about the lone player in a certain market segment that is vertical enough to have no direct competitors, but the winner who can eliminate all enemies and survive to the end in the face of many powerful competitors in markets with huge consumer stocks.

In other words, to become a giant, one must go through a life-and-death test of sufficient magnitude.

Just as the English navy defeated the Spanish "Invincible Armada" in Calais in 1588, announcing the official arrival of the British maritime era, the rise of "BAT" is always accompanied by the collapse of other powerful companies of the same era, including: the battle between QQ and MSN, the battle between Taobao and Ebay, and the battle between Baidu and Google.

When we look for the next BAT, we must examine its position in the industry and its situation with its strong competitors. Emerging companies that have not gone through a life-and-death battle of sufficient magnitude cannot be included in the candidate list even if they look promising.

Many companies on our candidate list have been or are in fierce business wars, and some are fighting fiercely in the same field. They may have the opportunity to become the final winner and take a huge market cake. Of course, it would not be surprising if challengers that we have never heard of emerged in the near future, which is common in the history of the development of the Internet.

in conclusion

Predicting the future is always difficult, especially in a field that is changing rapidly. Nevertheless, when we fully review the rise of industry giants including the "BAT" generation, and even earlier than them, such as Yahoo, Microsoft, and Apple, we can still find that in the Internet industry, the change of dynasties and the birth of new stars have certain "rules". And such rules are still true in the mobile Internet era with a high probability.

These rules include:

1. To a large extent, they monopolize core industry resources such as capital, talent, and Internet traffic;

2. In terms of product concepts and business operation directions, fully cater to the next generation of Internet technology trends and population characteristics;

3. Defeat competitors and survive in a market segment with huge incremental value.

We believe that companies with these characteristics have a greater chance of becoming the "next BAT." Next, we turn our attention to the emerging star companies that have flourished in recent years. We find that some of these companies, despite attracting attention, do not have these important characteristics, while some hot companies have already shown signs of becoming "kings."

Enterprises with the appearance of a king:

Didi Kuaidi:

In the past three years, Didi and Kuaidi have jointly attracted nearly 3 billion US dollars in financing, which is unmatched in China. The fact that Didi and Kuaidi, who were originally at loggerheads, finally decided to merge to share a huge market share also surprised other competitors. As one of the most promising application scenarios in the mobile Internet era, the services provided by Didi Kuaidi are completely based on mobile devices, and there is still a huge market growth to be tapped in the next generation.

Meituan/Dianping:

Meituan and Dianping are in the trillion-level consumer market. Their recent merger has not only changed the O2O ecosystem, but also the Internet landscape. The two companies have raised about $2.4 billion so far. From their ability to absorb capital and traffic to their current size and market share, to the imagination space in their markets, Meituan/Dianping are the disruptors that are changing the BAT landscape.

Millet:

People have talked a lot about Xiaomi, and the term "TABLE" has been around for a while, including the Xiaomi system. Of course, we believe there are some new challenges for Xiaomi, that is, in the past one or two years, traditional giants and emerging companies have rushed into Xiaomi's home turf: the smart device field, which may bring a series of unexpected changes that Xiaomi needs to actively respond to.

Today’s headlines:

Some people may argue that this company, which focuses on information and news services, is not in the "trend" of the moment. However, Toutiao may be the only company in its field that is favored by capital, and of course there are certain reasons. In the past year, Toutiao's APP has become one of the most installed APPs on smartphones. They are also one of the few companies in China that attaches great importance to big data and machine learning technology.

There is a huge difference between Toutiao and traditional mobile news clients. The latter is essentially a continuation of traditional media on mobile devices. Toutiao is a new generation of information push engine based on machine learning and big data mining, which enables the client to efficiently process massive amounts of information and push information in a personalized manner based on each user's reading preferences. This approach may profoundly change the production model and product form of the information industry. We believe that what Toutiao is doing is what Baidu and Google did in the previous generation - changing the way people get information, which is of great significance and has huge market potential.