After Zhihu’s market value dropped by 80%, has ChatGPT become the last straw for this paid online writing platform?

The three major Internet communities in China - Zhan.com, Zhihu, and Xiaohongshu - all started from a niche market and have grown like a snowball, controlling hundreds of millions of traffic. The difficulty in community operation lies in the balance between community atmosphere and commercialization. As the largest question-and-answer community in the Chinese world, Zhihu's commercialization journey has been stumbling, and its performance in the capital market has been a mess.

Zhihu went public in March 2021 with an issue price of $9.5 and raised $850 million. In the past two years, Zhihu, which has been listed in New York and Hong Kong, has seen its share price hover around $1.5 for a long time, shrinking by 80% in two years.

In terms of revenue, the compound annual growth rate of Chinese online content communities is over 30%, exceeding 270 billion yuan in 2019, and is expected to reach a market size of 1.3 trillion yuan in 2025. In such a large market, Zhihu, as one of the largest players, has repeatedly suffered losses and seems to be stuck in a quagmire that is difficult to get out of.

In the fiscal years 2019-2021, Zhihu's adjusted net losses were 820 million yuan, 340 million yuan, and 750 million yuan, respectively. In the first three quarters of fiscal year 2022, Zhihu's total revenue was 2.49 billion yuan, and its net profit attributable to the parent company was -1.40 billion yuan. In the past 11 fiscal quarters, Zhihu's cumulative losses exceeded 3.2 billion yuan. The endless losses are a curse for Zhihu.

1 Community and business are a contradiction

In the arena of the Chinese Internet, Zhihu was once an outlier. The pure community culture and idealism constituted the underlying color of Zhihu.

"Professional discussion" is the positioning that Zhihu has repeatedly adhered to. Under this adherence, Zhihu started from niche topics such as technology and the Internet, and gradually moved towards hot topics such as digital, entertainment, and fashion. After going beyond the circle, Zhihu now has more than 30 topic sections including finance and health.

In the unsolvable contradiction between community and commercialization, Zhihu once stood firm on the side of the community, repeatedly resisting the temptation of premature commercialization. Zhihu, which was launched in December 2010, did not start its commercialization journey until 2016 under the name of knowledge payment. It was precisely because of its rejection of commercialization that Zhihu was able to defeat its competitors and stand out. Zhihu knows and believes in the power of the community.

In 2018, after Zhihu’s E round of financing, CEO Zhou Yuan raised three soul-searching questions on Zhihu: How to ensure a healthy discussion atmosphere? How to balance the quality and quantity of content? Can excellent creators earn income? … Community is a lifeline of Zhihu. Zhihu is trying to draw a clear red line between community and business.

However, community is an ideal, while commercialization is a reality. Between the ideal and reality, and in the frenzy of falling stock prices, Zhihu can't help but go crazy.

2 Vocational education? A completely unfamiliar world

Advertising is the starting point of Zhihu's commercialization, and it still occupies a large part of the market. The domestic online advertising market is a trillion-dollar market, but Zhihu has obvious latecomer disadvantages and only gets a tiny share. In 2020, Zhihu had to sacrifice the purity of the community and launch a soft advertising service content commercialization solution "Zhi+".

Zhihu's paid knowledge business has been groping along the way, and was upgraded to Yanxuan membership business in 2019. However, Yanxuan is no longer a pure paid knowledge platform. It focuses on online stories of strange news and romance, and occupies the top of the popularity list. Yanxuan is essentially a paid online novel platform.

In addition to online advertising, which accounts for 60% of its revenue, and Yanxuan members, which account for 30%, Zhihu has placed its future bets on vocational education. In June 2018, Zhihu's "knowledge market" was upgraded to Zhihu University, which tested vocational training with courses + books + training camps. In 2020, Zhihu spent 130 million yuan and 50 million yuan to acquire Shanghai Pinzhi Education and Papa Education respectively. In December 2022, Zhihu launched the vocational education platform Zhixuetang...

After many twists and turns, Zhihu finally stepped into the vocational education world that has long been dominated by Offcn, Huatu, and Fanbi. A completely unfamiliar world.

3. If you have questions, where can you find answers?

ChatGPT became popular overnight, and it is naturally a question-and-answer community. As the largest question-and-answer community in the Chinese world, Zhihu suddenly stood at a crossroads.

Going forward, it has been moving forward along the track invented by ChatGPT, developing 480 million questions and answers and 590 million pieces of content accumulated in 12 years, becoming an artificial intelligence giant; going forward, it has been stuck on the three starting lines of online advertising, membership services, and online education, where the ceiling is obvious, and has been overly distracted until it is gradually replaced by AI questions and answers...

On February 8, Zhihu, a potential ChatGPT concept stock, suddenly jumped in Hong Kong stocks, rising to 57% during the day and still maintaining a 40% increase at the close. The capital market seems to be helping Zhihu make decisions. After all, no one can ignore the new productivity track opened by ChatGPT.

Of course, Zhihu has community genes but lacks technology genes. Or perhaps, Zhihu is too busy submitting a profit report to the capital market and is unable to start new investments, thus heading towards a future that is destined to be difficult and bumpy... Where is Zhihu going? Will Zhihu, a membership payment platform that focuses on online novels, plunge into the red ocean of vocational education?

Where there is a question, there is an answer. This is a slogan of Zhihu.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.