The prospects of Baofeng Video are not optimistic after its listing. Is there still hope for VR projects?

The listing of Baofeng Video did not make its founder Feng Xin feel relieved, because the market he faced had become more cruel.

On March 24, Feng Xin, who had been in business for 8 years, finally led Baofeng Technology (hereinafter referred to as Baofeng) onto the red carpet of the Growth Enterprise Market as he wished, issuing 30 million shares at an issue price of 7.14 yuan per share, and intending to raise 510 million yuan. Will this listing allow Baofeng to have a chance to make a beautiful comeback in the video industry? The situation is not optimistic. The copyrights of film and television and variety shows have long been rising, and the copyright packaging fees of popular variety shows on satellite TV have reached hundreds of millions. In this situation, what should Baofeng Video do next? Feng Xin, the current CEO of Baofeng Technology, said that his thinking is to attack the mobile Internet because "PC is no longer worth the effort"; at the same time, turn video into a wider range of entertainment, including music, games, performances, etc. Guided by this idea, Feng Xin's second entrepreneurial project Baofeng Magic Mirror began to take shape.

You are all partners

As we all know, Baofeng Technology's road to listing was not smooth. After venture capital such as IDG entered the market, Baofeng, like other Internet companies, sought to list in the United States using a VIE structure (variable interest entity). In 2010, Baofeng reorganized, with US dollar capital withdrawing and domestic capital such as Huawei Investment and Jinshi Investment introduced, turning its listing direction to the domestic market. During this period, Baofeng also transformed from a household video player to an online video platform.

Summarizing the gains and losses of Baofeng, Feng Xin believes that he made three mistakes. First, he had no experience in financing and did not dare to ask for too much money. Second, he only looked at product opportunities and did not have a big enough strategic pattern. Third, it was a management problem. "Management is inherently against freedom." He said with emotion, "Therefore, Magic Mirror gave me this opportunity to reshape an organization. Although the new organization has greater risks, I am more worried about not getting more outstanding talents in at a faster speed."

Mojing is an independently operated company spun off from Baofeng Technology. It carries many of Feng Xin's imaginations about Baofeng's future business model. Feng Xin set up two 10% incentive mechanisms: one is to issue 10% equity to the team every year without setting an option maturity period; the other is that each round of investment requires investors to acquire 10% equity from the partner team. Moreover, every time the company increases its capital, partners can sell their shares to cash out without any restrictions.

He admitted that the operation model of Magic Mirror looks a bit risky. In this regard, Feng Xin gave the logic that the company respects time costs more than performance assessment. It is reported that Baofeng Magic Mirror is recruiting 210 partners in virtual reality content production across the country, including 100 panoramic filming teams, 100 VR game studios and 10 software and hardware manufacturers. This means that the entire team will expand from more than 100 people to more than 1,000 people in the next six months.

Feng Xin promised to give these partners extremely favorable conditions. For example, in each round of financing in the future, the company will purchase some old shares from the employees who hold shares, so that the employees can realize their benefits, instead of like other startups, where the only way for employees to realize their shares is through acquisition or listing in the distant future.

At the end of last year, Baofeng announced that it would set up a CEO interview day every Friday in the recruitment plan for 10 VR (virtual reality) startup project partners, and would determine 10 VR startup partners by the end of the year. The projects include more than a dozen projects from hardware, background, virtual community, virtual cinema, market, overseas promotion, etc. Partners can also apply for other projects according to their own expertise.

Talking about the recruitment order, Feng Xin once said frankly that it was the result of reflection and summary of the experience of more than 100 days since the release of Magic Mirror 1: the embarrassment of lack of content made the team realize the importance of game and movie content to Magic Mirror and the significance of establishing a content cooperation industry chain.

In January this year, the company convened a closed-door meeting of the Magic Mirror startup team at Beijing Ziyunxuan. At the meeting, participants learned that the new company will not have a vice president, and the leader of each project will be a partner, with full power. Each project will be accounted for separately, and there is no cap on project establishment, funding, and employee size. "I don't even care about the team's loyalty, but I am results-oriented and encourage them to become independent from Magic Mirror Company as soon as possible and become a subsidiary." He said, "This sounds a bit incredible."

Decentralization and Risk

Regarding the entire development process of the Magic Mirror platform, Feng Xin believes that the biggest innovation lies in the operating model. For example, if 5 of the 20 incubated projects have made outstanding contributions, the company will distribute 10% of the equity to these 5 project teams. "It doesn't matter what services you will provide to us in the future, but that we recognize your contribution this year, and what we give is not options, but equity. The general practice of companies is that if you have not made any contribution this year, you will not be given equity, but we will still distribute 10% of the equity, which is our respect for the cost of time." In his opinion, for Internet companies, time is everything.

Moreover, every time the company raises funds, everyone can sell their 10% equity. "Funding is a common practice for Internet companies. The company allows everyone to sell their equity. If the company raises funds once a year, it means that the value of your equity is reflected every year," said Xu Yaping, a partner of Baofeng Mojing project.

The company's basis for project assessment is data. Feng Xin's job is to set a yardstick to ensure that employees' interests are realized. "Entrepreneurs will deal with capital, while employees will not deal with capital. I let the project team directly connect with capital. This is a bold innovation in the operation model." Feng Xin said. For this reason, the assessment system in principle only relies on data. According to his idea, the incubated team is encouraged to be independent from the company. At that time, Magic Mirror Company may hold 50%-60% of the company's shares, and both parties will adopt a profit-sharing model.

Within the Magic Mirror team, the department that manages these projects will not, in principle, convene project team meetings. What they do is collect project books. This project book contains three aspects: one is what you are going to do; second, what kind of resources are needed; third, if you think this project is evaluated, will it generate value in terms of data or user reputation? Where exactly is the value it may generate?

Then, at the end of each quarter, the Magic Mirror management team will pay a thousand users to vote and evaluate the products, and good projects will receive bonuses and equity. It is said that this fully decentralized operating model is the organizational structure that Feng Xin longed to have when he was working. "The fully decentralized partnership system is conducive to the rapid development of the company, but the problem lies in the uncontrollable project risks, project feasibility, resource integration and financial pressure." Zhang Kai, general manager of Zhidao Consulting, believes, "First of all, we must choose the right leader, and secondly, we must keep up with the market for project selection and have the ability to turn around in time, rather than just starting from our own strengths."

Virtual Reality World

Indeed, finding the right people is the key to everything, especially for the virtual reality world that still needs to cultivate an ecosystem and business model. Games, application services, movies and other content all need to run in this new ecosystem before more funds can come in. Today, there are thousands of movies and TV series on the Magic Mirror platform, and 50 to 70 videos and panoramic pictures are updated every Friday, and then some small games and social applications will be gradually put on the platform. For VR content, Magic Mirror will adopt a cooperative model, such as IP cooperation with the famous American Discovery Channel. In the future, it will also further cooperate with entertainment companies and sports event companies.

For the entire technology industry, virtual reality is a world of unlimited possibilities, and more and more technology giants are pouring in. For example, Intel recently participated in the investment of a virtual reality company called Avegant, which is developing a virtual reality helmet called Glyph that can project videos directly in front of the user's eyes. This round of investment raised a total of US$9.37 million.

Last year, Facebook acquired Oculus VR, an immersive virtual reality technology company, for $2 billion. Facebook founder Mark Zuckerberg pointed out that the company's plan is not to match Facebook with the real world and add a "share" button to events in life, but to incorporate the real world into Facebook's virtual walls, that is, humans can live in "The Matrix" belonging to Facebook. There are also reports that a group of Hollywood producers are working on 10 fully 3D modeled virtual countries.

Data shows that as of March 2015, Baofeng Mojing had nearly 240,000 users, with the highest number of daily active users of the app exceeding 14,000. The product is still in its early stages. In the future, this platform will continue to develop. "You can bring the real world into virtual reality, bring a real coffee cup into the world of Avatar, and drink coffee in the virtual world," said Feng Xin. Virtual reality is one of the trends in future technology, which uses cameras to automatically identify the real world around you. Although at present, through this 3D device priced at 99 yuan, Magic Mirror users can only see panoramic pictures, panoramic videos, games and 3D movies. But behind this is obviously the possibility of establishing a virtual business practice outside the real world. The price of hardware is just enough to spread the cost. Making money from software is the original intention of many Internet companies to start making hardware.

However, some people in the industry believe that Magic Mirror is a risky move for Baofeng. If a purely tool-based product wants to be commercialized on a large scale, it should follow the path from product to channel and then to platform and finally to the entrance. Magic Mirror, with the advantage of Baofeng's own film and television platform, skipped the intermediate form and directly entered the entrance, which seems somewhat "super fast" to outsiders.

In fact, Feng Xin's business intention is very clear. He hopes to use virtual reality products and rely on the Baofeng team's many years of technical experience in the video industry to quickly transform into a virtual reality platform. To this end, the combination of helmet glasses + smartphones has become the preferred model of Baofeng Magic Mirror. Feng Xin believes that in order to eventually seize the platform opportunity in this virtual world, it is necessary to have a large number of users first, and the key to whether a large number of users can be gathered lies in whether the experience brought to users by the magic mirror is successful.

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.