Crowdfunding is not lending: just talking about money is not enough

Recently, the popularity of crowdfunding has exceeded everyone's imagination, just like the current stock market, which is crazy and unreasonable. During the month when the stock market soared to 3,000 points, less than 5% of investors outperformed the market. Similarly, the concept of crowdfunding has been so popular that it is still difficult to find successful cases. What we see is still financing, associations, lending, and membership cards dressed in the guise of crowdfunding to raise money crazily, that's all.

The Heart of Rock has always believed that simple money transactions are the most inhumane and greedy game, so cold that it is a life-and-death struggle. As long as you make money, I lose money. The loser gets nothing, and the winner will lick the blood of the loser and sneer, which is creepy. Therefore, simple money transactions will only make the originally rich game of life become a game where the value of life cannot be seen at all.

So, what exactly is crowdfunding? Where does crowdfunding come from? How can companies truly use crowdfunding to grow rapidly? After more than a month of comprehensive review and thinking, I finally realized some truths and hope to share them with you.

Crowdfunding is not a new thing. It has existed since the agricultural era.

I think crowdfunding is nothing new. In a broad sense, it means a group of people pooling money to do something. And many current market behaviors are manifestations of crowdfunding.

Let’s start with farming in the early countryside. Due to low productivity, each farmer contributed one animal to form a group of three with other neighbors to cultivate the land. These three families jointly crowdfunded a centralized “animal group”. Each of them had equal interests. In addition, they all had to participate in the use of this “animal group” and were very skilled. These three animals were not randomly put together. They had to be of similar size and had to be of good temper and not easily bite or kick each other, so the choice of animals was critical.

I think the "livestock groups" before the 1980s have all four conditions of modern crowdfunding: social (neighborhood relationships, mutual understanding), decentralization (each family has an animal and has equal rights to allocate and use it), sense of participation (everyone is skilled in using animals for farming), and endogenous demand (all need to cultivate the land but cannot do it on their own).

There are many crowdfunding cases in the contemporary economy, but some do not have these elements. Take the current common stock market as an example, isn’t this a kind of crowdfunding? Enterprises go public to raise funds, and sell their total assets to shareholders at N times the price. This is a way to decentralize corporate assets. Shareholders participate in investment and receive dividends. This crowdfunding model only has one of the four conditions of the "livestock group", that is, decentralization.

Because shareholders do not know each other, there is no social relationship; shareholders do not participate in the management of the enterprise, and have no sense of participation; shareholders do not even need the enterprise to bring them any products and services, but simply pursue profits. This way of pursuing profits is currently labeled as crowdfunding. For example, many private financing cases even give you a sense of participation.

For example, some individuals who raised illegal funds let farmers participate in the production of handicrafts under the pretext of making them. They promised to buy a woven carpet for 30,000 yuan, but required farmers to pay 3,000 yuan for the raw materials. They then invited 10,000 farmers to participate and obtained 30 million yuan in funds. They used the 30 million yuan to buy luxury cars and mansions to show off that they were big bosses, and that they could do whatever they wanted with money and that they were absolutely reliable and dependable. They continued to carry out bigger scams, but eventually, as more and more farmers demanded to buy carpets, they ran away with their funds, and either ran away or were arrested.

Crowdfunding cases that have met the four conditions have all become great companies today. Take Alibaba's 18 Arhats as an example. Jack Ma found 18 people to participate in crowdfunding a company. They contributed money, effort, and shared a common dream, and eventually created a great company. Tencent, led by Ma Huateng, crowdfunded Zhang Zhidong and several other people to found Tencent, which has a market value of one trillion yuan. Lei Jun of Xiaomi also found seven founders first. They are all top talents in hardware, software, Internet, and marketing. They have resources, ability, and money. It took Xiaomi only three years to reach a valuation of more than 40 billion US dollars, and its mobile phone sales accounted for the top three in the world.

From the above analysis, we can see that crowdfunding is not a new concept, but a business model that has always existed. Some people may ask, why is the concept of crowdfunding more popular than ever before? The answer is simple, because of the popularity of social networks, crowdfunding is currently a byproduct of the popularity of social networks.

The popularity of social networks has provided a breeding ground for crowdfunding

Whether it is the "cattle group" or outstanding companies like Alibaba, Tencent, and Xiaomi, the people they crowdfund are very familiar with each other. It is really rare to meet such a confidant in life to start a business together, so social interaction is the foundation of crowdfunding.

With the popularization of social networks, communication between people has become very simple. At the same time, the role of friend circles and groups can also test and supervise people's credit. Through all a person's social activities, you can completely spy on him. Through social networks, which are complex and scientific tools for networking, you can even get to know anyone in the world. This was once Facebook's vision. After social efficiency and credit supervision are guaranteed, it also provides strong support for the development of crowdfunding from the elite to the common people.

At the same time, the Internet as a product has a natural crowdfunding gene and is also a nearly perfect crowdfunding case. Every successful Internet product is a typical example of continuous optimization and pursuit of perfection by millions of ordinary netizens. After a version of an Internet product is released, internal employees of the company will be invited to conduct internal testing, and then a large-scale public testing will be conducted. This process is to crowdfund a group of people with common needs around the Internet product. They all love this product and must use it. They sincerely help the company make suggestions and jointly optimize the product.

In this process, Internet technology actually plays a key role, providing convenient communication, fast feedback and optimization, and feedback and optimization. In this process, there are four essential conditions for crowdfunding: social interaction, decentralization, participation, and endogenous demand. The only thing missing is money. Participants in crowdfunding do not need to pay a penny, and Internet products are provided to everyone for free. Isn't this the ultimate of crowdfunding? Only the Internet can achieve this ultimate crowdfunding, pure crowdfunding, and crowdfunding full of love.

Therefore, the current popularity of the crowdfunding concept is closely related to the popularization of social networks, the improvement of credit supervision, the convenience of online payment methods, the digitization of money, the networking of communities, and the transparency of information. At the same time, the popularization of the Internet has not only brought about technological changes, but also cultivated people's pursuit of self-rights and democracy in the process of participating in Internet product crowdfunding, making them want to make suggestions on products and services that they are not satisfied with, and hope to be adopted, and even hope to rebuild a product and service with other people who have the same needs.

Therefore, the popularity of social networks is the most important reason why the concept of crowdfunding has begun to flourish, and it is an excellent soil for crowdfunding to be popularized.

How can crowdfunding really take root?

All theories must be implemented and executable. I always like to raise questions and solve problems, and I never write eunuch articles. So how to implement crowdfunding? Although it is very difficult, I still found some rules and implementation plans. These implementation plans are very valuable consulting plans, but I will give them to you here without reservation.

Some people say that a certain restaurant is doing a great job in crowdfunding. It raised 3.02 million in just a few days, and it was snapped up like crazy. It sounds very attractive, but when we heard about his so-called crowdfunding plan, it was very boring. Each person who invested 7,200 yuan could get 620 yuan in cash after one month, so they were snapped up like crazy.

This is not actually called crowdfunding, it is lending, but many people are lending together. You can also compare it with the recharge cards issued by bath centers and haircut shops, where you can get 10,000 yuan for every 10,000 yuan you recharge. The only purpose of the participants is to get high returns. There are many cases where bath centers and haircut shops ran away after "crowdfunding", but they were not filed because the amount involved was small. At the same time, it seems that each participant has made a small investment and is willing to accept the loss.

Including some crowdfunding private equity, VC (P2P) cases are all profit-seeking money games, and cannot be called crowdfunding. The civilian crowdfunding I want to talk about here is to help small and medium-sized enterprises solve the problem of financing and intellectual capital, so that every civilian can participate in entrepreneurship, enjoy the passion and benefits of entrepreneurship, and make their lives infinitely better. And this kind of crowdfunding must grasp the following points:

First of all, complete decentralization is not desirable. The most talked about crowdfunding case now is that 1,000 people crowdfunded a coffee shop together. The coffee shop is not profitable, but just a place for everyone to talk about things. Everyone can know nothing about the operation of a coffee shop, hire a professional team to manage it, make money by talking about things, and then go to support the coffee shop. This case is actually not representative at all, because it is just an association or club of rich people.

Real business must consider profitability, so crowdfunding an unprofitable coffee shop and crowdfunding a profitable dumpling restaurant are two completely different things. One is a platform, and the other is a business. Therefore, crowdfunding a dumpling restaurant cannot be completely decentralized. It must be transformed into a crowdfunding restaurant based on an established dumpling restaurant.

Because someone must be responsible for operating and managing this dumpling restaurant. Professional things must be done by professionals. Even if a professional team is hired, someone must be able to supervise their work. There have been many crowdfunded coffee shops in some cities. The purpose is to sell coffee and make money. As a result, because the crowdfunders took turns to manage, but did not understand the operation of the coffee shop, it eventually closed down. This also tells us that complete decentralization is not advisable.

Secondly, the person in charge of the enterprise should be truly open and have ambitious goals. At present, many small and medium-sized enterprises are family businesses. They want to control all the shares and profits, but are unwilling to share profits and rights with others. This is wrong. To participate in crowdfunding, you must abandon this kind of thinking, be truly open, and listen to the suggestions of others like Internet companies. Only in this way can your company get the opportunity to transform into crowdfunding.

Third, the investment amount of crowdfunding participants is secondary, what is important is the sense of participation. At the beginning of the article, I mentioned that none of the four conditions of crowdfunding involve money. Instead, more conditions are social, decentralization, sense of participation, and endogenous demand. And this is the constraint condition for crowdfunding participants. They must be interested in and understand the projects they participate in crowdfunding. It is best to be direct users of crowdfunding projects, and they have gained full recognition and understanding of each other through multiple social communication.

The crowdfunding amount does not need to be set too high (it is mainly raised according to the needs of project development). The amount is just to form a constraint, so that you not only invest money, but also contribute your efforts, participate in the entire design and marketing process of products and services, and put forward your own opinions and suggestions. Because of hobbies, you will invest in research. Only by investing can you feel involved in entrepreneurship. A group of people with common hobbies actively participate in the optimization of products and services is Internet thinking, which will inevitably create the ultimate product and form a good reputation. In the end, a win-win situation is achieved for all parties. Ordinary people participate in entrepreneurship and gain the benefits of corporate growth. Companies do not need to be threatened by angel investors and VC cold-blooded institutions to obtain shares, but can obtain financing, wisdom and users, and can also establish deep friendships. More importantly, products and services begin to move towards the extreme.

Everyone can participate in the crowdfunding of multiple products and services, transform all the unsatisfactory services around them, become a shareholder of N companies, and because of sincere participation in the operation of the company, they can be fully confident that the company can continue to make profits and get better and better, instead of gambling in the stock market or leaving it to private equity to tell fortunes. In the end, the whole world will become a better place, which is of course the most ideal vision.

At this point, we find that it is impossible to crowdfund first and then do things. Instead, it is to have things first and then transform them into crowdfunding. In fact, it is also a baptism of Internet thinking for traditional industries. When crowdfunding, it must be a group of people who are interested in the project, can have a sense of participation, and have endogenous needs, rather than simply raising money and wisdom. It is to crowdfund a group of people who have the dream of pursuing the ultimate life service.

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.