This is the best team: from Ctrip to Home Inns, Hanting I

Chapter 10 Transformation Acquisition (1)
website trends
01 Crab Eater Ying Haiwei

When it comes to China's Internet, there is a name that cannot be avoided, Zhang Shuxin.This girl who was born in Fushun, Liaoning and graduated from the University of Science and Technology of China is the first person in the Internet industry to eat crabs. In 1995, when people didn't know what the Internet and e-commerce were, she had already established her own company - Ying Haiwei, and erected the company's billboard at the intersection of Zhongguancun, Beijing, which read: Chinese people are far away from the information superhighway. How far is it?1500 meters to the north.

As the first ISP (Internet access service provider) and ICP (Internet content service provider) in China, the development of Yinghaiwei can be said to be struggling.

According to Zhang Shuxin, when she went to the Ministry of Posts and Telecommunications to apply for the Internet, the staff were all confused. No one knew which category to put it in, and no one knew how to charge.

When the company was first established, the registered capital was only 700 million yuan. Later, ZTE became a shareholder of Ying Haiwei, and the registered capital of Ying Haiwei increased to 8000 million yuan.Since Zhongxingfa owns 73.5% of the company's shares, Liang Yeping, president of Zhongxingfa, became the chairman of Ying Haiwei, and Zhang Shuxin became the CEO of the company.

Some people may ask, what does this newly established company do?What Zhang Shuxin said is that Yinghaiwei provides a network platform for end users to enjoy service content on it.

In retrospect, this business model seems unprofitable in 1995.At that time, Yinghaiwei had 8 branches across the country with 5 users.According to the operating conditions of the Beijing company, 72 users can make a profit of 11. If this is the most profitable team, then Ying Haiwei is still short of 1997 users overall.What is even more frightening is that in June 6, the 70 National Multimedia Communication Network with an investment of 169 billion yuan was launched, making Ying Haiwei's situation even more precarious.

Based on this situation, the decision makers of Ying Haiwei have to carefully consider the company's future development direction.Zhang Shuxin believes that the public-oriented "minminwang" is the future development direction of Yinghaiwei, while Liang Yeping proposes that Yinghaiwei's business should be transformed into providing financial information services to corporate users.

Different road non-phase plan.After several rounds of negotiations, Zhang Shuxin was forced to leave the company he founded because the capital had the absolute right to speak.

In this way, Zhang Shuxin failed completely, but where did Zhang Shuxin fail?
Afterwards, Zhang Shuxin reflected: I entered the Internet industry by mistake, which was a misfortune among luck.I was in the right industry at the wrong time and it turned out wrong again.I made three major mistakes: first, there was no background industry resources; second, the capital structure was unreasonable; third, the business model did not have a variety of value chain designs.

However, an entrepreneur who has worked with Zhang Shuxin thinks otherwise.His evaluation is: Ying Haiwei's development has three limitations.First of all, the overly powerful propaganda offensive gives people an illusion; second, as a manager, Zhang Shuxin is like a strategist in macro strategy, and it is difficult to see his management strategy for market development.

Third, since Yinghaiwei is a test product for the development of the Internet in China, Zhang Shuxin's ending in Yinghaiwei is inevitable.

Despite the differing opinions, one thing is certain.If the company does not make money, the CEO of the company must dismiss the get out of class.This is the inspiration Ying Haiwei gave to later Internet entrepreneurs.

02 There are two modes of making money

Ying Haiwei's failure does not mean that the Internet has failed. The reason why Zhang Shuxin is out is because of her business model.Let's take a look at how people make money and appreciate the successful business models.

The first company was Yahoo.Yahoo was founded by Stanford University doctoral students Jerry Yang and David?Created by Filo.

The company was established on May 1995, 5.

In August 1995, I sold my first advertisement and made some money.

Unexpectedly, in April 1996, Yahoo! was listed on NASDAQ.The stock price soared 4% on the day of listing, and the company's market value was 154 million US dollars.

Later, with the Internet boom sweeping the world, the growth of Yahoo's stock price was even more incredible.Someone once calculated that if you bought $1997 of Yahoo stock on January 1, 31, it would become $1 on the same day three years later, and the annual return rate was as high as 3%.

The previous introduction is the development of Yahoo, now let's discuss its business model.

At the beginning of Yahoo's establishment, the function of the website was to provide web directory and search engine, and later expanded to a full range of content, including ghosts and snakes.Including news, chat rooms, real-time stock quotes, financial information, real-time broadcast, e-mail, bulletin boards, online bill payment and many other services.

How does Yahoo make money?To put it bluntly, in one sentence: form an alliance, find the best alliance, form more alliances, and form faster alliances.In addition to more than 1000 advertisers and more than [-] online merchants stationed on the online shopping platform, Yahoo also has more than [-] strategic partners.

This is the portal website model invented by Jerry Yang.Tim?"Yahoo is the only place anyone has to go when they want to have a relationship with anything or anyone else," Koogow said.

However, Yahoo was not the only successful model of the Internet at that time. In the United States, there was another way to play, and that was the AOL model.

On January 2000, 1, the world's largest ISP AOL (America Online) and the world's largest media group Time Warner announced that the two companies would merge to form a huge Internet and media group - AOL-Time Warner.

It was the largest merger ever, with a total transaction value of $1840 billion.After the merger of the two companies, it will become the seventh largest company in the world, with an annual turnover of 300 billion U.S. dollars and a total market value of 2860 billion U.S. dollars.After the news was announced, Time Warner's stock soared from $75 to $95 that day, and rose to $102 the next day.

After the merger, Time Warner's stock rose.But, one wonders: What is the current market cap of a 70-year-old media conglomerate that owns CNN, Cartoon Network, Warner Bros., People, Fortune, and Entertainment Weekly? With a value of US$830 billion, it is the unique leader among traditional media.Even willingly let AOL, which has only a history of more than 10 years, be annexed.

A spokesperson for Time Warner came out after the merger to explain:
Knowing the impact of the Internet on traditional media for a long time, Time Warner also tried to enter the Internet, but unfortunately it was unsuccessful. Although AOL has only been in development for 10 years, in the second fiscal quarter of 1999, its profit was more than four times that of Time Warner, while AOL only had more than 4 employees, while Time Warner had more than 1 employees. The disadvantages of traditional media are fully exposed.

At the same time, AOL has stated that the acquisition aims to obtain the right to use assets such as Time Warner's cable TV network, huge user database, TV and newspapers. AOL is not only satisfied with being the largest ISP now, but is rushing to open up the future network world.In other words, if the whole real life is to be moved online, the online content is no longer just 74 words and graphics, but sound, light, and video together.

In short, this acquisition has turned AOL into an unparalleled new media juggernaut.Although AOL is no longer considered a "pure-bred" Internet company, and its stock price can no longer rise dramatically like ordinary Internet companies, this merger has injected stability into AOL's risky Internet business.

Wall Street analysts generally believe that what AOL-Time Warner has created is a new model that embodies the perfect combination of tradition and innovation.

03 Sina is one of them

What is lacking in the market is the ability to innovate, but there has never been a lack of means of duplication.

Soon, the portal model on the other side of the Atlantic was transplanted to China.

In 1997, Wang Zhidong founded Sina, Zhang Chaoyang founded Sohu, and Ding Lei also founded NetEase.

Of the three newly established companies, Sina (formerly Stone Lifang) deserves a special mention.The company's growth has seen the dot-com bubble inflate and burst.

In October 1997, three venture capital companies including Walden of the United States invested US$10 million in Stone Lifang, and China's first portal website was established. The company's founder, Wang Zhidong, was known as the "Chinese Internet King".

Although Wang Zhidong explained that he was called the "Internet King", but it happened that his surname was Wang.However, Wang Zhidong is indeed No.1 in the introduction of venture capital in the domestic IT industry.

After Stone Lifang was established, its development has been dramatic.

In September 1998, the general manager of Huayuan China called Wang Zhidong, saying that his boss Jiang Fengnian wanted to discuss a merger with Stone Lifang.Originally, Huayuan wanted to acquire the other party, and Huayuan's assets were twice that of Sitong Lifang.Unexpectedly, after the meeting, the asset ratio of the two parties was reversed, becoming 9:2, and Sitong Lifang acquired Huayuan.Afterwards, Wang Zhidong said mysteriously, because I gave the other party a bomb.

After the merger, the new company was named Sina and was established in December of that year.

Another introduction of venture capital, another merger.Sina's purpose is obvious, everything is for listing.

Unfortunately, when Sina was still preparing, in July 1999, China.com was the first to be listed on NASDAQ.

The concept of the first Chinese portal was snatched away by CDC. The board of directors of Sina was very shocked, and immediately launched the IPO, followed by a road show.

On March 2000, 3, the Sina Roadshow troupe led by Wang Zhidong set off from Hong Kong.Strange to say, the Nasdaq stock has been plummeting during their roadshow trip.The Nasdaq plummeted more than 30 points the day the roadshow troupe left London.

But they don't care that much anymore.Let's go public first. On April 2000, 4, Sina was officially listed on the Nasdaq stock market, with an opening price of US$13. After the opening, it only rose to US$17, a rise of only 22% from the issue price.

And CDC, which is also a concept in China, was oversubscribed by more than 10 times when it went public, with an offering price of US$20, which rose to US$60 at the opening, an increase of more than 200% on the day.In contrast, Sina is indeed a bit disappointing, so that there are still a few Chinese companies preparing for IPO to withdraw quickly.

The Internet bubble burst.Did the bursting of the Internet bubble cause the Nasdaq to fall, or did the decline of the Nasdaq exacerbate the bursting of the Internet bubble?No one can figure it out.

What is certain is that starting from the Nasdaq's "diving" plunge in April 2000, the days of website CEOs have been difficult.

A year ago, almost all the best billboards in China had the name of an Internet company written on them, and everyone was burning money.Now, many websites even have a problem of survival.

At the same time, investors from overseas are wandering around Zhongguancun with money all day long, and a bowl reads. com beggars can get tens of millions of dollars in venture capital.Now, venture capitalists in the United States have suddenly become smarter. They not only have to make up a good story, but also see whether the story can bring benefits.

At this time, I don't know how many Internet companies died overnight.Even more than 40 companies that IDG invested in China have closed down.However, has Ctrip, which was once very optimistic about IDG, survived?

Decided to transform
01 Which product is promising

The Internet bubble burst, will the Internet industry also start to shrink?
The opinion of Shi Mingchun, the representative of Softbank China, is that the Internet industry cannot be said to be wrong, nor can it be said that the entire industry is a bubble.When the industry is growing, there may be some companies whose stock prices are too high and need to be adjusted, and some companies may die suddenly. These are all normal.In fact, there are doors opening and closing every day in any industry. Even if Amazon goes bankrupt one day, it cannot be said that the B76C model is wrong. It can only be said that we need to find new ways.

Ctrip founder Ji Qi's view is to thank the Internet bubble.In a speech, he said: "Ctrip's success is related to team building and historical opportunities." Only with the Internet can there be Ctrip, and only with the Internet bubble can Ctrip be created.The bubble made Ctrip's value overestimated, allowing Ctrip to get an investment of more than 1 million yuan.What we do best is to buy time to integrate traditional industries.

However, it is really difficult to describe the process of the Ctrip team using the Internet to integrate traditional industries.

From the day the company was established, Ctrip's positioning has been to provide online travel services specifically for tourists, travel groups and tourism-related industries.

In this way, selling tour groups should be Ctrip's flagship product.Fan Min, a member of the entrepreneurial team, used to be the general manager of a Shanghai travel agency. He has been in this industry for more than 10 years, and he should be familiar with the operation.

It's nice to analyze logically, but it doesn't work like that in reality.First of all, the profit in this industry is very low, 10% is not enough; second, the competition in this industry is very fierce, travel agencies have their own mature channels, it is difficult for Ctrip to get group customers, and there are basically very few individual customers who make transactions online; and , Real tourism is realized by travel agencies, and travel agencies are more authoritative than travel websites.

In short, it is impossible for Ctrip to support this website through group booking business.This is really unexpected by the Ctrip team.

Selling tour groups does not make money, how about selling tickets?
New Year's Day in 2000 happened to be the transition point of two centuries.For this once-in-a-century opportunity, many merchants want to seize it, and of course, Ctrip is no exception. In December 1999, Ctrip won the online distribution rights for tickets for the New Year's bell ringing at Longhua Temple in Shanghai.

"Welcome New Year's Day to Longhua Evening Bell Event" is one of the most distinctive tourism festivals in Shanghai. Since 1989, it has been held every year.

It is said that this bell ringing ceremony is very grand and quite meaningful.That night, after the gate of the Maitreya Hall of Longhua Ancient Temple was slowly opened, the presiding master first gave a welcome speech.Then, 108 bell-ringing guests came to the bell tower, and the host master put a ribbon with the name and time of the bell-ringing person on each lucky person.Afterwards, amidst the singing of the "Song of the Three Jewels" by many monks, the guests walked up to the bell tower one by one, rang the ancient bell, and prayed for happiness.

The Longhua Evening Bell usually rings after 23:108, and the [-]th ringing is exactly at midnight on the new year.For tourists, this sense of sacredness and satisfaction may only be experienced by those who visit the site in person.

Therefore, this is a very good business, and Ctrip should sell it at a high price.However, to my surprise, Ctrip didn't even sell a single ticket online.In desperation, Ctrip employees had to brave the cold wind and ran to the gate of Longhua Temple to act as "ticket dealers".

Tickets are not selling well, so what about selling air tickets?

After specific exploration, Ctrip found that selling air tickets was not acceptable.After 20 years of development, this industry has become very mature.You can see it by looking at its services. Not only does it provide door-to-door ticket delivery, but it even has an air ticket agency, and it also offers free airport pick-up and drop-off.The most terrible thing is that after the ticket is sold, there is still a process of collecting money.

Selling tour groups, selling tickets and selling air tickets have all been tried now, and only hotel reservations are left.So can this business bring new hope to Ctrip?
02 The most profitable hotel booking
This time, Ctrip finally chose the right one.

Because this is different from selling tour groups and selling air tickets, those have been done badly, and hotel booking is still a new industry that was born less than 3 years ago.

Right now, there is clearly an imbalance between supply and demand in this industry.

For tourists, in the planned economy period, people need a letter of introduction when they go to a guest house, and there are no intermediary companies.However, since the reform and opening up, although there is no need to find someone to issue any letter of introduction, you only need an ID card to move in.However, what appeared in front of the passengers at this time was that, in addition to the guest house with "the sound of the waves still", there were also many hotels of various kinds and small hotels of various kinds.

Which hotel to choose is more suitable for you? Passengers are starting to feel dizzy.Travelers are not told which hostels have vacant rooms, nor is it possible for travelers to carry a guide book with them to find the phone number of the hotel at their destination.

The only thing a passenger can do is to find a travel agency to book a room for him, or make a living in a small hotel next to the station, but these two methods are not ideal.At this time, passengers especially need a professional room reservation agency to help him book a suitable room, and the procedure is simple and the price is reasonable.

For hotels, since the reform and opening up in 1978, the development of China's hotel industry ushered in the first spring.A number of classic joint venture hotels have emerged, such as Guangzhou White Swan Hotel, China World Hotel and Beijing Jianguo Hotel.

After 1984, Holiday Group and Accor Group entered China.Since then, international hotel groups have started to staking their fortunes in mainland China.

Especially in the 1985 years from 1995 to 10, the number of Chinese hotels has been booming all the way, and the number has increased by leaps and bounds, resulting in a relative surplus of hotel supply in the short term.

According to the statistical data at that time, among the 6000 star-rated hotels in the country, 3000 were at a loss, amounting to RMB 72 billion. The industry-wide profit margin was -5.46%, and the industry-wide vacancy rate was above 30%.

Therefore, in this case, they need a professional intermediary agency to distribute.

So who first discovered this blank market, of course not Ctrip.Before Ctrip was established, they had already done impressively.

(End of this chapter)