Today, what Sequoia Seeds brings is an “outdated” content.
It is “outdated” because the event recorded in this article took place in 2018-Shanghai Zhujiajiao, the Sequoia China Seed Fund held a “small stove” summit for CEOs for the first time.
Over the past three years, the continuous emergence of new technologies and the changes in the domestic and international environment have made the entrepreneurial and investment market ever-changing.
This is the same for Philip, who was invited to the summit to share his experience. As the founder of Dada Group, he was also an entrepreneur in 2018. Today, Philip is the chairman and CEO of this listed company with a market value of more than $6 billion.
In this closed-door meeting, starting from his own entrepreneurial journey, Philip explained his many years of entrepreneurial thinking in the four dimensions of direction, team, product, and financing, especially for the early entrepreneurs off the field. The methodology of these four mountains.
In our opinion, although the external environment has undergone tremendous changes, these experiences can travel through cycles and become more new over time.
Today, we present it completely for the first time. This will be a rare in-depth review of early startup ideas.
Since there are a lot of dry goods, we will present Philip’s thoughts in three phases. The topic of the first issue is about the choice of entrepreneurial direction.
Find direction, ask yourself 3 Why
Dada has experienced many twists and turns in the past four and a half years (Editor’s note: limited to 2018). When we first started our business, we hoped to build a logistics platform based on crowdsourcing. At this time, we were already facing the very critical problem of “going left and going right”. If you go wrong at this time, the company may hang up in less than half a year. We were fortunate not to go wrong, and then to do something right in succession, even in the face of fierce competition, we still survived very well.
Today, some people may think that I have started a business today, and Sequoia has already invested in me. I obviously have a direction. In fact, it is not. I believe that the direction of what you are doing today may be different from what you are doing a year from now or three years from now. So everyone must be prepared for this.
So what do we mean by direction? In my opinion, the direction is that you must answer these three questions:
Why This?-Why should I do this
Why Now?-Why do you do this now
Why Me?-Why is it made by me
These three questions are actually strongly related, and they are not easy to answer. Among them, Why This and Why Now are very important “infrastructure” issues in the entrepreneurial process.
2018 happens to be my home business in the first ten years, recalled this period of time, in fact, there are a few bands, if the time you enter the wrong band, will let the variable as “martyrs”, and go in too late will face life and death Competition, so we must step on the spot.
Some time ago, I came across a piece of data-in the ten years from 2008 to 2018, the total market value of Chinese Internet companies has risen from approximately US$30 billion to US$100 billion. In other words, over the past decade, there is no direction to do the Internet entrepreneurs have missed the biggest wave of entrepreneurial wave .
Why is it in 2008? Because around this time, computers, mobile phones, and broadband began to become popular from a niche, building the most basic infrastructure for the Internet. This is a watershed and a decisive factor for all Internet companies to take off.
So around 2008, social media appeared and began to connect people to people. After three or four years, WeChat, Meituan, Didi, etc. were born successively, and the connection between online and offline, and between people, and between people and services became closer.
When we started brewing Dada in 2014, we seized this wave of opportunities, the opportunity for people to connect. The fundamental reason behind this is that smart phones have become popular, and smart phones are used to issue and receive orders. Now, mobile payment is also popular. So our business model has become feasible.
I found the answer to Why This and Why Now in Sequoia
In this process, we have to thank Sequoia for solving the two problems of Why This and Why Now.
Why do you say that? First of all, when Sequoia invested in us, we did not have anything, not even the company name “Dada”, products, and teams. Sequoia gave us TS and made a real seed investment for us. Second, because Sequoia voted hungry yet , the US group, public review of such enterprises, which find the critical timing point we played a decisive role.
After taking Sequoia’s investment in 2014, we made the first product. At this time, I also met Sequoia and Zhang Xuhao, Wang Xing, Zhang Tao and others. It is very important to know them at that point in time, because through them, I learned that in the summer of 2014, Meituan and Ele.me had almost 100,000 orders a day, but by the winter of that year, they both managed to achieve 1 million orders a day. In other words, in those short months, a huge market broke out.
At that time, if you do it early or late, you will face bigger problems. If you do it late, for example, half a year or a year later, you will find that the market is already very big. These two companies have already made more than 1 million orders a day, and I have 1,000 orders or even zero orders. How can I play? If you enter too early, the entire company and team may not be able to stick to that “burst point”, because the development of a company requires potential energy. So this time point is very important, Why This, Why Now? Why do “this thing” “this time”? It is very important to answer this question well.
Finally, Why Me? This thing looks good, and the timing is good, but why should you do it first? There are many smart people in the market, and there are also many experienced, wealthy, and worthy people… and so on. Then why do you do this? This is something entrepreneurs need to ask themselves.
Where is your previous experience, experience, and enthusiasm, these are all decisive, because starting a business is very difficult, you need to constantly stimulate your enthusiasm, and at the same time ignite your team. All your accumulation and talents will be squeezed out before, so where your talents accumulate becomes very important. In other words, whether your accumulation can be truly released and burst out on that blade is the most important thing.
The general direction is very important, the small incision is more important
Why This, Why Now, Why Me, these are the general directions, but there is a very key detail in choosing the direction: I see the general direction, but where do I start? For example, you see the connection between people and services, online and offline are beginning to merge, but where do you start? Is it a takeaway platform? Or to make a SaaS software? Or open a takeaway chain? Or do logistics? Which link in the entire industry chain you cut into is very critical.
Take Dada as an example. At that time, it was decided to do crowdsourcing logistics. As for how to do crowdsourcing logistics, we don’t know how to do it, but we think that since Didi and Meituan can do it, we can do it, so we started. Do this. At this time, we are making the first very important decision on the company’s future direction. Are we 2B or 2C? In other words, who are your customers?
Are you going to serve end consumers, individual consumers, or serve businesses? I am very firm on this issue. I think we must serve businesses. The first decision we made was to start with 2B, which proved to be a very right decision.
Why do we say that we cut in from 2B? At that time, my logic was simple: Are you hungry? Meituan has made 100,000 orders a day, we are zero orders, and these platforms are rapidly digitizing businesses. For a user, the most common and high-frequency instant delivery demand based on food and beverage delivery has been rapidly e-commerce and modularized. At this time, if we were to build a 2C logistics platform, we would be faced with starting from scratch and being a company that competes with Ele.me and Meituan. I find it difficult to do it.
If we don’t do catering, buy purchasing or other directions, the efficiency of the entire model will be very low, and it will not be able to beat those high-efficiency models that have been e-commerce, so I think we can’t do 2C, we do 2B. This is a very right decision. There have been many such right decisions in history. So far, we have basically made major decisions right, otherwise we will not be able to make it today.
This is a very critical thing. When you choose the direction, the general direction is not enough. You also need to have a very clear subdivision direction.
Seek big opportunities by leaps and bounds, not small improvements in optimization
Regarding the direction, I think there are some methodologies for reference. Since you have decided to start a business and do some new things, these new things are usually not a blank in an industry. If it is a pure blank, you have to ask if it is reliable. Usually there is some kind of solution for this matter. For example, food delivery actually started from the Song Dynasty. This is an industry with a history of thousands of years. Distribution logistics but there is a calendar history, almost from the time it was started.
In short, these industries are not new industries in themselves. Since you are doing a new thing, a new entrepreneurial project, what problem do you want to solve? In fact, the problem of cost efficiency is to be solved. The cost is reflected in either your customer acquisition cost is reduced, or your default cost is reduced, in short, a certain cost of yours is reduced, and your certain efficiency is improved. In fact, in essence, the ultimate goal of all entrepreneurial projects is to improve cost efficiency.
In the past, you had to go to the library to search for information, and it took several days to finally know a little thing. Now you can find it after searching the Internet in ten seconds. This is an order of magnitude improvement in efficiency. In the past, you could only maintain reliable contact with more than a dozen or 20 people only by phone calls and letters. Now you can contact 5,000 people on a WeChat account.
These things are unlikely to happen at an earlier time. These are all cost-efficiency improvements, and cost-efficiency must be improved by an order of magnitude to have a big opportunity. If your efficiency is a little higher than others, then this is just an optimization, not a fundamental iterative or leapfrog opportunity.
If what you see is not a leapfrog opportunity, then the value of this company may be relatively limited. In the choice of direction, you may have to ask yourself after a while: am I doing the right thing, and am I doing the most right thing.
In addition, I have another feeling about the direction, don’t to VC! Even to Sequoia will not work, because to VC companies eventually hang up. At the same time, don’t catch all the air vents, it is very scary, there is usually a chicken feather behind the air vents. You need to have some real in-depth thinking of your own. You have to understand. Don’t feel that this matter is reliable because of who did it, who raised the money, or who invested. If you think about it this way, you may not go far.
First thing, you need to follow the trend and think about these three questions: Why This, Why Now, Why Me.
The second thing is that you must create value fundamentally and increase cost efficiency by orders of magnitude.
The third thing is, don’t go to VC, and do a deep thinking and judgment from the bottom logic and first principles of the matter.
These are my three suggestions on the choice of entrepreneurial direction.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/dada-kuai-jiaqi-before-an-entrepreneur-chooses-a-direction-he-must-think-clearly-about-these-3-things/
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