What issues should startups pay attention to?

Key point 1: Seize the opportunity and define growth indicators

Transaction size? Profit size? Number of employees? Business volume? PV? UV? DAU? …The vast majority of businesses don’t know what they need to grow.

In the process of business operation and decision-making, the first thing you should think about is, what exactly do you want to grow? Before you think through this issue clearly, your investment may be in vain, because blind growth is worse than no growth.

When defining the growth stage, I think the following three points need our attention.

1 Comprehensive assessment indicators

Common indicators for Internet companies include the following: number of new users, number of active users, transaction volume, retention, and profit. I have done tests before, and the above five indicators, no matter which indicator is set as the assessment, will eventually bring side effects. For example, when I evaluate the number of users, the number of users is rising, but it will bring a bunch of zombie users, which is actually an unhealthy growth model.

Therefore, there must be no single metric that can quantify your growth. In the definition of growth stage, don't just assess one indicator, but assess comprehensive indicators, and strongly link all incentives to these indicators, so as to ensure the health of growth. Only when growth indicators are defined can things that grow truly stand up to challenges and tests.

2. Invest funds decisively during the window period

Enterprises pursue different things at different stages of development, and the strategies they use are also different. When the window period comes, it is the most valuable period for growth. During this period, funds must be invested very decisively and to the end.

From the perspective of the Lexin window period, there is rigid demand in the early stage, the policies for Internet finance are favorable, and BAT has not yet entered, so it is extremely easy to obtain capital support for growth. Looking at it today, the window period for Internet finance no longer exists. The window period is very critical. If I were to do it from scratch today, I dare not say that I would do better than I am now.

Lei Jun said that when the wind blows, even pigs can fly. Whether you can catch the wind and seize the opportunity to grow rapidly is crucial to the development of an enterprise.

3. Balance short-term value and long-term value

After the window period comes, you can grow regardless of anything, but the most valuable growth must be able to balance short-term value and long-term value. of value.

Give an example. In 2014, we were in the window period of the installment loan business. We were very crazy about user subsidies at that time. The maximum subsidy for an iPhone was over 1,000 yuan. In addition to increasing transaction volume, this 1,000 yuan also brought real users. What would happen to these users in the future, I really didn’t know at the time. But I know very well how to convert these users into valuable users in the future. If I didn't think about this issue clearly, I wouldn't dare to spend money like this.

Key point 2: Small-scale "proofing" can replicate growth

There are generally two growth models: parallel business overlay growth model and core value-driven growth model.

The parallel business overlay growth model is simple and effective, suitable for industries with limited market capacity. Because it spans different fields, it requires higher talent and has diversified genes; the core value-driven internal growth model is more suitable For Internet companies, this model has huge market potential, low opportunity cost, and high competition barriers.

Enterprises should choose an appropriate growth model based on the industry and development stage they are in. In the early stages of starting a business, it is difficult to raise money if the scale is not large enough. How to achieve growth quickly? It’s a good idea to establish a replicable growth model.

Regarding achieving replicable growth, I think there are three key points: first, small-scale "prototyping", low-cost trial and error, and accurate calculation of input-output ratio; second, standardization of execution actions; third, large-scale replication , achieve exponential growth.

1 Case: How Fenqile grew exponentially in its early days

Let me share with you how Fenqile achieved exponential growth through scale replication in its early days.

In October 2013, we established a marketing center in Guangzhou, with a monthly transaction volume of 5 million.

At this time, we felt very confident. When I went out to raise funds, I told investors that I expected the transaction volume to reach 20 million in a few months. From 5 million to 20 million, is this increase too big? In fact, I only need to copy the Guangzhou model to 5 cities.

During the A round, I went to Beijing to raise funds on Monday, and the money was raised on Friday, because I didn’t need to explain a lot to investors, I just needed to show them our company’s growth model.

In April 2014, we started to launch Series B. At this time, our monthly transaction volume reached 20-30 million yuan.

In September 2014, I told the new round of investors that my monthly transaction volume could increase from 20 million yuan to 100 million yuan. You may think that a 5-fold growth is a fantasy, but I only need to copy 5 cities to the surrounding areas at the same time. One month later, we got the money.

This is a pure window period for us. Without scale, it is difficult to raise funds. So we adopted a very precise, very simple and controllable way to grow.

This is the charm of replicable growth. It is the simplest and most effective way to achieve rapid business growth.

Key point 3: Management-driven, sustainable growth

Although we can achieve rapid growth with the help of the trend, the window period will always pass, and market-driven growth will always encounter difficulties The ceiling and management drive are the core of long-term stable growth.

I suggest that you improve your management level from three aspects: products, operations, and talents.

1 Product system construction

The era of several high-speed growth curves brought about by one person or one product has passed. What we want in the future is a truly product-oriented mechanism and culture. Regarding the construction of the product system, the following points need to be noted:

◆User value orientation

There are several perspectives for designing products: "I" is the most primary need, and the "company" perspective In the middle, the "user" perspective is the perspective that the product should have.

For example, I will require that all products must have the function of user feedback, because a product without user feedback is incomplete.

◆ Iterate and optimize, run fast in small steps

If a product does not iterate and optimize based on the latest user feedback, then the product will basically die because it cannot Adapt to the future market environment.

For example, our products will be updated with a version every month. We will collect product requirements in the first week, discuss in the second week, develop in the third week, test and submit in the fourth week. If the requirements are not completed, we will stop and queue them for the next period. This forms a fixed iteration cycle and management mechanism.

◆ Appropriately redundant resources

Appropriately redundant resources are conducive to innovation. Several of Tencent’s most successful products today are all made by teams with redundant resources in Tencent. came out.

◆ Moderate internal competition

Appropriate internal competition actually helps the development of the entire business.

For example, we have two online cash businesses, both of which use the same credit limit. Whoever digests these credit limits first will be the winner. Moderate competition will allow everyone to continuously optimize their work and improve work efficiency.

Generally speaking, at the product level, I do not necessarily pay special attention to the details of the product. I am more concerned about how to establish a good product culture and product design mechanism within the company.

2 Operation system construction

In my opinion, operation is to continuously make your products achieve more growth goals, liberate manpower, and make some things that need to be done manually become more efficient. Gotta automate.

Regarding the construction of the operation system, the following three points need to be focused on:

◆ System standardization

You need to establish a complete set of indicators that can be counted, and then Break the large indicators into small indicators, and finally use statistical tools to count the completion of these indicators.

◆ Financial modeling

Financial modeling is something that all companies that want to accurately manage growth must practice.

Each business line of our team will be assigned a financial person. Every time we hold a monthly meeting, I will first ask the financial person to tell me how the salesperson's data indicators were completed last month. A good financial model allows you to see the actual development of your business.

◆ Low-cost grayscale trial and error

Every time before subsidizing users on a large scale, we will make many subsidy plans. I will use plan A to subsidize some users and plan B to subsidize some. Users constantly come to test the effect.

We treat this matter very rigorously internally. I must accurately use various data to trace the effects of the money I spend. If it is not accurately quantified and calculated, the money you spend may be wasted.

3 Before the troops are moved, talents come first

There are two core resources of an enterprise, one is capital and the other is talents. Regarding talent allocation, I have the following suggestions:

◆ Allocate talents in advance

In terms of talents, my consistent thinking is "before the troops are moved, talents go first." If you have a good grasp of your future growth expectations, you can allocate your talent in advance. After the A round, I hired a senior executive at a "sky-high price" because I knew what kind of growth pressure he would bear next year.

◆ Recruit the team from top to bottom

In the process of team building, we will build the team from top to bottom. I first found the core employees and asked them to form a team. I believed that the people he recruited would be more professional than the ones I recruited.

◆ Training system

After recruiting employees, a talent training mechanism must be established in a timely manner to allow employees' abilities to keep up with the growth rate.

The above are measures to promote sustainable growth through management methods. Management-driven growth has no bottlenecks because it is more certain.

Key point 4: Manage growth expectations and accurately grasp the pace of growth

Regarding the pace of growth, many people have a misunderstanding and believe that the faster the growth, the better. In fact, this is not the case. Fast growth is not necessarily a good thing, and slow growth is not necessarily a bad thing. Different periods should have different growth rhythms.

Companies in the angel round should clearly describe their business models; companies in the A round should verify the business model and growth potential; companies in the B round should replicate on a large scale and pursue exponential growth; companies in the C round should A growth mechanism for long-term sustainable growth should be established; listed companies should manage growth expectations and achieve 100% controllable growth.

When your company has reached a certain stage of development, especially when preparing to go public, you must accurately grasp the pace of growth, grow continuously and steadily, and build everyone's confidence in you. If you push hard for performance in order to go public, push your profits very high, and lay a huge hole, once the performance fails to meet expectations after the listing, the stock price will start to fall, and it will be very miserable.

1 Case - How Tencent controls the pace of growth

When it comes to controlling the pace of growth, Tencent is very good among domestic Internet companies. If you look at Tencent's financial report, its annual transaction volume growth remains at around 40% year-on-year. From a market value of less than US$1 billion in 2004 to a market value of US$400 billion today, this is the result of Tencent's precise grasp of the pace of growth.

Tencent’s control and management of overall revenue is extremely strict.

For an enterprise, the most core resource is people and money. How to spend the least amount of money to achieve the greatest results is what companies should think about. Especially in the early stages of starting a business, companies must spend money wisely.

How to spend money healthily? I have the following suggestions: First, for subsidies based on short-term scale, accurate calculations must be made; secondly, for large-scale spending, rigorous testing must be done; finally, the money must be spent appropriately and based on a long-term value. Barriers to competition.

To summarize, to effectively control the pace of growth, we must first conduct precise budget management; secondly, we must clearly judge the development stage and pursue different growth strategies at different stages; finally, we must have a sense of crisis and predict in advance risks and avoid interrupting the pace of growth.

The four key methodologies for healthy growth mentioned above are all methods we continue to apply in practice. Whether it is suitable for your business needs to be judged by everyone.

If you can accurately quantify your metrics and track them, your growth is half the battle. Many indicators are not created by patting oneself on the head, but by constantly trying to correct them. If you can find the best variables to break through these indicators, you will definitely be able to enter a good growth channel. Tencent Entrepreneurship Platform