Sun Yuchen's 2016 Investment Thoughts: How to Predict Tencent, Tesla, and the Crypto Era?
Author: Jaleel Plus Six
Original title: Sun Yuchen's 2016 Investment and Entrepreneurship Thoughts: Buying Tencent and Buying Tesla, How Can He Predict This Era?
Recently, the hottest commercial war in the traditional industry is not the Lao-Luo war against Sibemo.
At the end of the hustle and bustle, there was actually no getting around a simple question: Why are “pre-made dishes” so common in restaurants now? The answer is four words: replicability. A company, like McDonald's, can only become a big business if it achieves 60 points of quality and standardizes it.
Who would have thought that Sun Yuchen nine years ago had already explained this “60-point large-scale entrepreneurship logic” very thoroughly. Taking the perspective from restaurants back to business and investment, you'll find his series of “leap choices” back then: mining Bitcoin in 2012, reverse-investing when Tesla was shorted, shifting from investing to entrepreneurship, and moving from apps to blockchain.
Reviewing the content related to investment and entrepreneurship in Sun Yuchen's “The Road to Freedom of Wealth Revolution” course, we can find the reason “why Sun Yuchen after the 90s earned a net worth of tens of billions”, the framework and logic of his investment and entrepreneurship circuit. This is also a strong reference value for young people who are still investing in entrepreneurship today.
To make it easier to read, Rhythm BlcokBeats was organized “from light to deep” and extracted the essence of the last part of this set of open courses on investment and entrepreneurship, as a continuation of “”Sun Yuchen gave a lecture 9 years ago that flashed the Internet: Why not buy a house, not a car, or get married?” and”Why are Chinese people only three generations rich? Sun Yu Chen gave a cruel answer 9 years ago” The last article after” puts a complete end.
Deer don't pass by all the time; you have to lie down and wait
1. What should I invest in to quickly become rich?
Sun Yuchen: Investing itself is actually a big proposition at this stage. I'm sure it will take a lifetime for many people to learn how to invest.
I think there are a lot of targets now that are actually all good. For example, for example, stocks of some very good internet companies, such as Tencent, I think there is no risk in buying Tencent shares, at least for now, including even though I said, don't use buying a house as a strategy, but I think if you have a lot of money, buying a house in Beijing or North China is actually close to the front line. At least buying a house in Beijing and Shanghai is not a loss-making business, but none of these are my recommendations.
The most recommended thing I recommend is investing in yourself. I've already explained this very clearly. The biggest problem for most people is that they don't realize for a day that they should live for themselves. First of all, I don't think I'm selfish at all, because I haven't thought it out. If you can't even live for yourself, how can you still live for your wife? Therefore, the vast majority of people say we are investing in other things. For example, even if you invest in a house in Beijing or Tencent shares, you first ignore that you are the one who should be invested the most.
Do you think you know housing prices in Beijing, or do you know Tencent's stock price? You're not Ma Huateng. But you definitely know yourself best: what kind of person you are, what shortcomings you need to make up for, and where you need breakthroughs in life and career. In particular, for the vast majority of post-90s and 95s, time and money are originally limited. If you spend 20,000 dollars to buy 100 shares of Tencent, even if it rises to 30,000 in 2 years and earns 10,000, then it's better to buy a few more eggs to eat, which will help your health even more. I don't think it's possible to become rich overnight except by buying lottery tickets in this world, so don't think about investing in anything other than yourself.
So from this perspective, Bitcoin isn't actually an “investment” that everyone understands for me; it's actually a kind of personal belief, a vote for a personal career. If anyone works for Tencent now, and you are optimistic about this company, of course I would suggest you spend all your money to buy the options Tencent gives you. Because this is not only Tencent's stock, but also your business, I really encourage young people to join a startup to get the startup's options, and then buy the startup's options. You must combine this investment with your own business, because a person doesn't actually have much capital in the first place, and you must combine everything with yourself. I think only in this way can you truly gain the advantage of concentrating resources and be successful.
2. How to grasp the timing of buying? Take a look back at your three investment experiences: Tesla, Bitcoin, and Vipshop.
Sun Yuchen: Before talking about these three investments, let me share some macro background. Since the collapse of the American-led Bretton Woods system in the 1970s and 80s of the last century, the global financial system has long been decoupled from the gold standard, and overall inflation has shown a trend of moderate inflation over a long period of time. Even under the dollar system, the dollar surpasses every year; Japan and Europe have long-term low interest rates or even negative interest rates. In other words, when money is placed in a bank, not only is there no interest, but it is actually depreciating. The government continues to print money, and the purchasing power of money weakens, leading to the biggest phenomenon in the world: too much money.
Back to the three targets I voted for: Tesla, Bitcoin, and Vipshop. These three investments are just a few of the cases I made while studying in the US from 2011-2014, and are denominated in dollars. Incidentally, even people on the mainland can invest in US dollar targets: US stocks and Bitcoin can participate through compliance channels. I was investing in US stocks as a non-US tax resident at the time, and I was exempt from US capital gains tax if I met the relevant rules. Of the three, Vipshop is a Chinese securities company, Tesla is a US stock, and Bitcoin is a cryptographic currency denominated in US dollars.
To get started with investing, the first lesson is to remember: price matters. Whether the company is good or not and the people are good is certainly important, but the purchase price is even more important. Good standards are not scarce in the world; the key is what price you enter at. Let's not discuss “how to judge a good company” in this section; let's choose “timing”: use three examples to talk about when to buy.
Let's talk about Vipshop first. I think the best time to buy it was during the “bloody listing” in mid-2012. How exaggerated was that? Vipshop's early investors, Sequoia and DCM both had serious book losses: the share price was $6.5/share, while the Series B price had reached $10 per share. Many people will ask: the price is so low, is the company not doing well soon? The reason is not mysterious. There are roughly three reasons: first, China's securities reputation crisis, and Wall Street as a whole despises Chinese companies; second, China's e-commerce sector is under collective pressure, and JD, Van Ke, etc. have been in decline for a while; third, Vipshop's poor Series C financing is not “the money is ready and then listed”, but “it's not a matter of getting integrated and having to go public first.” The triple pressure was compounded, and the price was naturally hit very low. But that just gave retail investors in the secondary market an opportunity: it was never possible for students like me who were studying in the US back then to buy it; in the secondary market, we could buy it.
Let's talk about Tesla. I think the best time to buy is late 2012 to early 2013. There were also three “troughs” at the time. The logic was similar to Vipshop: First, the electric vehicle industry's overall trough. Mercedes-Benz, BMW, Toyota, etc. are all making electric cars, but it's generally not going well. The mainstream view in the market is that hybrid oil and electricity is the future; electric vehicles are being underestimated; second, Tesla has just been launched, and Wall Street has strong shorting power. Many people think of Musk as a “storyteller,” and think that the company only has a concept and no substance, so it goes short; third, the charging infrastructure issue remains unsolved: where and how many charging stations are built, and can they support national travel? These were all questions at the time. Because of this, for an excellent company and an excellent founder, this kind of misjudgment and uncertainty constitutes a good buying opportunity. Investing is essentially about constantly using reality to verify the three views; if you were initially strongly optimistic about oil and electricity hybrid and bearish on Musk, the market will “go to school.” You can learn a lot from tuition fees (provided that positions are manageable).
Finally, let's talk about Bitcoin. I personally think early 2013, or even earlier, was one of the last good buying windows. Unlike companies, Bitcoin was a new thing at the time. The biggest opportunity for something new is to lay it out ahead of time when you judge that its direction and core are right, and most people haven't understood it. Therefore, from the above three examples, we can draw a simple conclusion: the best time to buy is often a “good company/good asset,” but it is not yet favored by most people. Of course, the counterquestion also holds true: since most people aren't optimistic, does that mean it's bad? The key is to discern the reasons for “not being optimistic”: if it is a quantitative problem, such as financial aspects, rhythm, phased sentiment, short-term indicators, etc., it can mostly be solved; if there is a qualitative core problem, such as business logic, technical routes, and long-term trends, then it's a different story.
Take Vipshop as an example. Its proposed B2C flash sale model and the logic of cleaning up inventory can be successful; Tesla's pure electric route and vehicle integration capabilities can be seen to be realized in the long term; Bitcoin's scarcity and decentralized characteristics also have a place in the context of currency overspending and long-term inflation. Good target + misjudgment + good price/good timing. The moment these three things happen at the same time is when I take action.
3. How to understand a company and its vision? Including how to understand fundamentals and financial data?
Sun Yuchen: I think this is very simple. The financial reports of listed companies will be clearly focused, and anyone can download annual reports and quarterly reports from the investor relations page of the company's official website. A vision is often at a distance from the company's current business and the problems it needs to solve, so comprehensive judgment is required. What I'm talking about today is also the result of a comprehensive judgment; if you want to read the company's own statements, just go directly to the customs investment page to read annual reports and quarterly reports. Annual reports are generally more careful and worth reading.
As for financial data, I personally think that 99% of companies listed in the US don't dare to falsify it. The cost is too high, and the cost is too high, so overall financial data is reliable. The key is to see if these numbers point to the problem the company actually wants to solve: whether its money is being used for the right solution, which is very important.
Getting “original shares” and “options” is usually far away for ordinary investors. Basically, only stocks in the secondary market can be bought by the public. Stop dreaming about who takes “original shares” and “options.” If someone is peddling this kind of opportunity to you, it's probably a scam. No compliant company will issue shares to the public on a large scale before a public offering. This is not in accordance with the regulations of the China Securities Regulatory Commission or the US SEC. If this happens to you, don't participate.
So is it possible to get an expiration right? Yes, but only if you work for one of these companies. The original shares are basically only likely to be given to the founders or a very small number of core early partners. For most people, what is more realistic is an employee option: go to Tencent, Ali, Byte, or even work with a company like me, and only get a chance to get it if you do a good job and the time is up (usually around 2-3 years). Whether it's worth the money or not depends on the company's future development.
Another idea you can pay attention to: if the stock price of a technology company newly listed on the NASDAQ falls sharply or breaks due to poor market conditions or short-term weakness, and even falls below the C and D costs of many venture capitalists, the fundamentals have not deteriorated and the founders are excellent enough, then this kind of “golden pit” is worth studying. That was the logic when I bought Vipshop back then; Facebook listed for $38, and once dropped to $18, many funds cost more than 18, which was an excellent entry window. However, this kind of opportunity doesn't come every day; you have to guard it like hunting; deer don't always pass by; you have to lie back and wait.
Let's talk about Bitcoin. I personally think the 6500 price trend is not over yet. Even if it doesn't go up in the 5000-7000 range, it will fluctuate sideways for a long time, so it's not easy to drop off. I think breaking 10,000 is just a matter of time; I'm bullish on Bitcoin as a whole. There was also an ETF applied for by the Winklevoss Brothers in 2017. If it were to land, it would be beneficial. Of course, there will be a lot of fluctuation in the middle. So since I bought Bitcoin, it itself already comes with high leverage. I don't recommend adding leverage, let alone using futures. It makes no sense for people with little capital to beat their hearts faster every day. Personally, I rarely do high-frequency transactions: I first bought a wave of over 100 yuan and sold it when it went up to 6000; then it dropped to around 1500 and started buying in batches. 1500, 1400, 1300... I bought more than 900, and all of the 950 orders that were sold that night were sold, and I was amazed “why are people selling it so cheap”. It went up to over 5,000 a while ago, and I sold all of them again. I'm not bearish; it's just another arrangement. So if you want to buy the 6500 now, you can, but don't be heavy, leave room for yourself to buy as it falls, reduce costs, and it won't be easy to lose money in the long run.
Incidentally, let's talk about Baidu. I am deeply concerned about Baidu. It has long been hijacked by the profit structure of search ads, and its behavioral path cannot be changed; after Google left China, it was “ruined” even more. It always follows the concept of short-term preferences in the capital market. When O2O is popular, Baidu takeout is done, mobile devices also lack unified strategic thinking, and internal turmoil is intense. The overall feeling for me is chaos. In this case, I tend to think of it as a target that can be shorted. It recently climbed to 177, and I think you can consider shorting above 185; if you want something more aggressive, try it around 177. For me, shorting above 190 is more practical, and the margin of safety is higher. Of course, these are my own judgments and preferences.
Back to Bitcoin, I wouldn't recommend entering a heavy position at the price of 6500 right now. The return risk ratio in the 6000-8000 range is average, and the safety boundary is not very high; if it falls, short-term losses may occur, but long-term holding is definitely likely to make money.
Instead, I prefer opportunities with a higher margin of safety and greater confidence. In short, any investment requires rhythm and position management; don't buy a stud in the middle of a mountainside. We also need to be wary of the impact of “mass irrationality”: I bought 1500 and fell all the way to 900, and my mentality was also very painful; so don't take too heavy positions at the beginning, reserve a gradient for myself, buy more and more, slowly spread the costs down, and be a patient long-term investor.
The internet is the last channel to rise in class
4. When did you realize you wanted to start a business? Were you asleep the night you were sure you had earned over $10 million?
Sun Yuchen: This was a very dramatic moment in my life. Strictly speaking, I had already earned 10 million at the end of October 2013, but I was completely unaware of it. Because I'm in retreat to prepare for the LSAT (Law School Entrance Test). The LSAT exam is held every year in February, June, October, and December, and I was watching the December 15th.
And so I actually had my own multi-millionaire status. It's been about half a month, but I didn't even notice it at the time; I was still worried about two or three US dollars every day. Then I was preparing for the LSAT exam every day. I only turned on my computer to check the Bitcoin price on the night after the exam. I was directly dumbfounded: it was about 500 yuan before closing, but it was 6,000 yuan on the screen. The first reaction was a computer error. After confirming a few circles of Bitcoin friends, I was convinced that the price had actually risen to 6000. That moment was really exciting.
First of all, I think there are two things. One is like writing down the prediction of “the sun rising and setting in the east and west” and then actually seeing it happen. It feels like a physicist uses a formula to deduce the orbit of a planet, and then press the map to find it in the sky. Just like back then, based on Uranus's orbital anomalies, and estimated according to the law of universal gravitation, Neptune was actually discovered in the end. My feeling is this kind of joy, almost a “scientific discovery.” Second, we mocked ourselves at the time as believers of “bitterism,” and we had a strong emotional and belief dependency on Bitcoin. I really wept with joy the moment it was “acknowledged” by reality.
So of course I didn't sleep that night. This also directly affected the trajectory of my life, because I always wanted to go to law school and become an ordinary lawyer. Being a lawyer was one of my own life wishes, but after this experience, I completely switched to starting a business and have continued to this day. I actually started my business in 2012, but I didn't consider it a lifelong career at the time. As a result, the success of this investment just made me embark on a completely different trajectory, and I think it changed my life.
5. Is it still too late to access the Internet?
Sun Yuchen: This is like the famous question: When is the best time to plant trees? The first one was ten years ago, and the second one is now. Since 1995, people have been asking the same questions every few years; the last best time was ten years ago; the second best is always now. It still holds true today. When Ma Huateng and Ma Yungang touched the internet, many Sohu and Sina companies were already listed on the NASDAQ, and then took the lead.
The Internet industry is reshuffling very fast, which is of great benefit to young entrepreneurs. The cards are basically shuffled every 5 years. It's like playing Texas Hold'em. This is a poor hand, don't worry, grab another one; wait 5 years for another wave. The industry is re-ranked every 5 years, and sometimes new hot spots pop up in less than 5 years. As long as you're on the table, you can always wait until you have a good hand. Wang Xing is the best example.
In 2003, Wang Xing returned from the US to establish a “school intranet”, which ended in failure, and finally sold it to Chen Yizhou at a low price. In 2007, he did “Meal No” again, but it still didn't work. At that time, Mean no ran into the red line of regulation and was completely undermined by “unplugging the internet cable”; otherwise, today's popularity might not have been Sina Weibo, but the food no. In 2010, Wang Xing fought back after losing, and founded Meituan. This time, he finally turned over and became a company with a market capitalization of 10 billion US dollars. You see, Wang Xing started a business in 2003, 2007, and 2010, seizing a wave of opportunities every three or four years. Basically, this is the logic.
If you're in a traditional industry, it's much harder to get around. First, traditional industries are seldom shuffled; whoever gets a good card in the beginning can often always win. Look at many industries in the US, Carnegie and Rockefeller, which were the first in petroleum and steel, once they have established a leading edge, they are also heavily invested in assets. Unless they encounter the once-in-a-century energy revolution, it is difficult to shake them up. The financial industry is similar. Once brands such as Morgan Stanley and Goldman Sachs are established, it is difficult for you to compete with the giants even if you go it alone.
The internet is different. Even if they fail to start a business, “serial entrepreneurs” are more favored by venture capital. The Internet is changing rapidly: Sina, NetEase, and Sohu were the most popular in the previous ten years; now they have been replaced by Alibaba and Tencent. Baidu could also be called BAT two years ago; now, in just two or three years, everyone is already talking about “AT,” and to some extent B has faded out. Back then, when Sina and Sohu were in the middle of the day, many “veterans” who came up later hadn't even entered the business. So I think there are opportunities to enter the internet industry at any time.
Another advantage of the internet is that it explodes quickly. Let's say we “stay with me,” even if we don't mention external cases. I've been working for the company for over a year, almost 2 years, and I've only been in business for 5 years, but the valuation, revenue, and net profit of “stay with me” have surpassed that of companies that have been working in the restaurant and traditional industries for 10 or 20 years. It's a great deal in terms of time efficiency; it's also better in terms of human efficiency. Our team of more than 30 people can reach the same size as 3,400 or even thousands in traditional industries. One employee can top ten or even twenty of them. So, the internet really does smell good.
6. When you started starting a business, you ran into trouble. What did the investors say to you?
Sun Yuchen: This is also a very interesting point in my life. I just returned to China in January 2014. I made an appointment with several investors to discuss the project before the Spring Festival. A very famous fund partner didn't even wait for me to finish talking about his ideas and directly said to me, “Yu Chen, don't let your parents worry anymore. Revise your resume. Now it's still 6 months until a new batch of international students return home to find work, so you're still a fresh graduate. The qualifications of fresh graduates are very important; they may be able to settle in Beijing. Don't mess around, don't waste your fresh graduate qualifications and chances of settling in, and finally you don't have a job. Don't think about starting a business; just look for a job.”
Looking back now, most of it was out of kindness. He probably really felt that I was at an average level and couldn't support myself; in terms of time, I really only had 6 months left to find a job, and I haven't had a good internship experience. However, I still felt that I was being seriously disrespected at the time, and the reaction was huge.
I went back to him: “I started a business even though I never worked, but Zuckerberg and Bill Gates started a business before. Their first project was a success. Why did I have to work before starting a business?” He asked me, “Do you think you're Zuckerberg or Bill Gates?” The conversation fell apart on displeasure. If you think about it now, it's still that saying; stick to the original intention.
7. What is the hardest stage in the process of starting a business?
Sun Yuchen: I don't think it was difficult at the beginning. When I first started my business in 2012, I didn't understand many things, and I couldn't even register a US company or file taxes. But because everything is fresh, even though it's hard work, I learn something new every day, so I don't need “enthusiasm” to support it. The real difficulty is that after two years, the freshness completely faded away. For example, by 2014 and 2015, starting a business had become part of your daily routine and life. Can you think of it as a long-distance run at this point and be willing to run this long-distance run? I think this is the only difficult thing.
Around 2014, I went to Lakeside University for a few courses, and since then I have made a very important decision in my heart: I will start a business for the rest of my life and position myself as a “professional entrepreneur.” Starting a business may fail; the Accompany Me App may not succeed, or even the company will go out of business. But I'm likely to slow down, work on the next project, and never live another life. For me personally, it was a spiritual liberation.
Since my freshman year, I've always had a strong identity crisis: I don't know who I am, what my value in life is, and where my direction is. The pain and detours brought about by this mental confusion and strategic gap far outweigh “not enough effort” itself. Looking back, at age 26, I'm probably at my happiest stage so far. It wasn't because I made money and achieved what the outside world called success, but because I solved my most fundamental identity anxiety: I knew what kind of person I was, what I was willing to fight for the rest of my life, and found clear coordinates for my position and strategy. For me, this is the core of happiness.
8. Traditional industries have a relatively stable environment, enough known data and an assembly line production model. People can often make accurate trend predictions about the future of the industry and make industry reports for five or even ten years. However, there are too many uncertain things in the Internet age. Products are uncertain, users are uncertain, and trends are uncertain, so how should we find a way to adapt to “uncertainty”?
Sun Yuchen: The first one is familiar to almost everyone, MVP. The MVP here is not the “most valuable player” in basketball, but a minimum competitive product, or “minimum usable product.” In the Internet industry, the external environment and user behavior are highly uncertain, and we must let “data and reality” tell us where our products should go. I remember Zhang Xiaolong saying, “Products are not designed; products are evolved.” In other words, even he himself couldn't predict what WeChat would look like in two or three years from now; everything had to evolve iteratively around user experience, usage scenarios, and data feedback.
From this, it was decided that the product should be as restrained as possible in terms of initial investment: first make the version with the lowest cost and the most streamlined functions, but can actually be used, use it to gather feedback, verify assumptions, and then evolve according to user experience. This is exactly where many traditional companies are least comfortable “touching the Internet.” Many of my friends at Changjiang Business School have met: as soon as they decide to transform the Internet, they need to design an “all-encompassing” website or app, think out the features for five to ten years at once, and then let the product manager do it all in one go. In the Internet world, this is almost impossible. The correct posture is “run fast in small steps, iterate quickly”, polish only one small function at a time, and then build it layer by layer.
Since I am also a member of the Committee of the Chinese People's Political Consultative Conference, I can see similar issues in government projects. When working on livelihood projects, they always want to “get it in one step” so that ordinary people can enjoy a complete “Internet experience” at once, such as various “livelihood cards” and “welfare platforms.”
However, Internet products are never completed in one step; even whether these projects are established must wait until they go online and use real user feedback to judge. The traditional engineering logic of “project establishment - approval - one-time completion” causes huge waste: either the project is eliminated from the technical route as soon as it is implemented, or it cannot be continuously iterated according to reality and user changes, and eventually becomes an “unfinished project.” However, the “pilot-verification-iteration” mechanism, which truly conforms to the Internet worldview, is often not within government processes, making it difficult to use good methods.
The methodology is summed up as: MVP + rapid iteration. Mainstream Internet products are updated ten to twenty versions a year, on average once every two weeks; it can be seen that the pace is fast. Take the “Accompany Me App” I founded as an example. We basically maintain a biweekly version rhythm, so that users can use a new version that is more in line with their experience and perception every once in a while. Even so, our pace isn't necessarily fast in the industry as a whole. In contrast, the renewal cycle for traditional engineering and consumer goods is often measured in “years” and “ten years,” and housing is even measured in 20 to 30 or 50 years. However, in the Internet society, these long cycles are compressed into “yearly iteration, monthly iteration, weekly iteration,” and even “daily iteration.”
Further, everyone can see that the app form will gradually be replaced by a lighter one in the future. In the era of “what you see is what you get, what you touch and use” such as H5/applets, even local updates are eliminated. As soon as the server is updated, users immediately use the latest version. As a result, the pace of micro-innovation and iteration is being reduced to a granularity of “measured in seconds.” In an age of “iterating by the second”, who of us would dare say that everything we have can be done once and for all, never changed?
Let's talk about our college life. I shared with my friends how I joined a club when I was in college. I remember at Peking University. When we first joined the club, many of our friends only joined one or two clubs, and then ended their college club career. As for me, I'd rather report 20 or 30 first, run through each club in two weeks, and then leave one or two of them to participate for a long time.
This is the practice of using the “uncertainty principle” to explore first, use real experience and data feedback to filter, rather than “plan” based on imagination in advance. The same goes for the workplace: Many people explore multiple companies and positions in the early stages of their career, and only enter the racetrack they are better at after a year or two. This path of “trial and error - learning - iteration” is probably the better solution to freedom of wealth in this era. Even in traditional industries, this would be a huge conceptual breakthrough.
9. You've always said that the Internet is good. Where is the Internet better than traditional industries? What are the core strengths of the Internet industry?
Sun Yuchen: Because the Internet not only created a new world, but it also released a large amount of suppressed demand for the old world. A typical example is that e-commerce has spawned the express delivery industry, which has led to an increase in overall social retail sales. Today, let's talk about the second benefit of the Internet, which is good for merchants: as far as it is concerned, it is relatively far from all kinds of regulations. The reason is also simple: the Internet is a new thing. Although everyone in the industry knows that it has no “mysterious” high-tech threshold, outsiders often think about it very deeply, and the government has limited understanding of it, so it is relatively poorly managed. This is very important for the healthy development of the industry.
As a simple example, take the “Accompany Me App” I made myself. The company has been in business for so long, and the Environmental Protection Agency has not visited the door, and the departments of anti-corruption, family planning, health, etc. have never been in trouble. Other than paying taxes according to law and paying social security for employees in accordance with regulations and dealing with tax and social security departments, we have almost no intersection with other government departments. This is actually a huge dividend for first-time internet entrepreneurs.
Why do you say that? I attended the CEO class at Changjiang Business School, and after talking with classmates working in traditional industries, I discovered that regulations are generally very strict there. Take mining (such as copper mining) as an example: in the eyes of some local governments, you are a “fat sheep,” and they can't help but send a working group to stay at your company. Energy saving and emission reduction, environmental protection; production safety, quality inspection, and safety supervision; not to mention taxation, all departments have been completed. Compliance processes in many places are not transparent, and whether to “pass” often becomes a matter of relationship and cost. Take the most common fire report: although there is no nominal requirement for a “designated company”, if you don't follow the “default path”, the process may be delayed for a month; using a “designated company” can go through a week. For businesses, all office space has been rented; of course, the sooner the better. This kind of “card time” threshold is not uncommon in quality inspection, security checks, energy saving, etc.
Some might say: Miners are a minority after all. Let's change the general scene and open a bathhouse in a big city. The entrepreneurs thought “selling hot water” was simple: just set up a bathhouse, heat the water, and provide services. However, as soon as it opens, industry, commerce, and taxation are standard. Water and electricity need to be communicated, environmental protection depends on chimneys, city management needs to look at the exterior of the door, health and disease control needs to be inspected, and fire safety can also identify fire hazards... Departments come one by one, and many also “want you to cooperate at any time.” Looking back at the end, not many real problems were actually discovered, but whether it can be driven, how long, and when it can be driven is often in the hands of others, so the gray cost of “punching everywhere” came out.
Whether it's a “big startup” or a “small business,” administrative regulations can significantly raise costs in many traditional industries. From an economic point of view, this is tantamount to artificially increasing your unit cost. Originally providing a bathing service, it was probably 100,000 to start; all kinds of pre-approval and compliance costs were combined to easily become 200,000. In the end, of course, it will be passed on to consumers, but entrepreneurs will also be burdened by these things. In my early years, I also tried running my own firefighting and running processes in order to save money. The facts proved that the gains outweighed the losses. Now I'd rather have someone do it and focus my energy on more important things. Not to mention that in the past, even registering a company was very troublesome, which gave birth to a large number of agency agencies.
Therefore, “streamlining the military and government” is essential to the business environment. The simplest rule of business is: the less regulation, the more active the market; the more regulation, the more sluggish the market. What's more important to note is that most of these controls occur “before you enter the market.” A large amount of compliance costs must be paid in advance, that is, when you haven't opened a business or earned a penny, you must first hand in all kinds of “tickets”. Here's an inappropriate analogy: the underworld at least waits for you to make money before collecting a “protection fee”; some upfront compliance costs are that you only “want to make money”, and even if future profits and losses are uncertain, you have to pay first. This is not an income tax based on profit, but rather a number of upfront expenses, which has only raised the threshold for starting a business.
10. How to earn your first million? How to choose a promising industry circuit?
Sun Yuchen: I think the core of earning 1 million, making 10 million, or even Wang Jianlin's “small target of 100 million” depends on “strategy.” If a person is really eager to succeed and make money, execution is generally not a big problem; if I work hard, I default to option B, at least not much worse than others. Therefore, the most important thing is strategy, especially after entering the workplace for 3 to 5 years, to think about “choosing an industry.” Which industry would be more helpful? Broadly speaking, I think priority is given to the Internet industry; non-Internet industries also need to figure out how to integrate with the Internet and use the Internet to improve efficiency and expand output. Many examples today revolve around the Internet, but “the Internet” is not as simple as “going online”; it has a complete set of methodologies and industry standards. I've met quite a few traditional bosses in business school. They understood the Internet as “making a website,” but the difference is actually huge.
Let me first talk about the 5 military rules for “choosing an industry.” These 5 rules apply not only to career selection, but also to analyzing companies, selecting stocks, investing and choosing a career. The essential judgment framework is very close.
Article 1: Select an emerging industry that has not experienced a “big explosion” but is about to explode. The industry's dividends are greatest at this stage. For example, in recent years, leading companies are generally doing well on platforms that do live streaming and have a lot of traffic, because they have taken advantage of industry dividends. You may be in a leading company. Even if your performance is average, you can make money as the industry soars. Pay attention to the pace: it's too early to become a martyr (for example, many people who used artificial intelligence a few years ago became cannon fodder because many fields haven't been fully commercialized yet); too late to reap the dividends.
Article 2: The industry must be “fast and for a long time”. My basic definition is: compound annual growth of at least 20%, and continuous growth for 10 years, preferably 15 to 20 years. Use this to sift through A shares. Most companies don't meet the standards, and many racetrack ceilings are right in front of you. For individuals to enter an industry, they must have a complete cycle of “entry - accumulation - harvest - exit”, which can take 10 years; if it reaches the peak in two or three years, there is no point. Buffett chose Coca Cola back then, also because he judged that the carbonated drink market had a “long runway” of continuous high growth. Compound interest didn't look amazing a few years ago, but the runway is long enough, and the momentum is impressive.
Article 3: Reproduction must be fast and diffusion must be intense. Can you quickly replicate to more cities/crowds/scenes after getting through at one point? This is a typical characteristic of the internet industry. For example: Luo Min, who works upstairs, was still very young two years ago, but now he is a Qudian Group and is preparing for an IPO on the NYSE. It can be implemented. The key is that as long as one school runs the risk control model, it can be quickly rolled out to more schools and replicated. The same is true of our own Accompany Me app. Once the live audio game matures, it is based on “replication power” to expand across the country. The opposite example is food, especially Chinese food, which is difficult to standardize and replicate; a Michelin three-star chef is a scarcity of “people”, not a scarcity of “processes”. With family roots and 20 years of training as a head chef, how many restaurants can you open at most? McDonald's can replicate; it's essentially a “standardization” and a “real estate model”; it doesn't rely on a master. Another example is healthcare, law, and investment banks, which rely too much on “human” deliveries, and scale expansion is naturally limited. You can't recruit 200,000 investment bank advisors like JD to do IPOs all over the world; quality and compliance will collapse in an instant. Therefore, the market value of many brokerage firms and investment banks is not as exaggerated as you might think. As a result, even when traditional corporate financing is paid, copying is slow; the reason why Internet companies dare to finance hundreds of millions of dollars is because once the model is implemented, the replication speed is very fast. We need to be wary of the “fake Internet”. It's just moving the business online, but the core process cannot be replicated or standardized, and in the end, it still doesn't work.
Article 4: The demand must be obvious, preferably “just needed” or a new demand that has not yet been discovered. Many companies have VR/AR/AI concepts, but they don't meet the “obvious needs/replicable” requirements, so be careful even if the track looks new. Here are two examples of “just what you need”: the high-paying users of my app. The core motive is simple, “boring.” After the 90s, who were rich and idle in Tier 3, 4, and 5 cities, getting rid of boredom was just what they needed; the reason Momo made money was also to seize this kind of demand. Another example is early school loans. Banks didn't do it, but college students had a strong demand to borrow money to buy iPhones and packages, and they couldn't stop them. “naked loans” even appeared in the news. “Just need” doesn't have to focus only on clothing, food, lodging, and travel; those racetracks are often ruined. We need to understand human needs from the “Seven Deadly Sins”: Pride shows off corresponding to social networking with acquaintances; the desire for lust also nurtures a huge market within the scope of legal permission... Using human nature to look at needs is more effective than focusing on categories.
Article 5: Match your abilities and achievements. The first four are true, and that doesn't mean it “belongs to you.” Do you have 10,000 hours of experience in this industry? Is the team genetically compatible? Many large companies roll over because they “rush up as soon as they see a new opportunity”, and as a result, they are seriously dissatisfied. The first four are fine, but they don't suit you, so be an investor, not yourself. For us ordinary people, there aren't many pure investment opportunities like this, because the “new and about to explode” good tracks often haven't reached the secondary market.
When it comes to the secondary market, I like the opportunity to “sprout from old trees”. The company has been listed for a long time and has been obscured for a long time, but in the face of industry reshuffle, new demands/new technology, the original accumulation was ignited, and the table was re-washed. It just got two A's. The star of 2016 was Nvidia, the first artificial intelligence company: it was originally used as a GPU and was overpowered by Intel; with the advent of the artificial intelligence era, GPUs instead became the core of computing power, and demand for the B-side soared. It is in line with the first four: a new track, fast growing and long, replicable globally, and strong demand. Companies that bet on AI don't care whether chips are expensive or not, and “genetically matched.” This is a “God-given opportunity.”
Here's another one I found good in my recent analysis: LC (LendingClub). Internet finance is still an emerging industry in the world. Judging from US credit data, it is very small in size and growing rapidly. 20% has not been a big problem for 10 years; the model is replicable, and it “educates peers” globally; financial demand itself is just what is needed. The only shortcoming is Article 5, the risk of implementation of management changes. The company's founder/CEO/chairman was directly replaced by the board of directors due to compliance issues. At one point, the stock price dropped to more than $3, and the cash on the account was quickly higher than the market value, then returned to around $6. The general environment of the industry, interest rate hikes, and supervision are unfavorable in the short term, but the “old trees sprout” structure is still there. Here, I'm just analyzing it according to the framework; it doesn't constitute trading advice.
Similar opportunities include some companies in 3D printing: they went public early in the morning and fell due to “fake demand,” but when technology/costs/scenarios are completed, the secondary market will give a window for “value return.” If you grab one, it's more than a million in the order of a million.
Choosing a company, choosing an industry, and choosing a boss also uses this framework. If a boss's judgment path is the same as what I said above, if you join his company, at least you won't be taken as cannon fodder. After buying stocks, first use this method to pick an “industry+boss+job” because you bet on two or three years of youth; stocks are at most a sum of money falling asleep, but human capital misses the track, and the cost is extremely high.
Finally, my two investment cases also fully met this set of standards. From the end of 2012 to the beginning of 2013, I bought Tesla: it is on a new energy car track that “doesn't have much development, but it's about to explode”, and there are countless martyrs in the industry; Tesla's entry point is extremely accurate, making a “cheap sports car” first, seizing the immediate need for “acceleration” in the sports car field. Trains accelerate more rapidly. People in Silicon Valley who don't want to either drive a “native” sports car, love trends, and aren't that rich are all taken down. The track is “fast and long”, and running for 10 years is not a big problem; in terms of replicability, the Tesla factory is highly automated, with almost no workers in sight; production capacity is an engineering issue rather than a human problem; demand is obvious and marketing is strong; team matching, Elon Musk is an expert in government relationships and marketing, and new energy sources are inseparable from policy resources such as subsidies and road rights; new concept companies look at marketing capabilities in particular. Musk's previous experience with PayPal also proved his execution ability. So I bought this company's stock at the time.
Therefore, many Xiaobai only understand linear functions; once they become dynamic or multivariate, they can't understand them. This is actually a typical poor person's mentality. If you were to draw a picture of changes in wealth: the horizontal axis is time, and the vertical axis is wealth value. Xiaobai usually thinks that wealth will grow in a slow straight line: if you want to earn 1 million, you have to climb up little by little by 10,000, 20,000, 30,000, 40,000, 50,000, and 60,000. However, in reality, the real wealth curve is more like an upward parabola. The growth rate in the early stages may not be as good as the straight line: the straight line has already saved 50,000 or 100,000 in the second and third year, and the parabola is still below the straight line; however, by the later stages, the explosive power of the parabola will far exceed that of the straight line. Perhaps a straight line will take two million steps to 50 years, while a parabola can reach this level in the third, fourth, and fifth years.
Take a senior Ali engineer as an example. Everyone knows that these people are probably very rich; many have families in the tens of millions. But if he worked for Ma Yun's company for 10 years and saved a total of 10 million (we still calculate less), would Ma Yun send him 1 million a year, 10 years in a row? Obviously not. In 90% of cases, Ali received a monthly salary of 120,000, plus a few options; his salary would be around 12 million in four years. The key point is to have an option vest every year, then cash out Ali shares to get millions, and add up to this 10 million in revenue.
The vast majority of real money-making models are like this. But Xiaobai couldn't understand it; they only understood “straight lines.” In their opinion, one person must earn 10 million on wages: monthly income of 100,000, annual income of 1.2 million, and 10 consecutive years. However, it is difficult to accept the difference in the path of “wages are not very high, and options are cashed out to form exponential growth.”
Another example is that I've recently started a new blockchain and digital currency project. The English name is TRON, and the Chinese name hasn't been completely decided yet. The rules in this field have yet to be drawn up; it is a new circuit where “the rules have not yet been formed.” Some well-informed people have already heard it, and even went to my Weibo to ask. I think this type of person is not bad, and is likely to make money because he is well-informed. Unlike some people, Elm's head is very numb, and he is still indifferent even though the floods have rushed to his doorstep. The differences between people are often in the flow and sensitivity of information.
About this new project, I'll explain in detail in the program later. Why should we work on Bitcoin, blockchain, and digital currencies? The core is also because it is a new field, rules are being formed, needs to be integrated urgently, and has high potential for growth. Incidentally, recruitment: We currently have the greatest shortage of computer-related talents, and we also welcome students who are strong in mathematics and algorithms. Even if you don't work in technology, as long as you can do customer service, marketing, PR, and promotion, we welcome it. If you want to visit our company, you can leave a message on my Weibo “Sun Yuchen” of the same name, or leave a message at the bottom of this program. A colleague will contact you.
Blockchain also counts as a financial sector. Let me choose between “finance”: blockchain, or go to Morgan Stanley and Goldman Sachs, which have established rules and seem so tall? I would definitely choose the former. Because in such a big company, you go all the way from being an ordinary analyst to MD (Managing Director), let alone 20 or 30 years, until your hair is white, and this is still a smooth script. However, if I have been deeply involved in virtual currency in the past 20 or 30 years, I can mix up the CEO of a good company even if I “mix it up”; what I earn at this time is often much more than MD, and my sense of accomplishment in the industry is much stronger. This is the advantage and dividend of “making rules.” When the rules are set before going in, we often joke, “You can't even eat poop when it's hot.” Therefore, it is often the best choice to try to work in fields where the rules have not been established.
11. But now that social classes are so solidified, how should we work hard?
Sun Yuchen: In China's transition period, internet startups are the last upward channel. I've said it many times on the show, but many people still don't believe it. There is a good saying in the Bible: God shows people the truth, yet the world turns a blind eye. Many people who complain about the solidification of the class have indeed overlooked the fact that the Internet is an important opportunity for the country's development and also provides an upward channel for many people, but they often miss the opportunity. As far as my personal experience is concerned, as long as you work for an internet startup, you can become a semi-senior veteran for one year, a senior veteran for two years, and basically the oldest employee other than the boss in three years. Of course, on the premise that the company doesn't go out of business. If you switch to another industry, it's almost impossible to get this kind of treatment.
If you become a civil servant, you've only just started for three years. At most, you can figure out the office process; other state-owned enterprises and traditional industries are similar. Let me take the example of my classmate. Everyone can sit in the right seat. He graduated with me at Peking University and later went to the top five schools in the world for his master's degree (not to mention which, Harvard, Yale, Oxford, Cambridge, Stamford, everyone guesses). Graduated into one of the four major domestic businesses. Three years after entering, I basically figured out the way, but in these three years, don't ask for salary increases and promotions; don't even think about it. It's very much like entering a government office, first hitting “500 Kills Mighty Bang.” In the first year, I was assigned to the most remote and backward branch to work as a teller, so called “understanding the grassroots.” To put it bluntly, I really need to exercise. Half a month is enough; in fact, it didn't work for a month; it didn't last a year at all. Returning to a big city the next year and continuing to work as a teller may incidentally lead to the so-called “advanced business” at the office touchpoint, but that is a job you can learn in just three months. The third year's performance was particularly good. Maybe I was able to go to an overseas branch, and still do the most basic job. Anyway, the first three years were the starting price, so you can't ask for too much.
You need to understand that this is already the best promotion path. It's not an unmistakable experience, but rather a “reuse.” Just like you came to “the app with me,” I'll let you clean the door for three years, also called “reuse.” In the banking system, you have to understand it that way. Banks are of course a good industry, but in terms of promotion channels, they are far worse than the Internet. This also explains why some banks have repeatedly revealed “unspoken rules” and sexual harassment: the room for improvement is too narrow, and power is highly concentrated. Many people go through the grey channel in order to quickly change things to the right and rise to power quickly.
And we don't need it here. I've been in business for 5 years, and there are no unspoken rules. It's simple: the company only looks at performance. If someone with strong abilities comes in for two months, they can be put on the front line or even lead a team; those who are mixed up are invited to leave in two months. What we want is a result, not a “kill stick.” Because of this, it is difficult for internet companies to breed sexual harassment and “unspoken rules”. They often arise from scenes where power is unequal: the director decides the life or death of an actor in one sentence, and the leaders in the industry decide once and for all. Startups are different; you can break through the ceiling on the spot; but if you're “Mr. Nan Guo,” you can't get along here at all; the boss can tell at a glance. Conversely, people with real skills will soon be seen and reused in such companies, and there is no “three-year starting price.” At an internet company, you can do a great job in three months and be remembered by everyone.
Why can you become a veteran after spending three years in an internet company? The reason is simple: the average lifespan of a Chinese startup is just 2.7 years. If you work for one year, 50% of the company will go bankrupt; if you work for another year, half will go down; in the third year, half will be eliminated, and not many will survive in the end. Being able to work for three years at a startup first shows that you have a good vision and have picked a team that exceeds the average lifespan. We've been working on this project for 2.5 years now (I've been in business for 5 years), and the business conditions are OK. Visually, it's not a big problem to live for another 2 years; it should exceed the average lifespan.
Second, you must have been a veteran for three years. The company has been around for a total of three years. You worked from beginning to end, aren't you a veteran, who is a veteran? Moreover, startups have a large turnover of personnel. Using our own experience, people came to “practice” in every position at the beginning, and in some cases, I found out and invited them to leave; maybe three or four were fired to keep one really competent. There are also people who think it is “inappropriate” to take the initiative to leave. The turnover rate was indeed high in the first two years, but gradually stabilized in the second and third years. At this point, what was left behind was basically the backbone.
Third, three years is usually the beginning of a company's harvest period. Many teams didn't make it through the first two years, and if they are still there in the third year, it means that it has found a position and direction in the market and has begun to grow steadily. By the fourth or fifth year, it hasn't fallen, and that is often just entering the fast track. Companies that can survive for ten years have basically formed a very clear advantage in the field of segmentation. Look at Ali, he's only 18 years old today. This curve is very similar to the medical age mortality rate: the death rate for children aged 0 to 4 in China is about 1.2 per 1,000; after age 4, it drops to about 0.2 per cent at the age of 5 to 9, and continues to drop to about 0.1 per cent at age 10 to 14. The risk in the front is 6 times that of the back. The same goes for companies: Newborn are the most vulnerable, have the lowest immunity, and can't do anything but cry. When we first started our company, we had a tearful history: if we wanted to recruit people, we had to recruit people first; we didn't even know who to find to change the water in the water dispenser; without administration, we had to do everything ourselves. At the same time, whether your idea can be verified by the market and whether it can attract enough users and partners is also being tested. When these key issues are straightened out, it is often the third year, which is why the “high death rate” of startups is concentrated in the first three years.
12. In the traditional concept, starting a business often involves opening a store, turning it into a century-old store, and adhering to a stable set of business philosophy and human principles for a long time. But your new generation is post-90s. Like Yu Chen, you just mentioned, you believe in the power of “constant agitation” and “long-term persistence,” and regard “continuous torsion” as your creed for the next ten years. I've also seen you jump from company to company, from industry to industry. My question is: In your opinion, which path is more important for a startup to continue refining a “century-old enterprise” or continuing to struggle through trial and error between different industries? How do you balance these two choices? Which one do you agree with more?
Sun Yuchen: I really want to answer that because it was really well mentioned. While attending Lakeside University, Ma Yun told an example that left a deep impression on me: when he went to Japan, he discovered that the companies there are often hundreds of years old, but they are all very small. He entered a store with Sun Zhengyi, and only learned after shopping and chatting with the store manager. This store has reached the 4th and 5th generation, and the store is less than 10 square meters. It is very compact, and the “120th anniversary of our store” sign is still hanging at the entrance. I remember this very clearly.
I think the reflection behind this is the internal “genetic” differences in different countries and ethnic groups. Japan and Germany are particularly prone to this kind of “small but long-standing” century-old store because they attach great importance to the spirit of craftsmanship and are willing to do the ultimate in one thing for a long time. I don't evaluate good or bad, but that's their cultural orientation.
In a playful analogy: Why was McDonald's successful? Because it “made the burger untasty enough”, to be more precise, it stabilized at 60 points. There are too many people in the world who can make an 85- or even 100-point hamburger if you count bad food as 0 points and extreme good as 100 points. Craftsmen in Japan and Germany are looking for a “10,000 point” hamburger. If you take it down, your soul will go out of your way, and Michelin Samsung is not enough to describe it. However, the problem is that this kind of craft is extremely difficult to learn and pass on. The requirements for cooking, ingredients, and cooking are extremely high. It is often passed down from generation to generation, making mass production extremely difficult. They probably only make a few servings a year, and only a few people in the world can eat them, so it's hard to make a big business. Even if a burger sells for 100,000 yuan, it only has a turnover of 500,000 a year.
The reason McDonald's was able to get away with it is because it can “standardize 60 points,” which has almost no threshold for people and no requirements for materials. Ingredients can be purchased locally all over the world, and Chinese ingredients can also be made in China. Like me, Sun Yuchen, you can get a job after a week of training at McDonald's. There are no special requirements for ingredients, ingredients, heat, or location, so anyone can make the same burger according to the process. McDonald's is following this path: making the process replicable so that people around the world can quickly score 60 points, so it can dominate the world.
This also corresponds to the advantages of China and the US: we are good at making things “usable, accessible, and replicable”, so that consumers can enjoy qualified products at a lower cost. For example, in the past, a button was handed over to Japanese and German people, and the quality was extremely high; when Chinese people made it, the standard was “just enough,” and the selling price could be drastically reduced, which is of course good for consumers. In contrast, Germany and Japan are better at making things “ultimate and long-lasting.” Each of the two pathways and two “genes” has a role in the global division of labor.
As for my choices, I'd rather be bigger, make things bigger, and make something that everyone can use, rather than pursue the best in the world.
13. What advice would you give to young entrepreneurs now?
Sun Yuchen: The premium that startups are willing to pay you is often the highest. Just like Cai Chongxin, he also taught us classes at Lakeside University. He is very kind and also very good at telling bad jokes. We often laugh a lot when we listen to his classes at Lakeside University.
He was a lawyer working for top US law back then, and had a high annual salary of 100,000 US dollars, but he was only a “senior migrant worker.” After going to Alibaba, he immediately became the second most popular person after Ma Yun. For this reason, he did give up the opportunity to become a well-known lawyer in the US; when he went to Ali at the time, his first monthly salary was only 500 yuan. But in the end, Ali went public, and Cai Chongxin started a foundation with Ma Yun and his wife, often donating hundreds of millions of dollars. The return on his personal wealth was probably around 45 billion US dollars.
So, if you're good enough, it's also worth joining a startup. You are already a “big Buddha,” and of course, the small temple will do its best to provide for you; once completed, the excessive rewards you get are often not able to enjoy in the field where the rules are set.
Speaking of which, I have two suggestions: first, as a job seeker, try to join companies that are “in the process of formulating rules”; second, as an entrepreneur, try to choose a “rules are still being formed” circuit, so that small companies can have a chance to “fish in muddy waters.” I often think: I was born a few years late. If I had been born in 1985, I'd probably be worth $10 billion now, haha. Don't laugh, this isn't necessarily a joke. If I had started my business five years earlier, just in time to catch up with the mobile internet wave in 2009, I might actually go a step further.
In reality, I started my business in 2012. Not too late for post-90s peers, but that was the end of mobile internet. If I can enter the market three years earlier, step on the cusp, and use my self-confessed ingenuity, my achievements may be even higher. This is also the core reason why I repeatedly talk about “Start a business early” on the program. Success or failure is of course related to ability, but the deciding factor is often whether you're on time. Therefore, I recommend that everyone “always be there and keep trying”, always when it's your turn.
Some people have used the Companion Me app, and they say, “Yu Chen, you're probably quite different than Momo. Why haven't you done Momo? One important reason is that when I started my business, the mobile internet pattern in China was basically stable. In the early days, Momo used the new “geolocation” capability on mobile devices. It stepped on the cusp of “scarce app supply” and accumulated a large number of users at a very low cost. The mobile internet, which first started in 2009, almost “lives when planted in the ground”, and can be popular no matter what you do; today's entrepreneurs are often “chasing the wind,” and if they don't step on the right path, they can only wait for the next wave.
Therefore, it is best for a company to develop in the “rule-making period” field, so there is room for fishing in muddy waters; if you honestly work upstream and downstream in an “established rule” industrial chain, there is often very limited room for growth.
My second opinion: the real path to wealth growth is “non-linear.” The middle class path we are familiar with is defined, hard work → high score → good university → good job. This is linear. The real wealth transition, on the other hand, is exponential, fractured, and accompanied by restructured rules. No one in the world has ever been rich by simply receiving wages day after day, year after year.
Every day, “Xiaobai” asks very “straight forward” questions: I have a monthly salary of 5,000 and an annual salary of 60,000, so wouldn't it take 100 years to earn 6 million? This is typical linear thinking. Of course, you have to save wages for 100 years; but the path to wealth growth is not linear; it is exponential and breakpoint.
What does that mean? Let's take the Companion Me app as an example. When we first started, we lost a million or two million a month, and almost lost all of our underwear. But if we seize an opportunity and get the key points right, we can immediately make 45 million dollars a month. Some people asked: How long did it take from a monthly loss of 1 million to a monthly profit of 45 million? Is it going to take a long time, ten years? The answer is simple: two weeks. It actually turned a loss into a profit in two weeks.
This example shows that the pace of making money is not calculated by “daily earnings x 365 = annual earnings”, multiplied by several years. Anyone who has started a business or done business knows: early stages are often at a loss; once the track, strategy, and timing are right, the dynamic reverses soon. Of course, it is also possible that you have enjoyed a good life. Suddenly, the industry underwent a major transformation, and it quickly failed. Wealth is essentially a process of “dynamic fluctuation and step-up” rather than a straight linear growth.
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