This is an era when big fish eat small fish and small fish eat shrimp. The law of 28 is applicable at any time. 80% wealth is in the hands of 20% minority, in other words, 80% majority pays for 20% minority. We can find the root of this problem in our minds.
1. Where does the money come from?
Where does the money burned by Internet companies come from? The answer is undoubtedly investors. Who are the investors? There may be (venture capital) institutions, (public/private) funds, unicorn shares, and even state-owned assets. They may have invested in shares in internet companies in the early days, so most of them are in the primary market or earlier, and of course they may also include some individual investors.
If the company goes public, it will raise funds in the secondary market. Investors also include retail investors, bankers (cattle scattered), hot money, brokers, insurance and other financial personnel. No matter what the listing situation is, during the period from angel to A round, most Internet companies are jointly invested by venture capital institutions, and then withdraw at a suitable price when the company goes public.
These venture capital institutions have gathered elites in society, and they have gained tens of thousands of returns through these original investments. Will these venture capital institutions pay for Internet companies? No, investment institutions have invested a lot of money in the project. As long as they catch a few unicorns, the return on equity is unimaginable. If they don't open for one year, they will open for three years. Even if they read the wrong project, there is always a way not to go to the receiver. The pick-up man is either another institution (before listing) or an investor (after listing). So, where do institutions like banks, insurance companies and securities firms get funds? I believe everyone has already thought of it. It comes from the savings of residents and the insurance bought by ordinary people, so it is still taken from the people.
2. Where did the money go?
The fundamental purpose of Internet companies burning money is to quickly seize the market and win the trust of consumers. Therefore, it is a word to subsidize, seize the market and suppress competitors at all costs. The premise of rapid and barbaric growth is to have enough money and a steady stream of money. The early growth of Meituan and Didi was burned by burning money, so that other competitors were burned to death, so they could sit firmly in the position of the boss.
It is the consistent routine of internet companies to lure for free first and lock in after paying. First, let you use its products through various free means, and let you form the habit of indulging in them. After you get into the habit, internet companies can start rolling wool, and consumers pay the bill. If the company does not operate well, then the shareholders' meeting will pay the bill, because they have invested real money, and the main shareholders are the chairman, the board of directors and minority shareholders. The net profit generated by the company does not include various expenses. The main expenses in these expenses are human resources and employees, who are also ordinary people. When the company develops well, employees and shareholders make money, and the money earned is either deposited in the bank, consumed or invested. This is a cycle, and capital is profit-seeking. Where there are arbitrage opportunities, there will be hot money pouring into this place. In the end, there are only two kinds of people who pay the bill, the retail investors who entered the market late. Individual combat.
Large institutions with large funds may step on the thunder and burn all the money before the project fails, but large institutions will allocate assets and eggs will not be put in one basket. Just like a venture capital institution, it may have invested in 100 projects, 95 of which failed, but the five successful ones became unicorns. The return on investment of these five projects alone can make up for all the previous losses and make a big profit, so in the long run, it will still pay the bill.
As for ordinary people, no matter what money you earn through work, entrepreneurship, investment and other channels, it will eventually flow to these places, such as bank savings, insurance and medical care, daily consumption, real estate and stock market. Most of these ordinary people belong to conservative pure savings or insurance, and the funds are invested in banks, insurance and other institutions. Daily consumption is the daily need of food, clothing, housing and transportation. Real estate is China people's favorite fixed asset, and investors are in batches.