Breakthrough - Trend Chapter
A few days ago, Mr. Run taught in the course "Liu Run. Breakthrough Offline Class. Trend Chapter" that when the four winds of trends, cycles, dividends and opportunities come, Trend - Technology driven: Never look back, keep moving forward Cycle - Economic driven: Cycles start again and again (century-old enterprise) Dividend - Structural driven: Short-term supply and demand imbalance, but will eventually return to a balanced state, quickly seize short-term accumulation opportunities - Business Driver: What belongs directly to you corresponds to technology, economy, structure, and business. Technology is the foundation of all industries. With the rise of Internet technology, some normal companies have become power law companies, and the remaining normal companies are linked to On the tree of power law companies.
So we can only learn from Internet companies to cooperate with Internet companies.
But the reality is not optimistic, because we have also moved from the incremental era to the stock era. Since 1949, China’s economy has gone from poverty to the world’s second largest economy, especially in the past 40 years. Economically, China has opened its door to the outside world, increased exports, introduced foreign investment, and opened up its coastal cities. China’s total GDP has grown from 12.3 billion U.S. dollars in 1979 to 13.6 trillion U.S. dollars in 2018. It has increased nearly a thousand times in 40 years. The output value is about 9 billion RMB.
However, in the past 10 years, China's economic growth has been slow. With the start of the Sino-US trade war, the macro situation has become a hot topic in the circle of friends. Even small businesses like mine are feeling the pressure of this economic downturn.
So what should we do? The lecture gave 8 tips and suggestions on how to survive the winter carefully
1 Cash is king (cash flow, cash flow, cash flow)
The first suggestion Cash is king, and cash safety is far greater than profit. Some projects that are difficult to pay and have high profits should be done less, otherwise they will appear to be very profitable, but in the end these are money you shouldn't make, and you won't make it in the end.
2. Focus on the short term (build your career on the basis of business) Amazon, a company that has been losing money for 20 years, once became the number one in market capitalization, making a man who helped his shareholders lose money for 21 years become the richest person in the world. Therefore, we generally say that we should focus on the long term.
Then, why should we focus on the short term? We must build our career on the basis of business. The first thing is to keep yourself alive. Even Vanke said this at last year's annual meeting, so only by surviving can we have a long-term future.
3 Cheap and high-quality (making China’s MUJI, Uniqlo)
Cheap and high-quality. After Japan encountered the economic crisis in the 1980s, it realized that consumers need cheap and high-quality products. , so we improve efficiency through economies of scale and produce products that are cheaper and of higher quality than what was on the market at the time, such as MUJI and Uniqlo.
At present, we are also facing an economic crisis and an opportunity to upgrade consumption. Therefore, we must also produce products with low prices and high quality, and be China's MUJI products. For example, Xiaomi today is carefully selected by NetEase.
4 Cut off the long tail (cut off products and businesses that involve energy and have poor income)
Cutting off the long tail means cutting off some non-core businesses that have no competitive advantage and low income. Excellent product. Only in this way can we focus our energy on our core business.
For example, before Steve Jobs returned to Apple in 1997, the company was not doing well because it lost focus due to too many product lines. Therefore, Steve Jobs said a very famous saying at that time, he said, I will only make one The table can accommodate the products. Apple is what it is today because of Steve Jobs' drastic decisions.
5 Retain customers (customer value gt; cash flow gt; revenue gt; profit)
To retain customers, more specifically, to retain core customers. The first point is that cash flow is greater than profit, but cash flow comes from core customers. But on the one hand, core customers may be surrounded by more unimaginable wolf-like competitors, trying every means to steal your core customers.
On the second hand, the economy is in decline, and core customers are also controlling spending, with fewer and fewer customers.
Therefore, in this case, you need to visit frequently and use your own advantages to retain core customers.
6. Dig deep into barriers (make your own high-profit products, unaffected by substitutes)
Dig deep into barriers to protect your own high-profit products, unaffected by substitutes. The stock god Buffett said: If you want to obtain excess profits, you must dig a moat for your company. There are four types of moats:
1) Intangible assets; 2) Switching costs; 3) Cost advantages; 4) Network effects.
The first point is intangible assets, such as patent applications. Huawei owns most of the world's 5G patented technologies, forming a technical barrier.
The second point is the conversion cost, such as enterprise ERP management system or Apple's IOS system. Once selected, the conversion cost of usage habits, software purchase, data, etc. is very high.
The third point of cost advantage is that Xiaomi, for example, released a 69 yuan power bank that year, which was 1/2 of the market price, forming an absolute monopoly on the entire market.
The fourth point is network effect. Take WeChat as an example. The more people use it, the more inseparable it becomes, forming a powerful network effect.
7 Invest cautiouslylt; Investments with high returns and low probability will further reduce the probability of success;
Invest cautiously. We often hear investment companies say that if you invest in ten projects, you only need to invest in one. The project is profitable. Those investments that had a low probability of high returns in the past have a further reduced probability of success. You must invest cautiously during a downturn in the economic cycle.
8 Be brave in innovation. Only "innovation can cross the cycle"
Musk said: "The moat theory is very old, and innovation is the key to maintaining competitiveness." Therefore, Musk put All Tesla's technologies, tunnel technology, and even rocket technology are made public, and then they continue to innovate.
For example, Meitu Xiuxiu uses the disruptive innovation of technology to help girls who don’t want to go to the gym lose weight by taking a photo. These are the results of real technology and the power of innovation.
Schumpeter said: Entrepreneurship without innovation is "arbitrage". Only those who innovate are worthy of being called entrepreneurs.
Innovation is an economic process that rearranges and combines original production factors into new production methods in order to improve efficiency and reduce costs.
For example, an Indian company uses a streamlined method to perform eye surgery. The cost is 1‰ of eye surgery in other countries, and the infection rate is lower than that of other hospitals. This is a case of reorganizing production factors to improve efficiency and reduce costs.
Only innovation can transcend economic cycles. ? Summary China may have bid farewell to the era of incremental economy in the past when GDP was soaring, and has entered the era of stockpiling like the United States, Europe, Japan and other countries. At this time, it is more important to look up at the road than to look down to pull the car. . ? And please keep in mind RAY DALIO’s three suggestions:
1: Don’t let debt grow faster than income
2: Don’t let income grow faster than productivity (because then you will have no Competitiveness All income should be equal to all output. If income is higher than output, it means that the increased income is all because others borrow money to consume. More income drives more spending and debt, and the debt burden and leverage will eventually increase. It will be unsustainable and collapse. "Don't let income growth unreasonably exceed productivity for a long time." Otherwise, you will eventually return to the first point of "being unable to repay debt and being crushed by the debt burden."
3: Make every effort to increase productivity
Great companies are all children of winter.
The ultimate is 99 points, the top expert is 90 points, and excellence is about 80 points, but most people mistakenly think that 10 points are That’s full marks.
In 2020, sneak your eyes from the sky to the opposite side, stare at consumers, calm down, improve your capabilities, improve efficiency, and get out of winter and usher in summer.
AMAZON printing farmer Lao Yang