Chapter 19 Chapter 4 Cultivating virgin land: market and capital are indispensable

In the "Mengniu Inside Story", which has been hyped up for a period of time, the author of the book summed up the "life" philosophy of Mengniu Group into three points: "Great victory depends on virtue, great wisdom depends on learning, and big names rely on innovation." These "three rely on classics" It not only points to the end, highlights the essence of Mengniu culture, but also makes people have endless aftertaste.However, it is too ideal to only rely on "morality", "learning" and "creation" to determine the success or failure of an enterprise.Regardless of all the cultural accumulation, innovation and change, if it is just a insistence on a philosophical value point, I am afraid that Mengniu will not achieve the great achievements it is now.The era of getting rich overnight by relying on a little speculation is gone forever. The era of capital where "big fish eat small fish, and small fish eat shrimp" has arrived. Funding is not the only factor in the ups and downs of a company's life and death, but it is definitely a factor. One of the most important factors.

Coincidentally, it is this kind of capital view that is being actively used by businessmen. In 2005, Yuan Xincheng, executive vice president of TCL, made such a metaphor when commenting on the importance of capital in the commercial market: "Guangzhou people make good soup, with a strong and pure taste. The secret lies in water and seasoning. Soup should be boiled with water. , but soup is not water. Data is not information, it needs to be refined. Money is not everything, but without money, nothing is possible.” Before May in the first half of 2003, Jiang Nanchun successively invested nearly 20 million yuan in the installation of LCD screens, but the advertisers were not busy paying for it, they were still hesitating to wait and see.Having invested so much money but not getting the expected results, Jiang Nanchun felt a huge psychological gap and loss.

"By May 2003, the mid-to-high-end office buildings under our control had expanded to more than 100, but they were still burning money. At that time, I felt quite embarrassed. After all, it was my own money that was burning, and I felt very painful at the time. Sleepless day and night. Later, the burning became numb, and I felt that what I burned was not money, but the youthful years in 10 years. I put in so much effort in 10 years, and it was spent in just a few months. I have never encountered pressure before." Recalling the scene at that time, Jiang Nanchun, who had already gotten out of the predicament, still smiled bitterly and helplessly, and added, "I feel that I have to burn money every day. The youthful years were burned away together, and there was a sense of fear of failure."

The days of burning money every day made Jiang Nanchun feel like an ant on a hot pot, sitting on pins and needles. Jiang Nanchun felt unprecedented financial pressure.During those days, he would sweat profusely in bed every night.He said: "I often wake up in the middle of the night and can't fall asleep again. I think I will burn to my bottom line in another three to five months. When I feel that in another three to five months, I will face nothing. Efforts have been wasted, and the fear is still very strong." However, the reality is in front of us. If Jiang Nanchun does not continue to increase investment at this time, not only will the money invested in the early stage be in vain, but the new media model that was developed after hard thinking will be stillborn.But if you continue to burn money, when will the burning end?In case of "losing the wife and losing the army" in the end, the 10-year achievements may be brought to naught because of this decision-making error.

Having no money to burn meant to Jiang Nanchun that 10 years of hard work would be in vain. Jiang Nanchun, who was only 30 years old at the time, also prepared for the worst and wanted to give up.Jiang Nanchun set aside money for his own retirement, and once again made such a decision: "Once I fail, I am doomed to be disheartened and I will make up my mind to quit the advertising field." "Now, it should be said that the building TV advertising industry is in a market state of staking, and it depends on who can run fast and can catch the users in need." This is Wang Hao, general manager of Array Networks Beijing Co., Ltd. A word from an interview.It has to be admitted that the importance of sufficient funds is self-evident in staking land, and the distribution and addition of capital actually follow economic laws.

If Jiang Nanchun hadn't met Yu Wei from Softbank China, Focus Media might not have the glory it is today. We know that Jiang Nanchun may not be the first person to be creative in building advertisements, but others are not as lucky as him. The large investment has strongly supported the rapid advancement of the new media business.Because staking is originally a corporate marketing method full of variables.On the one hand, these enterprises involved in land enclosure have high risks, because the input of manpower and material resources is astonishing and huge.On the other hand, it is not that enterprises that use land enclosure to expand their territory do not have opportunities to enhance their strength in the land enclosure.From the perspective of market trends, analysts generally believe that with the help of non-stop staking, companies can gradually achieve breakthroughs in development bottlenecks, and can even expect to lead the information business era as an industry leader.But in any case, what is needed most in staking is not decision-making, but funds.

In this regard, Serge Tcharak of Alcatel of France and Craig Barrett of Intel of the United States deserve special credit.They all made correct judgments and decisions on the global economic and industrial situation in the past two to three years.While other competitors have repeatedly adopted cautious expansion policies and strict financial systems, staking and large-scale investment have helped Alcatel and Intel maintain a relatively large increase in revenue and obtain relatively good returns.But please don't ignore that Alcatel and Intel are internationally renowned groups, and they themselves have a back-up financial strength that Jiangnanchun's Focus Group does not possess.Enclosure is necessary for the progress of Focus Group, but in the final analysis, sufficient capital supplement is the last word in enclosure.

Secondly, we know that a person's ability is limited, and after reaching a certain level, his marginal wealth conversion rate will inevitably decline.To create more wealth and break through the ceiling of personal ability, more people must participate and form a team to do more things.Of course, to bring together many people, not everyone can be a shareholder or partner, which requires capital. However, Jiang Nanchun has his own unique logic of thought. "I used to do business. One was never to lend money to others, and the other was never to borrow money from others. As for financing, I never had such an idea in my heart. But after burning the money for half a year, there was still no improvement, so I Knowing that my previous estimate for this project was too simple, there were many difficulties in terms of funds and various resources, so if I wanted to do it, financing was the best choice I could decide at that time, after all, everyone makes a lot of effort.” For From "burning one's own money" to "burning other people's money", Jiang Nanchun confessed to "Human Capital" magazine about the change of his mind.

Coincidentally, there is also an old Chinese proverb, "A horse cannot be fat without night grass, and a man cannot be rich without external wealth."If you want horses to be fat and people to be rich, you have to rely on outside grass and money.Under the premise of complying with social legal norms and moral norms, "a person who has no external wealth is not rich" is an empirical statement, because it reveals the importance of investment and financial management.It is difficult to accumulate wealth quickly only by working hard day after day, and the dream of financial freedom will always be out of reach.

In the same way, if the development of in-building TV is to rely solely on the "single strength" of Jiang Nanchun's own funds, the future of Focus will be more gloomy than bright, and more bumpy than smooth.Jiang Nanchun, who understood and was good at integrating various available resources as early as in college, did realize this truth later, but understanding does not mean that he will be able to master enough capital to deal with competitors Juzhong Media and Oriental Pearl TV. Aggressive, you must know that people are not as good as heaven. In Jiang Nanchun's view, trying to seize the domestic building TV advertising market as much as possible is the best way and method to avoid his Yongyi "super monopoly encountering a realistic bottleneck" a few years ago.Therefore, in his eyes, staking "is the beginning of happiness rather than the beginning of pain", because it is to open up a broader space for business development and to clarify the future direction.

The bigger the spread, the higher the cost for companies to implement the plan.Economists believe that there is also a critical point for economies of scale, and beyond this critical point, it may become "diseconomies" of scale. Every new market has to pay a large amount of venue fees, equipment fees, personnel expenses and many other expenses.Therefore, for Jiang Nanchun, the sudden break of the capital chain seems to be an unexpected disaster, but this predicament is all within reason.It has become an indisputable fact that Jiang Nanchun's goal has encountered greater pressure in the capital chain. For Jiang Nanchun, the investment in building TV is huge.A LCD monitor cost 8,800 yuan at that time, and the average price of the first batch of LCD monitors was 8,000 yuan. Leaving aside the costs related to the property contract, the price of 300 LCD monitors was 2.4 million yuan.More importantly, the coverage of only 50 office buildings is not enough to attract larger customers for long-term advertising investment. Jiang Nanchun must rapidly expand the coverage of office buildings in a very short period of time, and the product cost and labor cost will suddenly increase. Lift. Profit requires a critical point, but Jiang Nanchun has no idea how many office buildings need to break through this critical point.You know, when Jiang Nanchun made up his mind to transfer his work focus and dream from the advertising agency of Yongyi Communication to building TV, his entire net worth for establishment and operation was only a mere 20 million yuan.Although this is not a small number, it is not a drop in the bucket for a project that needs to invest 30 million yuan in the early stage, and it is far from enough.Moreover, the project at that time had not yet been listed, so funds could not be raised through the stock market. In fact, according to Jiang Nanchun's pre-forecast, he would first invest a part of the funds to buy LCD screens and install 50 buildings, and then use the advertiser's money for further investment. He thought that he would be able to make money back soon.But his wishful thinking was in vain.Jiang Nanchun said: "At the end, when the customer gave the money, he still hesitated. He would say wait, let others try it first. I predicted that the sales order would be 10 million, but in fact it might only be 1.5 million in the end." The stalls either continue to expand or wait to die.In crisis, there is opportunity in danger.Facing the shortage of capital, what will Jiangnanchun do?Where is the road?