Chapter 14 Chapter 13 Subversive innovation is an afterthought
Who would have thought that 360 Security Guard would become a master?Zhou Hongyi himself didn't expect it either.But from this "unexpected success", he immediately realized its possible subversive power.After reviewing the logic of Google and Tencent's success, he came to a conclusion: free is the foundation of the Internet.The applications that everyone needs to use on the Internet, such as email, communication, and chat, are all free.The Internet would not be what it is today without free, premium services.
On April 1, 2006, just a few days after Zhou Hongyi became the chairman of Qihoo, Apple, which he admired the most, celebrated its 30th anniversary.The company founded on this April Fool's Day is not a joke at all. On the contrary, its growth has made many former big companies a joke.
Apple was founded in 1976 by two young men named Steve in a garage.One of them was the later famous Steve Jobs.At that time, Jobs was only 21 years old.
Just because of personal interest, they used some electronic components to assemble the first prototype of the personal computer, the Apple I. They did not expect to get a trivial venture capital investment later.Then they developed the epoch-making personal computer Apple II and quickly achieved commercial sales.
The great success of the second generation of Apple in the market made Apple go public immediately 4 years after its establishment, and successfully landed on NASDAQ in the United States, becoming a dazzling new star in the US capital market.
This makes IBM very upset! IBM is an old company with a history of one hundred years. The founder, Thomas Watson Sr., sold products such as balances, scales, and punching tabulators. In the early years, after several generations of continuous efforts, it has developed into an industry giant that manufactures large computers. , its computer products mainly serve large enterprises and industry customers.Before the Apple II came out, IBM had lost out to Digital Equipment Corporation in the microcomputer market.
The second generation of Apple is a product for individual users, referred to as PC (personal computer).
Different from the Apple I, which had no keyboard, chassis, sound and images on computer circuit boards, the Apple II, born in April 1977, was the first personal computer product with color graphics display, keyboard, power supply and styling. The first personal computer to be sold on the market.
The second generation of Apple was just launched in the summer, and the company's output value quickly exceeded 1 million US dollars.
A year later, Apple was the fastest growing computer company in America at the time. At the end of 1980, Apple went public, and on the day of its listing, it produced 4 billionaires and more than 40 millionaires.For this reason, Jobs appeared on the cover of "Time" magazine, and his story was called "Endless Money Rolls".
In fact, Apple's "unexpected success" itself heralds a disruptive innovation.It's just that what it subverts is not necessarily technology. Just like Digital Equipment Corporation's microcomputer has not broken through IBM's mainframe computer at the technical level, but it is much simpler.What it subverts is the market and users.
In the face of Apple, IBM certainly cannot take it lightly. They have already suffered because of Digital Equipment Corporation.As a result, IBM announced that it would also follow Apple to launch a personal computer, and its products were referred to as IBM-PC.
Since Apple II has a first-mover advantage in the personal computer market, with a high degree of market recognition and many fans, IBM offered a magic weapon—opening the architecture of personal computers, allowing other manufacturers to produce compatible machines, so as to impact the market of Apple II. share.
The reason why IBM dares to do this is because it has a lucrative mainframe (server) business. Even if it muddies the water in the personal computer market first, it can be satisfied by catching a few side fish.Apple, on the other hand, cannot do this because its survival and development are entirely dependent on the personal computer market.
Contrary to IBM's open strategy to the PC market, Apple has adopted a closed technology system strategy to prevent other compatible machine manufacturers from coming in to take a share.
The open strategy of IBM's personal computer worked quickly.A large number of emerging IT companies, including the United States, Japan, and China, continue to join the ranks of compatible machine production, such as Digital Equipment Corporation, Fujitsu, Lenovo, LG, Compaq, and Dell.In order to reduce the manufacturing cost in the fierce competition, KM and the counterparts of these compatible machines have launched outsourcing operations, outsourcing some low-tech components to suppliers with low quotations.
IBM even outsourced the operating system, the core software of the personal computer, to a small company called Microsoft.
In the ensuing ten years or so, manufacturers of compatible machines, computer components and peripherals surrounding IBM personal computers rapidly increased their specialization due to the division of labor, and achieved an amazing scale effect: the prices of products continued to decrease, and their performance continued to increase. Improvement, production capacity increased sharply, and a huge personal computer industry ecology was formed.
Except for high value-added components such as CPU (Central Processing Unit) and hard disk, most computer accessories are subcontracted to China, which has entered the era of reform and opening up.
In order to compete with IBM and its industrial ecological alliance, Apple, under the leadership of Jobs, turned to arduous closed innovation.After the second generation of Apple, the Macintosh computer, a new product launched in 1984, introduced the mouse for the first time in the industry and adopted a graphical user interface.
Since the performance requirements of the supporting application software and hardware required for the graphical operation interface are greatly improved compared with the character operation interface, it is conceivable that the development difficulty of the software and hardware package is only relying on Apple's own strength. The Tosh series products were once difficult to produce.
In order to concentrate on leading the R&D team in technological innovation, Jobs found a professional manager for Apple: Sculley of Pepsi.Who would have expected that he would join the board of directors and fire the founder Jobs after one year of joining the company.
While IBM established a huge industrial chain of personal computers based on IBM compatible machines through authorization, it was almost destroyed by its own creation.It's a bit like the plot in the novel Dr. Jekyll: the chemist makes Frankenstein, but Frankenstein destroys the chemist's life. In 1993, IBM was in a huge loss situation and had to invite Gerstner, the director of the biscuit factory, to be the CEO.As a result, IBM no longer became the leader of the personal computer industry chain, but was swayed by Wintel (the business alliance between Windows and Intel), and finally had to undergo transformation and evolution to gain a new life.
Companies and people are the same.People need to keep learning and evolving to be able to develop.The company relies on innovation, market demand and innovation in business models.
Disruptive innovations are often hidden in those "unexpected successes", which can only be seen by extremely keen people.
After completing the first round of financing, Zhou Hongyi became the chairman and CEO of Qihoo, re-established the company's business development direction, and devoted himself to the security field besides community search. On July 27, 2006, Qihoo officially launched 360 Security Guard, entering the field of Internet security with anti-rogue software as the entry point.
As a result, a pool of spring water in the security field was quickly turned upside down, because this newcomer to the industry carried a weapon of mass destruction with him: free.
Speaking of Zhou Hongyi’s free experience, it can be traced back to the period when he was working at Peking University Founder.When he returned to Beijing from Xinjiang, he experienced the benefits of free Internet for the first time and downloaded a lot of software.
In fact, almost at that time, there was one person who had already wielded the "low price" butcher's knife, and that was Huang Guangyu and his Gome Electric Appliances. "Small profits but quick turnover", a sharp weapon that Chinese businessmen have used since ancient times, protected a small store in Zhushikou, Beijing from the vortex of the traditional retail field. By 2006, the store was already in full swing.
But no matter how fierce Huang Guangyu was, he didn't dare to do it for free.Dare to do it for free, only everyone on the Internet can "get it".
In the past, there were free mailboxes and free searches, and later there was free Tencent QQ. Now, Zhou Hongyi has blown the whirlwind of free into the field of Internet security.But in fact, the reason why 360 Security Guard was free at that time was not as many people thought, as if Zhou Hongyi was a lunatic who wanted to break the industry rules.
First of all, 360 Security Guard is just a software tool, not its main business.Qihoo’s main source of income at that time was community search, and 360 Security Guard was only used by Zhou Hongyi to remedy his previous mistakes.Secondly, the 360 security guard at that time was very simple and had only one function, which was to detect and kill rogue software.
Who would've thought such a thing would be such a big deal?Zhou Hongyi himself didn't expect it either.
But he immediately recognized the potential disruptive power of this "surprise success".After reviewing the logic of Google and Tencent's success, he came to a conclusion: free is the foundation of the Internet.The applications that everyone needs to use on the Internet, such as email, communication, and chat, are all free.The Internet would not be what it is today without free, premium services.
So later he always emphasized that subversive innovation is an afterthought, and you will only know it after letting it go.
Fortunately for him, the rapid development of the Internet has exceeded people's imagination.When free has become a kind of spirit and culture of the Internet, as well as a very important business model, many companies have not yet realized this.The bigwigs in the Internet security field at that time were more than a little late in their understanding. What they did at the time was to severely criticize Zhou Hongyi's unlawful behavior and persuade him to turn around.
How can a person like Zhou Hongyi, who is getting more and more frustrated and courageous, be willing to restrain himself, so many companies that realized too late were buried.The era of selling software, with the rise of Google and the Internet, has long passed.
In the past, there was only one choice for everyone to choose an operating system, Windows, and then there was Linux.After Google launched the Gmail mailbox, many small and medium-sized enterprises do not need to buy mail servers.With the Google Docs office suite, you can edit Excel tables and Word documents online. For ordinary people, they don’t need to use tens of thousands of functions of regular Office software, so they don’t need to spend money to buy this software. Adobe's most successful product is not Photoshop, but the free Flash.
In fact, Jack Ma's Taobao is free, and Tencent's online chat is free. At first, few people saw its value.It is precisely these free services that have become a basic service of the Internet and have created many first places on the Internet in China. However, manufacturers in the security field are still selling software according to the traditional model.As an Internet veteran who has witnessed so many successes and failures, Zhou Hongyi seized this opportunity.
In 1996, he realized the benefits of being free, but hadn't thought of doing something. Ten years later, he realized that this is a kind of spirit and culture, so he went to pursue this spirit and culture.
360 Security Guard initially took a free form to check and kill rogue software for users, perhaps because of Zhou Hongyi’s remedial psychology and the immaturity of the software itself, but the storm it set off has been extraordinary, because the first thing it killed was 3721 (later renamed Yahoo Assistant) built by myself.
This made Yahoo furious, and Zhou Hongyi was sued in court with a lawsuit.
On August 16, 2006, Yahoo China announced that it would sue Zhou Hongyi for violating his right of reputation.Zhou Hongyi immediately fought back, and the next day, Qihoo announced that Zhou Hongyi sued Yahoo China for infringing its right of reputation, claiming 3.6 million yuan in compensation.A year later, the lawsuit that developed into a farce was eventually dismissed by the courts.The Beijing No. 2 Intermediate People's Court found that:
"Although the remarks of both parties are extreme, they have not constituted damage to the reputation of the other party, and the claims of both parties are not supported."
Zhou Hongyi had been prepared for the criticism that the anti-rogue software would encounter, but he did not expect Yahoo China to react so strongly.Zhou Hongyi said bluntly: "There are actually many ways to mess up Yahoo China, and it is not cost-effective to do so (referring to the method of using anti-streaming software)."
"Of course, my motives are not very noble." Zhou Hongyi stated that the three purposes of "anti-hooliganism" are, "to rectify my name, to expand Qihoo's reputation, and to find a way out for the companies I invest in." Yahoo can't make it through.
"Yahoo is not the only company that makes rogue software. I have taken down hundreds of rogue software companies. Many of them are my good friends, old colleagues, and old subordinates. They are all relying on rogue software to make money. I have offended countless people, if it is purely for the purpose of attacking Yahoo, there is absolutely no need for me to do such a thing, the risk is too high and the cost is too high.”
Zhou Hongyi's concept of paying attention to the number of users won him another victory.Now it seems that at least the first two of Zhou Hongyi's three goals have been achieved.In less than a year, Zhou Hongyi has made a high-profile transformation from "the godfather of rogue software" to "network security guard" due to the constant hype in the media.
In July 2005, half a year after the inside story of the original 3721 team publicly challenging Yang Zhiyuan was exposed, Zhou Hongyi announced that he would resign at the end of August of that year. On August 11, 2005, Yahoo bought 40% of the shares of Alibaba Group at the price of "Yahoo China + 1 billion US dollars" - Jack Ma, who had intended to acquire 3721, finally got what he wanted after a circle, and the price was still high out a lot.
Zhou Hongyi did not attend the signing ceremony. It is said that at the employee meeting announcing the news of the merger, he asked Jack Ma to "treat my employees well" in front of all employees.However, after Ma Yun took over, Yahoo China first cut off the portal business—this is Zhou Hongyi’s best business at Yahoo—and adjusted the organizational structure. Yahoo Assistant.It didn't take long for Zhou Hongyi's traces to be wiped clean.
After leaving Yahoo, Zhou Hongyi first entered IDGVC, quit half a year later to work alone, and made a comeback with his Qihoo a year later, kicking off this lively and extraordinary scolding battle between the two tigers.
Regardless of whether Zhou Hongyi's pure remedial psychology at the beginning was mixed with revenge emotions or not, in this round, Zhou Hongyi's performance was even more eye-catching, and 360 Security Guard's offensive was also more marketable.Chinese netizens who have been bullied by various rogue software for several years have no reason not to choose free but usable Internet security software.A large number of deep-rooted plug-ins under Baidu, CNNIC, Yahoo and other companies were killed by security guards in an instant.
But this is only the beginning of Zhou Hongyi's journey and "war of scolding".First of all, after killing the rogue software, he is bound to open up new fields.Secondly, he cut off the financial resources of many people and companies, and he was destined to be surrounded by spittle all the way.Give a simple example.In the survey report of iResearch Consulting, 3721's revenue in 2004 was about 200 million yuan, and it doubled to 400 million yuan in 2005, but in 2006, the profit began to decline.
According to Tian Jian, the executive president of Yahoo at the time, the top three revenue-generating businesses of Alibaba and Yahoo at that time were: 3721, SMS value-added, and search bidding. Soon after 360 Security Guard came out, 3721 never brought considerable traffic again.Just imagine, could Yahoo China not be in a hurry?
Although free mode has been talked about for a long time, many people still have misunderstandings about it.
Zhou Hongyi believes that "free" is the gene and blood of the Internet. If a certain service is needed by everyone, it must be free, such as search, instant messaging, etc.; but value-added services are not required by everyone, so they can be charged.For example, when playing games, if you don’t want to spend money, you spend time in it; some people just buy a sword and make a fool of themselves. Therefore, selling props can become a value-added service.
Both the free theory and the long-tail theory summarized by Chris Anderson are based on a huge user base, otherwise they will not work.China and the United States are on the same starting line in the Internet world, and they also have the largest population. There are 300 million Internet users on traditional personal computers, and the number of Internet users on mobile phones will reach 600-700 million in the future.So, good examples of free-to-play models can be found in China, such as Tencent and 360.
After acquiring a huge user base with a free service, the cost of reaching users is almost zero.For example, if Tencent launches a new product, it only needs to introduce it among its own users, and many people will use it overnight.In addition to charging for value-added services, the savings in market costs and the huge brand value are intangible assets obtained from the free model.
Zhou Hongyi once told Zhang Chaoyang that it is good to make input methods. Zhang Chaoyang said that he would not make money, but he can build a brand and popularity through the free Sogou input method, which is much more effective than spending the same money on advertising.
Traditional companies such as Mengniu and Yili spend a lot of money on CCTV to do a lot of advertisements every year, but compared with Internet companies such as 360 and Xunlei, who will reach more people in the end?With a huge user base, subsequent marketing will enter a virtuous circle, basically without marketing costs.
But the free model looks simple, not everyone can do it.If you enter a market where there are already giants, the competition is fierce and often requires a lot of investment.For example, Qihoo 360 entered the security market a few years ago because they had tens of millions of dollars to support them. Otherwise, it would be difficult to persist in making security software for free and competing with Rising.However, judging from the situation in the United States, in the Web 2.0 era, there are many creative ideas that do not have a large initial investment, including Twitter (Twitter), but the premise is that you have special innovations, and people will not be able to understand Twitter after two years. What is going on.
Often everyone makes a mistake, which is to apply existing business models to new applications.For example, Yahoo is doing banner advertising, so Google is afraid to operate, but doing keyword advertising, which is a subversion of the business model.When Facebook came out, many people would use the search engine's point of view to analyze that it should do targeted advertising. Facts have proved that the advertising model does not work here. Facebook's income mainly depends on value-added services, which is a bit like Tencent's model.
Looking at Twitter again, this is a revolution in the future, it may be a kind of subversion to the entire Internet including Google, and this subversion is in progress today.We cannot use the business model of traditional portals to read Twitter, otherwise we will draw wrong conclusions.
Twitter makes the communication between people neither "one-to-one" nor simple "one-to-many", but a complex network.When Twitter's terminals are no longer limited to websites, and may cover TVs, mobile phones, etc., this is a subversion of the Internet.By that time, many of today's Internet products will be completely useless, and it can ruin an old industry. This is the power of revolution!
Therefore, Zhou Hongyi believes that Sina Weibo is not Twitter in the strict sense, and its business model is destined to be Sina's original media model, advertising or sharing accounts with operators.
The existing rules in the market are made by big companies.Rules are someone else's system. If you get into that trap, you will never be able to make it out.There are only two ways to gain a foothold: stay outside the cover and not go in, or poke a hole in the cover.
American business schools have courses devoted to subversive innovation and destructive innovation, but in China, these two terms are negative.Destruction and subversion are bad things that break the balance.Many people shout about innovation while yelling at destruction and subversion.In fact, the innovation they call is improved innovation.
Improved innovation is also a kind of innovation: doing a little bit better than others.This kind of innovation is more suitable for large companies, which are constantly improving, and are very suitable for stable and mature markets.But for exploring new markets or new fields, it is difficult to be really effective.
The development of new markets and fields relies on constant subversion and subversion, such as animation.As for the so-called balance and harmony, it is more about the state that manufacturers hope to achieve with each other.All successful people hope that their company can monopolize the market for many years, and everyone hopes that the market will remain unchanged, but this is negative for the development of the entire society.
One very important reason why there are so many innovations in Silicon Valley in the United States is that their culture is constantly subverting and innovating.Subversion, just like the metabolism of nature, constantly squeezes old, old, and lifeless companies out of the industry, allowing those new blood to boil.So in the United States, disruptive innovation has basically become a symbol of Silicon Valley.
Of course, there may be victims of this disruption, and the victims are the old frontrunners who don't think ahead and stick to the rules.But the biggest beneficiaries are not only new disruptors, but more users.
So Zhou Hongyi has a point of view. Whether it is subversion or destruction, it is meaningless to say that it "hurts" the entire industry. The most important moral evaluation is: can you really bring about technological and product progress after you finish this matter? , and finally create greater value for consumers.
The series of books "The Innovator's Dilemma", "The Innovator's Solution", and "The Innovator's Turnaround" are about disruptive innovation and how to measure disruptive innovation.One of the most obvious characteristics is pointed out: whether you can make things that people need to spend a lot of money to do cheap; whether you can make things that people are difficult and troublesome to do easy.
For example, the era of personal computers created by Apple is called subversive innovation.Its computers were poor in performance and functionality, but that didn't matter. What mattered was that it allowed people to own a computer of their own for the first time.
Another example is that Xerox invented the copier back then, which was later subverted by Canon.Because the Xerox copiers were big copiers, people had to go to a copy center and have someone do the copying for you.Canon made the world's first desktop copier, which was obviously inferior in quality to large copiers, but the only benefit was convenience.Convenience quickly wins the market, and once you win the market, you can quickly improve performance.
The performance and functions of today's personal computers far exceed those of mainframes 20 years ago, and the performance of today's copiers has also improved those shortcomings.
Therefore, subversive innovation is something that all entrepreneurs should think about.
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