Business Model

After the Luojia Forum ended, Lin Jia kept sighing on the way back:

"Lei Jun was far too shrewd. He effortlessly rode the wave of publicity. That question about recruiting you sounded like something he had coordinated with the host beforehand.

Without drawing attention to it, he responded to Huawei's Genius Youth Program, which had been all over the internet recently.

Listening to his interview, it sounded like he said nothing at all, yet everyone outside automatically said what he wanted to say for him.

When those statements later became problematic, he could lightly step forward and say that his original words had never meant that."

Born into a business family, Lin Jia had met plenty of big names, including many in the internet industry. Lei Jun was definitely the most skilled marketer she had ever seen.

Lin Jia had thought so before; this time merely deepened that impression.

Chen Yuanguang did not quite get it. "Did he really mean all that?"

Lin Jia knew Chen Yuanguang was slow when it came to this sort of thing, but she had not expected him to be this slow. "Of course he did. Since Huawei launched the P20 Series last year, Huawei's rapid rise in the smartphone market marked the start of an even fiercer, white-hot stage of competition.

A huge number of smaller players were on the verge of collapse, or had already collapsed. With technological innovation and America's divine assistance, Huawei was attacking Xiaomi's core market.

Among the four major domestic manufacturers, HMOV, OPPO and vivo both relied on offline channels. They did not pursue value for money, nor did they compete for online attention. Their target users barely overlapped with Xiaomi's.

Huawei, meanwhile, originally relied on offline channels, from its early cooperation with carriers to later building its own channels. Since the P20 last year, Huawei's growth through online channels had been extremely rapid. Its Honor sub-brand specifically matched Xiaomi flagship phones feature for feature and took the value-for-money route.

That was why Xiaomi's stock price had been falling continuously since the second half of last year: Huawei had dealt Xiaomi a severe blow.

Lei Jun needed to do everything he could to fend off Huawei's offensive. He would not miss any opportunity in the arena of public opinion, just like how he used the topic of recruiting you today to respond to Huawei's Genius Youth Program.

This was a top marketing master's means of saving himself. Of course, to him, it was probably nothing more than an insignificant bit of on-the-spot improvisation. Just wait for the internet to put on a show later." Lin Jia spoke eloquently.

Chen Yuanguang roughly understood what Lin Jia meant. He asked, "If Xiaomi can't hold on, and I later start a business and ask President Lei for investment, will he be short on cash flow?"

Lin Jia first objected. "If you start a business, come directly to me. I can invest in you. I can approve up to twenty million myself. If it's fifty million, I can probably make it happen if I try. Anything higher, though, you may need to talk to the old man yourself."

Then she explained, "What are you thinking? Lei Jun may be Xiaomi's founder and helmsman, but Xiaomi doing poorly does not mean he is doing poorly. Xiaomi has performed terribly on the Hong Kong Stock market this year, falling without end, but that has not stopped his personal assets from continuously rising.

Besides Xiaomi, he has made many investments, and their success rate is extremely high, about on par with the best venture capital firms I know.

If you plan to start a technology company later, going to him would actually be a good idea. With Lei Jun backing you, future fundraising would be much easier."

Chen Yuanguang thought about Learning Acceleration. If he took the direct-sales route, it seemed he could reach break-even quickly and would not really need further financing.

The technology was too sensitive. Chen Yuanguang planned to discuss it with Lin Jia after they got home.

He was also extremely cautious with his wording. "Suppose there were a technology that could help people learn faster.

For example, memorizing five hundred characters might have taken you around fifteen minutes before. With instantaneous memory, after using this technology to stimulate the brain and memory-related cortex, you would only need five minutes to memorize those five hundred characters, and the memory would last longer.

For science and engineering students, this technology could improve their logical reasoning and computational abilities. How do you think such a technology should be commercialized?

While working on computational chemistry, I developed some rough ideas in this area. I planned to make this technology my main research focus during my PhD at MIT."

Once they returned home and there was no one else around, Chen Yuanguang brought up the idea he had conceived during the interview and discussed it with Lin Jia.

Chen Yuanguang felt that he was not particularly sensitive to business. There were too many secrets involved, and he would likely need to rely on Lin Jia for the subsequent commercial operations.

As for Lin Jia, proving her abilities before entering the family system could only benefit her.

Lin Jia's eyes lit up after hearing him out. "This technology would be worth at least a hundred billion.

But before monetizing it, we would first need to solve several problems. One is clinical safety validation and efficacy validation. That would involve a large number of clinical trials, and since it directly stimulates the cerebral cortex, costs would become especially high once it reached the stage of human Clinical Trials.

The early investment would therefore be enormous. You would first need to verify its feasibility, then seek investment. Experimental costs, subsequent patent registration, clinical approvals, and everything else combined would cost no less than one billion yuan.

And that would only cover some countries. If you wanted clinical approval in Europe and America, the cost would at least double.

The upfront investment is too large. Going to Lei Jun would be the right move. Only he might be able to put up that kind of money, or rather, help you find someone who could.

Only after all that work is done would the question of a business model arise. There are many options. One would be simply selling the equipment along with maintenance services. The advantage is that the company would be relatively straightforward and easy to manage.

Since it would also be a monopoly business, it would generate first-rate cash flow, just like high-end precision instruments, where only one or two companies do it best.

The downside is that you could only earn a small portion of the profits.

There are far too many parents and individuals around the world who want to improve learning speed. If you only make money from equipment, the intermediaries would take the bulk of the profits.

The second option is to produce and sell it yourself: establish your own institutions and sell services, selling services that improve learning speed. That would involve site selection, facilities, staff, marketing, and so on. Once this technology is introduced, there will definitely be people deliberately looking to cause trouble. If you operate it yourself, there will be many lawsuits and disruptions.

You would earn the profits, but there would be more matters to worry about, and management difficulty would rise exponentially.

Of course, we could also look for a middle ground: a franchise model. We would sell equipment to franchisees, while acting as the ones who set the industry rules.

For example, how much each service costs and how much we take from it. We eat the meat, give the franchisees a little soup, and let them handle the trivial matters.

Those are roughly the three types. The details may change, but the fundamentals remain the same.

But are you sure you can develop this technology?"

Lin Jia felt that she trusted Chen Yuanguang too much. The technology he had proposed sounded so science-fictional, yet she was already helping him analyze its business model.