Long Distance Running For 13 Years, Fast And Slow In Education And Entrepreneurship: Netease Has Landed Behind Wall Street.

In October this year, NetEase landed on the New York Stock Exchange to become the first NetEase subsidiary to complete its IPO listing. According to the issue price, the market value of the company exceeds 1 billion 900 million US dollars.

At the beginning of the founding of the NetEase, the search engine business of the NetEase was completed. After that, it gradually completed the transformation to online education, and launched the K12 business in an all-round way.

According to the prospectus, online learning is one of the four main businesses of NetEase. Among them, boutique courses are the main revenue of online courses. According to the data disclosed in the prospectus, there were 12 million 100 thousand registered users in the first half of 2019, 338 thousand paid users and 2.8% conversion rate; K-12 paid users 105 thousand, an increase of 80.8% over the same period.

NetEase shares IPO's share price on the same day. Ding Lei, chairman and CEO of NetEase's board of directors, seems to have been psychologically prepared to tell the stock market ups and downs that NetEase has experienced before breakfast.

In June 2000, NetEase became the second China Internet Corporation to land on NASDAQ. It went through a break on the day of listing, and the closing price dropped by more than 20% compared with the opening price. Then the Internet bubble burst, with the NASDAQ index from 5048 to 1638, and NetEase's share price fell to less than $1.

"According to the listing price, NetEase has generated about 70 times return for investors in the past 19 years, and the figure is more than 1000 times at the lowest price point." Ding Lei said.

On the day of listing, NetEase has a letter from CEO Zhou Feng: "today, we have become a public company. This means that we will become more open and transparent. At the same time, it means that we have more responsibilities, challenges and external torture."

In the view of Zhou Feng, the listed companies are "less likely to change and stick to the same changes", which he believes is the beginning of NetEase's "new term".

2006-2014, from search engine to online education.

Back in 2004, Ding Lei, who had won the top prize of Hurun's list, was annoyed by spam in NetEase's 163 mailbox. He wanted to find a Chinese to solve the spam filtering problem of Chinese mail system.

Zhou Feng, a doctoral candidate at University of California at Berkeley, made his eyes bright in his thesis "approximate object localization and spam filtering in P2P system". After the communication, Zhou Feng solved a series of thorny problems for Ding Lei's mailbox for Ding Lei, and Ding Lei sent an invitation to Zhou Feng to support her independent entrepreneurship in the NetEase system.

In 2005, Zhou Feng, who was studying in Berkeley, became the main architect of NetEase's new search service platform. The following year, NetEase formally established, and began to build an independent search engine for NetEase. After that, Youdao Dictionary launched a series of products such as Youdao Dictionary, Youdao cloud notes, Hui Hui net, Youdao Zhi Zhi, Youdao excellent course and so on.

NetEase officially became an online education company in 2014. In April of this year, Ding Lei said that NetEase's multiple products in the field of education had formed a "force to be ignored", and openly put forward the strategic conception of "NetEase's online education platform + product matrix".

At that time, NetEase and its subsidiaries had launched education related businesses such as Youdao Dictionary, NetEase open class and NetEase cloud classroom.

Recalling NetEase's 13 year entrepreneurial process, Zhou Feng told the twenty-first Century economic news reporter: "it is able to identify the time when the market is worth investing. This requires years of team accumulation. We must understand what is good business and what can bring income. Only in this way can we make full use of the opportunities when it comes. "

2014-2019, NetEase's way of education.

NetEase has spent eight years from searching the search engine to formally entering the online education, and has locked the core battleground of online education in "four years" in four years.

In view of Chen Rui, managing director of Junlian capital, compared with some companies who cut into the Internet education, NetEase has cut through education for nearly 10 years before entering education, which has a deep understanding and understanding of the industry.

"Compared to investing in other mature fields, education is in the ascendant, which makes us more inclined to have the ability to become a platform company itself." Chen Rui said.

In October 2016, NetEase launched an education cooperation program called "Tong Dao plan", which is to work together with the top teaching teams in China to create quality courses.

The "co plan" of the education business and the studio support program of NetEase mobile tour business came down in one continuous line. In 2014, NetEase set out the budget of 50 hand tour teams, and started the research and development of 70 hand tours. The plan of "Tong Dao" was 500 million yuan in two years, 20 high-quality educational workshops were hatched, and the flow of these Studios was fully opened.

Now, after one year of co - operation program, we have built up a large educational IP, such as the 46 levels of examination, the entrance examination, the high school, the logical English and so on.

In March 2019, NetEase made adjustments to the education sector and merged NetEase Education Department of Hangzhou Research Institute of NetEase into NetEase Youdao. NetEase NetEase's cloud classroom, credit card programming, MOOC and other products of NetEase have been added to NetEase's products and services.

According to the data disclosed in the prospectus, intelligent learning business, which is an important part of online courses, is bringing about large-scale revenue for NetEase. Online courses including boutique courses, Chinese University MOOC and NetEase cloud classroom have received a 330 million yuan contribution to NetEase's contribution in 2018, making it the largest revenue in 2017. This figure is 120 million yuan.

2019, "the new term begins."

NetEase's path from 0 to 1 was completed in NetEase's system. Before NetEase went public, the shareholding ratio of NetEase was 66.2%.

Speaking of the support of NetEase and Ding Lei, Zhou Feng said: "the trust he gave us is not easy. We have been doing business for a long time, not everyone can support such an unprofitable business for so many years.

There are also financial investment institutions in the fast track of development. In April 2018, NetEase completed a A round of financing with a valuation of US $1 billion 120 million.

At that time, NetEase did not lack money, and Ding Lei could agree to carry out independent financing independently. He looked at the resources and strategic synergy of investors: Mu Hua investment was an education industry fund launched by Tsinghua holding's education company.

In the newly completed IPO, NetEase has completed the financing of over $220 million by issuing new shares and placing the private placement. The subscribers of private placement are NetEase's largest institutional shareholder Orbis fund.

As a matter of fact, the US IPO market, which is listed in the preparatory period of NetEase, is not optimistic: the US government stopped at the beginning of the year for more than 1 months, resulting in a sharp decline in the number of IPO transactions in the first quarter of the US stock market. The super Unicorn Lyft went on the market for second days. It was thought that the two quarter Uber listing could give the market a strong heart.

Zhou Feng has his own insistence and conviction on the listing. He said in an interview with reporters on the day of the listing: "the environment of the capital market is not very good. Today we have crossed the milestone of listing, and in the long run, we are confident that we will do well in business and reward shareholders. "

"I looked good 13 years ago, and I still looked good at IPO." Ding Lei also expressed support for action and subscribed ADS for 20 million US dollars. He said he hoped every decent colleague could see the future of the company, including the tremendous impact of the company on online education.