Founder of Huajia: WeChat's only remaining 23 yuan of change has also been blocked
I don't want to win first, I want to think about how not to lose.
Text: "Chinese Entrepreneur" reporter Tao Tao
Editor|Li Wei
Header image source: Respondents
In an alley in Shanghai's Jiading District, the elevator of the office building rises to the fourth floor, and when the door opens, you will see a company with no reception at the front desk and no lights in the entire lobby - FlowerPlus (hereinafter referred to as "Huaplus").
If it weren't for the founder Wang Ke who quickly "rushed" out of a dim area to greet him, it would be easy to wonder if the place where he made an appointment was here.
The rent has been owed here for more than 1 year, and the utility bill is the only fee that the company is still paying. It is not difficult to understand why Huajia will save every penny of electricity bills.
Wang Ke finally turned on the chandelier in the hall. Walking through the large open room that no one has entered for a long time, there are traces of a meeting just held - fresh ink can be seen in the dense words on the whiteboard, full of words related to the development of the enterprise such as "profit", "growth" and "advantage". He sat down here and was interviewed by "Chinese Entrepreneur".
Flowers plus meeting room whiteboard. Photo: Tao Tao
Wang Ke has the characteristics of a code farmer, accustomed to wearing a white shirt, a black jacket, and a pair of black-framed glasses from the public, and is relatively slow to communicate with people. The name Wang Ke may not be familiar to the public, but for many middle-class people with petty bourgeois sentiment, he has been operating Huajia for many years and has occupied the minds of consumers for many years.
In 2015, Huajia created a daily flower subscription model of "online subscription + direct delivery from the origin + value-added services", overcoming the difficulty of a large amount of loss between production and retail in the flower market. In 2015~2019, Huajia has successively received 6 rounds of capital injection from investment institutions such as Kunzhong Capital and Zhen Fund, with a financing amount of nearly 200 million yuan and an annual turnover of 800 million yuan, becoming a unicorn enterprise for a while. At the height of 2017, Huajia created 10,000 jobs for the upstream and downstream industrial chains.
In addition to flowers, many vertical e-commerce companies of flowers have also run out in the same period. In July 2017, Huadian obtained a B round of financing of more than 100 million yuan, and in October 2015 and December 2016, Huaji.com and Taidi Technology also went to the New Third Board respectively. At that time, in Wang Ke's blueprint, Huajia was not far from listing.
However, the gears of fate have stuck this company in 2022. Hidden dangers such as repeated epidemics and high labor costs appeared, and Huajia gradually fell into a crisis in the capital chain. On September 25, 2023, Wang Ke issued an internal letter and decided to enter the stage of suspension of business for rectification.
Since then, inquiries from suppliers, customers, banks and employees have begun to snowflake towards Wang. As he spoke, he opened the call log on his mobile phone, showing the number that has been received, missed, saved, and unsaved every day, and it takes a long time to draw to the end.
"The company still has millions of dollars on its books. I had planned to suspend business for two weeks to optimize the channel and organizational structure, and when operations resumed, the funds could be rolled again. However, as the lawsuit increased, the bank account could not be unfrozen, and the company's path to resuming business was blocked. "The situation completely exceeded Wang Ke's expectations.
"I used to almost never smoke. But from the end of September, I can't fall asleep until about three or four o'clock in the morning every day, and I will wake up after 2~3 hours, and I need to smoke two packs of cigarettes to relieve my mood, and my face is blackened. Wang Ke smiled bitterly and pointed to his light brown cheeks.
After 2 months of repeated thinking, Wang Ke felt that this lesson of frustration education had made him figure out a lot: "In the past, my brain was a little hot, and I wanted profits, scale, and listing. Lately, I've been thinking about how to win, how not to lose. I think we must give up low-end business in order to ensure the reputation of Huajia, and cut off channels that do not make money in order to greatly reduce costs and increase efficiency. ”
A week ago, Wang Ke's mood gradually calmed down, and he changed to smoking a few cigarettes every day: "I used to be too smooth, and I only paid attention to the small circle as a company, and I was very dull to the big environment. After this battle, I feel that I have become much more sensitive to the external environment. ”
Born in the early 80s, Wang Ke said that in the past 40 years or so of China's fastest development, there is always some idealism in their generation, hoping to influence the world: "When Steve Jobs said to Scully, 'Are you going to sell sugar water for the rest of your life, or are you going to change the world with me?' This brings me to reflect on my life: How can I influence others in my life?"
From the establishment of NOOLABEL Private Wardrobe in the early years, to the auction of Zero-Raccoon Online to Huajia, Wang Ke's consistent business vision is to improve the quality of shopping and optimize the consumer experience.
On the whiteboard of the Huajia conference room, you can find a line of small words in the full board book: "The price of a cup of coffee, enjoy the pleasant mood of the day." Wang Ke hopes that one day, if Huajia can return, consumers can still "please themselves" because of Huajia's flowers.
In the torrent of the times, Wang Ke may be just a drop in the ocean, and like many entrepreneurs, he has lived a life of adventure and turbulence for a long time. Wang Ke hopes that while enterprises and brands enjoy applause for vigorously creating social value and assuming social responsibility at the peak, they can also get a little more tolerance at the trough.
The following is Wang Ke's own statement:
"Thank you to my wife for not forcing me to deliver takeaways"
Do you know that after Alipay was blocked, today, the only 23 yuan of change left in my WeChat has also been blocked.
Before, I mortgaged my personal real estate and funds, plus the money I borrowed from friends, a total of more than 10 million yuan, and now I can't move it.
I'm not alone in going through this. There are a lot of bosses like me who have faced similar dilemmas in the past two years. A real estate boss in his sixties and seventies told me a few days ago that he took his grandson out and wanted to buy lollipops for his grandson, but because he was blocked, he didn't have a penny in WeChat, so he had to give up.
I also saw another story about a female entrepreneur in Wenzhou, who was asked to buy back and had her social security confiscated, and she sat in front of the hospital crying because she and her husband were sick. Imagine how helpless a company CEO who may have an annual income of nearly 1 billion yuan cried there.
Some time ago, I was in a state of anxiety and so anxious that I could only sleep for two or three hours a day. Every day, banks, suppliers, customers, and employees call me to collect debts, salaries, and orders.
When I think of some employees who have been following me since the beginning of my business, for seven or eight years, and now because of me, my social security payment has been cut off, I can't see a doctor, I can't even get a few thousand yuan, it's really devastating; when I think of some suppliers who have cooperated with me for many years, the company owes them as little as a few thousand yuan, as many as several million yuan, if the account is not unsealed, they can't get the money for a while, and the pressure is very great.
I didn't want to do anything at first, I just wanted to lie flat. I used to barely smoke, and since the end of September, when all my accounts were closed, I smoked two packs of cigarettes a day, and I felt like I was being blackened.
I'm grateful to my wife for being able to give me some tolerance when all my accounts were blocked and didn't force me to deliver food (laughs). The whole burden of family life is now on her. Otherwise, I wouldn't be able to spend all my time with four or five employees in this conference room with zero output.
I'm also grateful to the few staff members who are willing to stay, such as the in-house counsel, to discuss how to communicate with creditors. I think they are all the forces that support me to continue to do Huajia.
What I hope most now is that the supplier can withdraw the lawsuit as soon as possible and reach a settlement with Huajia. Of course, all suppliers will not be able to get all the arrears in the first place. But only if they withdraw the lawsuit, the company's bank account can be unsealed, and after the unsealing, the previous debts can be repaid when Huajia is operating normally and generating profits.
However, for the time being, it is a huge challenge for all suppliers to withdraw their lawsuits. Because all the suppliers of Huajia add up to about 400, it is difficult to reach an agreement. And, according to the law, for suppliers, if one of them chooses to settle and the others are still suing, the court will enforce it and transfer the funds to the first person in line among those who are still suing. So I also understand the supplier very well, in their opinion, this is a kind of "good people are bullied" game, we still need to throw the best solution ourselves.
We recently held a weekly meeting with our suppliers to communicate with them on the latest situation of Huajia, and many of them expressed their full support for debt restructuring. We have also discussed in detail the situation of deferred payments and debt-to-equity swaps, and have made every effort to optimize the debt scheme for all.
I'm grateful to one of the vendors who, through their own resources, introduced three investors, two of whom I am still in contact with. They all have the willingness to invest in Huajia once they resume business.
In addition, we are also communicating with the bank, and the bank said that as long as the supplier withdraws the lawsuit, the company can return to normal business status and take out loans.
I haven't received a single salary for half a year, and so have the rest of the employees. At present, I am handing out some shopping cards that I have saved up to these employees to keep everyone alive, but the last food and grass are almost exhausted.
The dividends of the times hold up the highlight moments
All enterprises are enterprises of the times. Looking back now, the rapid development of Huajia in 2016~2018 lies in seizing the market dividend at that time.
I started my business in 2010, and in the years when China's economy was taking off, the country's total GDP reached the second largest in the world, and the consumption power of users increased significantly. It was also around that time that the penetration rate of mobile Internet increased rapidly every year.
IN 2010~2014, I SUCCESSIVELY FOUNDED ZERO-ZERO RACCOON ONLINE PHOTOGRAPHY AND NOOLABEL PRIVATE WARDROBE, THE FORMER IS A SHOPPING GUIDE WEBSITE THAT REGULARLY SELECTS RELIABLE ITEMS AND COLLOCATIONS FOR USERS, AND THE LATTER PROVIDES PHOTOGRAPHY AND IMAGE PROCESSING SERVICES FOR E-COMMERCE PLATFORMS.
At that time, there were opportunities everywhere and gold everywhere. Around 2013, when I found that there was a great demand in the flower market, and the price of flowers in the flower shop was very high, but the flowers in the flower market were not expensive, I considered entering the flower consumer market again.
According to the law of the industry, when the per capita GDP reaches more than 7,500 US dollars, the daily consumption of flowers will usher in the outlet. So, in 2014, when I found out that Shanghai's per capita GDP had exceeded $8,000, I decided to do it.
At that time, it was not too difficult to get financing. However, for a vertical track such as flower e-commerce, it is a "non-standard product" in the eyes of investors, and it is not easy to win financing.
But even so, from 2015~2019, we have successively raised 6 rounds of funds from investment institutions such as Guohao Venture Capital, PS-CC Venture Capital, Kunzhong Capital, and Zhen Fund. Looking at it now, it is true that the amount of money in the entire market was too large at that time. So outside of us, at that time there were other companies that took the time to wait.
At that time, the investment circle was relatively pure, which was more suitable for my personality who was not good at dealing with and was not very good at drinking. Before 2020, I didn't drink once in the rounds of Huajia financing, and I didn't even eat much with those investors, and I directly talked to them about business logic, repurchase rate, and user base, and the money came. The institutions that voted for me are generally more pragmatic.
Hanaka was indeed doing well at that time. We build our own flower fields, self-built sorting, procurement and other midstream links of the supply chain, which reduces the disadvantage of a large amount of intermediate loss between production and retail in the flower market. Our main focus is the subscription system of daily flower consumption, divided into quarterly and monthly subscriptions, such as "99 yuan 4 bouquets of monthly package", users can order on a monthly basis and receive a bouquet of flowers on a weekly basis.
The strength of the flower plus also lies in the diversity of the bouquet. Every time the user receives the flower, he does not know which kind of flower it is made of, so he can get a surprise like opening a blind box.
In the past, the number of users was very large, shipping more than 100,000 or 200,000 orders per week, customers from Tiannan and Haibei, there should have been a huge floral team, but we invested a lot of money in the algorithm of flower matching, a total of tens of millions of yuan in those years, and the technical staff reached about 40 people at most, accounting for one-tenth of the total number of employees at that time. As a result, our company later only needed two florists to assist in the manual operation.
Source: Interviewee
At its peak, around 2017, the company's turnover reached 800 million yuan, hundreds of upstream farmers hired a few people, and five warehouses in the midstream also employed workers. Together, the company has fed more than 10,000 people in the upstream and downstream industrial chains.
In 2018, 2019, even in 2020 after the epidemic, we were still profitable. I originally thought that after another three or four years of continuous profit, Huajia would be able to go public. But Huajia fell to the bottom all at once.
Willing between
Recently, my staff and I have been researching and solving solutions online and offline every day. At least one or two hours a day, sometimes seven or eight hours, just order takeout.
We feel that the poor operating performance of Huajia in 2022 is mainly related to the epidemic.
In the second quarter of 2022, the downstream of Shanghai could not deliver goods normally, and in the fourth quarter, some positive cases appeared one after another across the country, and our five warehouses across the country had logistics interruptions or backlogs of goods, the Yunnan flower market was closed, and the warehouse personnel were interrupted due to positive and interrupted, and the communication efficiency of employees repeatedly working from home has decreased, and the whole is in a completely chaotic state.
In addition, in the whole year of 2022, the normal working hours of the 200 employees added by Huajia are about half a year, on the one hand, the income is declining, and on the other hand, the fixed costs and personnel salaries are still very high, which is difficult to adjust, resulting in a significant loss of funds.
In the first half of this year, the direct impact of the epidemic dissipated, but Huajia's business recovery was still not as expected. I conclude that this mainly lies in two points: first, in the fourth quarter of last year, due to the abnormal performance of the contract, consumers had a poor experience of the flower plus service, which affected the renewal of the contract at the beginning of this year; second, the impact of the market environment began to appear this year, after all, the consumption of flowers is not just needed, so the number of new subscribers is also small.
However, it must be admitted that the reason why the capital chain of Huajia will be broken is that its own organizational structure, management expenses and hidden dangers in the cost of flowers cannot be underestimated.
At that time, the company was in a period of rapid development, recruiting a lot of surplus manpower and some high-quality personnel, resulting in a rapid rise in costs and contradictions between new and old employees, internal consumption increased, but the business was not fundamentally improved.
I used to feel like I had to spend a little more money on marketing. In terms of e-commerce, in addition to Tmall and JD.com, some unknown channels have also been launched. There are too many channels for marketing expenses, too scattered, the efficiency of user acquisition and service is low, the allocation of personnel is excessive, and the input-output ratio is seriously reduced.
Subsequently, I plan to make some adjustments in these aspects: remove some loss-making products in terms of products, remove many non-profit small channels in channels, turn five warehouses in the country into one large and one small, and optimize personnel to 1/3 of the original. As well as reducing management fees, optimizing supplier negotiations, etc., with efficient management and steadily improving user experience as the core of operation, so that the company can have a better viability.
In addition, I think that if the brand of Huajia wants to last, it still needs to rely on long-termism and the quality of flowers to win.
Around 2019, the low-priced flowers of Douyin live e-commerce did pose a crisis of user loss to us. In order to compete for the market, in 2020, we did a test on Douyin for about a year, as long as the price is reduced, the number of orders sold in the live broadcast room will increase, but as long as there is no promotion, the algorithm will not recommend Huajia. Under the promotional price, the gross profit of the product was negative and unsustainable, so it was later abandoned.
Therefore, for the sake of our company's reputation and for the company's normal profitability, we will definitely abandon the low-end market and focus on the high-end market.
Of course, as a mid-to-high-end user, the amount of starting in the early stage may be relatively small. Because such a group of people must meet three conditions: first, they are busy with work (they don't have time to match their own bouquets), second, they have quality requirements for life, and third, they have surplus funds to spend. But in the long run, the user experience is better, and the stickiness may be higher.
Moreover, I think that as the economy picks up and the wallet bulges, white-collar workers may no longer be satisfied with the quality of flowers in the live broadcast room, and will return to Huajia.
idealism
Although Huajia is still trapped in the situation of having his account blocked, I still believe in the future.
Some people feel that the subscription system is a pseudo-demand, and if this is the case, it is impossible for Huajia to be profitable until 2020.
As for the impact of integrated e-commerce on vertical e-commerce, which has been widely mentioned in the past two years, in my opinion, the impact on Huajia is not large. The flowers of Dingdong and Hema are mainly single products, and consumers mainly buy flowers with vegetables as the main scene, which does not overlap well with the audience of Huajia.
Moreover, compared with developed countries, such as Japan, the sales scale of daily flowers accounts for nearly 40% of the overall market size, while China's current weekday flower market reach rate is only 8%~9%, and there is still 3 times the room for growth.
Of course, even if the market has a promising future, for entrepreneurs like us, to continue to run a company that is in prison, it is necessary not only to have strong comprehensive capabilities, but also to be strong enough to resist pressure.
My entrepreneurial beliefs were influenced by Bill Gates and Steve Jobs, two giants of Internet innovation. When Steve Jobs said to Scully, "Are you going to sell sugar water for the rest of your life, or are you going to change the world with me?" and this led me to reflect on my life: how am I going to influence others in my life?
I have started my own business again and again, and every time I start a business, it is a practice of idealism.
From the establishment of NOOLABEL Private Wardrobe in the early years, to the auction of Zero-Zero, to Huajia, my consistent business vision is to improve the shopping quality of users and optimize the shopping experience of consumers.
NOOLABEL's private wardrobe solves the problem of dressing for more women through algorithms, while the online auction solves the pain points of merchants to display goods from multiple angles and in an all-round way through technology and art, and improves the interactive experience between buyers and sellers.
And then to Huajia, I hope that consumers buy flowers, not for others, but "to please themselves", just like the motto of Huajia hanging in the office hall: "What is sold is not flowers, it is happiness~". Huajia's mission is to exchange the price of a cup of coffee for a happy mood for a week. It is this sense of mission that supports me to be strong.
Flower plus motto. Photo: Tao Tao
These days, I and many entrepreneurs in Shanghai are also encouraging each other. The inspiration we have for each other is that we had a good time before, only thinking about the company's ceiling, and now we need to consider some bottom line issues, and life and death are the core. What is the scale and how much profit is to consider later.
After so many years, I definitely won't give up on Huajia easily. Many of Huajia's users, suppliers, and employees have deep feelings for Huajia, and their encouragement and support over this period of time are also the motivation for me to continue to operate.
Moreover, the flower industry is currently in a booming stage in China, and there are no companies with a large market share. Huajia has been deeply involved in the industry for 9 years, in addition to obtaining multiple rounds of financing, it has also accumulated more than 10 million users and rich supply chain experience. I believe that the current difficulties are only temporary, with the further improvement of people's living standards, the market will get better and better, and Huajia will also have the opportunity to gain greater room for development.
In this 100-billion-level market, there will definitely be one or two listed companies. Perhaps, after going through the wind and rain, Huajia will set sail again and can become the leader of the industry again.
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