Dialogue with Yang Jinhe of Zi Niao Browser: A grassroots entrepreneur from the heart of the industry | PLG Ten People Talk

Editor | Mai Guangwei

In the past two years, the SaaS industry has experienced great ups and downs.

Since it became popular in 2019, the epidemic, low interest rates, and technological changes have given rise to the development of various companies. Now the market has returned to calm, valuations have declined, business has stagnated, and the industry is "crying". Perhaps the market is "unwilling to be lonely", and PLG, a product-driven growth concept, has surfaced and attracted a lot of attention.

Although the concept is popular, what kind of enterprise is truly "product-driven"? King Yang, founder and CEO of ZiNiao Browser, has a deep understanding of this.

Zi Niao Browser is a SaaS product for overseas merchants, and its main business is account security and OA (performance). However, the origin of the company originated from a sleepless night.

King started to be an overseas seller in 2016, mainly producing customized products such as T-shirts and carved wine glasses, and has been involved in platforms such as Amazon, eBay, and Shopee.

Late one night in the summer of 2017, one of our company’s Amazon stores suddenly became quiet, but several popular products were clearly selling like hot cakes in the early hours of the morning, which puzzled everyone. After investigation, we found that it was an insider who secretly removed our company’s products in order to rank his own store higher.

This incident made King very angry. After calling the police to investigate, he calmed down and began to reflect on what went wrong.

Like most overseas sellers, King's store directly handed over the account and password to employees, and changed the password after the employee left. In addition, it used Excel spreadsheets to manage the accounts and passwords of multiple stores. The problem is that employees can not only log in to the account at will, but also download the spreadsheets with the account and password at will. Therefore, employees often sneak into the backend and operate at will in the industry, which is a headache for everyone.

King decided to write his own system to manage the account passwords, so that employees can have the right to operate but cannot see the passwords. This system needs to be used on fixed hardware or the company's local area network, and cannot be operated after leaving the company. This not only protects the security of the store, but also avoids the many troubles caused by fixed IP addresses.

This is equivalent to providing a secure container for overseas accounts, corresponding to only one IP, plus a protective password. King then upgraded the system and made the company's OA-confidence-based. Gradually, the company's security and efficiency improved, and this system was also discovered by the seller friends around him. At a drinking party in Shenzhen, King's long-time friend asked directly: "Lao Yang, how much do you charge? I want to buy your system."

Later, more and more seller friends wanted to pay King to manage their account passwords. King wondered, could this small thing be turned into a business?

An Amazon store account requires an email address, a mobile phone number, and credit and debit card information. If a company has 100 Amazon stores, it will need 400 corresponding accounts and passwords. China has a huge number of sellers, so there is a huge room for imagination.

With this in mind, at the end of 2017, King decided to shift his new entrepreneurial goal from selling goods to solving pain points in industry segments, and Zi Niao Browser was born.

This simple cloud product focused on two pain points in the industry: one was locking IP, and the other was OA for internal employees, so it became a rigid demand in the industry at that time.

Chinese overseas accounts are very vulnerable and often encounter problems such as being blocked, false orders, association, delayed delivery, and too many negative reviews. The annual mortality rate is over 40%.

According to overseas rules, each account has a fixed IP address and requires a fixed device. If the IP changes frequently, it will be considered stolen by the platform. If the account is blocked, the company needs to submit information via email. After a few days, the ranking of the account that cannot be operated will drop, which is very troublesome.

Many cross-border e-commerce companies have thousands of employees, and the turnover rate is very high. Changing passwords back and forth is too troublesome, and it is difficult to report problems to the police and collect evidence. For sellers with multiple accounts, the cost of personnel management is very high. For companies with hundreds of people, at least 1-2 labor costs can be reduced.

In this way, with many years of seller resources and few competitors in the industry, Zi Niao Browser has developed rapidly. It had 1,000 users in 2018 and more than 10,000 in 2019. It currently has 120,000 sticky service companies, with a repurchase rate of more than 90%, accounting for almost 25% of the national market. The market share of more than a dozen other competing companies combined is less than one-third of Zi Niao's.

Speaking of products, the charge is 68 yuan per account per month. In terms of management, many operations are retained by the browser, and even if there is a problem, the specific person can be found, which improves the security of the store.

When it comes to price, King and his team came up with it on the spur of the moment. There were no real competing companies at the time, so there wasn't much room for reference, but a price that was too high wouldn't be appropriate. At the same time, since they entered the market in 2017, the customer acquisition cost was only 0.1 yuan at the time, but now it has risen to 300 yuan in 2022, and the cost for new players is 500 yuan, so the first-mover advantage of Zi Niao Browser has been reflected.

There is no shortage of challengers in the industry, including large companies such as Ucloud, which have no shortage of funds, technology, and talent. King is very clear that it does not have much advantage to compete with itself, and creating differentiation is the key.

After trying out several products from other competitors, King discovered that the "common problem" of other players is that they focus on technology and ignore the industry itself, and don't understand what users really need. One phenomenon that deeply touched him is that his own products are often "copied", but only copying the functions without understanding the logic behind them. It can be said that they just copy the functions for the sake of having them, which greatly affects the user experience.

For example, some products become laggy after adding new features, but users find that logging into Amazon is smoother on ZiNiao. This is because ZiNiao spent 10 million to speed up broadband, which is equivalent to giving users invisible benefits.

And account management itself is a great test for the security of the cloud. Once hackers invade, everything will be zero. In order to strengthen its own risk resistance, Zi Niao's technical team thought of a storage technology similar to blockchain, breaking up the account password into multiple segments of characters and then storing them in five different places.

Zi Niao has also invested heavily in security. In the past two years, Zi Niao has recruited technical experts from large companies such as 360 to form a dedicated security team, investing tens of millions of yuan a year.

For the sake of account security, Ziniao cooperates with almost all cloud vendors on the market. This was due to an "accident."

In the summer of 2021, one night, all accounts suddenly lost their login capabilities. This incident caused a great shock in the industry, with complaints and doubts. Everyone speculated that Zi Niao had problems with its operations and was going to run away. King was very anxious. After investigation, the team found that a cable of the cloud vendor had been dug up. After the repair, King discussed with the team that they would never dare to purchase from only one company in the future, and the data would never be put in one basket.

In this way, Zi Niao, which holds 25% of the market, is favored by capital. In 2021, investment representatives from some first-line investment institutions found King to learn about the company's situation and discuss cooperation, which made him very happy.

In King's opinion, Zi Niao's biggest advantage is that it starts from the industry and truly understands the pain points of users. He admits that he is more like a down-to-earth "grassroots" entrepreneur. The company grows together with the sellers, and the products are constantly iterating. Through capital investment, the gap in technology with other companies will be gradually narrowed.

When it comes to advantages, King believes that there are two main ones: one is the first mover, and the second is the accumulation of original customers. Zi Niao has built a relatively deep barrier, and most of the cooperation users are sticky users, so the next step is to consider the issue of additional purchases.

King compares it to a housekeeper. The merchant first hands over the key to the purple bird, and then the purple bird can go in and out to clean up, help turn on and off the lights, and then step by step into every aspect of life... ...

Currently, Zi Niao is testing a function similar to the overseas security guard, which can dynamically monitor the health indicators of platform accounts, and automatically generate physical examination reports on performance, funds, inventory, shipments, etc. After that, many mechanical steps of platform management, such as report downloads, cash withdrawals, and other non-innovative tasks, can be fully automated, which will save merchants a lot of manpower costs... ...

Looking into the future, if the market share reaches 50%, how much room for imagination will there be with such huge data?

From the founding of Purple Bird Browser to the present, King and his team have been adhering to the core concept of product-driven business growth.

In September 2019, King came to Shenzhen from Xiamen. He was responsible for the market, and another partner was responsible for the product. After that, the startup team grew from two people to more than a dozen people, and then continued to expand. Now it has a size of about 500 people. Among them, technical personnel account for 65%, and the sales team has only about 25 people. The company's marketing expenses are controlled at 8%-10% of the turnover, which has never changed.

When we first came to Shenzhen, we were very anxious due to the lack of major customer cases and the fact that marginal costs could not be reduced.

King knew that he could only start marketing in a big way after getting orders from leading companies. So he took his products and solutions and went to Xiamen, Fuzhou, and Shenzhen to visit companies one by one. At first, he passionately talked about the products and functions, the industry prospects and the future to his former colleagues, but the listeners were confused. It is not difficult to understand that there were no similar competitors in China at that time, and everyone found it difficult to digest the security concept proposed by King.

Fortunately, after repeated communication, more and more big sellers agree with King and Zi Niao. In 2020, a leading cross-border listed company took the initiative to contact King and said that more than a dozen accounts of the company would be handed over to Zi Niao for safekeeping. So far, Patosun, Youkeshu, Aoji, Yibai, etc. have become benchmark cases of Zi Niao.

With these benchmark cases, coupled with years of industry accumulation, user trust has increased rapidly, Zi Niao's moat has become deeper, and marginal costs have been reduced again and again. At this point, new players will have little effect if they start a price war.

At this time, there were two paths before it: to expand the marketing team by leveraging the potential of users from many leading companies, or to continue to delve into the product. King chose the latter.

Zi Niao's sales team has always had a very low staff ratio. At the beginning, there were only two customer service representatives, one of whom was King himself. Now the company's marketing team of more than 20 people mainly conducts return visits based on the background situation, focusing on service rather than marketing.

Speaking of marketing costs, King has calculated that the online conversion rate of the product itself is extremely high, and 57% of revenue growth comes from organic traffic, which is cost-free.

When it comes to promotion, Zi Niao holds many cross-border summits every year, during which it can grow together with users, service providers, and sellers in a mutually beneficial way, so the marketing cost is not high. Zi Niao's annual cloud vendor procurement costs are as high as tens of millions of yuan, so it can collaborate on marketing, and major cloud vendors continue to endorse Zi Niao, which is in line with Zi Niao's altruistic corporate values.

King admitted that the company's sales staff ratio is very low, which is the company's weak link. As the complexity of the product increases, some professional sales teams are still needed, because many functions cannot be presented only in the form of pictures and texts. But that's all later. For Zi Niao, advertising marketing does not necessarily have to have high conversions. Although the annual marketing investment of tens of millions only brings less than double-digit revenue growth, it is more for the brand mental effect.

Since starting his business, King has seen many "dead" SaaS vendors, and he is filled with emotion.

For example, once an ERP company laid off its sales staff, its turnover immediately plummeted. This is a typical example of a company that is driven by sales rather than products.

After visiting many entrepreneurial partners, King found that many SaaS companies started to spend money to expand the market and do marketing after financing, and few companies actually thought about whether the market investment was proportional to the performance. King felt helpless. In fact, if the ROI was not proportional, it was meaningless to spend money on advertising.

King, who has been a seller, knows that ToC is about seizing a user's pain point and spending money like crazy to occupy territory, while SaaS is a ToB business. The early stage of discovery is very slow. This is the time to cultivate market trust. When it becomes an industry necessity, trust will drive business, revenue, and potential to take off. The best reference case is the big brother Shopify, which was officially launched in 2006, received a $100 million Series C financing in December 2013, and achieved revenue of $3.27 billion in 2021 through merchant solutions, a year-on-year increase of 61.8%. Behind the glory is 15 years of ups and downs.

However, many SaaS vendors are engaged in marketing madly when their products are immature and the market is unstable. During this period, if the user experience is poor, the retained users will complain, which undoubtedly overdraws the user's trust. King believes that the ToB business must not be forced to mature, but must be done slowly and down to earth.

For some failed SaaS companies, if we simply summarize the failure experience, King believes that first of all, the company must have a clear understanding of its product strength and management capabilities. For example, after financing, they will recruit people crazily. The company's leadership should think that once the number of people exceeds the company's own management scope, the team will breed many newbies and the efficiency will be greatly reduced. If you want to improve the retention rate of the product, you must start from the core needs of users and not blindly provide invalid needs.

Some companies, when they get their first round of financing, are very clear about what they want to do. When they get their second round of financing, many companies will be confused about whether to do marketing aggressively. However, relying on marketing to increase sales is one of the simplest means. Once marketing is stopped, sales will fall back to the original level in seconds, and the company will end up in a mess.

Ultimately, product strength is an effective guarantee for user retention, and marketing and retention rate need to be combined, otherwise it is easy for the company and the product to be short-lived.

If entrepreneurship is treated as a marathon, King and other entrepreneurs feel that they must remain calm and understand what they want.