Founder of SHINER: The collision between traditional education and online education just begin

With the outbreak of the coronavirus, most of the ESL teachers can't operate any offline class. Most of the schools don't get any income for 3 months, and can't pay the full salary for their teachers. In the worse scenario, some brands dismissal over 60% of their teaching staff in order to survive.

In this scenario, lots of teachers turn from offline jobs to online teaching jobs.

The outbreak of the coronavirus has been a disaster for the traditional education industry, but it has been a historical chance for the online education industry.

Online or offline, what will happen to China's ESL market. Let's listen to the opinion of Dong Zheng, the founder of SHINER Capital.

"With the development of the online education industry, I think it is not only the integration of online and offline, but also a comprehensive attack from outside the school on the campus."

--------Dong Zheng, the founder of SHINER Capital

Two months have passed since the outbreak of coronavirus. Under the tide of "Suspension of class, no suspension of education", the online education industry has had explosive growth. Behind the explosion of customer data, what is the future of online education?

A few days ago, Oriental coordinate institute of New Oriental education co., LTD., in conjunction with Weibo education, held a "coordinate thinking meeting" with the theme of "insight behind the explosion of online education customer data".At the meeting, SHINER capital founder Dong Zheng combined with the conference theme, from the perspective of investors for the corresponding share.

SHINER capital is an investment service organization based on the Chinese market and facing domestic and foreign customers. Focus on the new economic field of high-quality enterprises, customize the high-speed development process of capital operations for customers, and provide full service.

Mr. Dong, the former managing director of HINA investment group, has been involved in investment and banking since 2004. He has invested in projects such as best logistics, Chinese online, SHENGJING 360.

Dong shares tips are as follows:

The collision between traditional education and online education just begin

The covid-19 outbreak had a completely different impact on us than SARS. The world economy is in decline, but in 2003 it was booming. Just after the first dotcom bubble, China's GDP per head was accelerating...The economic environment, the duration of the epidemic, and the scope of the epidemic are all different.

But for now, education, especially online education, is the only sector that has been left open to opportunity in this outbreak. Outbreaks present both opportunities and challenges. The opportunity comes from the customer side having a clear understanding of online education and being very transparent - every corner of China knows about online education. The challenge is that all the offline education institutions now know it's time to do the lesson online.

At this point, the collision between offline education and online education really began. We saw some amazing data in the background system. For example, in the discipline of rigid demand, the proportion of offline customers switching to online is as high as 95%. For example, if a child is tutored in an offline winter vacation class, his conversion rate can reach 95% when he goes online. Online institutions don't even need discounts. For example, if a child signs up for a class of 10,000 yuan, the online organization issues a voucher of 500 yuan and the class of 10,000 yuan can be continued, which is fully recognized and accepted by the parents. Meanwhile, some companies do get a lot of traffic through free classes.

But how does the traffic stay? It mainly looks at two aspects: one is the technical level of the platform, and the other is the quality of the content. If the flow can not be retained, it means the platform is not good enough in these two aspects. Now, users have so many options, one can sign up for several classes and can quickly identify the quality of the class.

Two important trends in the online education industry will emerge after the outbreak

Investors often say that education and health care are industries that could travel through the cycles, but education is actually deeper than health care. From the perspective of global history, there are only two things that not only travel through cycles, but even through history. One is religion, and the other is education. Therefore, the brand value of education is the largest, but the brand is also the most difficult to make.

The industry chain of education companies can be long or short. How short can it be? One person teaches the other person something, two people on WeChat become a friend, then one pays another to teach. How long can it grow? For example, New Oriental now has over 100,000 employees. An education company can reach the scale of 100,000 employees.

Educating clients is probably the most complex of all industries. When a child fails to do well in a subject, the reasons for his failure may or may not be clear after being studied by 10 experts for 5 years. Not to mention, what children learn is still changing. So basically, the education industry has the most backward industrial chain of all industries, because its chain is so complex. But it's easier to make money in education, so there are opportunities. But who can seize the opportunity? Only those who are prepared.

After the outbreak, I see two important trends emerging in the online education industry.

One is that there is bound to be a lot of mergers and acquisitions in the industry. Because at the moment, it is clear that there is a group of companies that are doing particularly well on the C end, in terms of sales, and a group of companies that are doing particularly well on the customer and product side. Let's say an early stage company starts with $3 million, $5 million, and goes to $10 million. It could end up raising $40 million, $50 million. How the money is distributed among the company's people, technology, products, services and marketing basically determines where the company's core strengths are.

I don't think $50 million is enough to make a company do well from start to finish. Unless it only teach a first-grader's math, perhaps that's the only thing the money can do well; Perhaps the national version of first-grade math can not be done. But there is a conflict: how many companies can raise $50 million just by doing a first-grade math class? It's impossible. So there is bound to be a lot of mergers and acquisitions in the online education industry.

Merger and acquisition are not only recruiting the employees of the other side, the labor contract to move over, the merger of statements to complete, but merger and acquisition is also a very invested thing. If marriage is a one-to-one affair, a merger is equivalent to 10 people marrying 10 people, with each pair having different problems in their lives.

There hasn't been a particularly successful case of offline merger and acquisition yet, but is there an opportunity online, and can you make it happen? It's definitely open now, especially this time the company that did a good job on the C end is getting a lot of traffic. In my opinion, online giants will emerge quickly, and we won't have to spend many years like offline ones.

The question is, can the company catch the wave? Judging from some of the best entrepreneurs we've had in the past, the opportunity has arrived, even three years before. Because in the education industry, it is very important for professional people to do professional things. People who can teach are going to do the content, people who can do the C end are going to do the C end;The future must be a combination of this form, rather than a company from the beginning to the end. But under this scenario, mergers and acquisitions between online education companies will proliferate.

Second, the discussion on the nature of online education is more in-depth. Because after the outbreak, the giant effect formed, the c-end traffic formed. Then the requirements of teaching methods, teaching ability, and system deepening of online education will be put on the agenda. 10 thousand yuan for buying convert can no longer work.

There are two kinds of education, one is evaluable and the other is unevaluable. Unevaluable may be more brand tactics, marketing tactics, see who can catch more users. But the most lucrative part of education is the evaluable part. For example, most junior and senior high school students in Beijing have to take one-to-one courses offline, because the results are the best. What is the average cost of 1 to 1?About 150,000 yuan in 3 months. That's a lot, and whoever can carve out a market in the evaluable part has a chance to break down the barriers of public schools. Because children's time is the most precious element, money is no longer important.

So, is there a way online education can break through to this position and achieve the same or even higher level of one-to-one online education? This is now the opportunity for online education.

The students have walked out of the school wall

Online education is arguably the worst industry for investors in history.

Since 2004 and 2005, there has been no online education company that has become an industry model, even including those that have gone public. We say the Internet has changed the world and made the world flat, but our education system is still very three-dimensional and very uneven.

So this time, in essence, I think it's not just a combination of online and offline, but also an all-out attack from outside the school. Because we can see that in the whole "Suspension of class, no suspension of education", the public school actually loses to the outside school; Only a handful of schools are reliable.

So in the long run, if the epidemic can comprehensively promote the equity of teaching resources, and then promote the reform of the education system, that is the real big opportunity. Now we have the opportunity to implement this blueprint. In the past, we have been working hard for so many years. Everyone has been circling the school wall, but they just can't get in. The wall is too high for the institutions. But this time, the students came out.

And this time, the parents sat in front of the screen. Today's parents, most of whom come from offline training classes, have no intention of turning their children over to online education. But this time, if the parent is responsible enough, he can clearly see that there is a huge difference between the quality of the children's online education in after-school tutoring and the quality of their on-campus education.

What will be the impact on China's entire education system if it is seized of an opportunity to really break the shyness of many parents about online education? This is something to look forward to.