Text | Boss Dai Chen Bin
The West cannot be without Jerusalem, just as the history of the Chinese internet cannot be without Huqingjiayuan.
Huqingjiayuan is a residential community located in Haidian, Beijing, covering an area of 190 acres, with 23 residential buildings, 97 units, 1,776 parking spaces, and 2,475 apartments—ranging from 37 square meters studios to 177 square meters four-bedroom units. Surrounding it are 19 hair salons, 8 cafes, 5 massage parlors, and 3 Baoding donkey meat buns shops.
The earliest owner of this land was Liu Xiaoguang, the big brother of the real estate industry in Beijing—Shouchuang Group. Shouchuang acquired the land in 1994, but by 1996, due to operational difficulties, it was sold to another real estate company in Beijing for a floor price of 4,000 yuan per square meter, which was considered an exorbitant price at the time, leading industry insiders to mock: "Is the buyer a fool?"
After the new owner took over, construction began immediately. The first two phases of the project were called "Dongsheng Apartments," and the third phase was renamed the stylish "Huqingjiayuan," echoing Tsinghua University across the street. The community opened for sale in 2000, with the first batch priced at 5,000 yuan per square meter, prompting public outcry over the high prices. However, it later became clear: some things you think are at their peak are actually just the beginning.
In the second year after opening, Huqingjiayuan's price per square meter broke 7,000 yuan, surpassed 10,000 yuan in 2005, exceeded 20,000 yuan in 2006, broke 40,000 yuan in 2010, surpassed 60,000 yuan in 2012, and in 2013, the price per square meter for small units once approached 100,000 yuan, shocking the entire real estate market. In 2014, it briefly adjusted back to around 70,000 yuan, but then soared again, with prices in 2020 already exceeding 160,000 yuan.
The ferocity of Huqingjiayuan is closely related to its "favorable location": west of Zhongguancun, east of Wudaokou, south of Zhichun Road, and north of Tsinghua Garden. A splash of urine can reach three PhDs, and a thrown brick can hit five programmers. Moreover, prestigious schools like Zhongguancun No. 2 Primary School serve as educational support, making its 30-fold increase in 20 years not surprising.
But with countless properties across the country increasing by dozens of times, why does Huqingjiayuan have a name in history?
The reason is naturally those internet tycoons who emerged from here: Wang Xing's Xiaonei Network once rented in Building 13, Room 805; Wu Shichun's Kuxun was once in Building 11, Room 1706; Su Hua and Cheng Yixiao were in Building 7, Room 305... Through the ocean of plaid shirts in the community, you can still find the shadows of Zhang Yiming, Xu Yirong, Chen Annie, and others.
With the label of "the place where the big shots once fought," Huqingjiayuan became a revolutionary old area for internet people. Following Line 13 north from the community's east gate, crossing Tsinghua Garden leads to Shangdi, Houchang Village, and Xierqi, places that were once farmland and graveyards but are now filled with internet companies, densely packed.
During the days when Huqingjiayuan's housing prices soared, students memorized "The Programmer's Interview Bible" and flooded into big companies, while dollar funds made peppercorn-style investments with stacks of term sheets. The crowds at Xierqi subway station surged, and in the sardine can-like train cars, someone was always eating chive boxes while anxiously pondering whether the future listing entity would be listed in the Cayman Islands or Virgin Islands.
That was the golden age, with ringing bells and a rush of financing, dollars rolling in. The future "Internet Dictionary" will surely have a phrase: Zhang Hua worked as a programmer in Houchang Village, with ample options; Li Ping invested in the internet at a VC, with rich carry; I sold school district houses at Lianjia in Wudaokou, earning 100,000 a month: we all had bright futures.
Shakespeare said: These brutal pleasures will ultimately end in brutal conclusions.
Gatsby's World
During the short video war in 2019, a joke circulated in Beijing's internet circle:
A junior algorithm engineer at Weibo was first referred to Douyin, doubling his salary; three months later, he was poached by Baidu, with a 50% increase in his package; half a year later, he jumped to Kuaishou, gaining another 30%, along with a lot of options. Essentially, he made a round in Houchang Village within a year, doing nothing, but his salary was three times what it was before.
This absurd scenario is an uncommon footnote in the many "internet wars" of the past twenty years in China, but undoubtedly, the internet has become the golden channel for the children of poor families to leap up the social ladder—after the reform and opening up, college entrance exams, going into business, and real estate speculation briefly led this channel, and now it’s the internet's turn.
The earliest year that Chinese universities offered computer science majors was 1956, where students had to learn tedious programming languages and deal with cold mainframes filled with circuit boards. In the 1990s, as the internet and PCs with graphical interfaces gradually became popular, the popularity of computer science began to rise. After 2000, domestic web 1.0 companies emerged, and the pay began to significantly outpace other majors.
In 2010, with the explosion of mobile internet, salaries at big companies soared, surpassing those of Java training at Beijing University of Aeronautics and Astronautics, which overtook the excavator training at Lanxiang and the Hunan cuisine specialization at New Oriental. Tsinghua's Yao Class and Jiaotong University's ACM became legendary on Zhihu and Weibo, and even young children began writing their first line of "hello world" in various programming classes.
Morning rush hour at Xierqi subway station
Programmers have become one of the few professions that can catch the eye of mothers-in-law. In Shenzhen, girls in the matchmaking market prefer men from Tencent, followed by those from Huawei; in Hangzhou, beautiful women from well-off families need connections to post marriage ads on Alibaba's internal network; in Shangrao, Jiangxi, a parent hung a red banner saying "Congratulations to XXX for joining JD with a monthly salary of 18,000," a scene comparable to celebrating a college entrance exam top scorer.
A folk song goes: Marry a hero in the 50s, marry a poor farmer in the 60s, marry a soldier in the 70s, marry a degree in the 80s, marry a rich man in the 90s, and marry a programmer in the 2000s.
HR in big internet companies are clearly more anxious than matchmakers. In 2015, when Yahoo's Beijing Global R&D Center closed, a "famous scene" unfolded at the entrance of Tsinghua Tongfang Building:
Hundreds of HRs and headhunters gathered, trying to woo the 350 Yahoo employees who had just received N+4 severance packages. Many beautiful women held up signs, some saying "Join us and get an iPhone," others "B-round unicorn urgently seeking CTO," and some said, "Yahoo's brother, we can help you continue to be awesome."
People from all walks of life flocked to the internet, including real estate developers, club owners, sellers of adult products, and even a Shanxi coal boss renting a room in Huqingjiayuan to start an app. They were ambitious, with Zhang Yiming's ambition and 100 viewings of "The Social Network," often saying: Everything is ready, just missing a programmer.
The craze seemed to reflect in domestic TV dramas: early on, IT tech men were portrayed as Xiao Bei in "Dwelling Narrowness"—a victim of infidelity due to housing issues. Now, while the image of programmers in domestic dramas hasn't yet reached the coolness of "The Matrix," at least they can now pair up with Tong Liya in "My Economic Suitable Man."
Executives, on the other hand, are rolling in wealth. In 2005, Baidu's IPO created eight billionaires, and nine years later, Alibaba's IPO nearly added two zeros to that number, with over 1,000 millionaires, while the IPOs of JD, Pinduoduo, Meituan, Xiaomi, Inke, Huya, Beike, Kuaishou, and others granted a large number of people financial freedom.
Of course, this hot money ultimately finds its way back home like migrating salmon: to real estate.
A well-informed Haidian real estate agent recalled: People from ByteDance, Kuaishou, and Tencent prefer large units of around 200 square meters, often making purchases before year-end bonuses; employees from Baidu and NetEase mostly buy two or three-bedroom apartments, often paying in full; small units are mainly bought by people from Sina and Xiaomi; it seems there are hardly any people from Sohu.
Haidian school district houses are merely an option for the overworked, while internet capitalists clearly have higher aspirations. In Shanghai, successful founders like to collect a suite in Cuihu Tiandi; in Shenzhen, Shenzhen Bay No. 1, near the border, has become a standard for the new elite in Nanshan; in Beijing, Huqingjiayuan is just an entry-level option, while the villa area in Shunyi, where new money gathers, is the next stop after ringing the bell on Nasdaq.
The style of internet tycoons may be completely different from that of coal bosses: they usually dress simply, wear Apple watches instead of Patek Philippe, take commercial flights instead of private jets, work overtime 996, and don’t arrange a wedding convoy of 36 Hummers, nor do they buy two units in Wangjing before dinner, but their wealth accumulation speed and influence in public opinion are historically unprecedented.
Thus, when Shunyi mothers gather to discuss their husbands' co-investment projects, when the banquet in Wuzhen is filled with discussions about the next trillion-dollar opportunity, and when Porsche sales in Hangzhou pre-celebrate Ant Group's smooth IPO and new Family Offices in Cayman and Singapore spring up like mushrooms, the atmosphere suddenly becomes Gatsby-like.
How will people remember these extravagances and restlessness years later?
The Story of Liquidity
The vast majority of wealth in this world comes from the illusion created by monetary injection and liquidity overflow.
John Doerr, a father figure in the internet VC circle, commented on the new money in "Silicon Valley Fire": "The only and largest legal accumulation of wealth this century." Clearly, before the label of monopoly was applied, the rolling wealth of China's internet was also considered "the cleanest generation."
However, the rise of the internet was too rapid, astonishingly so. Walmart employed 2.2 million people over 50 years, while Meituan's delivery riders exceeded 5 million in less than 10 years; Huawei took 23 years to build a global high-tech talent team of 100,000, while ByteDance achieved the same number in 8 years. Why?
Technical dividends and model innovation are the textbook answers, but where does the money supporting these technologies and innovations come from?
Is it from local venture capital institutions? Looking at the portfolios of RMB funds like Shenzhen Capital Group, there are hardly any star internet companies. Is it from government subsidies? Over the years, we've heard of subsidies for photovoltaics, wind power, and chips, but never for the internet; is it from the money of real estate tycoons? It seems only Jia Yueting has done this.
Is it self-generated? Looking at the financial reports, Alibaba has earned about 630 billion yuan since its establishment, Tencent 550 billion yuan in the same period, Baidu 170 billion, and NetEase 100 billion. Besides these four, other internet companies are still pursuing positive cash flow and breakeven, with their total profits being less than a fraction of the four above.
Direct financing is the biggest faucet, with two forms: primary market financing and secondary market IPOs. In these two scenarios, internet companies can disregard profits and magically convert metrics like PV, UV, DAU, MAU, GMV, ARPU into a continuous stream of dollars.
What is a dollar? The advisor in "Let the Bullets Fly" defines it: the US dollar, US knife music.
Transporting green paper from one side of the ocean to the other, the direct financing of internet companies is essentially a large pipeline that has been running for 20 years, one end being the vast global currency reservoir and the other end being the heavily regulated financial market of mainland China, cumulatively transporting 300 billion dollars over the past 20 years.
This is real big money.
The valve of the pipeline is the dollar funds standing at the forefront of the times, while the pipeline workers beside the valve are a group of VC/PE investors. Unlike secondary market fund managers, VC/PE investors are naturally a profession that requires exposure, firstly for fundraising, and secondly to create momentum in their invested sectors. Therefore, under the media and self-promotion, a significant portion of investors have become "heroes of the era."
In the field of communication, Xiong Xiaoguo is the bespectacled godfather, Shen Nanpeng is the suited shark, Zhang Ying is the coolest capitalist, Lin Xinhe is the sniper with an 8x scope, and Xu Xiaoping is the talent scout for Ivy League elites, like a machine gun placed at the T3 terminal of Capital Airport, every young person returning on a flight from a prestigious school will be shot by him.
Investors come from all walks of life, with various schools of thought flourishing: player faction, whaling faction, track faction, vertical faction, research faction, trend faction, pepper-sprinkling faction, club-pulling faction, and agency-pulling faction... There are more factions than the Kuomintang reactionaries. However, aside from occasional conflicts over cases, everyone generally keeps to themselves.
The success of dollar funds is partly due to their luck in timing historical processes, and partly due to the tacit acceptance of gray areas by regulators on both sides of the ocean, such as their "two-headed" model—raising funds abroad with LPs being dollar-based; exiting overseas, with most companies using VIE structures to list abroad and cash out in dollars. This model avoids a large amount of taxation.
Dollar direct financing is a perfect match for the light asset, innovative model, and high-risk internet industry, allowing the latter to operate independently of the prevailing mortgage culture in the local financial market, making them unafraid of tight monetary policies and macroeconomic controls, and enabling founders with programming backgrounds to avoid awkwardly dealing with local bank presidents at banquets and golf courses.
Since the 2008 financial crisis, with QE flooding in waves, dollar interest rates have continuously declined, and the overflow of liquidity has directly raised the tide in the global primary market. Clearly, in a world of decay, the high-tech industries of China and the US belong to a promised land amidst the ruins. The Chinese internet on this side of the pipeline can naturally receive the surging flow of water immediately.
The result of the massive influx of dollars is a continuous twenty-year, resource-consuming, unprecedented war of division in Chinese business history.
The War of Proxies
An entrepreneur emerging from the corpse-strewn battlefield of the internet is likely to quote Zeng Guofan's words when reflecting on their experiences: spending money like dirt, killing like hemp.
Zeng Guofan was skilled at building strongholds and fighting conventional battles, but internet entrepreneurs believe in the blitzkrieg of the Third Reich. Reid Hoffman wrote in "Blitzscaling": Speed is key, efficiency can be discussed later—if you win, efficiency doesn't matter; if you lose, efficiency matters even less.
Since the "Thousand Group War" in 2010, the smoke of blitzkrieg has never dissipated. E-commerce wars, takeaway wars, live-streaming wars, ride-hailing wars, short video wars, shared bike wars, community group buying wars, online education wars... It is said that the United States has only been at peace for 18 of its 244 years, and the internet's ratio is likely even lower.
Some of this involves giants attacking each other, but the results are usually not friendly. For example, when Tencent entered e-commerce, it earned Liu Qiangdong's famous remark—"You can't even beat a bunch of brothers below"; similarly, when Alibaba ventured into social media, it urged all employees to promote "Laiwang," leading to posts on Douban about downloading Laiwang to save Alibaba employees, yet it still failed.
In fact, after Tencent changed its mindset, Alibaba faltered with Laiwang, and Baidu sold off its takeaway service, the older generation of internet companies sitting on Jinshan found it difficult to mobilize directors with annual salaries in the millions to engage in hand-to-hand combat; they preferred to fight proxy wars through investments (giving money) and ecosystems (providing traffic).
The so-called proxy war refers to internet giants abandoning the old path of doing everything themselves and instead forming various "indestructible alliances" through traffic and investment.
The giants use traffic to support their demands for alignment, while dollar funds navigate both sides, with the former seemingly having endless cash flow and the latter holding thick checkbooks, both working together to supply arms to the battlefield. As for entrepreneurs, ten years ago they worried about whether the "damn BAT would copy me," and ten years later they care about whether "respected BAT will invest in me."
Due to the existence of "competitive restrictions" in investment agreements, dollar funds often have to take sides. A typical example is in online education, where new giants Yuanfudao and Zuoyebang clash in the K12 sector, and their shareholder lists basically include half of the top dollar funds, with the former backed by Hillhouse, IDG, and Matrix Partners, while the latter is supported by Sequoia and SoftBank.
In a vertically segmented internet field, where competition is generally moderate, suddenly being hit by dollars. Players who touch the lottery must rely on rapid growth to prove themselves, and after securing funds, they immediately scramble for talent, traffic, and resources, which explains why someone can jump around Houchang Village for a week and see their salary double.
Some investors bluntly point out: History will punish those who dare not spend money. A typical example is the early ride-hailing company Yidao and its boss Zhou Hang. In 2014, Zhou had at least six term sheets in hand, with intended funding of 300 million dollars, but out of caution, he only took 100 million dollars in Series C funding, only to realize something was off a few months later.
By the end of 2014, Didi, backed by Tencent, secured 700 million dollars in financing; in January 2015, Kuaidi, backed by SoftBank and Alibaba, secured 600 million dollars. Both sides were well-armed and began pouring ammunition into the center of the battlefield: after five months of "hot war," they invested 2 billion yuan just in subsidies, and Didi gained 78 million new users as a result.
With the entry of Uber China, the "fight" escalated to a new level. In 2016, the Saudi Public Investment Fund provided Uber with 3.5 billion dollars, explicitly stating it would be used for the Chinese market. Prior to this, Uber's CEO Kalanick had announced in front of global investors that he would spend at least 1 billion dollars on ride-hailing subsidies in China.
As for Yidao, which held 100 million dollars, it could only tremble—soon it would lose to Didi, Didi would lose to Kuaidi, and Kuaidi would lose to Uber, leaving no one left to lose.
During the most intense period of the ride-hailing war from 2014 to 2016, Didi disclosed a total of 13 financing rounds, with a total amount exceeding 10 billion dollars, while its competitor also held at least 5 billion dollars. In this context, the weak Yidao was forced to submit to LeTV, but the honeymoon period was short-lived as LeTV drained it, ultimately leaving the table in disgrace.
The ride-hailing story ended with the merger of Didi and Kuaidi, a happy ending for all parties, with Kuaidi's management cashing out 600 million dollars, leaving the scene quite gracefully (especially compared to Didi now, which is quite lamentable). Similarly, the founding teams of Dianping, Mobike, Ele.me, and others achieved mergers and exits, escaping this battlefield.
When "billion" becomes a commonplace and attainable number, proxies inevitably feel a sense of being players. In fact, the risk of being abandoned by internet giants has always loomed: even if you make 99 right moves, one wrong move can undo all your efforts. Distant examples include Feifan e-commerce, recent examples include Shihuituan, and those not far or near include ofo.
In the decade from 2010 to 2020, funds from internet giants and overseas VCs poured into various battlefields, using "billion" as the basic unit, creating unprecedented prosperity in the mobile internet era.
The outcomes of these wars usually fall into two categories:
One is the Didi-style outcome. After merging with Kuaidi, Didi maintained an almost monopolistic market share for a long time, transforming from a pawn into a player. The other is the ofo-style outcome. Meituan, Didi, and Alibaba launched their own "agents," unable to eliminate each other and with no hope of merging, they could only sound the retreat, transforming from players into discarded pieces.
On the surface, ofo made the classic mistake of "blitz expansion"—neglecting internal management in pursuit of growth. However, the negative externalities of ofo's defeat were very high; the impact of the shared bike war on social opinion was far more complex than the rise and fall of a single company.
In 2018, during the heated shared bike war, 55-year-old photographer Wu Guoyong traveled across more than 20 provinces, visiting 45 abandoned shared bike sites, capturing a series of photographs titled "Nowhere to Put Them": abandoned bikes spread like colorful ants in every corner of vacant lots, resembling a graveyard. This series of photos dropped a shocking bomb in the hearts of the thrifty Chinese.
One of "Nowhere to Put Them," the "shared bike graveyard" in Pudong, Shanghai
As the enormous waste was presented before the Chinese people, the siphoning effect of high internet salaries was taking place in hidden corners. In chip companies, HR found that microelectronics graduates were all switching to computer science; in aerospace, personnel watched helplessly as young people resigned to become community operators right after securing their household registration; in established media, core journalists privately discussed whether to go to big companies for PR, only to suddenly realize their leaders had already jumped ship.
In fact, the siphoning effect of the internet on social resources, like the photos of bike graveyards, speeches at the Bund Financial Conference, Didi's IPO, online education companies' Spring Festival Gala advertisements, riders trapped in systems, and community group buying "competing with small vendors," have all become symbolic events of this turning point in the era—no one can clarify the specific impact of each event, but the cumulative lollapalooza effect is visible to all.
During the "proxy war" of the 1930s—during the Spanish Civil War, Hemingway wrote "For Whom the Bell Tolls." The ending contains this line: "Do not ask for whom the bell tolls; it tolls for thee."
Epilogue
In 2000, the internet bubble burst, the Nasdaq was howling in the cold wind, and domestic internet companies were also in disarray. On December 12 of that year, a conference titled "Ten Years of Capital Market Development" was held in Shanghai, where a deputy director surnamed Liu from the National Information Center delivered a speech titled "New Economy and Capital Markets and Venture Capital."
In his speech, he clearly pointed out that despite some recent fluctuations in the Nasdaq market, "the new economy, relying on the internet, continues to penetrate and expand, becoming a core factor influencing economic growth, income distribution, international division of labor, and national competitiveness."
He analyzed the digital economy policies of countries like the US, Japan, and the UK, then summarized the framework of China's government "15th Five-Year Plan" for informatization, and finally gave a clear conclusion: "The trend is very clear, and I do not believe that cyclical factors will interfere with structural changes, so there should be no confusion about the big direction."
Twenty years later, rereading this speech, one still finds its viewpoints remarkably prescient and enlightening.
A year later, he published a paper titled "Unifying the Development of the New Economy with Reform Goals." The paper pointed out that the conditions for the rise of the American internet were lacking in China, but China also had potential that the US did not possess: such as a vast potential market, the increasingly important role of small and medium-sized enterprises, a thousands-of-years-old educational tradition and strong talent reserves, and a system conducive to the development of the internet economy gradually taking shape under the promotion of the government and grassroots enterprises.
The paper pointed out that China is very likely to carve out a new path different from that of the US: "Using the vast domestic market scale to drive the formation of industrial scale, and then promoting the formation of standards through the expansion of industrial scale and extensive international cooperation, China's customized capabilities in new economic development may be driven by domestic demand."
Twenty years have passed, and everything has almost unfolded as predicted in the paper.
The internet economy has led the first 20 years of this century, creating countless wealth myths while bringing tangible efficiency improvements to China—over 10 million direct jobs, tens of millions of indirect jobs, and leading global digital capabilities... In every moment of the pandemic, who can deny the internet's tremendous positive impact on society?
However, after 20 years of rapid growth, this industry is becoming increasingly burdened. One piece of evidence is the near-peak internet penetration rate; as of June 2021, China had a 71.6% internet penetration rate and 1.011 billion internet users, with users inside and outside the fifth ring road achieving "Douyin freedom," and almost all areas that needed to be penetrated have been.
Another piece of evidence is that innovative models are running dry. Over the past 20 years, most internet innovations have essentially been downstream model innovations, but now, in almost all fields, including food, clothing, housing, and transportation, giants have turned over countless times with swords and plows, and with upstream technological innovation stagnating, only a few battlefields remain for the big companies' imagination.
When an era reaches its farewell, it won't simply say goodbye; instead, it will express a hundred sweet nothings, desperately hinting, "Actually, I don't want to leave; I actually want to stay." Those who remain attached to the old paradigm will only come to their awakening after experiencing countless injuries.
Will the next Huqingjiayuan be the Zhongxin Garden community in Zhangjiang, Pudong? This question, like "Will hard technology take over the internet?" is impossible to predict. However, using a property to represent an industry carries a layer of metaphor: the internet and real estate are the two major paradigms of the past 20 years of the economy, and they have both encountered their curtain call simultaneously.
Over the past forty years, we have witnessed and personally experienced the endings of countless golden ages: the end of the golden age of township enterprises, the end of the golden age of processing trade, the end of the golden age of coal bosses, the end of the golden age of infrastructure projects, the end of the golden age of real estate... Often, a dignified farewell is the best farewell.
The era has come a long way, and the era has also moved away; those immersed in the shadows of the past need to turn to the next page.
Source: Caijing Eleven WeChat account: caijingEleven