Two months ago, rumors about ofo founder Dai Wei’s successful American business ventures returned to China and sparked intense debate. Unexpectedly, his coffee experiment was practically “yellow” before the last heat was over. People with knowledge of the situation claim that there is a problem with the project’s capital chain. The current stores are in jeopardy, and the expansion plan has been fully shelved. It seems to be only one mistake away from happening again.
What caused the previously youthful and bright “genius entrepreneurs” to end up here?
The Internet was buzzing recently with rumors that ofo founder David had traveled to the United States to build a café. The most recent information indicates that Dewey’s startup venture, About Time Coffee Cafe, has been experiencing operational difficulties as a result of capital chain delays.
About Time Coffee in New York has started to shut its locations, and the establishment of new locations in major cities other than New York is “nt moving at all,” according to sources acquainted with the situation who were cited by Interface News. Additionally, the company has ceased expanding along the whole East Coast of the United States. According to a second source with knowledge of the situation, the chain’s growth plan has been entirely shelved, the original store’s operations have remained unchanged and are run more simply, and the project’s internal members are waiting to see.
The word of Dai Wei’s return to business in the US circulated back to China in mid-May. Many ofo users yelled “refund” when they recalled the deposit that was not returned. “Can David still go abroad?” and “Can David start a business?” were real questions posed by several internet users. It had been almost five years since the “ofo yellow car” filed for bankruptcy, other internet users moaned.
Five Peking University alumnus co-founded Ofo. When it was at its busiest, it was processing over 20 million orders per day and had a market share of over 90% for shared bicycles with Mobike. But in 2018, ofo eventually collapsed due to the acceleration of funding and the escalation of uniform competition.
These days, everyone is interested in David since the word about him continues spreading. Where are the enterprising bike-sharing folks that used to have an endless supply of beautiful scenery?
01
Return Luckin to the United States
After being assailed for “taking countless 99-yuan yellow car deposits” and being assassinated in the US, Dai Wei, the erstwhile creator of ofo, gave rise to a new wave of coffee entrepreneurs. Chinese folks are likely acquainted with About Time Coffee’s Luckin taste, which was born in North America. At the moment, About Time Coffee concentrates on affordable coffee goods, with unit prices ranging from $3 to $7. “In 2016, Boba milk tea at the gate of American universities had been sold for about $8,” said Xiao Chu, an American student. Right now, About Time Coffee is quite affordable.” New coffee varieties like pearl and taro coffee are featured prominently at About Time Coffee establishments rather than more conventional offerings like American coffee. The beverages themselves resemble milk tea goods more. Easy-to-pull cans are mostly utilized in packing. About Time Coffee not only introduces innovative coffee items but also actively encourages APP downloads via marketing tactics. It’s said that About Time Coffee has released an online order registration app to get more users to download the app. It’s free for the first five cups. Regarding look, flavor, cost, and internet promotion tactics, About Time Coffee is comparable to Luckin. “We have a mature model from China,” About Time Coffee CEO Marian Chen previously told the press. We provide coffee that tastes better than Starbucks at a lower price. This seems to support the theory that About Time Coffee aspires to emulate Luckin’s path to success. It is difficult to determine, nevertheless, whether About Time Coffee’s Luckin model is appropriate for the American market. First off, the social qualities of new, popular beverages like milk tea and coffee in the Chinese market are somewhat better than those of same items in the US market. For instance, even though Starbucks has been promoting its own “hidden menu” on Yelp and Instagram, customers still most frequently order American and lattes from the establishment. Occasionally, online celebrities flaunt pink and blue Starbucks drinks like “unicorn frappuccino” and provide detailed instructions on how to order from hidden menus. The so-called “Boba Coffee” and “Boba Milk Tea” have been “crossing the sea” to North America with Chinese students as early as 10 years ago, but no new beverage brands have found significant success in the US to far. As a customer, Xiao Chu expressed his own views. The growth of the takeout sector in China has not kept pace with the creation of new beverages. Our favorite situation to sip milk tea on a daily basis would be the afternoon tea served by the corporation, which is followed by dating and shopping. Nonetheless, in contrast to China, the US takeout market is not as advanced. Milk tea has less calories and no cooling properties by itself. On the other side, milk tea shops may not be the greatest option for Americans as a social venue unless you happen to walk by.” Xiao Chu said, “There are a lot of rich social scenes in America, like fraternities, churches, adult small group meetings, college clubs, and so on.” Their selection of sceneries and social spaces is more varied, which lessens the new tea shop’s ability to compete by offering social space in addition to the goods. It will be more challenging to promote online payments in the US than in China, in addition to goods and markets. Many American customers are more used to using cash or credit cards than they are to the highly developed internet payment system in China. Although Starbucks has been offering offline applications for years, the majority of locals still choose to pay with cash. The notion of “private marketing” being accepted by Chinese customers is also essential to the Luckin model’s success. Conversely, the idea of “community marketing” does not seem to be met with much “cold” resistance among Americans. The most crucial point is that revenue generation is the goal, not traffic attraction. It is difficult to predict whether About Time Coffee will be able to turn a profit while facing several obstacles.
02 The “glorious years” of Ofo.
The most frequent query after the announcement that Dai Wei traveled to the US to start a company was not only whether or not their deposit might be returned, but also where the funds originated.
According to reports, Zhenge and Wei Lie are both longtime stockholders ofo and have a significant influence on Dai Wei. In addition, Dai Wei is the limited partner (LP) of one of Wei Lie Capital’s funds. As a result, he received some funding for About Time Coffee. Furthermore, the success of ofo may depend entirely on these expenditures.
In 2015, Guanghua School of Management at Peking University’s Dai Wei established ofo, which started out as just a “sharing plan” for the campus, mostly for students to recycle bicycles and use them to share bikes with lecturers and other students. Dai Wei said at the time that he would introduce 10,000 shared bicycles to Peking University and seek for 2,000 car-sharing owners for Beijing educators and students.
The bicycle sharing concept gained popularity as soon as it was introduced, and in 2016 funds, including Zhenge Fund, Jinshajiang Venture funds, and other capitals, backed it.
After receiving funding, Ofo swiftly grew to include more than 200 colleges in more than 20 cities nationwide, amassing 800,000 users on campus with 200,000 orders placed on average per day. By October 2016, ofo had left the campus and joined the metropolitan market with the aid of money.
Tianyancha claims that between February and October 2016, ofo successfully completed fundraising rounds A, A+, B, and C, garnering money from investors like as Xiaomi Group, Didi Chuxing, Jingwei Venture Capital, and others. Among them, about 200 million yuan were raised in only 2016 alone.
Capital steps in, grows the company, gradually boosts revenue, and then draws in additional funding. But the issue with O is that, as it grows, it is “burning” more money than it is bringing in. Ofo often offers very low-price discounts in addition to a monthly card promotion worth one yuan as a means of supporting its members. The increase in users is a direct consequence of the campaign; in 2017, ofo and Mobike split about 90% of shared bicycles, processing over 20 million orders per day, and had plans to introduce 20 million yellow automobiles by the end of the year. Nevertheless, living over its means is another issue that ofo is dealing with concurrently with the advertising. It has been stated that as of December 2017, the total cash accessible on the ofo book, including the deposit, was just 350 million yuan. A deposit of 3 billion yuan was also used to settle the supply chain’s arrears in order for business to continue. And ultimately, this “demon hand” resulted in the loss of several customers’ deposits. You know, legitimate channels help individuals become lucrative, whereas fraudulent ones are simply good for funding. Ofo, which was first extremely steadfast on the independent way, also started to look for mergers from Mobike and sell shares to Alibaba for cash out as the rivalry became more intense and lucrative. But ofo’s life is becoming worse and worse as Alibaba and Didi’s own shared bicycles have ended. You know, shared bicycles have practically no moat. Bicycles are easy to gather, may be subsidized, and customers are not devoted. Anyone with less money may utilize it. Ofo clearly has no edge in this “whoever has money, whoever can stick to it” market. 2018 saw ofo file for bankruptcy under intense pressure, and ever then, David and his co-founders have seldom been in the spotlight.
03
Where are my partners now?
David is the most well-known of the founders of O. Fewer people may be aware, however, that Xue Ding, Zhang Siding, Yu Xin, and Yang Pinjie were the other four co-founders of ofo who were also Peking University graduates.
Zhang Siding previously disclosed in an interview that there isn’t a clear division of work among the several joint enterprises. It means “Where the enterprise needs us, we will explore wherever we go.” However, David is the team’s ultimate leader.
It was previously said that Xue Ding was in charge of campus growth, supply chain management, and urban operation in ofo, while Zhang Siding was in charge of personnel finance, security risk control, and campus expansion.
Former Uber regional manager Zhang Yanqi became the COO of ofo in 2016. Ofo’s six-person crew has come together so far.
The six-person group soon went their own ways as ofo progressively waned.
Beijing Baiklock Technology Service Co., Ltd., an associated business of ofo, had a shareholding change in January 2019, after the withdrawal of Xue Ding and Zhang Siding. The data shows that following the split, co-founder Yu Xin had 10%, co-founder Yang Pinjie held 20%, and founder Dai Wei controlled 70% of the company. At that point, OFO retorted that this was a typical adjustment being made by its subsidiaries.
Xue Ding founded Beijing Space Sharing Technology Co., Ltd. in September of the same year, with a 1 million yuan registered capital. Tianyancha claims that the business is still operational. Xue Ding’s move from shared bicycles to shared spaces seems to be an extension of the sharing economy’s business model.
Zhang Yanqi is searching the sharing economy for further company prospects. The former CEO of Uber, Travis Kalanick, reportedly worked with Zhang Yanqi, the former COO of ofo, in February 2019 to bring CloudKitchens to the Chinese market. However, the Cloud Kitchen brand hasn’t made a mark as of yet.
In 2019, Zhang Siding created the consumer brand Blank and formed Kongwu Yiwu (Beijing) Commercial Co., Ltd. Furthermore, there’s not much information on Yu Xin and Yang Pinjie relaunching their firm.
It seems that these creators, who have put a lot of effort into ofo, have not yet discovered their own “highlight moment” in either consumer brands or the sharing economy.
When mobile Internet use increased, shared bicycles, as embodied by ofo, emerged as a novel business model that met contemporary demands and gave birth to a cohort of youthful entrepreneurs.
The most well-known of them is Hu Weiwei, the creator of Mobike, which at the time was Ofo’s main rival. Mobike was founded in 2015 and has raised over $1 billion in three years. In 2018, Meituan purchased Mobike for a sum of $2.7 billion.
Hu Weiwei’s worth as the founder skyrocketed. Based on 9% of the shares, some media sources predict she might cash out 1.5 billion yuan. When the firm was experiencing an operational difficulty, Hu Weiwei made the fortunate decision to retire, as opposed to other business owners in the same time who were financial reporters or novices in the field.
The success of Mobike draws in further funding and businesses engaged in bike sharing. The misconception surrounding capital operations, however, will always be dispelled in the absence of practical operation. Since then, a mad subsidy war that is costing millions of dollars has engulfed most of these businesses.
Following financial challenges, Xiaolan Bicycle had a capital chain disruption issue. It owed suppliers close to 60 million yuan at the same time. Didi Chuxing was eventually given full ownership of Xiaolan Bicycle by its founder, Li Gang. Following an issue with Xiaoming Bicycle’s capital chain, Deng Yonghao, the founder, lost communication, and the business ultimately went into bankruptcy liquidation. Furthermore, Wukong, Kuqi, and other businesses ceased operations and ceased transportation as well.
Ofo founder Dai Wei has resurfaced in the public spotlight today, but the coffee company he started is facing new challenges on the other side of the globe. This may suggest that business owners should always abide by the rules of the market and give users genuine value-added services, since this is the cornerstone of the company.
