Tech startup: I really do make mobile phones!

Chapter 109 Nietzsche's Sudden Collapse
In a gilded private room at a club in Yingtian, the air was thick with cigar smoke.

Xiao Li leaned against Lu Laowu's chest, the financial report spread out on her fair thighs, her fingertips tracing the data on it.

"By the end of the month, we had completed the renovation of 600 offline stores, and shipped 160 million units this month, with an average daily sales volume of around 8.8 units!"

She traced the profit curve with her fingertips: "3300 million in daily profit seems glamorous, but..."

Xiao Li's red lips suddenly came close to Lu Laowu's ear, her warm breath mingling with her own.

"Orange Mobile is eroding our offline rural market. The new profits are entirely supported by 300 new stores. In fact, the overall profit margin has dropped by 18% compared to the first half of the month!"

Nietzsche's store and labor costs are fixed. As more and more rural users choose Orange phones, the decline in total profit per store is inevitable, and it is not surprising that the overall profit margin is declining.

"Based on the data from the survey of smartphone markets in five townships, Nietzsche has a market share of 33%, with a growth rate of 12.5‰, while Orange has a market share of 28.2%, with a growth rate of 28.8‰. Other brands only have a market share of 38.8% in townships. At this rate of growth, we and Orange will inevitably clash sooner or later."

These seemingly ordinary data fluctuations served as a wake-up call for Lu Laowu, signaling the end of the honeymoon period when Nietzsche and Orange Mobile were tacitly dividing up the traditional counterfeit and surplus mobile phone markets in rural towns.

The smartphone market in rural towns is now almost monopolized by two companies. Although Nietzsche has a slight advantage in sales at present, Orange Mobile has emerged as a dark horse due to its technological and brand advantages.

Once Nietzsche experiences 60% of the performance of a smartphone, he will inevitably yearn for the more feature-rich Orange phone.

As a result, in the existing market in rural towns, Orange Mobile has transformed from a former ally into Nietzsche's most formidable rival.

"Damn it!" Lu Laowu took two big puffs of his cigar, blowing smoke into Xiaoli's face: "Where's Lao Wang's new phone?"

Xiaoli didn't rush to answer. Instead, she turned around and wrapped her arms around his neck, her nails lightly scratching the fabric of his suit: "Old Lu, I've been with you for five years, can't you give me a proper title?"

"Well! No rush. You two can get along well after Xiao Ran comes back from North America." Lu Laowu chuckled. "Sweetie, shall I take you to buy Hermes tomorrow?"

"You're just trying to fool people with your bag!" Xiaoli pretended to be angry and turned her head, but softened when the other party kissed her: "The prototype is done, Lao Wang is just waiting for your approval."

"Good, good, good!" Old Lu rubbed his bald head and laughed heartily, "When our new machine comes out, we'll immediately stop giving Orange orders!"

Otherwise, he would work hard to sell a Nietzsche 1, only to have the other party earn money from OEM manufacturing and branding. This was like two people fighting, and he was almost at a disadvantage, but he still had to keep giving money to his competitor. Lu Laowu felt extremely frustrated.

He stroked the leather sofa armrest, a fierce glint in his eyes.

"Giving them the orange-branded machine order now is just a quick way to make some money, keeping our Nietzsche 1 production line in limbo, so we can just cut off their supply chain and break the contract later!"

"We'll mass-produce the Nietzsche N5 in our own factory and crush that Orange 1. Then, I'll see what Orange phones will use to compete with me for market share when their cash flow runs into trouble!"

After saying that, he grabbed the cigar on the table and took another big puff. In the swirling smoke, he seemed to see Nietzsche N5 trampling Orange 1 under his feet, and his own store was continuously devouring the rural users that the other party was losing.

Xiaoli, nestled in his arms, flashed a cold glint in her eyes before giggling and dialing a phone.

"Old Wang, President Lu wants to see you."

Half an hour later, Lao Wang handed over the Nietzsche N5 with its glass cover, his palms damp with a thin layer of sweat.

"President Lu! This is our Nietzsche N5. It not only optimizes the underlying JAVA system, but its smoothness is comparable to the Galaxy S flagship phone that Sanjing just released this month."

Lu Laowu casually swiped the screen, the glass cover gleaming under the crystal chandelier.

"Excellent! Excellent!" Lu Laowu made the final decision: "Let's start production! Lao Wang, from today onwards you are the R&D director of Nietzsche."

"Thank you for your trust, Mr. Lu. I will definitely do a good job in preparing for mass production!" Old Wang raised his glass, but inwardly he cursed: This is a custom JAVA version that I had a modder in North China flash. Apart from the built-in applications, the installed programs simply cannot run.

Moreover, JAVA systems have long been obsolete, so who would still be developing applications for them?
However, the layman Lu Laowu was completely unaware that after a smooth experience with the Nietzsche N5 engineering prototype, he was only immersed in the dream of mass production of the new machine.

He believes that, apart from the battery, the Nietzsche N5, with its "hardware advantages" in screen and chip, will soon reverse the decline of the Nietzsche 1 in the rural market, and may even crush the Orange 1.

The Nietzsche N5 "engineering prototype" that Lao Wang brought actually has a lot of secrets.

Back then, Lu Laowu and Jiang Laodi used a rebranded Apple 4 to fool viewers on TV shopping channels. Now, Lao Wang is trying to fool him with a Samsung Galaxy S with a different shell and a JAVA system.

This truly is the cycle of karma; no one escapes the wrath of Heaven.

After Lu Laowu was picked up by his driver while he was drunk, Xiaoli, wearing ten-centimeter high heels, burst into the private room next door.

Old Wang shook his head at the "real" N5 engineering prototype: "This configuration simply can't handle it, unless it relies entirely on external plugins."

"Who cares!" Xiaoli tugged at her collar, grabbed Lao Wang's tie, and pressed him down on the sofa, her scarlet nails digging into his shoulder.

"Once the funds arrive, we'll work together from the inside and outside to intercept the payment. Once we have the money, we'll split it and run!"

Old Wang's Adam's apple bobbed: "This...this is a scam." His legs trembled.

In any case, with Old Wang's audacity, he could only have gotten his hands on some counterfeit goods back then. If he really does this now, he'll be truly on the path of crime.

"Slap!" Xiaoli slapped the gold-rimmed glasses he was using to disguise them away.

Xiaoli stepped on his chest with her high heels: "Don't forget, your wife ran off with all your money a long time ago. Who brought you to Yingtian and gave you food in the first place?"

She suddenly lowered her leg, brushed the dust off his white shirt, and chuckled, "Or you could turn yourself in. If you're lucky, you might be able to go back to Shenzhen and continue being a homeless person?"

Old Wang stared at his distorted reflection in the shattered lens and finally spoke in a hoarse voice.

"I know a supplier in North China. For our first batch of mass production, we can use the lowest-end, inferior resistive touchscreens, acid-washed chips, and motherboards to fill the order and avoid arousing Mr. Lu's suspicion."

"Haha! Look at you. You just won't listen to reason and you'll have to suffer the consequences!" Xiaoli picked up a glass of champagne from the table and handed it to him. The two toasted.

A cold, venomous glint flashed in Xiaoli's eyes as she tossed a procurement document stamped with the company seal from her Gacci bag.

"We'll place another order for 200 million more units of materials, ensuring that Lao Lu will never recover!"

Besides the inventory trap, she had already prepared a series of schemes—using the company seal to forge false bank statements, using Nietzsche's offline stores as collateral to obtain cash from banks, and then canceling the offshore company and running away with the money once the funds arrived.

“After you’ve done all that,” she said, tapping her champagne glass with her red fingernails, “you take thirty percent and get out.”

"But General Manager Jiang at the factory has connections," Old Wang hesitated.

"Ha! He's been eyeing Lao Lu's 1200 stores for a while now!" Xiao Li laughed. "We'll take the money, and he can keep the stores. Making money with a phone is nowhere near as fast as taking from our brother's savings."

On that day, the assembly plant that Nietzsche acquired in Shenzhen was brightly lit. When inferior resistor screens and a large number of pickled parts were mixed into the production line, Lao Wang, the R&D director and production line manager, wrote "meets standards" on the acceptance form and then decisively signed his name.

If Old Wang doesn't want to live a life of hardship for the rest of his life, then he has no choice but to do this.

The sweltering heat of June in Shenzhen seeped into Orange Technology's Conference Room 1. The fresh air system was running at full capacity, making a slight noise. Gong Yun opened the frosted glass to block the employees' view before turning on the projector.

Chen Mo came in carrying a laptop and projected the sales data of Nietzsche and Orange phones that the marketing department had compiled that day onto the screen. The red and black contrasting bar charts and growth curves were painful to the eyes.

Nietzsche 1 mobile phone
Monthly sales: 160 million units (78% of which were sold in rural towns).

Pricing structure: A uniform price of 399 yuan + a 99 yuan stylus pen.
Sales growth rate: 18.2‰ (year-on-year)

Profit margin: 60.4%
Orange 1 mobile phone
Monthly sales: 120 million units (68% of which were sold in rural towns).

Pricing structure: 499 yuan in Shenzhen city / 599-899 yuan in towns (significant price differences)

Sales growth rate: 28.5‰ (year-on-year)

Profit margin: 13.8%
Chen Mo explained to everyone the general findings of the marketing department's investigation.

"Nietzsche 1 adopts a standardized pricing model of 'low price + accessories' to ensure market penetration in rural towns!"

“Our oranges have significant regional price differences, with premiums in rural towns reaching 30-80%, but the growth rate is also 10.3 percentage points higher than that of Nietzsche, reflecting part of the brand premium capability.”

Yes! Thanks to Nietzsche's contrasting example, Orange 1 remains very popular in rural markets despite the markups from multiple middlemen.

Chen Mo paused for a moment, then continued.

"Due to its store advantage, Nietzsche has a slightly higher market share in rural towns than us, at 78% vs. 68%, which shows that it is our main competitor in the rural market!"

"The apparent profit margin of oranges is 13.8%, but after the terminal price increase, the actual profit is almost the same as Nietzsche's 60.4%. The problem is that the middlemen make a profit by increasing the price through the rural channels, which means that users have to pay nearly 2 times the price, directly causing us to lose a group of price-sensitive rural users."

All of Orange Technology's current top executives were present in the conference room.

After analyzing the opponent, Chen Mo made a summary and took the opportunity to boost morale.

“Nietzsche should not be our opponent at all, but because of our secondary distributors, our prices in rural towns are too high, forcing us into a situation of being evenly matched with them!”

Chen Mo turned around and tapped on the conference table.

"They're just rebranding our 'X' machine; the real problem lies with us!"

His gaze swept across the conference table:
Zhao Tiezhu, who is usually carefree, sat upright today, his hands resting on the edge of the wooden conference table.

Sister Gong from the logistics department stared at the statistical bar chart on the screen, her fingertips unconsciously stroking the cap of her pen, as if she was thinking of a way to break the deadlock.

He Jian, a new employee, lowered his eyes and focused on taking notes, his handwriting moving quickly across the paper, while Wang Teng casually scratched the sticker on the computer case with his fingernail.

The two of them clearly did not have a deep understanding of Orange Technology's main business.

Chen Mo tapped the projection screen: "Judging from the slow growth curve, users in rural areas actually recognize our technology and brand. However, the middlemen add layers of markups, raising the price of Orange 1 from 499 yuan to nearly 699 or 799 yuan. Our technology equality and profit sharing then become a joke."

He glanced at Zhao Tiezhu, Gong Yun, and the others: "I've gathered everyone here today to brainstorm and have you share your solutions!" "Zhao Tiezhu! You go first," Chen Mo called on him directly, wanting him to set an example.

Zhao Tiezhu slapped the conference table with a "bang," then turned sideways, revealing his true colors within minutes of becoming serious.

"Mr. Chen! If you ask me, we should just cut off Nietzsche's supply and leave them with nothing to sell."

This tactic is somewhat underhanded, and it's a double-edged sword, damaging one's own business reputation while potentially having no effect on Nietzsche.

“Without our mature supply chain support, what will they use to OEM in a short time?” Zhao Tiezhu shouted.

Nietzsche had already established a presence in Shenzhen, acquiring medium-sized contract manufacturers with complete equipment, production lines, and skilled workers.

Even if Orange cuts off the supply of "X" machines from OEM manufacturers, Nietzsche can quickly adjust its production lines to achieve independent production thanks to the production capacity reserves of its own factories and its technical team.

In this way, if oranges were to abruptly cut off the supply, not only would they make enemies for no reason, but they would also be unable to truly shake Nietzsche's market foundation, ultimately resulting in a lose-lose situation.

Chen Mo shook his head and glanced at the group.

"Competition isn't about constantly watching what our competitors are doing; that's too passive. We should just focus on ourselves!"

Chen Mo is a somewhat idealistic person. Unless absolutely necessary, he doesn't want to resort to dishonest business tactics to deal with his opponents; he cares about his reputation.

"Healthy competition between companies is not about who uses the most ruthless methods, but about who makes fewer mistakes."

Chen Mo set the tone for his business strategy: We will not target our opponents, but only look for breakthroughs within the company.

Afterwards, everyone expressed their opinions.

Zhao Tiezhu proposed reducing supply chain costs, specifically by implementing a full-sales rebate strategy for secondary suppliers, thereby extending the scope of control over terminal prices.

In essence, this is still the same old method of market cost control.

After all, you can't expect Zhao Tiezhu, that good-for-nothing, to suddenly come up with any new ideas.

But at least it's a solution, Chen Mo nodded with a smile, as a form of encouragement.

"This method is worth a try!"

He turned to Gong Yun: "Can the logistics manager push the e-commerce channels even harder?"

Gong Yun opened her notebook and said while looking at the notes, "We can increase the placement of information flow ads, but we are not a traditional internet company and lack the genes for traffic generation, so it will be difficult to increase natural traffic."

As she spoke, she turned to the page that recorded last month's e-commerce sales data and said, "Last month's traffic conversion rate was only 0.03%, which is 27% lower than the average of similar mobile phone brands!"

"So much lower!" Chen Mo shook his head with a wry smile. Sure enough, Orange phones have no presence online.

Based on this data, Orange Phone is now completely "immune" to e-commerce, which explains why people don't pay much attention to e-commerce channels these days.

Consider the later Xiaomai mobile phone; the reason it was able to create a sales miracle through internet channels was due to a combination of favorable timing, location, and people.

On the one hand, e-commerce channels have matured, with events like the payment red envelope wars, Singles' Day, and 618 shopping festivals, and e-commerce culture has become deeply ingrained in people's minds, attracting many new online shopping users.

Secondly, Lei Jun himself comes from the internet industry and is very good at creating hype online. The fact that all senior executives of Xiaomai work on Weibo attracts netizens' attention.

Finally, he is a "big celebrity" with his own built-in audience and excellent marketing skills, which others cannot match when it comes to internet channels.

Chen Mo turned to the two newcomers, He Jian and Wang Teng, and said with a smile, "Manager He! Manager Wang! You two should also share your opinions. Two heads are better than one, so let's all speak freely!"

He Jian suddenly looked up, then quickly shook his head.

"Mr. Chen! I'm new here and don't know much about this."

Before he could finish speaking, Zhao Tiezhu sneered, "You..."

Chen Mo glared at him, and Zhao Tiezhu immediately shut up.

“I have a way to save costs!” Wang Teng suddenly said, “President Chen! I want to develop the Orange Treasure Input Method to save on TouchPal’s licensing fees.”

"Hmm... how difficult is it?" Chen Mo couldn't help but ask curiously.

"It's simple. I have the core code of the previous scrapped version. Only a small part needs to be rewritten. We just need to buy another exclusive font license and reskin it. The main problem is that testing is a waste of time."

As long as he's going against Chu Bao, Wang Teng has inexhaustible energy.

Chen Mo raised an eyebrow: "What about the development cycle?"

"The basic version will take a week, plus the 9-key compatibility feature you mentioned to me before, Mr. Chen, it will take half a month."

Wang Teng's voice trembled, clearly showing some excitement. Judging from President Chen's repeated questioning, this matter was promising!
Chen Mo paused for a moment, then indicated that he could do it!
Wang Teng began to make his request: "I need to allocate some staff from the App Store team to help!"

All eyes turned to He Jian.

The middle-aged man wearing black-rimmed glasses paused for a moment, then said, "The app is now in its final online testing phase. If Mr. Chen has any needs, Orange Treasure Studio can coordinate personnel to assist with development."

He pushed up his glasses, revealing a dark and unreadable gaze behind the lenses, making it impossible to discern his emotions.

"At the latest, by the end of August, Orange Treasure Input Method will start being pre-installed on the new device!"

Chen Mo quickly assigned tasks: Zhao Tiezhu from the Marketing Department was responsible for securing full-sales rebates to limit price increases by secondary distributors, while Gong Yun from the Logistics Department was responsible for promoting e-commerce platforms.

As for Chengbao Studio, Wang Teng, as the person in charge, led a team of members to develop Chengbao Input Method within half a month.

"Alright! Everyone, get back to your posts! Meeting adjourned!"

At Orange Technology's first high-level meeting, they discussed Nietzsche, a competitor they had cultivated under a private label, and the issue of Orange 1's price being lower than that in rural towns.

After the meeting ended, the setting sun cast a long shadow of Chen Mo.

He stood in front of the floor-to-ceiling window of the general manager's office, looking down at the bustling North China Strong Market.

Zhao Tiezhu has already started contacting contract manufacturers to adjust production plans, Gong Yun has increased the homepage ranking and traffic on e-commerce platforms, and Wang Teng's workstation is lit up with lights that never go out, with lines of code flowing on the screen.

Three days later, a payment reminder call from the Yingtian Yangjiang Warehouse Center shattered Lu Laowu's daydream.

He grabbed the 8838 titanium alloy phone, shirtless. The lingering scent of Xiaoli's perfume mixed with alcohol in the blankets made his temples throb.

When he stormed into Nietzsche's headquarters wrapped in a bathrobe, the corridors were already packed with suppliers demanding payment, and the bank's legal department was taking inventory of assets.

"Mr. Lu! It's terrible! Sister Li has absconded with the money!" The CFO's voice trembled. "She even forged 300 million in bank statements as collateral!"

Lu Laowu's curse words stuck in his throat as he watched Jiang Laodi, dressed in a suit and tie, lead his secretary through the crowd, and the three of them slipped into the office.

"Brother Lu, don't worry!" Brother Jiang handed over a tissue to wipe his sweat: "I can invest 50 million to help you save 1200 stores."

His secretary unfolded the contract at the opportune moment, the guarantee clauses gleaming coldly under the crystal chandelier.

In his desperation, Lu Laowu suddenly came to his senses, threw down his pen, and overturned the coffee table.

"You little bastard, how long have you been eyeing my store?"

Meanwhile, in Shenzhen, after working three consecutive all-nighters, Wang Teng finally saw the first test version of the Orange Treasure Input Method pop up on his computer screen.

He rubbed his red eyes and synchronized the code with the testing team.

Outside the window, the neon lights of Huaqiangbei still flickered, and the roar of trucks starting up could be heard in the distance.

Those were discounted models that Zhao Tiezhu had shipped to towns and villages overnight, with a sales rebate instruction manual for oranges directly pasted on the packaging box.

Meanwhile, in a port in Southeast Asia, Old Wang huddled in a corner of a container, counting the 30 million yuan in cash that Xiao Li had given him.

Old Wang originally thought the other party would break their promise, but he didn't expect to get it anyway.

My phone vibrated. It was a message from A-Bao: The transfer boat is ready. Someone will come tomorrow to take you to India.

He gazed at the surging waves on the sea and suddenly remembered the man who had patted him on the shoulder and said, "Follow me from now on," three months ago in the detention center.

In the port city, in a small office of the "Duty-Free Commissioner".

"Brother Ji!" Ah Bao asked curiously, holding his phone, "Didn't you say you wouldn't pay any attention to anyone or anything related to Zhao Jie from now on? Doesn't this violate your principles?"

"What's the value of principles?" The fat man flicked him on the forehead: "Ah Leopard! You're stupid for not making money when you can!"

"It's me, Tiger! Brother Ji, you've got the wrong person!"

"Hmph! That's exactly why I'm hitting you. Ah Bao helps me make money, and all you do is eat and do nothing all day long!"

The fat man glanced at the group photo on the wall—an old photo of him and Zhao Jie wearing the customs anti-smuggling uniforms of the port city. In the photo, Zhao Jie's face had been burned with a large hole by a cigarette butt.

Chen Mo never expected that Nietzsche, the opponent he valued so highly, would completely collapse overnight.

Therefore, entrepreneurship does not necessarily require constantly defeating competitors to reach the top. It can also be about avoiding mistakes and patiently waiting for competitors to self-destruct.

Orange: I was fully prepared and just about to make my move when I walked in and saw him stabbing himself repeatedly, coughing up blood!
Nietzsche: Cough cough cough... Why bother? We're half-brothers, can't you lend your brother a hand?
(End of this chapter)