Thread by @ruima

Substack alert! 👏

No this isn't my substack but it's one of the ones I've discovered translating China tech insights into English. Fairly new & it is right now working on a series of lectures from Meituan co-founder Wang Huiwen

chinaplaybook.substack.com 👈Subscribe here

https://twitter.com/ruima/status/1370815732817162241

Wang Huiwen is a legitimately important person in China tech. His retirement (he's just 42 now) was announced a year in advance and prob accounted in part for the major restructuring.

equalocean.com/briefing/20201…

Maybe I can get u to subscribe by having a short summary on what he said in this newest issue on TAM:

Wang was responsible for the food delivery business, which accounts for what he thinks is $100Bn of Meituan's mkt cap today. Cumulative losses? $2Bn.

chinaplaybook.substack.com/p/pm10

When he first started, everyone thought he was too aggressive in his estimates. But obviously, he was proven right. Food delivery industry in China started ~10 ys ago & has 50-60M orders / day. At growth rate of 20-30%, Wang thinks it's pretty certain it'll be 100mm / day.

You don't have to be the first mover.
Take Maoyan movie ticketing. There were already competitors. But Wang wanted to go in bc he saw big enough TAM. Gewara who was earlier lost focus started doing other things. Meituan was also late to hotels (2013). Ctrip started in 2000!

It's easy to make mistakes. Previously, Chinese entrepreneurs look to US to estimate TAM. So Wang looked at Grubhub etc. At IPO it was still just 200K orders a day. He also looked at the competition. They were also tiny. Daojia had 10-20K a day after 3 yrs in operations.

Then they saw eleme was growing at 200%. And their models showed 10mm orders / day as a possibility. (It turns out they're still off by 10x). The important thing to do here is to constantly adjust your models. Oh, also consider using the following 3 methods:

1. Modeling using current mkt size & growth rate. Good for mature industries, not for new.
2. Go back to basic human needs which I will translate as really being creative w your assumptions. Reason it out. I paste his explanation below.

3. Finally try to find an analogous situation and reason that way. He used social division of labor & urban density etc etc and arrived at the Japanese convenience store market size as a proxy for Chinese food delivery.

Smart dude. Subscribe & read more from him. /end