54: Chapter 54 Strategic Misjudgment! The Arrogance and Fatal Blind Spots of Giants

At first, the full-time employee next to him didn't pay much attention, assuming he was just watching some funny local videos.

But as time passed, half an hour went by.

The employee hadn't even eaten his meal, completely immersed in the small screen.

He was completely deaf to the voices of his colleagues around him.

Finally, a programmer nearby couldn't help but lean over and take a peek.

What was playing on the screen wasn't a movie or TV show, but a series of ten-second Short Video clips.

There was no need to search laboriously or wait for buffering; all it took was a swipe of the thumb.

The next hot dance video or funny skit would pop up seamlessly.

This simple and brutal "swipe-up to refresh" mechanism hit the brains of these internet professionals like a hammer.

"Buddy, what software are you scrolling through? It looks pretty engaging."

"Xinghuo Platform. It just came out, go search for it in the app store yourself." The freelancer didn't even look up, his finger sliding again.

Over the next ten minutes, this pattern spread like wildfire across the cafeteria tables.

As the lunch break neared its end, a scene appeared in the cafeteria that would later leave the HR manager, who reviewed the surveillance footage, feeling stunned:

Looking around, many Penguin Empire employees had abandoned their lunch breaks and conversations.

They kept their heads down, staring intently at their phone screens, their fingers mechanically swiping upward.

It wasn't until the afternoon work hours began that this group of social product experts reluctantly closed the black-and-gold themed software and returned to their workstations.

That afternoon, this incident in the cafeteria was placed on the desks of Tencent's executive team, alerted by the warnings from department heads.

As the hegemon in the social sphere, Penguin Empire had a keen sense of smell. The management sensed unease and immediately launched an internal investigation.

However, when the investigation data was submitted hours later, every manager who saw the report felt a jolt of alarm.

The data in the report was absurd to the extreme: in less than three days, a staggering thirty percent of employees within the company had registered for this software called "Xinghuo Platform" using their own mobile numbers.

But what truly made their backs break out in a cold sweat was that core indicator representing the vitality of an internet product: the average daily time spent by users.

These Penguin Empire elites, who were usually crushed under the pressure of their projects, were each spending an average of over half an hour every day on Xinghuo Platform.

You have to realize, it was 2011. This was an era where even the voice function of WeChat had just launched, and smartphones were only just beginning to become popular.

At a time when the vast majority of mobile apps were still stuck at the "use and leave" stage, a piece of software with no foundation whatsoever had managed to snatch away thirty minutes of absolute attention from this group of the most discerning internet professionals.

This exceeded their cognitive framework for traditional social products. This abyss-like user stickiness was by no means a flash in the pan that could be achieved by throwing money at marketing.

This was a traffic pool built specifically to retain time, one that understood human nature.

Facing this investigation report, Pony Ma pressed the intercom button and issued an assembly order.

Within just half an hour, all core executives of Tencent at the Shenzhen headquarters, the heads of various business groups, and even Zhang Xiaolong, who was far away in Guangzhou, were urgently summoned to the top-floor conference room.

The doors were locked, cut off from the outside world. This meeting lasted for over five hours.

The atmosphere in the conference room was heavy. On the projection screen, the black UI interface of "Xinghuo Platform" and the upward-swiping Short Video stream were played repeatedly, along with live broadcast room footage filled with yachts and sports cars flying across the screen.

The executives conducted intense sand table simulations surrounding the "Short Video plus live streaming" track. They placed Jiyuan Technology's capital, technical architecture, and server leasing logic under a magnifying glass for dissection.

However, when the brainstorming session ended, this group of people who ruled half of China's internet industry reached a highly unified yet arrogant conclusion regarding the strategic positioning:

"The business model of Xinghuo Platform is unsustainable. There is absolutely no possibility of continued expansion."

In front of the conference room whiteboard, the financial executive and the technical chief gave their verdict:

"Mr. Ma, everyone. We must admit that the product manager of Xinghuo Platform understands human nature. But they have violated the law of the internet: cost."

A core executive pushed up his glasses and summarized in a cold tone:

"The transmission of video streams is a bottomless pit that devours bandwidth."

"At their current concurrency levels, the high cost of domestic 3G data fees at this stage dictates that ordinary users will stop using it once they leave a WiFi environment. It cannot penetrate the sinking market."

"And on the enterprise side, the sky-high server bandwidth costs are a sword hanging over the head of Jiyuan Technology."

"The greater the traffic, the faster they bleed out."

"No matter which capital stands behind Jiyuan Technology, this kind of Short Video platform that relies on burning money to subsidize bandwidth will eventually be crushed by the massive traffic it creates and go bankrupt completely."

However, the cruelty of history is that even the top think tanks cannot fully escape the cognitive blind spots of their own era.

In this life-and-death judgment, the senior management of the Penguin Empire committed two fatal strategic misjudgments.

The first misjudgment lay in their stereotypical impression of the network environment. They rigidly calculated the high cost of 3G network data with pen and paper, but subconsciously ignored an underlying variable.

Since 2008, wireless routers had already begun to become popular in offices, university dormitories, and even homes. These free networks offset the users' data anxiety.

Not only that, they also applied the money-burning logic of traditional long-video websites to measure "Xinghuo Platform".

But they forgot that in 2011, the cameras on the vast majority of smartphones on the market had a pitiful three to five megapixels.

The ten-second Short Video clips captured by users were rough in quality and very small in file size. After being compressed by Jiyuan Technology's backend algorithms, the actual consumption of server bandwidth was far less terrifying than the Penguin Empire executives imagined.

And the second misjudgment was what truly cut off their last chance to strangle "Xinghuo Platform". They underestimated the money-making ability of "show-style live streaming".

In the cognition of the Penguin Empire executives, internet products should honestly burn money to acquire territory, and wait until the traffic is mature before monetizing through advertisements and games.

They couldn't understand Shen Du's simple and brutal approach.

In those first three days of launch, relying on the one thousand streamers created by Red Phoenix with fifty million in real cash, as well as the independent streamers who registered later to follow the trend, the virtual gifts on the Xinghuo Platform never stopped for a single second.

Those wealthy patrons who were drawn to the live broadcast rooms by Short Video and stimulated by the sales pitches didn't even blink when they showered hundreds or thousands of virtual gifts.

In just these short three days, the platform's cut of the gifts had already easily covered the twenty million in server channel fees that Technical Expert Su Hua had added. It even generated a healthy positive cash flow.

Jiyuan Technology would not "bleed to death" as they predicted. On the contrary, it was capturing territory while running a money-printing machine.

Regrettably, the Penguin Empire executives knew nothing about this.

"Then let the bullets fly for a while." At the end of the meeting, facing this monster that seemed about to be consumed by its own costs, the senior management set the strategic tone: do not intervene directly for now, and wait for Jiyuan Technology's capital chain to break.

It was precisely because of this misjudgment, which carried the limitations of the era, that the Penguin Empire giant closed its newly opened vigilant eyes and retreated to the safety zone.

They didn't realize at all that they had just personally handed over a core track worth trillions in the future to Shen Du without any resistance.