Tech giants start by disassembling systems

Chapter 19 The Eagle Conference

Conference room on the 23rd floor of Tianying Technology headquarters, Nanshan District, Shenzhen.

"This is the market performance of the Hongyuan Flyer F2 working version over the past month."

Wu Zheng stood in front of the projection screen, holding a laser pointer in his hand, his voice calm and unhurried.

The screen displays a PowerPoint presentation titled: "Hongyuan Intelligent - Analysis of Emerging Competitors".

"In the four weeks since its launch, the F2 work edition has sold over 350 units in five provinces in South China through on-the-ground sales, at a unit price of 1999 yuan. 32 units were sold in the first week, and over 150 units were sold in the fourth week, representing a week-on-week growth rate of over 30%."

"Three hundred and fifty units?" The man sitting at the head of the conference table frowned slightly. "Is that a large number?"

The speaker is Lu Weimin, the founder and CEO of Tianying Technology. He is 47 years old and has been in the electronics OEM business for more than ten years. In 2014, he switched to making drones.

In his view, monthly sales of 350 units are negligible. Tianying's total sales of consumer drones exceeded 100,000 units last year, averaging nearly 10,000 units per month. A small factory selling 350 units a month is not even a fraction of Tianying's sales.

"The number itself isn't large," Wu Zheng said, unaffected by his boss's tone, "but there are three signals worth noting."

He switched to the next slide of the PPT.

"First, the growth rate. Week-on-week growth exceeded 30%, and this was achieved without any online promotion, without any distribution channels, relying solely on on-the-ground sales and word-of-mouth. If this growth rate continues, monthly sales may exceed 1,000 units in two months."

"Secondly, the pricing. 1999 yuan. This price is ultra-low-end in the consumer drone market, but Hongyuan positions it as an 'entry-level commercial aerial photography drone,' targeting wedding companies, real estate agencies, and small media outlets in county towns. This is a market that Tianying has never seriously considered."

"Third, and most importantly—product quality."

Wu Zheng opened a video.

The video was collected online by his team—a flight demonstration of an F2 working drone, in which the drone hovered motionless in windy conditions.

"I showed the video to the technical department. Their assessment was: this level of flight control shouldn't be found on a machine costing only two thousand yuan."

The meeting room was silent for a few seconds.

Lu Weimin's brows furrowed even more: "You mean, their flight control system is very strong?"

"It's not just 'very strong,' it's 'exceptionally strong.'" Wu Zheng's wording was precise. "Our technical department disassembled an F2 workpiece—"

"You bought one?" Lu Weimin asked, somewhat surprised.

"I had someone buy it from a promotional point in Huizhou last week," Wu Zheng nodded. "After unpacking it, I found that the hardware configuration was very ordinary—it uses the most common general-purpose flight control board on the market, and the sensors are also standard low-to-mid-range models, almost exactly the same as those used in our Tianying entry-level model."

"But the flight quality is at least two levels worse."

"What is the conclusion?"

"The conclusion is that they did a deep customization of their flight control firmware," Wu Zheng said. "With the same hardware, their firmware squeezed performance to the limit. Our technical director said that this level of flight control firmware optimization would require at least a top-tier flight control engineer with five to ten years of experience to achieve."

"Hongyuan Intelligent has such a person?" Lu Weimin's expression turned serious.

"Hongyuan's founder, Su Chen, is twenty-three years old and just graduated from Shenzhen University this year." Wu Zheng himself found it absurd when he said this.

"Twenty-three years old?" Lu Weimin narrowed his eyes.

"Yes. His father, Su Jianguo, passed away last month, and he inherited the company. Previously, they faced a quality crisis caused by internal corruption, leading to all distributors stopping orders. Within a month, he not only resolved the crisis but also launched the F2 series and a working version, gaining a foothold in the market."

A murmur of discussion broke out in the conference room.

In just one month, a 23-year-old young man revived a dying small factory and launched a new product with technological barriers—this story certainly doesn't sound real.

"Alright." Lu Weimin raised his hand to silence the murmurs. "Let's get to the conclusion, Wu Zheng. What do you think we should do?"

Wu Zheng switched to the last slide of the PPT.

There are only two lines of text above:

Option A: Launch Tianying's own low-end commercial aerial photography drone, priced at 2299 yuan, and differentiate it in terms of hardware configuration.

Option B: Increase investment in flight control firmware R&D to narrow the technological gap with Hongyuan, while establishing comprehensive advantages in product lines, after-sales service, and brand.

"I suggest that A and B be pursued simultaneously," Wu Zheng said. "In the short term, use solution A to seize the market, and in the long term, use solution B to build technological barriers."

Lu Weimin remained silent for more than ten seconds.

Then he spoke.

"Option A is feasible. We can cut features and reduce costs from our existing entry-level model, price it at 2299, and ship it within a month."

"Option B is temporarily suspended."

Wu Zheng's expression changed slightly.

"President Lu—"

"Wu Zheng, let me finish." Lu Weimin's tone was calm and measured, yet carried an undeniable firmness. "The company's strategic focus this year is to achieve annual sales of 150,000 units and secure the second-largest market share in the consumer electronics market. All resources must be directed towards this goal."

"Flight controller firmware development is a long-term investment with slow returns. Investing resources now won't help sales in the short term. We're not DJI; we can't afford to burn that kind of money."

"But Mr. Lu," Wu Zheng's voice carried a hint of urgency, "if Hongyuan's flight control technology continues to evolve, in six months it might—"

"We'll talk about what will happen in six months," Lu Weimin said, standing up. "Our current competitors aren't Hongyuan, but companies like ZeroTech, Haoxiang, and Xingtu, which are about our size. Hongyuan sells 350 units a month—that's less than our daily production."

He slammed his hand on the table: "Alright, meeting adjourned. Plan A will be implemented within a month. Wu Zheng, you'll oversee it."

The management team members left the meeting room one after another.

Wu Zheng was the last to leave.

He stood in front of the floor-to-ceiling window, looking at the rows of office buildings in Nanshan District.

Lu Weimin's assessment is not without merit. From a short-term perspective, concentrating resources on boosting sales is indeed the safest option. Flight control R&D is a long-term investment; there's no guarantee of a return, but not investing in it won't lead to immediate financial ruin.

But Wu Zheng always felt that something was wrong.

The young man named Su Chen made him uneasy. Not because of the current 350 units—but because of the speed.

It took only one month to go from near collapse to a turnaround. It took only four weeks to go from zero sales to widespread positive word-of-mouth.

There must be something supporting this speed—not just luck, nor just hard work.

"Six months from now, it might not be 350 units anymore," Wu Zheng muttered to himself.

But he never said that to anyone else. He was just a vice president; the company's direction was determined by Lu Weimin.

Tianying's annual GG marketing budget is 30 million, while its technology research and development budget is only 4 million.

This proportion is the same as that of the vast majority of small and medium-sized drone companies in the industry.

This is also the same reason why they will be eliminated in the future.

Wu Zheng turned off the conference room lights and walked out.