Losing Money to Be a Tycoon

April 19th, Tuesday…

At Otto Technologies…

In the conference room, Chang You was eagerly explaining Otto E1 cell phone's outstanding results to the core members of Otto Technologies.

Pei Qian was present as well, but he did not look very happy. For some reason, he felt like he was being kicked while he was down…

Ever since Otto's cell phone was released and became popular, the brand had become peculiar and exotic. The words 'peculiar' and 'exotic' were neutral.

The cell phone had very obvious flaws.

It was heavy, and it contained no independent technology. It was a product of supply-chain technologies and original equipment manufacturing. At best, one could say that it was balanced and typical in all aspects. There was no secret technology involved that was worth marveling about.

Even the cell phone's system was closer to the original Android System. Some people thought it was cleaner and purer, but others thought it was lacking and inconvenient.

Still, the cell phone's merits were outstanding enough that people could not forget them after witnessing them just once.

Its brand was very distinctive. The mystical logo on the back of the cell phone had appeared on Tomorrow is Beautiful before. One only had to whip the cell phone out for everyone to recognize that it was worth over eight thousand yuan.

At the same time, Chang You's presentation of the cell phone at the news conference had been quite notable. In addition to the various benefits and additional services that came with the cell phone, it was now unique in the market.

To many rich people who lived in Jingzhou or who heavily relied on Tengda's other business arms, the cell phone was irreplaceable even if they possibly could not afford it just then.

Until now, Otto had sold almost 160,000 cell phones already. It was no longer short on stocks, and it could supply cell phones immediately upon purchase. Although the sales volume was still increasing, it would no longer explode like it did before.

Those results undoubtedly still left Otto Technologies under the 'others' category in the local market. Hongcheng Technologies, the company that Chang You had worked at before, also achieved similar results with their newer cell phone models.

Otto Technologies probably only held a 0.5% share of the local market for now.

Still, the amazing thing was that Otto Technologies was prospering after reaching this sales volume. Hongcheng Technologies had sold that many cell phones before, but it closed down soon after.

The profit margins were equally small, but the more expensive a cell phone was, the more profit the company would earn.

If a company sold a cell phone for a thousand yuan and earned a five percent profit, each cell phone would only make thirty to forty yuan. Selling a hundred thousand cell phones would only generate three to four million yuan in profit. That little money would not be enough to plug any gaps in the supply chain.

However, if a company sold a cell phone for eight thousand yuan and earned a five percent profit, each cell phone would make four hundred yuan. Selling a hundred thousand cell phones would generate forty million yuan.

Thus, despite having distributed its profits to the other subsidiaries and keeping five percent of the profits, Otto Technologies had still made a lot of money!

A virtuous cycle had formed.

Pei Qian had never expected that setting such a high price would cause his downfall. Of course, after calming down, Pei Qian realized that the sales volume was not completely unacceptable.

After all, the cell phone market was considered a sunset industry. The big brands and producers were dominating more and more market share. Even those in third or fourth place would suffer for a long time, much less Otto Technologies which was now below tenth place.

It was a miracle that the company could sell hundreds of thousands of cell phones.

The most mysterious part was that, although it still fell under the 'others' category, Otto E1 was extremely popular online. Although most people would not pay for the cell phone, it was still very famous on the internet.

Chang You was very proud of himself.

Otto Technologies had already taken a successful first step as a new brand. What's more, since there wasn't a lot of demand and the supply problem had already been resolved, people would continue to purchase the cell phones in the future. Thus, the company could continue earning profits in the long term.

After hearing this, Pei Qian became frustrated. He cleared his throat and asked, "Do you mean that there isn't a single problem with Otto's cell phones now?"

Chang You immediately smiled and said, "Don't worry, Boss Pei. I'll talk about it at once!"

Chang You was already prepared for this.

He knew that Boss Pei did not like hearing successful results. Instead, he liked looking for problems. Thus, before the meeting began, he had already planned to analyze the cell phone's problems after announcing its successes. That would help them to set the future direction.

Pei Qian expected to be a wet blanket by posing that question to Chang You, but Chang You seemed well-prepared. He was speechless. It was almost as if his employees' defenses were too powerful. He was finding it increasingly difficult to overcome them…

After talking about the cell phone's successes, Chang You began talking about the cell phone's flaws.

"At the moment, inventory is the biggest problem for our cell phone.

"To small manufacturers, inventory is often a problem that's difficult to resolve. At the end of the day, it's all about money. If one wanted more stocks, they would have to prepare enough money for the supply chain. At the same time, their warehouses would have to store a lot of goods.

"Storing inventory is very dangerous. If a cell phone is sold for two thousand yuan with a profit of a hundred yuan, that means that twenty cell phones have to be sold to cover the cost of storing one cell phone. That's a very scary ratio.

"However, having a lack of supply is another problem. Consumers' desire to buy goods would not be satisfied on the spot. After calming down due to the lack of stock, they might end up buying cell phones of other brands.

"For a company of our size, that's a very tricky situation.

"On top of that, the details of our cell phones are far from ideal. A high-end cell phone cannot be lacking in details…

"…all in all, our aim for the next stage is to remain steady. We have to build on our brand's name and fame and better organize the supply chain, so that we can release the new and improved E1 by the second half of the year. In addition, we have to work hard to guarantee adequate supply so that we can move up a tier!"

Pei Qian remained silent. He seemed to have noticed a paradox. Often, when he offered guidance, the situation would strangely turn around, and projects would start generating profits.

However, when he did not offer guidance and let things be, projects would still generate profits.

Take this time, for instance. Chang You had set a steady path for Otto's cell phone. Should Pei Qian interfere or not?

Once Chang You finished speaking, he instinctively turned to observe Boss Pei's reaction. Boss Pei was frowning and in deep thought.

Chang You could not help but feel nervous.

What is Boss Pei thinking about? Did he find a problem with my plan? Is he thinking of a better one?

That can't be. Boss Pei is far-sighted. He must have thought of a better plan already; he shouldn't be starting to think of one right now.

Could Boss Pei have suddenly realized something? Does he want to overturn the plan that I came up with and come up with a better one? Is Boss Pei thinking two steps ahead of me right now?

What could he be thinking about?

Forget it, I won't be able to figure it out. This is the best I can do. I shall wait for Boss Pei to clarify his thoughts.

Thus, Chang You waited patiently. The others waited patiently as well.

After two minutes of deep thought, Pei Qian suddenly noticed that everyone was quiet. He looked up, scanned the group, and realized that everyone was looking at him expectantly.

Pei Qian understood why it was so quiet. Everyone was waiting for him to speak…

That's awkward. I have to say something now. I can't possibly admit that I have nothing to say after so long, can I?

That would trigger their imagination.

Why was Boss Pei saying that he had no opinion after thinking for so long? Did he have a better plan that we hadn't thought of? What could it be? Why wasn't he talking about it?

Pei Qian pondered for a moment and decided that leaving it to everyone's imagination would be much scarier. Thus, he decided to lead them down the wrong path. Even if they ended up generating profits, at least they would earn less!

At that thought, Pei Qian said, "Don't work on another cell phone. Just sell the remaining stocks and stop sales."

Chang You nodded. "Hmm… alright, Boss Pei. What next?"

Pei Qian, "…"

What do you mean? Aren't you shocked at all?

Shouldn't you at least look a little shocked so that I can be sure that my plan is ridiculous?!

Yet, everyone in the conference room continued looking at him intently, waiting to hear what he would say next. Pei Qian sighed inwardly and continued speaking.

"Delay the next goal; make it ten months to a year later.

"Set up a software laboratory and do things like creating applications that people can use, perfecting the cell phone's system, and improving the image algorithm.

"We promised our customers that we will release two versions of operating systems and allow them to switch between both with a single button. We only have a simplified version now, but not a feature-rich one.

"We have to keep our promises."

Chang You spoke softly. "Boss Pei, the feature-rich version was supposed to be developed together with the new cell phone. We talked about this before."

Pei Qian was confused.

Have we talked about this before? Oh, I think we have.

Still, Pei Qian maintained a stern expression. "We have limited resources for research and development. We have to focus our resources if we want to accomplish big things. You could go through the same process with less investment and end up with vastly different results.

"Don't think that you can fool customers with a feature-rich operating system that you created with little effort. If we want to do it, we have to make it perfect, understand?"

Chang You looked guilty as he nodded. "Yes, Boss Pei."

Pei Qian was considering this: now that a new cycle had begun, he could extend the deadline of another project to the next cycle.

At the moment, Otto Technologies looked like a good candidate.

Pei Qian would only extend the deadline of a project if it had three characteristics: first, it posed a threat at the moment; second, a large number of resources could be invested in it so that more money could be burned; third, the product or project would be accomplished before the end of the next cycle.

Otto Technologies' cell phone fulfilled all three criteria.

Pei Qian prioritized setting up a software laboratory over a hardware laboratory. Although a hardware laboratory would burn more money, the project could easily come to naught at the end of the day.

That was because it was not easy to make hardware. The products would either work or not; there was no gray area. If they failed to release any products before the next settlement date, wouldn't Pei Qian be finished?

On the other hand, a software laboratory would cost a lot of money and easily produce results. Setting one up was unlikely to affect settlement.

Even if the software laboratory only served to improve the operating system, release a passable application, or improve the cell phone's image algorithm; it would still be an achievement. Pei Qian could just try to find a way to generate revenue to satisfy the System.

Chang You noted down Boss Pei's instructions very seriously, without raising a single question.

Boss Pei had planned everything from market placement to brand marketing for the Otto E1 cell phone. He had bought Chang You over completely.

Now, Chang You only had one principle: if Boss Pei had requests, he would fulfill them to the best of his ability; otherwise, he would make decisions on his own.

Chang You felt that Boss Pei was aiming too low. Were they really going to spend ten months to a year on improving the cell phone's operating system, creating a few applications, and researching the image algorithm?

It was an overkill.

Still, Boss Pei had already spoken, and Chang You did not dare to be overconfident. After all, Boss Pei's requests had always yielded perfect results.

Pei Qian watched as everyone took notes seriously. All of a sudden, he felt extremely lonely in this world. He wondered how all of them would interpret his words.

Ai, it was destined that the speaker would be misunderstood!