From chain family to shell Zuohui’s Secret War in 19 years


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By Guo Chaofei
Source: Blue Hole business (ID: value_ creation)
When the bell of listing rings, Zuo Hui hugs the company’s management and investors.
As the chairman of shell’s house, people familiar with him often comment on his low-key and few words, and it is rare for him to expose his open-minded mood.
Facing the media on the eve of the bell ringing, Zuo Hui even said, “frankly speaking, I haven’t found any exciting points for this listing. I feel that I have been set off by the people around me. Many people are there to congratulate you every day. It seems that this is a very good and big thing. Our nodes are not discussed before and after listing, which is just one thing. ”
It took Zuo Hui 19 years to establish a chain family to go public. In particular, in 2018, the chain family transformed into a shell, which caused a lot of criticism and confusion. What Zuo Hui often talks about is that he insists on doing difficult and correct things.
In the shell model, the core and the most difficult is the so-called “dual network and dual core”. Dual network is an online digital solution and an offline contact point centered on stores and communities. The former includes a whole set of systems, such as real estate dictionary, real estate verification system, process and service standardization system, SaaS system for brokers to obtain customers and work; dual core is the network effect and platform effect released by ACN (broker cooperation network).
According to the data, in the first half of 2020, shell connected 265 brand chain brokerage companies. These brands have 42000 stores in 103 cities, and the total number of brokers exceeds 456000.
According to the shell listing prospectus, its operating revenue in 2017, 2018 and 2019 were 25.5 billion yuan, 28.6 billion yuan and 46 billion yuan respectively. In 2019, shell GTV (the total amount of platform transactions) will reach 212.8 billion yuan, surpassing Jingdong, meituan and other Internet platforms, and second only to Alibaba in China.
Capital markets also responded positively.
On August 13, shellfish landed on the New York Stock Exchange. The opening price was US $35.06, up 75% compared with the issue price. The final closing price was 87.2% higher to US $37.44. The total market value on the first day of listing reached US $42.2 billion.
From chain family to shell, what did Zuo Hui do right?
The hardest time
In April 2018, in the midst of a lot of doubts, shells went online to find a house. Even a large number of chain family employees did not know what medicine was sold in Zuohui’s gourd.
Shell to do a platform, chain home to become a shell subsidiary, at the same time restart Deyou, using the mode of joining. According to the plan, there will be several real estate intermediary brands on shell platform in the future. If compared with Jingdong, Lianjia and Deyou are similar to Jingdong self operated, while other brands are third-party pop. Shell will provide a series of bottom-up services.
According to the current popular saying, shell wants to be an industrial Internet, bringing the networking and digital experience accumulated in chain home to the “living” industry.
Qi Shizhao, the general manager of shell’s north area, is an old chain family member and served as the COO of Deyou. According to his recollection, when Zuo Hui just proposed the platform strategy, many people were stunned. Zuo Hui didn’t force everyone to accept it immediately. Instead, he talked one by one and broke up the explanation. For the longest time, Zuo Hui talked with Qi Shizhao for nearly four hours. Qi Shizhao did not fully understand this. But as a veteran under Zuo Hui, he did not object, “since the open strategic company has been decided, we will certainly do our best to implement it.”.
From chain home to shell, Zuo Hui and shell CEO Peng Yongdong have a hunch that it is not easy, but what they didn’t expect is that the most difficult time comes so quickly.
“Starting from April 2018, it is actually our lowest low point in September, and the number changes little.” Peng Yongdong admitted that at that time, the shell team worked hard to learn and was forced to move forward. He also saw that the team would have some obvious weaknesses and some brands were also a little shaken.
“At this time, people began to doubt that there was no one outside to say good words. Is it right that this road is not open and feasible?” However, Peng believes that this is an internal challenge and an opportunity for the shell team to learn and upgrade the rules, design and logic of the platform.
The shell platform regards ACN as an infrastructure operating system, which is actually a broker cooperation mode. Shell divides a complete second-hand house transaction (including second-hand house sales and leasing) into different steps, allowing multiple brokers to cooperate in a transaction across brands and stores, and allocate commissions according to their roles. Through these collaborations, brokers can be more professional in their own field.
Therefore, in a transaction, the number of brokers involved may be more than 10, including the role of house source entry, maintainer, recommender, transactor, financial consultant, etc.
In the chain family era, this kind of inter store cooperation is very common, and the sub Commission mechanism makes the efficiency higher. Shell to cross brand, cross store broker cooperation, the initial difficulty can be imagined. Especially for the brands and brokers outside the chain family, due to the great changes in the whole operation mode, they often need to increase their performance and more customers at the first step, but real house supply and ACN need to take time to verify.
Shell discussed the rules of ACN cooperation with different brands, store owners and brokers on the platform, forming a rule framework system of “general rules – various sub rules – applicable rules for different cities”.
Most of the time, the toughest moment is when the turnaround comes.
In October 2018, Peng Yongdong found that the first wave of brands and store owners who joined shell began to improve, and the platform effect of shell began to show. At the same time, the new house transaction has become an important SKU of shell.
Peng Yongdong is particularly pleased that ACN mechanism has been gradually accepted. What impressed him was that an agent of another brand told him that he had never shared housing before, but once he entered a set of housing resources in the system, and finally completed the transaction in the hands of other people. He was also given 10% of the performance. “It’s very unexpected that even if you enter a house, you can pay for it.”

In September 2018, Jiangyuan real estate, located in Ningbo, settled in shell platform. In the second year, the transaction scale of Jiangyuan real estate increased by 350% year-on-year, and the average store performance doubled. According to Fu Bin, founder and general manager of Jiangyuan real estate, through ACN rules, shell breaks the information island between stores and brokers, realizes the cooperation and cooperation between different stores and brokers, changes the previous vicious competition mode, and promotes the efficient matching between supply and demand.
Zuo Hui also said that he would like to say one thing to the store owners or brand owners who come to our system. When you first come in, the efficiency of your store will surely decline, because this is a completely different way of thinking and working, which needs to take a period of time to settle down. From now on, it will get better after six months, and it will increase greatly after 12 months. “This is the characteristic of the industrial Internet. The cycle is very long and you can’t see the return for a long time.”
According to the data from shell, for all brand stores that joined the shell platform before 2019 and have been operating for more than one year, the total volume of GTV transactions in the same store has more than doubled after one year. At present, on the shell platform, on average, 7 out of every 10 transactions are cross store transactions; one transaction is completed by the cooperation of 13 brokers at most; the farthest cross city transaction is 3000 km away; each broker serves 16 families on average every year.
Yuan Lingyun, CIO investment assistant of Huaxing capital, analyzed in an interview with blue hole business that “the so-called digitalization and internetization of shell, in addition to real estate dictionaries, is the most important thing to build ACN network since the era of chain family. Today, we are just opening the original internal collaboration system to the outside world. If there is no such thing, the chain family can not be open. The core of shell is actually ACN network, which is not built by other intermediary companies. ”
Get rid of chain house
Why does Zuohui have to be a shell and turn from vertical to platform? Looking at China’s Internet industry, there are few successful cases.
In the eyes of the outside world, it’s not necessary for a chain family to be a shell. In 2015, Lianjia launched 11 mergers and acquisitions nationwide, including Chengdu Yicheng, Shanghai Deyou, Shenzhen Zhonglian, Guangzhou mantanghong, Dalian good hope corner and so on. After that, Lianjia has become the first leader in the domestic real estate intermediary industry, and Lianjia is living well.
At that time, Zuo Hui divided real estate intermediary into three kinds of forces, namely traditional intermediary, Internet Intermediary and chain family. In Zuo Hui’s opinion, it’s not that offline has defeated online, nor is it pure Internet. Chainers have done a lot, such as building real estate dictionaries, building data and so on.
At this time, Huaxing capital began to study the field of “living”, and frequently contacted with real estate agents including chain house. Bao fan, chairman of Huaxing capital, recalled that he didn’t chat much with Zuo Hui for the first time. He felt that he was different from other real estate agency owners. He was a bit cold and more like people in IT industry. Later, I learned that Zuo Hui was a computer science student and had it background and experience.
“At that time, most of the investors in the market still regarded the chain family as a traditional real estate intermediary, so the round B financing was not smooth. Our original intention was to invest in a brand-name company that can grow up in the” living “industry. We have different views on the chain store.” After communicating with Zuo Hui for many times, Bao fan thinks that what he wants to do is more than just a real estate agent. To some extent, he wants to change the order of the industry, which is what Zuohui finally moves Bao fan.
In 2016, Huaxing capital led the chain family B round of financing, and the investors also included Hillhouse capital, new hope, Tencent, Baidu, etc. Blue Hole business learned that at that time, many investors didn’t know much about the chain. An important strategic investor proposed that Huaxing should complete the delivery first before they could follow up.
“In fact, when we invested, it was already expected that chain makers would turn to shells. We think this is the future direction of the industry. Just standing around 2015, I’m not sure when and how this can happen, but the direction is certain. ” Yuan Lingyun believes that it is also necessary for enterprises to evolve from vertical chains to platform shells. Only by continuous self evolution can they lead the way for a long time.
Around 2014, Zuo Hui and his team have been thinking about a question: who will kill the chain family? At that time, they thought that there might be an online platform, which would integrate offline and eventually subvert the chain. It’s like the story of Ali, meituan and didi in the field of clothing, food and transportation.
At that time, Peng Yongdong with a small team, built a website called shell. Yan Mian, CTO of shell looking for a house, remembers that he had already thought about it at that time, that is, to be a broker platform, not only open to the chain family, but also to serve more brokers, forming a positive cycle. However, because the conditions are not mature, soon this small team with other teams to transform the chain home online, to do chain home network.
In April 2017, shell platform was put on the agenda again. This time, Peng Yongdong plans to select several points to test first, and finally land in Zhengzhou, Xuzhou and other cities. During this period, his strategy is constantly adjusted. Some points are connected with big brands, others are medium or small brands, some are pure asset light mode, and some are light weight combination.
Peng Yongdong also personally ended up. In the summer of 2017, he went to Zhengzhou to talk to the largest local intermediary brand. It was a weekend when the office air conditioning was turned off and the electric fan was on. He was sweating and describing to each other the future of shells and the industry. At that time, the third-party brand had a strong vigilance. On the one hand, they thought that the chain family was worth learning, but on the other hand, they felt that the company was low-key and mysterious. They did not know what the chain family was doing, and they were not sure what the two sides could do.
In the first three months, there was little breakthrough, and then there was gradual progress. By the beginning of 2018, Peng Yongdong believed that the shell model was more and more determined and basically mature. Three months later, the shell officially came out and began to promote.
Such a big turn, left Hui and investors also carried out in-depth communication.

Bao fan remembers that in 2017, he met Zuo Hui at a man cafe in Shunyi, Beijing. Zuo Hui took out a piece of paper and explained that he planned to make shells. Zuohui talks and draws. Shell is a further evolution of chain family. It will move from a relatively closed system to an open platform. Many production relations are straightened out at the level of Chainmen, and they try to promote this emerging production relationship to a larger market.
“At that time, Lao Zuo felt that I didn’t understand. In fact, I thought I understood. Later, he chatted with me and said that he didn’t speak very clearly that day. In fact, I should have understood 80% of the total.” Bao Fan said.
Zuohui got the support of investors and shareholders. Later, the shares of the original investor in the chain family were translated to the shell through the agreement mirror image.
Athletes and referees
Going public is seen as a company’s rite of passage.
In January 2020, shell GTV exceeded 2 trillion yuan. In an internal meeting that followed, Zuo Hui stated, “we have indeed passed the stage of 0 to 1, and the shell has gone through the stage of settling down. It is very difficult for us to survive in this market today.”
In Zuo Hui’s opinion, shell still has a long way to go. They divided the stores on the platform into two categories: one is the base line, which can be called the food and clothing line, that is, the annual GTV reaches more than 50 million yuan. The other is middle line, which is the middle line, with an annual GTV of more than 100 million yuan.
Taking this as a standard, only 12% of the stores in 2019 can meet the middle-class standard, that is, only 4400 stores can achieve this goal, and only a quarter of the stores that exceed the so-called food and clothing line, and more than 9000 stores (many stores joined later, not the annual data).
Until the listing, Zuo Hui still said, “I don’t think that we are completely through today. I think we may have finished from 0 to 1, and we are still alive.”
In Zuo Hui’s opinion, there are three marks in running. First, the efficiency of the industry has been greatly improved. At present, the per capita GTV of the industry is 3-4 million, and the average GTV of the store is about 20 million. Shell’s goal is that by 2024, more than 90% of the stores can reach the food and clothing line, that is, more than 50 million yuan of GTV. Secondly, the industry consumers’ NPs (net recommended value) value is very low, and it may be negative. It is hoped that the whole shell system will increase the NPs to 20% – 30% in a few years. Third, at present, the average working time of brokers is only six or seven months, which is expected to increase to about 30 months and basically complete the professionalization of service providers.
However, the controversy about being both an athlete and a referee has not yet been settled because he is also a chain player.
Zuo Hui used an example. The difficulty of building an operating system in the real estate service industry is that it can understand an IOS business for chain members. Shell can make IOS more open. This industry needs an operating system. From a commercial point of view, why is this operating system only available to 100000 people in the chain? If the 2 million people in the whole industry can use it, it can bid farewell to the wild state of the industry.
Bao fan believes that the problem of athletes and referees depends on which perspective to look at. From the perspective of real estate intermediary today, we may come to the view that shell is both an athlete and a referee.
The core of the industry is two ends. One is users, that is, people who buy or rent houses. Whether they can get efficient and high-quality services; the other is brokers. This industry cannot do without human services. Whether they can live with more dignity, have a sense of gain and can make money. In the future, organizations will be more and more diluted in the industry. To a large extent, shells provide the underlying platform or infrastructure. In today’s industrial structure, there may be athletes and referees’ views, which may not be the pattern in the future industry.
The shells of the future may not be what they are now.
From the perspective of income, the shell platform ACN operates normally, with platform fees; if it provides infrastructure, it can have service fees; in second-hand stores, such as house source survey and house source entrustment, if brokers can’t do it, shells can provide solutions and play a new role, and they will also have income; they can also do financial extension products to earn income; or they can add new SKUs to make money, such as decoration Community, business, data, IOT and so on have imagination space.
According to Peng Yongdong’s description, the path of shell to do industrial Internet in the field of housing is vertical and deep, and then horizontal platform. There are not many categories in the residential field, but they are very difficult and complicated. To enter any category, you should first do vertical work, understand it from the beginning to the end, and then use new technologies to do the industry again.
When he first started a business as a property insurance agent, Zuo Hui developed the habit of studying the industry and not afraid of being boring. He concluded, “this is a necessary process. Facts have also proved that it is because we know the industry better than others and understand our competitors that we won the battle. ”
(statement: This article only represents the author’s point of view, not Sina’s position.)