Analysis: How to invest in Internet companies (Research papers Download News) The following is the second oldest Feisibuke Fangsan Wen <<: >> a logical investment in Internet text excerpt: What is the second Feisibuke There is a value investor Warren Buffett called the originator, Buffett invested in many companies the old man, but he has a top, not investment in Internet companies, explained his reasons:? First, he does not Internet companies understand the second, he does not understand what the Internet companys moat is. I am also a believer Buffett, but I think in this matter and my views differ from the old bar, I think the Internet is the worlds best value target for investment, we should invest in Internet companies. Why? Main consists of three reasons: First, the scale of the Internet industrys beyond the imagination of many people, is a very high degree of industry concentration of the industry, Second, the Internet company is bound to be highly profitable industry, high profits and to what extent? Before we have a slogan Robbery is better to stocks, we can give this sentence by sentence, drug trafficking is better to cast the Internet company, other industries There is a 20% gross margin, 30%, we feel very good, but if an Internet company gross margin below 50%, you are embarrassed to say that they probably are Internet companies, Third, the Internet company actually has a very deep and wide moat U.S. Internet companies such as Facebook, the scale of 850 million users, Chinese people are familiar with the QQ, the scale of 711 million users can be said that there are business history since the user scale to achieve this magnitude of companies and products are very rare, large-scale means Company development space is very large. Why do you say? First, talk about the problem, I think profit margins determined by three factors:. Economies of scale, the proportion of its own users, the conversion efficiency of speaking of scale, large-scale Internet companies destined characteristics of Internet companies in the expansion process, the scale effect is particularly evident when its users and revenue to grow exponentially, the growth rate of investment in Internet companies is much lower than its revenue growth. simply compare, for example, is a traditional commercial giant Wal-Mart, which each open a malls have to put the appropriate real estate, property, and its revenue growth and investment growth are parallel, but the Internet companys revenue growth and investment growth must cross the line, once the Internet company to break through this crossing point, it enters into the profits of the times , Second, the real Internet companys marketing and promotion is basically word of mouth by the user, the cost is very low. Traditional business each get a basic user needs to pay the cost, but the real Internet companies because of its own with its own massive users It can be reused for each user, that is, when the Internet company has its own mass of its own users, its user cost substantially close to zero. Third, take a look at the conversion rate. Massive user how to transform the companys business to create value for users? Because upgrading Internet technology are constantly improving their conversion rate, conversion rate of once every raise, it means that the companys profits rise. We look at what determines the conversion rate. First, determine the conversion rate is website content and trading relationships, the better the relationship between the corresponding transformed the relationship, the better the view of three sites: Sina, search room, we transformed the car home or car Sinas conversion rate considered home rate? undoubtedly car home because home contents and car sales correspondence is good, but the content and the corresponding Sina trading relationship is poor. Look at the search room, the conversion rate is very high, in 2011 found room ad Revenue probably around 2.2 billion. Sina as a veteran Internet company, far more than the amount of users found room for the company last year, is also 2.5 billion in advertising revenue, which can be seen in the industry to improve the conversion rate of the corresponding brought. Higher efficiency than the body of this correspondence is transforming a single link, similar to Sina, search room, car home, it corresponds to the Pan entire correspondence, but like Baidu, Google, it can be used to create content and advertising keyword Relations between, so the conversion rate has been a qualitative improvement, such as Sina website magnitude of millions of users, it is more than 20 billion in advertising revenue last year, Baidu has 14 billion (in revenue. In addition to keywords corresponding to improve the conversion rate, there is a conversion factor we often overlook: the corresponding time, maybe you know you need a certain type of advertising, but its hard to kno