Regarding revenue, going global and going public, Yunjing CEO Zhang Junbin chatted with us for three hours | An exclusive interview by HardcoreTech.

Author｜Huang Nan

Editor｜Yuan Silai

The storm commenced at 12:00 am on January 1, 2021.

Before going to bed, an unexpected phone call dealt a heavy blow to Zhang Junbin. At the other end of the line, an anxious employee informed Zhang Junbin that half of the company's sweeping robots simultaneously crashed, and hundreds of thousands of devices turned into useless "bricks" overnight.

Although it was already early in the morning, users quickly flocked to the after-sales service, and the customer service phones rang continuously. From employees to executives, the defense lines were breached layer by layer. They found themselves facing the biggest crisis in the company's five-year history, and no one dared to make a decision.

The pressure ultimately fell on Zhang Junbin. He recalled to Yingke that during that period, calls came in almost every second. In a week, Zhang Junbin had less than 24 hours of rest. One night, he looked at the ceiling and counted his heart rate, which exceeded 200 beats per minute at its peak.

Zhang Junbin didn't have much time to think. Narwal quickly established seven new repair lines. Users sent back the faulty products, the factory inspected and tested them, and then sent them back after restoring normal operation. The entire process proceeded in an orderly manner, and Narwal's rapid response prevented the storm from further spreading. At this point, only 20 days had passed.

But Zhang Junbin's anxiety did not ease. "We couldn't find the problem. Even if this problem is solved, will it happen again? What if this kind of situation occurs again? How to deal with more other problems?"

Behind the dark cloud is the crisis hidden beneath Narwal's excellent performance. In 2020, Narwal's performance soared, but the resources, personnel allocation, and supply chain at hand were stretched thin. The large-scale crash that late night was a concentrated outbreak of the hidden concerns beneath the surface.

At that time, Narwal's size was nearly ten times smaller than that of its competitors, with only over 200 people. Including Zhang Junbin, many in the team were newcomers who joined the company right after graduation to participate in the entrepreneurship, and the management experience was relatively lacking.

Zhang Junbin also noticed that Narwal's pace was too "slow". The initial technical architecture in the design stage failed to incorporate the platform thinking, which led to difficulties in subsequent iterations to keep up with the market pace. This accident made him determined to change.

Immediately, Narwal launched a large-scale recruitment, and the company grew from over 200 people to 1,000 people; adjusted the organizational structure, refined the product division to accelerate the rhythm of new product research and development; expanded channels, and went overseas to lay out global business.

In recent years, the growth rate of domestic home appliance retail sales has been relatively small, and even a downward trend has emerged. The main reason is that the market saturation of such products is high, the new demand is limited, and in addition, the early product experience of some products is poor, and the enterprise competition has fallen into price competition and product homogeneity.

Until 2024, the entire industry ushered in a turning point. Affected by factors such as national subsidies, the home appliance market has seen growth after a long absence, and the retail scale in the first three quarters exceeded the peak in 2019. In this wave of policy dividends, the sales and prices of smart cleaning home appliances represented by sweeping robots have both increased.

It can be said that the past year has become a growth window that sweeping robot companies must seize.

Narwal has also been steadily maintaining its own rhythm. Behind the rapid expansion, all Narwal employees have to face a painful running-in period. The organization still needs to be adjusted, the structure needs to be streamlined, the process needs to be optimized, and the product iteration speed needs to be accelerated. So in the industry explosion point in 2024, Narwal took a big step forward.

According to the monitoring of Aowei Cloud Network in November 2024, the cumulative online retail sales share of Narwal sweeping robots in the year is 18.54%, with a year-on-year growth of over 100%; the cumulative market share of floor washing machines in the year is 5.46%, and the market share growth rate exceeds 400%, ranking first in the industry.

Yingke learned that Narwal has reached the revenue target for the entire last year in advance in November 2024, and the sales have increased by nearly 1 time year-on-year.

Narwal has experienced several ups and downs. Behind every turning point is how a hardware startup strives to find survival rules in an increasingly difficult era.

"I don't think there is the most difficult time for Narwal, but every decision is extremely important. Once a wrong choice is made, it may be irreversible," Zhang Junbin said in an interview with Yingke.

As time enters the ninth year since Narwal was founded, Narwal is no longer the startup that needs to raise funds from mentors. Zhang Junbin is about to turn 35. He forces himself to grow from a geek with a student air to an entrepreneur, to get used to the complex business world, and to make heavy and realistic choices.

Zhang Junbin

The following is a conversation with Zhang Junbin, the content has been edited:

In 2024, We Can Compete with Competitors

Yingke: Narwal has been established for 9 years. You mentioned before that "it wasn't until 2024 that many shortcomings were almost made up for". How are these "shortcomings" developing now? Has the competitive landscape with competitors changed?

Zhang Junbin: In 2024, we can compete with everyone.

When Narwal only had a single price range product before, it was easily caught in the middle by competitors. So since 2023, we have been consciously improving the product matrix, and by 2024, we have achieved product layout in every price range. After the product matrix is opened, competitors can no longer catch us in the middle with the price range.

From the perspective of product functionality, I think the company's competitiveness was already very strong in 2023, and J4 was the best-selling Top1 product in 2023.

Narwal aims to output high-quality products in every price range, which requires high requirements for the organization's management ability and the project's development ability. It is definitely not feasible to only change the name without changing the product in each price range. Something different still needs to be made. We not only want to create a hit product, but also multiple hit products.

At present, Narwal's product matrix is relatively simple. There is one main product in each price range every year, which will not cause too much choice interference to users.

Yingke: Narwal's sales in the 2024 Double Eleven exceeded 1.7 billion and doubled. How was this achieved?

Zhang Junbin: First of all, the foundation is relatively solid. Previously, there was only one price range, but now there are four; previously, there was only a sweeping robot, but now there is also the floor washing machine category. The market share of the floor washing machine is expected to reach 10 points in the fourth quarter of 2024, and about 5 points for the whole year. With the addition of the two categories, it is equivalent to doubling the performance of Double Eleven.

Secondly, it is the bonus of the entire industry - national subsidies, trade-in, and so on. The country's subsidy for home appliances will definitely continue, which is beneficial for home appliance enterprises.

The offline channels are also performing well, and more than 70 offline brand stores have been opened.

Overall, Narwal's annual target for 2024 was actually completed during the Double Eleven period.

Yingke: Is the development speed of domestic offline stores within expectations?

Zhang Junbin: It is within expectations. Among the more than 70 self-built brand stores, basically, they are profitable. At the same time, we are the exclusive partner of Hongmeng Zhilian in the field of smart cleaning robots, and have entered more than 200 Huawei全屋智能体验 stores nationwide.

Narwal is relatively restrained in doing offline business. We need to make the SOP, promotional activities, and conflict system with the online more clear before we will promote it on a large scale.

In 2025, Overseas Business Will Triple or Quadruple

Yingke: Many enterprises are accelerating the pace of going overseas in 2024. How is Narwal's current overseas performance?

Zhang Junbin: We officially launched a large-scale overseas business in 2023.

Narwal is a DTC (Direct-to-Consumer) enterprise with strong online operation capabilities, and it can quickly open the market. The overseas marketing sector previously underwent an organizational upgrade. After the organizational structure adjustment and the product foundation were established, in 2023, we spent a lot of energy expanding the online channels in key countries.

Last year, we began to focus on offline channels and just laid them out in the second half of the year. We believe that this year will be a large-scale harvest node. Narwal's overseas goal for 2025 is to triple or quadruple the revenue. It will continue to grow at a rate of tripling every year.

Yingke: How many channels have been laid overseas?

Zhang Junbin: As of the end of September 2024, Narwal has covered more than 30 countries and regions. Currently, the markets with better feedback are North America, South Korea, and Australia. For example, in South Korea, Narwal entered the market for only one year, and in the first quarter of 2024, it achieved the second place in the mid-to-high-end sweeping robot market share, surpassing LG and Samsung.

At the same time, we found that the key countries suitable for online channels often have a relatively complete information infrastructure construction, are more advanced in the consumer field, and users of their favorite brands will have loyalty. These key countries have a radiating effect on the surrounding areas. Therefore, in these key countries, we will not adopt a "cost-effective" strategy, but will cultivate them for a long time, continue to make brand investment and user awareness education.

Previously, the revenue proportion of online and offline channels was about 7:3. By this year, we hope to adjust it to 60% offline and 40% online.

Yingke: Which product sells better overseas?

Zhang Junbin: Narwal Freo X Ultra, which is the domestic J4. Narwal is very cautious in the iteration of overseas products. Generally, a product will run in China for half a year before considering going overseas, and the new product speed is basically one generation behind compared to the domestic one. Because for products like sweeping robots, once there are batch problems, it is quite troublesome. We are also accelerating this link.

Yingke: Compared with competitors, Narwal's overseas expansion is relatively late. How to break through currently?

Zhang Junbin: Although it seems late from the outside, it actually conforms to our own rhythm. Instead, in our opinion, Narwal's timing for going overseas is better.

On the one hand, with the concentrated overseas expansion of Chinese enterprises in global trade, the recognition of Chinese products by overseas users will be higher, and we have enjoyed this bonus. On the other hand, the space left after the business contraction of overseas sweeping robot companies is something that Narwal can quickly strive for. Before this, it might have cost more to obtain it.

In addition, overseas is facing the product upgrade of sweeping robots, which is a great opportunity for Chinese enterprises.

Behind the Organizational Adjustment

Yingke: Why was the product iteration of Narwal so slow in the previous years?

Zhang Junbin: Before 2021, we lacked a product strategy and suffered from an imperfect R & D system. We did not consider the platformization and modularization of the product, which led to a slower product iteration speed.

This mistake was made with the J1 product. We did not consider the platformized iteration of subsequent products, so that the J1 product platform could no longer be maintained. Eventually, we had to redesign the software and hardware structure from scratch on the J3 platform. Therefore, the release time of J3 was half a year to one year behind the expected time. In fact, the definition of J3 was completed internally in 2020.

It was also after this that we realized that it is impossible to start from scratch for every new product every year, as this would be very slow.

So we started to formulate a product strategy in 2021 and completed the innovative platform architecture in 2022. The advantage of this transformation is that when you look far enough, many subsequent innovations can be continued, rather than having to change the entire product architecture when you need to create a new product.

Yingke: What did the internal team do at that time?

Zhang Junbin: In 2021, we set binocular vision as the group's product strategy, and we have been investing in the research and development of vision base (visual components) for these four years. Now, the proportion of R & D personnel in Narwal is more than 43%, and I myself led a new platform in 2024.

Thinking clearly about the direction for the next two or three years will also accelerate the overall iteration speed. Only when the product platform strategy considers the user needs can the company not be dragged by others in the competition, and not be particularly panicked when others launch new products. Absorb the good parts of others, and do not absorb the unnecessary ones, and go our own way.

In terms of management core and rhythm, the strategic thinking or discussion about the entire product development system is no longer done by me alone, but involves the entire team. With the improvement of the decision-making mechanism, the innovative ideas will be more flexible, efficient, and comprehensive, and the vision for looking at problems will naturally be much higher than before.

In this process, we have cultivated a group of very excellent product managers who can help me make many decisions. I only need to do a double check, which was difficult to achieve before.

It is necessary to bridge the understanding of the product between the front-end marketing staff and the back-end technical staff. Previously, the marketing promotion and product staff would give a product plan respectively. Either the R & D team made decisions blindly, and in the end, the product might not sell well, or the marketing team made decisions blindly, which could easily lead to a situation where the product is a patchwork and ends up being unrecognizable. Compatibility between the two departments is an important management change in our system.

The team is testing new products ((Source: Narwal))

Yingke: How to balance R & D and marketing?

Zhang Junbin: Now it has been departmentalized. The department should have technical understanding and product planning.

The front-end marketing is like the channel distributors and agents in the market, and they have their own demands for the product. If the front-end marketing has a strong demand for a certain category or brand and believes it will be a hit, then the marketing will pay the development fee to the R & D to do it. Conversely, on the premise that the R & D recognizes a certain technical direction, and the demands of both parties are consistent, then even if the front-end marketing does not pay the development fee, the R & D will continue to develop.

Both are profit centers rather than cost centers, and there is an internal settlement price. Under the premise of ensuring that the product can be profitable and sustainable, the R & D department will not easily make overly "novel and peculiar"