When Lei Jun starts to lose fans

October 13th was a tough day for Xiaomi and Lei Jun.

Early that morning, a Xiaomi SU7 crashed after speeding and caught fire. The failure of the hidden door handles made the rescue efforts of passers-by in vain. Eventually, the drunk driver unfortunately died.

On the same day, Xiaomi's Hong Kong stocks tumbled 7.3% in a single day, wiping out more than 90 billion yuan in market value.

Lei Jun also made it onto the hot search list after losing 290,000 followers on Douyin, with the topic garnering over 34 million views. Currently, Lei Jun's follower count continues to decline.

As of October 20th, Lei Jun's follower count dropped to 44.521 million. Source: Lei Jun's Douyin account

Although those 290,000 followers don't shake Lei Jun's solid foundation of over 40 million followers. But when "product accidents", "stock prices", and "entrepreneurial IP" resonate, it forces us to think about a question:

Has the business model of entrepreneur endorsement, which has become the norm, reached an inflection point?

01

Let's rewind to 2011.

That year, Chen Ou, the founder of Jumei Youpin, frowned in the board meeting when he received a new task - to be the brand ambassador for Jumei Youpin.

At that time, the Internet circle advocated "keeping a low profile while working". If a founder went out for high - profile promotion, they were likely to be labeled as "opportunistic" and "not focusing on their main business".

Chen Ou was hesitant: "It's embarrassing to do CEO marketing around myself. People will say I'm showing off. I'm quite concerned about my reputation."

Xu Xiaoping, an angel investor and board member, brought up "Zhang Chaoyang" and pointed out that Zhang Chaoyang successfully boosted Sohu's popularity at a very low cost by building his personal brand.

Chen Ou was convinced.

Back then, Jumei was just a small player in the e - commerce field. Despite having an annual sales volume of 150 million yuan, it still couldn't afford to hire celebrity endorsers.

Meanwhile, Lefeng.com in the same field saw a rapid increase in user conversion rate thanks to Li Jing's endorsement. Vancl's sales soared tenfold with Han Han as its endorser.

Everyone in the industry saw the power of "brand personification" and was eager to try.

Finally, after multiple rounds of negotiations with the board, Chen Ou got a commitment:

"Shoot a short advertisement first as a trial. If the negative feedback exceeds 30%, stop airing it."

The advertisement would cost at most over 100,000 yuan to shoot, but success could save the company. This logic of "taking a small cost for a big opportunity" was hard for Chen Ou to resist.

When summer came, the first advertisement was launched in the market, immediately dispelling Chen Ou's concerns. The Weibo topic related to it was viewed over 2 billion times.

"The struggle and perseverance of the youth."

"You can look down on our youth, but we'll prove whose era this is."

"I'm Chen Ou, and I speak for myself."

...

These lines, which now seem rather cheesy, were the most sought - after "Chen Ou style" back then. Chen Ou's "fighter" image made Jumei Youpin's brand feature of "genuine product guarantee" deeply rooted in people's hearts.

Source: Jumei Youpin's advertisement

After that, Chen Ou frequently participated in various variety shows, such as "Happy Girls" and "Day Day Up" on Hunan TV, and "You Are the One" on Tianjin TV. This further established his persona as a "new 80s entrepreneurial elite" and enhanced Jumei's popularity.

Compared with 2010, Jumei's turnover in 2012 increased nearly 15 times, exceeding 1 billion yuan. And the marketing expense ratio was much lower than that of its peers. It saved 100 million yuan in advertising fees.

His catchphrase "I speak for myself" became the clarion call for many entrepreneurs to step into the limelight.

In 2014, Dong Mingzhu, the "queen" of Gree, announced the end of the endorsement cooperation with "Jackie Chan". She joined hands with Wang Jianlin, a real - estate tycoon at that time, to shoot an advertisement for Gree's photovoltaic air - conditioners.

In the advertisement, Wang Jianlin asked: "I heard that central air - conditioners don't need electricity?"

Dong Mingzhu replied: "Yes! They use solar energy!"

Wang Jianlin then said: "Then I can save 1 billion yuan in electricity bills every year."

With the combination of the two business tycoons and the CCTV platform, Gree's photovoltaic air - conditioners quickly became popular.

After that, Dong Mingzhu frequently appeared in Gree's advertisements, and her posters were hung in exclusive stores across the country. When asked the reason, she didn't shy away:

"I just want to save resources. It can save 10 million yuan a year."

But besides cost - saving, Dong Mingzhu found that her own endorsement had a similar effect to that of celebrity endorsements.

Data source: Research on the Value of Entrepreneur Endorsement under the Resource Theory Framework, Liu Bin

Some researchers compared the annual sales volumes of air - conditioners of Gree, Haier, and Midea from 2009 to 2018 and calculated the sales growth change rate for easy comparison.

At that time, Haier and Midea always used the traditional celebrity endorsement method, which formed a contrast with Gree.

As can be seen from the graph, in 2015, Gree and Haier both reached an inflection point and started to grow positively. Midea was a bit late and entered the growth mode one year later.

The result is clear. After switching from celebrity endorsement to entrepreneur endorsement, Gree didn't fall into a relative disadvantage. Instead, it could grow in parallel with its peers.

Entrepreneur endorsement is indeed effective and cost - effective.

After that, the entire business world entered the "era of entrepreneur endorsement". Many entrepreneurs frequently appeared in public and variety shows, becoming extremely popular.

But is this the ultimate solution for enterprise development?!

02

While Chen Ou was enjoying the glory of being an enterprise endorser, Li Yang, another enterprise endorser, was dragging himself and his enterprise into the abyss because of the "domestic violence incident".

In 2011, Li Yang's ex - wife Kim exposed photos of her being domestically abused on Weibo, which caught the whole network's attention. In 2013, Li Yang's domestic violence was confirmed by the court, and they were divorced.

This was the first time in China that domestic violence was clearly recognized in a public figure's divorce case. It was also the first time that a "personal safety protection order" was issued, and it became a typical case that promoted the introduction of the "Anti - Domestic Violence Law".

This incident also became the turning point of Li Yang's career from prosperity to decline. The enterprise behind him suffered a systematic and irreversible blow.

Before the domestic violence incident, Crazy English planned to go public in 2014. After the incident, investors withdrew their funds collectively, and the listing plan was shelved permanently. The business shrank comprehensively, 80% of the institutions were revoked or cancelled, and the senior management team left en masse. As of 2021, Crazy English's market share in English training was less than 1%.

His "English guru" and "inspirational mentor" persona, which he had built through speeches, was also overturned. Parents asked for refunds one after another and were reluctant to let their children learn from a teacher with a domestic violence history. Netizens even joked that "Crazy English = Crazy Domestic Violence".

Li Yang became a typical case in China's business history, making entrepreneurs in the limelight start to have a sense of crisis and think about:

What is the underlying logic behind the prevalence of entrepreneur endorsement?

The new "Advertising Law" in 2015 was a catalyst. Article 56 clearly stipulates:

When a false advertisement of a product or service related to consumers' life and health causes damage, the endorser shall bear joint liability with the advertiser.

Once a violation is found, celebrities have to pay fines and be banned from endorsement for three years.

However, entrepreneurs as advertisers can skillfully avoid these regulations and save a considerable amount of endorsement fees. After that, a group of Internet tycoons such as Lei Jun and Zhou Hongyi frequently appeared in public and became "Internet - famous bosses".

But besides these, there are two intangible factors:

Credibility and scarcity.

It is reported that from 2007 to 2014, the industrial and commercial system investigated and dealt with as many as 370,000 advertising violation cases, with fines amounting to 216 million yuan. But the celebrity endorsers remained unscathed. Some celebrities shirked responsibility by saying "they didn't know" or "they had stopped endorsing" after the incident.

This led to a sharp decline in the credibility of celebrity endorsement. When consumers saw a product endorsed by a celebrity, they didn't think the product was good but rather regarded it as a money - making act of the celebrity.

Moreover, celebrity endorsement essentially uses their "persona label" to endow the brand with "personality traits". For example, when a "powerful actor" endorses a car, it creates a unique image of "safety and reliability" that consumers can immediately recognize.

But when celebrity endorsement is over - used and the categories and qualities are uneven, their "persona" will be diluted, and the endorsed products will lose their uniqueness.

In these two aspects, entrepreneur endorsement is a natural choice.

Entrepreneurs, especially the first - generation founders, naturally have public persuasion power. Their entrepreneurial stories, values, and the development achievements of their enterprises are their endorsements.

Secondly, the personal characteristics of entrepreneurs are non - replicable and are quite scarce business resources. Just as there are no two identical leaves in the world, there are no two identical entrepreneurs.

In addition, entrepreneurs have a trait that celebrities don't have: professionalism.

Many entrepreneurs have worked their way up from the front line and are very familiar with their products.

For example, Lei Jun popularized knowledge about mobile phone processor chips at the product launch. Yu Chengdong detailed the manufacturing process of Huawei's Kirin chips at the product launch.

This way of "professional endorsement + scenario - based storytelling" alleviates consumers' technological anxiety on the one hand and consolidates the entrepreneurs' "technology guru" persona on the other hand.

According to industry analysis, consumers' trust in entrepreneur endorsement (68%) is 2.1 times that of celebrity endorsement (32%). When making consumption decisions on technology products, the influence coefficient of the founder's professional endorsement (0.82) is 2.3 times that of celebrity endorsement.

In summary, the reason why entrepreneur endorsement can be accepted by the public, become part of the enterprise brand resources, and bring sustainable competitiveness to the enterprise is that entrepreneurs have:

Credibility, scarcity, and professionalism.

Then why did Lei Jun, with a seemingly perfect persona, attract attention because of the loss of followers?

03

Maybe we can first talk about a decision Dong Mingzhu made ten years ago.

In 2015, the domestic mobile phone industry was booming. Dong Mingzhu made a firm decision to make mobile phones and declared that "Gree can easily defeat Xiaomi in the mobile phone business".

In March, the first mobile phone was launched. When it was turned on, users could see Dong Mingzhu's photo and a greeting letter. After that, the sales of Gree mobile phones were always mediocre. No matter how Dong Mingzhu promoted them, consumers just weren't interested.

The problem actually lies in the issue of "professionalism".

The promotional photo of Dong Mingzhu for Gree mobile phones

For a long time, Gree has been deeply labeled as an "air - conditioner expert" in consumers' minds, and it's hard to change. When it suddenly started to promote mobile phones, people would question, "Can a company that makes air - conditioners make good mobile phones?"

This cognitive bias will invisibly raise the threshold of market acceptance. Some people even think Dong Mingzhu is "not focusing on her main business" when they see her making mobile phones.

The problem Lei Jun is facing now is quite similar to what Dong Mingzhu faced back then.

On the surface, Lei Jun's loss of followers is related to the collision accident of the Xiaomi SU7. But in fact, it is the public's doubt about his "professionalism".

For a long time, Lei Jun has mainly presented himself as a "amiable engineer", especially in the mobile phone field. His "technical expertise" is beyond doubt.

But when Lei Jun suddenly switched to the automotive field and wanted to be a car blogger, the public would also question:

"Can a person who makes mobile phones make good cars?"

The frequent car accidents and Lei Jun's responses have confirmed the public's doubts.

For example, the accident in Tongling, Anhui in March this year and the sudden drunk - driving collision accident in October both show that the "assisted driving system" and "battery" of the car are different from what Lei Jun promised at the product launch.

This is closely related to Xiaomi's production logic. He applied the experience of "rapid iteration and improvement while selling" from the mobile phone business to the automotive industry.

The public does like to try new things, but no one wants to be a guinea pig, especially when the product involves personal safety.

Lei Jun once advocated "being friends with users", but after the accident, he never gave a direct response.

On October 16th, Lei Jun attended the World Intelligent Connected Vehicles Conference. He didn't mention the accident that happened three days ago at all. Instead, he emphasized cracking down on online water armies and black public relations. People can't help but think that he ignored the accident itself and regarded the public's criticism of the product's safety on the Internet as black public relations.

This cold and non - responsive attitude shocked many netizens, who called his remarks extremely unreasonable. The trust capital he had accumulated over the years was shattered, and his "amiable engineer" persona was on the verge of collapse.

Lei Jun, one of the most successful Internet - famous entrepreneurs in history, doesn't seem to realize that as the "first person responsible for