This article is the 843rd original work of Deep Dive Atom

Zhihu lacks strategic thinking and has narrowed its path

Yang Xiaoxian | Author

Edited by Deep Dive Atom Studio

Although both are known for their communities and emphasize community atmosphere and content tone, contrary to Xiaohongshu's rising popularity, Zhihu seems to be increasingly losing its imagination.

On August 23, 2024, Zhihu released its financial results for the second quarter of 2024. The financial report showed that Zhihu generated revenue of 934 million yuan during the reporting period, down 10.54% from 1.044 billion yuan in the same period last year, and a net loss of 80.6 million yuan, narrowed by 71.1% year-on-year. After adjustment, the net loss was 44.6 million yuan, narrowed by 79.9% year-on-year, setting a record for the largest reduction in losses and the lowest net loss in a single quarter since its listing, far exceeding market expectations.

In terms of revenue composition, marketing services generated 344 million yuan, down 16.71% from 413 million yuan in the same period last year; paid membership revenue was 433 million yuan, down 3.56% from 449 million yuan in the same period last year; and vocational training revenue was 134 million yuan, down 7.59% from 145 million yuan in the same period last year.

The financial report showed that Zhihu's operating costs and expenses decreased by more than 16% in the second quarter. Among them, R&D costs decreased by 11.4% to 209 million yuan (US$29 million), which Zhihu attributed to more efficient technology innovation spending.

Simply put, despite declining revenue indicators across the board, Zhihu's losses have narrowed. Although earnings have decreased, so have investments and expenses, leading to narrower losses - but the overall trend is still downward.

Since its launch in January 2011, Zhihu has been around for 13 years. Instead of being in its prime, it seems to be narrowing its path and looking increasingly outdated. Is this really due to the mismatch between its positioning as a "knowledgeable" platform and commercialization, as many media outlets and commentators have suggested? Or is it the result of repeatedly missing out on industry trends?

It's not that the community lacks imagination, it's that Zhihu has narrowed its path

When it comes to Zhihu, especially its stagnation, it's easy to draw parallels with Tianya, the "ancient beast" of the internet. Tianya once gathered some of China's most talented content creators and developed its unique style and tone, but unlike the myth that internet traffic equals everything, it eventually declined.

Unlike Tianya and Zhihu, Xiaohongshu, as a rising star, has maintained its strong momentum. Recently, it has even explored its unique path in e-commerce and commercialization. So, it's not that the community model doesn't work, nor is adhering to a community tone necessarily incompatible with commercialization.

In conversations with Deep Dive Atom, many netizens use Xiaohongshu as a search tool, believing that it contains many practical guides. Some even prefer images and text to videos, as they can quickly and easily absorb information - videos require watching the entire content to extract information, while image and text tips can be scanned at a glance to grasp the core elements.

Therefore, Deep Dive Atom does not believe that Zhihu missed the short video trend. Instead, the essence of a community-based product lies in creating stars and dreams. Today, it's still difficult to associate Zhihu with any significant "internet celebrity," and its perception remains as a question-and-answer platform that attempts to give pretentious answers to questions. Preambles like "Thank you for the invitation, I'm in the US and just got off the plane" have become ironic internet memes implying "I'm trying to impress you, the following content is all made up, please praise me." Zhihu cannot absolve itself of responsibility for this.

While Xiaohongshu's content may also contain elements of social pretension, such as the once-criticized "social elite" and "elite group-buying" phenomena, this kind of pretension represents a desire and celebration of a better life. One can argue that it's filtered and staged, but it cannot be denied as unbeautiful. In fact, one could say that everyone has a Xiaohongshu inside them, as it easily resonates with people. This is highly consistent with the logic of consumerism - cosmetics may not fundamentally make people more beautiful or change their physical appearance, but they bring irreplaceable emotional value.

When social media emerged, product managers and marketers touted "native advertising" and "native content." Xiaohongshu best embodies this concept. In contrast, whenever a Zhihu user wants to express something, they must go through a pretentious build-up. Behind this air of sophistication lies an arrogant and unpleasant "fatherly" demeanor, a personal showcase of skills after much contemplation, making it difficult for others to feel close.

Therefore, the community model is not a constraint on internet products. Take Xiaohongshu as an example - it started as an e-commerce platform but thrived as a community. In the heyday of e-commerce startups, almost all commentators and investors emphasized the importance of verticalization to stand out in a market dominated by giants. However, Xiaohongshu transitioned from a vertical overseas shopping platform to a community and carved out a unique path. The crux of the matter is not the community model or verticalization but whether it can provide tangible value to users.

Labeling Zhihu as "intellectual" is a gross misunderstanding of the term. While there may be various definitions of an "intellectual," it certainly isn't limited to those who can read and write. Some attribute this label to Zhihu due to its often esoteric and professional content, far removed from everyday life. Zhihu's sharing and discussions have always been distant from scientific inquiry and too close to the mentality of small-town test-takers - as if self-gratification and self-realization can only be achieved by negating others and highlighting one's own answers.

Zhihu has also ventured into knowledge-based paid services, following in the footsteps of platforms like "Dedao." However, the underlying logic and code of these two platforms are fundamentally different. Dedao, rooted in Luogic Thinking, has consistently focused on serving users by simplifying complex content and empowering them with a sense of satisfaction and confidence. In contrast, Zhihu users who consider themselves knowledge producers are unlikely to easily pay for courses created by others on the same platform - why should they? Moreover, compared to Zhihu, Dedao is a smaller, more elegant company, while Zhihu requires greater revenue and scale to sustain its grand narrative and imagination.

In the light of Xiaohongshu and Dedao, Zhihu's lack of strategic thinking and narrow focus become even more apparent.

Vocational education remains lukewarm - where is the way forward?

For a long time, Zhihu has been searching for and answering what its second growth curve should be. Its answer: vocational education. This seems like a promising path that aligns with policy goals and the desire of many to enhance their professional skills. However, as mentioned earlier, Dedao, a pioneer in knowledge-based paid services, has gradually faded from view. The concept of knowledge-based payments faces many uncertainties regarding its commercial potential.

Zhihu defines the cornerstones of its vocational education as "books, courses, and training camps." Logically, Zhihu's user base aligns well with the target audience for vocational education, and it appears to have the educational capabilities. With successful cases like Fenbi, a competitor in the civil service exam preparation market, this path seems natural. However, in random interviews conducted by Deep Dive Atom, many users were not aware of Zhihu's foray into vocational education, perceiving it primarily as a Q&A community and proactive search engine.

Books, courses, and training camps, these specialties of the Zhihu community, are more suited to users outside of Zhihu. Self-production and self-marketing are more of a business hypothesis. However, even in a short span, the growth of once-leading players like Offcn Education, a civil service exam preparation provider, has stagnated. The crux of vocational education lies in providing practical applications and positive feedback after learning, but the reality is quite the opposite, with stagnation setting in.

The original code of Zhihu's community atmosphere was idle chatter - a showcase for those who were financially secure to display and flaunt their excess intelligence. Suddenly shifting vocational education into a professional discussion forum on Zhihu feels somewhat abrupt. Despite various communications emphasizing Zhihu's position as a leading player in vocational education, this is more of a marketing effort to educate its audience.

Within Zhihu's education matrix, each niche area is highly competitive, with experienced players vying for dominance. With limited brand recognition, Zhihu's unilateral declaration of being a leader carries a hint of arrogance.

Although Zhihu focuses on vocational education, seemingly avoiding regulatory risks, market responses indicate that consumers are most willing to pay for quality education and subject-related programs. While online education has cooled, educational hardware is booming, serving as testament to this trend. Therefore, the core of commercialization lies in catering to demand rather than unilaterally creating it.

On March 20 of this year, Zhihu held the "2024 Zhihu Discovery Conference" in Beijing, introducing new products and initiatives across multiple business lines, including community building, AI applications, marketing services, and paid reading. Zhang Ning, Zhihu's COO, Senior Vice President, and Head of Community Business, stated at the conference, "Zhihu needs to rely on the wisdom and strength of more community users." However, in Deep Dive Atom's view, Zhihu's primary challenge is to enable influential key opinion leaders (KOLs) to earn money while also generating revenue for itself. Similar to how Weibo monetizes KOLs, Zhihu must urgently explore a profitable business model. Focusing solely on vocational education may not sufficiently incentivize KOLs.

Zhihu should be aware of the impending crisis, as the time for its potential downfall may not be far off. Companies that cannot articulate a clear path to commercialization are unlikely to survive in the long run.