An IPO Is Not About Following the Crowd: A Six-Year Head Start and the Value of Differentiation

The 2017 shareholder letter again begins with a consistent emphasis on customers. They are never satisfied: today's “wow” soon becomes tomorrow's routine, forcing continual improvement. So focus on customers rather than competitors. Speaking of focusing on customers rather than competitors, seeing someone thrive and then trying to follow and copy the same approach is actually difficult too. Recently, I have received several inquiries about Xiaoshu Pharmacy's operations and IPO process. Many people see its post-IPO performance and want to follow. But Xiaoshu became a public issuer in late ROC year 103 (2014) and listed on the OTC market in March ROC year 105 (2016). It already has a six-year head start since listing, and preparing for an IPO takes another two to three years. If you are only now thinking of following because it looks successful, consider the time required and the gap. Bezos says to focus on customers rather than competitors. My point is this: think carefully about trying to overtake others on the same track or rushing in because they are doing well. Rather than trying to be better, create different value.