Tech giants start by disassembling systems

Chapter 75 New Chapter

5 month.

The news of Skyhawk's acquisition has been officially announced.

The acquiring party was an investment firm called Haotai Capital. They acquired 51% of Tianying's shares for approximately 300 million yuan, becoming the controlling shareholder.

Lu Weimin retained the title of CEO. However, four of the seven seats on the board of directors have been replaced.

Wu Zheng has left. Tianying's CTO and VP of Marketing also submitted their resignations a week before the acquisition was completed.

Li Hao published a long article on Hardcore Innovation Network titled "Tianying Technology Acquired: The Last Domino in the Reshuffling Period".

This article went viral in the drone industry.

The article uses a large amount of data to reconstruct the trajectory of Tianying over the past two years—

In mid-2017, Tianying was still the second-largest player in Shenzhen's consumer drone market, with annual shipments exceeding 20,000 units and a valuation approaching 800 million yuan. At that time, Lu Weimin was full of confidence and declared that he would catch up with the top tier within three years.

Then Hongyuan appeared.

The arrival of the F2 disrupted the Skyhawk's rhythm. The F3's free test flight program directly stole the market share from Skyhawk's entry-level products. The release of the F4 was a fatal blow—RTK, obstacle avoidance, and automatic flight path, these three features instantly made Skyhawk's products in the same price range seem like the previous generation.

Skyhawk tried every trick in the book.

Price war – The S1 was priced at 999 yuan, with the flight controller using the Starry Sky solution pushing costs to the limit. The result was a return rate as high as 8%, and a collapse in quality and reputation. Only 7,000 units were sold in total, with over 500 returned.

The attempt to poach Zhang Lei, a core engineer from Hongyuan, failed. Not only did they fail to recruit him, but they also exposed their shortcomings in flight control system development.

Patent War – Tianying sued Hongyuan for infringing two flight control-related patents. However, Fang Xu of Hongyuan filed a countersuit, and Tianying's patent strategy was dismantled in court.

GG Wars – Over eight million in GG fees were spent across various platforms. However, the revenue in the account couldn't even cover the GG fees.

The last resort is to develop its own flight control system. A year and a half ago, Lu Weimin announced the formation of a flight control development team, recruiting over a dozen people, saying they would develop their own flight control system within two years. However, a year and a half later, the team hasn't even produced a mass-producible flight control system. The core reason is that flight control systems cannot be developed simply by throwing money and manpower at the problem. It requires time, scenario data, and iterative experience. Hongyuan's flight control system has been running on over 50,000 consumer-grade products for three years, accumulating a massive amount of real-world flight data. Even if Tianying's team is of comparable capability, starting from scratch, it will take at least two to three years to catch up to Hongyuan's level from three years ago.

Where will Hongyuan be three years from now?

The answer is—industrial grade.

The article concludes by saying:

"The story of Tianying is a microcosm of the shake-up period in Shenzhen's drone industry. When a company lacks core technology, all it can do is wage price wars, poach talent, litigate, and undermine Google. These four tactics, used in turn, all fail. Because the core issue is never marketing, price, or the number of patents—the core issue is flight control. Flight control is written line by line with code, fine-tuned parameter by parameter on tens of thousands of units in real-world environments. These things cannot be bought with money, poached, or boasted about by Google."

"Mr. Lu Weimin of Tianying finally realized this in his final year. But it was too late. By the time he started building the flight control team, Hongyuan had already implemented obstacle avoidance and automatic flight path planning in consumer-grade products priced at 3,500 yuan. The gap wasn't narrowing—it was widening rapidly."

"As for why Haotai Capital acquired Tianying—it's probably not because they're optimistic about Tianying's future, but rather about the future of the drone industry itself. Tianying still has channel resources, brand recognition, and a research and development team that, while not fully mature, has a certain foundation. The price of 300 million is an acceptable gamble for Haotai. But whether this gamble succeeds depends on whether they can catch up on flight control technology—and that's the most difficult lesson to learn."

Su Chen read the article twice in his office.

After shutting down the computer, he leaned back in his chair and closed his eyes for a while.

He wasn't happy. The fate of Tianying wasn't something to celebrate. Lu Weimin wasn't a bad entrepreneur—he just made the wrong judgment at the wrong time. If he had invested resources in flight control R&D from the beginning instead of marketing and price wars, the outcome might have been different.

But that's just a possibility.

Because Su Chen possesses a virtual disassembly lab. This is unfair. Any competitor facing a reborn individual with a virtual disassembly lab has virtually no chance of winning.

Su Chen sometimes wonders – if he didn't have the system, could he have achieved what he has today?

The answer is most likely no. At least, it's impossible to do it that quickly. Taking a dying small factory to a valuation of 300 million in just three and a half years is inherently abnormal.

But the system is just a tool. He chose the direction himself. He chose the path of the flight control platform. He chose to pursue three parallel paths. He also chose the trade-offs at each critical juncture.

The system gave him superhuman analytical abilities and product optimization speed. But business judgment, strategic choices, and team management—those were his own.

Thinking of this, Su Chen opened his eyes.

That's enough. There's no need to think about Skyhawk anymore.

He turned on his computer and began updating the three-year strategy document.

In June, the Series B funding round was officially completed. Mingyuan Capital led the investment, raising 30 million yuan and valuing the company at 330 million yuan post-investment.

Su Chen's shareholding dropped from 71.7% to 64.5%, falling below the system's red line for the first time.

On the night he signed the document, he did a special test—he opened the virtual disassembly lab, brought up the F4's flight control module, and performed a complete parameter optimization simulation.

Everything is normal. The interface is normal, the analysis accuracy is normal, and the optimization suggestions are normal.

He then checked the quality data of the most recently manufactured batch of F4s. Every single one was of excellent quality. There was no difference from before.

The red line isn't a wall. It's a safety margin. Two and a half percentage points below that, nothing happens.

Su Chen noted this discovery in the document. Then he continued writing.

This strategic document is no longer the three lines of text it was three years ago. It has become a densely packed strategic map—

Consumer segment: F4 sales are steadily increasing, with an estimated 30,000 units for the full year of 2019. F3 production has ceased after inventory was cleared. F5 is planned for the second half of the year.

Crop Protection Level: SDK Alliance clients surpass 50. Overseas expansion to Vietnam, the fourth country. Toyota channels expanded to nine provinces. Data sharing pool continues to accumulate operational data.

Industrial-grade: The prototype has passed verification in two real-world scenarios. China Southern Power Grid's formal procurement process has commenced. A long-term cooperation agreement with AgriNusa is pending signing. Photovoltaic inspection customers have entered the testing schedule. The Series B funding will primarily be used for expanding the industrial-grade team and developing multi-scenario adaptations.

Team: 25 R&D personnel, with a target of 30 by the end of the year. Total employees exceed 500.

Financials: Series B funding of 30 million. Post-investment valuation of 330 million. Full-year revenue is projected to exceed 150 million. The company continues to generate its own revenue.

Competition: Tianying was acquired. The reshuffling of the Shenzhen drone industry is basically complete. Fewer than thirty companies remain. Hongyuan is the only company with a presence in all three sectors simultaneously.

Su Chen finished writing the last line and closed the document.

He stood up and walked to the window. June in Shenzhen was already fully summer. Outside the window, the skyline of Longhua District was dotted with lights in the night, a bit higher than it had been three years ago.

Three and a half years ago, he was reborn in this city. He only had 1.2 million yuan and a small factory on the verge of bankruptcy. At that time, only Zhou Ming and a few experienced workers were struggling to keep the factory afloat. The first product, F1, was assembled in a leaky workshop.

The company is currently valued at 330 million. It has three business lines, more than 500 employees, a 25-person R&D team, more than 50 SDK customers, four overseas markets, two industrial-grade testing customers, and an open ecosystem alliance.

But the story is not over yet.

The formal contract for the industrial-grade flight control system is expected to be finalized in the second half of this year. China Southern Power Grid Smart's procurement approval process is currently underway at the group level. The long-term agreement with AgriNusa has entered the legal stage. Testing for photovoltaic inspection customers is scheduled for the third quarter.

The successful signing of any one of these three contracts would signify that Hongyuan has officially transformed from a consumer drone company into an industrial flight control platform company.

And flight control is always the core of everything.

From day one to now. From F1 to F4. From consumer-grade to plant protection-grade to industrial-grade. From laboratories in Shenzhen to rice paddies in Chiang Mai, Thailand to palm plantations in Java, Indonesia to high-voltage power lines in Shaoguan.

A flight control system. A flight control system written line by line of code. A flight control system tuned parameter by parameter in a virtual disassembly lab. A flight control system that has undergone real flight testing on more than 50,000 products.

This is the soul of Hongyuan.

Su Chen turned off the office lights.

There's still a lot to do tomorrow. But he knows exactly what he's doing and where he's going.