The reasons behind the collapse of Band of Brothers PHP training school

Yesterday (2020.2.6), Li Chao, the founder of the offline educational institution Brothers, published a "Letter to All Brothers, Employees, and Shareholders" on his WeChat public account. Li Chao said that due to the impact of the new coronavirus epidemic, Band of Brothers’ Beijing campus will stop enrolling students from now on, all employees will be laid off, and Band of Brothers will be declared closed.

△ Source: Brothers Official Website

In addition, the Shanghai and Guangzhou campuses have been independently operated one after another and are no longer affiliated with the group headquarters. They can change their brands to carry out normal business. For Shenyang and Xi'an campus business and school cooperation business, the relevant person in charge will lead the employees to change brands according to their own circumstances, and they can choose to start their own business and be responsible for their own profits and losses.

It is reported that Band of Brothers is affiliated to Yidiyou (Beijing) Education Consulting Co., Ltd. and was established in 2006. Focusing on IT technology training, it is the earliest and largest PHP/LAMP technology professional training school in China. In 2015, Band of Brothers received a strategic investment of 125 million from Huatu; it was listed on the New Third Board in November 2016, and its listing was terminated on April 25, 2018.

The following is Li Chao’s original text:

A letter to all the students, employees and shareholders of Band of Brothers

Hello everyone!

I am Li Chao, the founder of Band of Brothers.

It’s snowing in Beijing today and it’s very cold! I am particularly sad to tell you that due to the company's cash flow problems, Band of Brothers' Beijing campus will stop recruiting students from now on, and all employees will be laid off. The Shanghai and Guangzhou campuses have been independently operated one after another and are no longer affiliated with the group headquarters. They can change their brands and conduct business normally. For Shenyang and Xi'an campus business and school cooperation business, the relevant person in charge will lead the employees to change brands according to their own circumstances, and they can choose to start their own business and be responsible for their own profits and losses.

The country is currently in the midst of a new coronavirus epidemic, among which our offline training institutions have been most affected. The government has issued a notice to postpone the opening of colleges and universities and suspend offline training services to avoid gatherings of people and resume operations. The time will be notified separately based on the situation of epidemic prevention and control work. This is undoubtedly adding insult to injury for the brothers, who have little capital reserves, heavy burdens and have been losing money. Before the holiday, we tightened our belts, slowed salary payments, mobilized all staff, and cut costs, just to turn around the peak enrollment season after the holiday. Unexpectedly, the epidemic hit so violently and unexpectedly, disrupting all our plans.

After 13 years of business, Brotherhood became the largest PHP training school in China in a short period of time after its establishment in 2007. In 2015, capital was introduced and entered a period of rapid development, with subject categories and campuses expanding rapidly. It was listed on the Third Board in November 2016, with a turnover of over 100 million. It completed the coming-of-age ceremony for the band of brothers and has trained tens of thousands of students. The teaching management is strict, the style of study is super positive, the annual salary of the students reaches one million a few years after graduation, and the scale of the entrepreneurial students' companies exceeds that of the brothers; the students cry with their teachers after graduation and are unwilling to leave; the skills learned and the high-paying jobs are open to the students A new chapter in his life, and it may also support the happiness of a family. This scene is always before my eyes, which makes me deeply feel the meaning of education and the original intention of education. This is also the reason why I have persisted until now despite encountering particularly great difficulties and hardships.

To this day, I reflect on the many problems I have in management, and I have failed to live up to the expectations of students, employees, and shareholders of me and the band of brothers. It is because I failed to lead the team well, and I am deeply sorry! I will use my best ability to arrange online learning for students during the epidemic and help our employees find suitable job opportunities. The employees of Band of Brothers are all excellent, very entrepreneurial and hardworking. We hope that excellent training institutions can give them new job opportunities.

Thanks to Huatu, Shanshui Venture Capital, and Weifang Dadi for their financial and resource support during the rapid development of Brothers. Thanks to Li Ming, Gao Luofeng, Zhang Xiaoguang, Li Jianhua, Jia Haifeng, Li Pinyou, Yan Shihong and other partners for their help to me and the band of brothers at various historical stages, and to all employees for their understanding and persistence during the company's difficult period! Without you, there would be no Band of Brothers.

Daughter-in-law, I’m sorry! You have always supported me unconditionally. In the early days of starting my business, you helped recruit students. After the company got on track, you helped me start the business with peace of mind. You were able to take care of the children at home alone. You even supported me when I pledged my house to save the company. You are also stupid. You know that I am under great pressure. You try not to disturb me. But I have sacrificed everything to get this ending, and I have to bear more than tens of millions of debts. I really have no face to face you. I will never forget you hugging me and crying in the middle of the night. I will never forget that after crying, you still said with a smile, "Hubby" come on! We are still alive, and as long as we are alive there is hope! Daughter-in-law, there is nothing better than a soul mate, I love you!

Many people lamented that their 2019 was not easy and they had to memorize words. On the contrary, I gained a lot in 2019, met a lot, and learned a lot. I am a contemporary of the reform and opening up. I am fortunate to be born in this era and catch up with China's rapid development. He came to Beijing from a small county town to start a business, and actually made some great achievements, allowing many students and employees to change their life trajectories through Band of Brothers. Band of Brothers is my biological child. My heart is bleeding when I write this letter. I will have to face the days without you alone in the future. I will give everything I have just to ask you to survive. In the face of a catastrophe, I can only watch you pass away... …

I have been an educator for more than ten years, and it is a true love, a love and reluctance from the bottom of my heart. I think education will be inseparable from the rest of my life! Winter will eventually pass and spring will come. Thank you to our colleagues who are still fighting on the front line. Let us welcome new life together after the disaster! I will then contact students, employees, and shareholders to handle the aftermath.

Finally, I would like to once again express my special thanks to my comrades in Band of Brothers for their hard work over the years. I will remember it in my heart! We are no longer blood relatives, thank you!

Li Chao said in the letter, "I have many problems in management, and I have failed to live up to the expectations of students, employees, and shareholders of me and the band of brothers." After the Beijing campus stops recruiting students, Li Chao will work with students, Employees and shareholders have contacted each other to do a good job in the aftermath, arranged for students to study online during the epidemic, and at the same time, tried their best to help employees find suitable job opportunities.

20200206夜李超

The reason behind the collapse of Brothers PHP training school:

was listed on the New Third Board after rapid expansion

Looking back on the rise and fall of Band of Brothers, Li Chao particularly recognized the company’s early development. "In the first few years, there was a sense of rebellion." After its establishment in 2007, Brothers in Arms gradually became one of the largest PHP programming language training schools in the country in just a few years.

In 2015, Band of Brothers began to embrace capital and received investments totaling tens of millions of yuan from Shanshui Venture Capital and Weifang Dadi. With the introduction of capital, Brothers has entered a period of rapid development, with rapid expansion of subject categories and campuses, and products covering multiple IT disciplines such as JAVA, PHP, H5, and UI.

In Li Chao’s eyes, the peak moment of Band of Brothers occurred in 2016.

In March 2016, Yi Diyou, the parent company of Band of Brothers, planned to list on the New Third Board. The prospectus shows that in 2014, 2015 and January-February 2016, Yidiyou’s revenue was 22.2339 million yuan, 63.5634 million yuan and 13.2801 million yuan respectively, and the net profits were -2.3417 million yuan, 1.3585 million yuan, - 1.381 million yuan, all revenue comes from the main business.

In May 2016, Band of Brothers received a total investment of 139 million yuan from CITIC Securities and Huatu Capital. Li Chao said, “At the most, Brothers and Sisters had 150 million in cash on their books.” In September of the same year, Yi Diyou was listed on the New Third Board.

△ At the signing ceremony

When Huatu Capital entered, Li Chao once summed up the three major advantages of Brothers:

First, teaching relies on It has strong curriculum development capabilities and teaching standards. Each subject is completed by lecturers, project managers and class teachers. It calls itself "New Oriental in the field of IT training";

Second, abnormal supervision, students must participate Full-time training and strict management to ensure learning results.

Third, professionalism runs throughout.

At that time, Li Chao also tried to change the charging model of IT training. The "Brotherhood" he launched implemented a free training system for students and charged fees through employment and other services.

In this period of 2016, the development of Band of Brothers is favored by many parties. Li Chao recalled, "The turnover that year was about 150 million, and it should be ranked among the top five in related fields. At that time, the entire company was particularly healthy, and the marketing ratio and team atmosphere were very good."

Betting and a series of directional mistakes

What Li Chao didn’t expect was that after the listing, Brothers made a series of mistakes in their business decisions.

Long before the listing, Li Chao and other company shareholders signed the "Supplementary Agreement to the Capital Increase Agreement" with Hangzhou Huatu, making a performance bet: If the company's net profit after deducting extraordinary gains and losses in 2016 is lower than 25 million yuan, and the company's sales cash inflow in 2016 was less than 150 million yuan, Li Chao and others agreed to pay the corresponding difference to Hangzhou Huatu based on the higher percentage of performance goals completed.

Fortunately, Band of Brothers achieved the target of net cash flow of 150 million. "I was still a little eager for quick success and quick profit. Because I was betting, I felt that there was too much money, so I wanted to spend it quickly to boost my performance." Li Chao said, "I spent a lot of money at that time, and I felt that money could do things. It's nothing."

In the process, Brothers began to make "directional errors." Originally, the company focused on word-of-mouth and community operations. According to Li Chao's recollection, the Band of Brothers forum had approximately 4 to 50 million members at that time. However, he chose to rely on funds and continued to place advertisements on Baidu.

"If you spend money on traffic, Baidu will make money if you invest in it. However, the original advantage will become smaller and smaller and will be gone in the end." Li Chao said.

In 2017, Band of Brothers spent 30 million yuan on Baidu and 20 million yuan in 2018. These do not include the cost of the team responsible for marketing. At its peak, Band of Brothers' total headcount reached approximately 750.

△ Company Development Events

Li Chao said that he had hired many "capable people" with high salaries, but Because it is only for performance, it distorts the corporate culture in disguise. "If the task is not completed, everyone will shirk responsibility from each other, and the team's vitality will become worse and worse."

In terms of teachers, Band of Brothers began to test the waters of dual-teacher teaching as early as 2014. After it went public, it completely switched to dual-teacher teaching, with only teaching assistants remaining in each regional campus. Although Li Chao realized that the dual-teacher model of Brothers was not effective at scale, it was not until the end of 2018 that Brothers stopped using the dual-teacher model and allowed each campus to have independent teachers.

Band of Brothers has been on a downward slope since its listing. From its revenue of 150 million yuan in 2016, it has dropped by tens of millions of yuan every year. "There were still hundreds of millions in 2018, but in 2019, when we ran out of money, it turned into more than 50 million in lost water."

The last straw that broke the camel's back

Until the review stage, Li Chao still believes that Band of Brothers still has a glimmer of hope in 2019.

"When I was struggling in the end, I focused more on sorting out the corporate culture, mission, vision, and values." Li Chao realized again that ensuring learning results is the lifeline of an education and training company.

In his view, the talent training model of traditional IT training institutions has aged to a certain extent: the longer the teacher's teaching experience, the more theoretical the teaching content is and out of touch with practice; at the end of the project, students' level Not up to a standard that can actually be delivered.

He believes that in order to allow students to get high salaries after employment, IT training institutions often choose to package resumes and falsify academic qualifications. However, as companies pay more and more attention to the practical skills of employees, this method is becoming more and more popular. decline. “For a while, I was super confused about how far the industry could go,” Li Chao said.

In mid-2019, Li Chao began to change the teaching model of Band of Brothers: retaining only a few original core lecturers to teach students basic IT theory; at the same time, introducing front-line technical managers to teach through the "master-apprentice system" Students can work on projects and avoid sightseeing-style learning. After a few months of training, Li Chao believes that Band of Brothers’ reputation has begun to return.

So Li Chao spent nearly half a year copying this model to the remaining fifteen campuses. At the same time, in order to stop losses, a pilot project was launched in Shanghai to encourage employees to start their own businesses, so that the campus could go from being "on the verge of bankruptcy" to "making a monthly profit". Subsequently, the Shanghai and Guangzhou campuses began to operate independently and were responsible for their own profits and losses.

Before 2020, the number of employees in Band of Brothers had dropped to nearly 130, and Li Chao's account was only a few hundred thousand yuan when he was most nervous. On the one hand, he controlled foreign debt, and on the other hand, he also tried his best to reduce costs. For example, he moved the Beijing campus with an annual rent of 4 million yuan to a new location with an annual rent of 1 million yuan.

“We mobilized our employees before the year, saying that we would get up when the peak was reached after the new year.” Li Chao recalled. According to reports, the one or two months after the Spring Festival will be the traditional peak season for IT enrollment, and the income can account for 30% of the total annual income.

However, the outbreak of the new coronavirus pneumonia before spring directly destroyed all the prospects of Band of Brothers. On the second day of the Lunar New Year, Li Chao directly explained the actual situation to the employees, "The employees have no energy."

Li Chao considers himself a "particularly optimistic person." At the end of the open letter, he said, "Having been an educator for more than ten years is a true love, a love and reluctance from the bottom of my heart...Winter will eventually pass, and spring will come. Thank you for this moment. Colleagues who are still fighting on the front line, let us welcome a new life together after the disaster!"

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