San Francisco becomes the proving ground this week as Andreessen Horowitz convenes its decentralized Tech Week 2025, a global gathering of founders, funds and companies testing the limits of venture spectacle.

After last week’s extensive research note on Micron Technology based on 22 years of hiring data, we take a look at a Chinese AI-company that made a dramatic, mysterious turn this week.

Check out our report below.

Our website is looking good! Have you seen it? Check out our repository of past notes and our searchable research database at epistrophy.beehiiv.com.

As always, I’m focused on three things:
1) Technology-driven change;
2) the latest in innovation and startup trends, and;
3) stock fraud.

Companies Discussed

In This Note:

• Companies Discussed

• From AI Tutoring to Pop Toys

  • Back To School

  • Class Dismissed

  • Pop Toys vs. Pop Mart: Toy Money

  • Committed: QuantaSing Founder Peng Li

  • What Next?

• Tweet O’ The Week

• Epistrophy In The News

• 📆 of Epistrophy Events

• Availability This Week

From AI Tutoring to Pop Toys

The Curious Journey of QuantaSing Ltd.

QuantaSing Group Limited (QSG:NASDAQ) can’t decide what it is. 

With its January 25, 2023 IPO, the company sold itself as a technology-first edtech platform. It boasted $403 million in trailing revenue, and was just making a dent into a $104 billion Chinese adult education market. The prospectus promised proprietary content, AI-powered tutoring, and “intelligent study toolkits” tailored for a massive aging demographic. It noted that China already had 264 million people aged 60 or older as of 2020, a figure projected to reach 366 million by 2030. This “Silver Economy” was the opportunity QuantaSing was uniquely positioned to exploit. 

So, naturally, last week it changed the business focus to stuffed animals. 

The company announced it was dumping its AI edtech platform – 81% of revenues — and changing it’s name to “Here Group.” The tech business it took public for $1.7 billion in 2023 was sold to a secret buyer for $24.7 million (and the assumption of some undisclosed liabilities). Meanwhile the erstwhile online education company completed a merger with the tiny “Letsvan”, maker of collectible figurines named WAKUKU, ZIYULI, FUNII, FIILA and PIDOL. 

This $1.4 billion market cap* Chinese artificial intelligence-powered tech company is now hawking second-rate Labubu’s as its principal business.

*(Many data sources have the share count and, therefore, the market cap wrong. There are 168.9 million shares outstanding.)

Back To School

QuantaSing seemed to have found an angle in the market for AI-powered online education in China. Beijing’s July 2021 “Double Reduction” policy had already demolished a $100 billion tutoring industry—banning for-profit classes, blocking licenses, and cutting off foreign capital. Giants like TAL Education Group (TAL: NYSE) and New Oriental Education & Technology Group (EDU: NYSE), lost more than 90% of their market value, tens of thousands of teachers were dismissed, and companies that had sunk millions into AI classrooms and study apps were forced to rebrand as lifestyle or hobby services just to survive.

But QuantaSing told investors it had found a legal niche. Its AI-driven “self e-learning” programs, aimed at older adults, were pitched as outside the reach of regulators, a promising carve-out in a banned sector. Despite its heavy investments in AI-driven classrooms and digital study platforms, QuantaSing said it was different, and that its focus on “non-academic… lifestyle services” for the elderly would make it immune from state actions. 

On paper, the scale was impressive—120 million “registered users” by 2024—but paying learners never topped a million. Most of that user base amounted to little more than click-throughs, and in practice the learning business began to fade shortly after the IPO.

Class Dismissed

With its tech-enabled e-learning falling apart at the seams, the veered into the toy business, acquiring of Shenzhen Yiqi Culture Co., Ltd. (aka Letsvan or “Pop Toys”), then led by CEO Huiyu Zhan. 

It’s a wholesale transformation. 

QuantaSing is making a complete exit from the business that they public. For about $33 million, QuantaSing bought a 61% stake in Letsvan on March 31, 2025, and the remaining 39% for 18.2 M shares of QuantaSing stock (worth an astounding $160 million) on July 31. The total Pop Toys purchase price of: $193 million.

Letsvan is a tiny business. In the June quarter, the “Pop Toy Business” reported revenues of $9.2 million. The unibrowed “WAKUKU”, the flagship "intellectual property”, contributed $6.0 million (65% of the Pop Toys), “ZIYULI” $2.5 million (27%) and the others (“FUNII", "FIILA" and "PIDOL") $730,000  (8%). Unlike the coveted Labubu’s, none of the Pop Toy’s appear to be in high demand and are available on Amazon (AMZN: NASDAQ) and eBay (EBAY: NASDAQ) at retail prices — or even on sale.

Letsvan has no meaningful retail footprint of its own, selling instead through a hodgepodge of online and retail sales. Searches of Chinese websites and social media show a few single-day pop-ups with Minso Land and scattered distribution channels. 

Disturbingly, this segment – the company’s new focus – had just 35% margins, a fraction of the e-learning businesses’ ~80% margins. Guidance is for just $10.5 million in toy sales next quarter (coinciding with Chinese National Day, Oct. 1) and $40 million for the full year.

It was founded in 2020 by Zhan Huiyu, now 41, who says he’s been an obsessive doll collector since childhood. He reminisces about a boyhood where dolls were his only companions, saying his parents were too busy to spend time with him. A glowing August 2025 profile in Demeng Toy said “He would arrange formations for them, invent plots for them, and make them ‘fight’ and ‘fall in love.’”  

Huiyu launched Shenzhen Yiqi Culture in 2020 with a flood of over 800 new trendy toy companies emerging in China, with new brands like 52TOYS and ToyCity, and companies like Miniso and Youku also expanding into other sectors. 

Shenzhen Yiqi Culture struggled. Huiyu blew through $2 million in venture funding and was forced to pivot into contract toy design for banks and other corporations using dolls for promotions. Huiyu said he developed stress-related obesity and “fatty liver disease” due to stress, anxiety and late nights

Our research shows that the struggles of that era led to a number of court cases with Chinese business partners. On the “judicial cases” tabs at Qichacha, Qixin, and Tianyancha, there are multiple case entries against the company, typically tagged as sales-contract disputes, supply-contract disputes or distribution-contract disputes. 

Court-notice tabs on the same registries show “court announcements” and “hearing notices” for Shenzhen district courts, which confirm active cases and, in some instances, that the court had to serve documents by public notice when direct service failed. The “enforcement” tabs list judgment debtor records, meaning the company has already faced post-judgment enforcement, and some dashboards also show minor equity-freeze entries. (The full documents are hosted on China Judgments Online and local court portals, which the registry dashboards link to; accessing the text generally requires a login.)

Pop Toys vs. Pop Mart: Toy Money

Comparisons between Letsvan’s Pop Toys and Pop Mart’s Labubu are farcical. 

Letsvan claims 15 toy IPs, 11 proprietary, two exclusive licensed, two non-exclusive (one wonders if the all-important $9.5 million in WAKUKU sales are a non-exclusive license). QuantaSing describes an “omni-channel strategy” for dolls, with online sales, offline promotions and international ambitions. Letsvan’s total physical retail footprint in China at under 80 active store-within-store outlets as of July 2025. 

Five years since its launch, Letsvan is a toy studio hustling for shelf space.

Pop Mart (9992: HKEX), meanwhile, is a global machine. Founded in Beijing in 2010, the company operates 521 stores worldwide and another 2,472 robotic kiosks. New stores have been announced for downtown San Francisco and New York’s Times Square. In 2024 it reported $1.8 billion in revenue and $460 million in net profit. It is the undeniable fad of summer 2025, with celebrities like Lisa and Rihanna clipping the weird ugly little dolls to their designer purses and posting pictures on social media. This is a breakout year for the company and we expect it to post $4.65 billion in revenue and $1.35 billion in net profit.

In its second decade in business, Pop Mart has the channels, scale and margins of a category owner. Pop Toys does not.

Committed: QuantaSing Founder Peng Li

Peng Li, 43, built QuantaSing on failure. He spent five years at Baidu (BIDU: NASDAQ) and a brief stint at UCWeb before co-founding a Groupon knockoff called “Qianpin” in 2011. Flush with hundreds of millions of RMB. By 2013 half the staff was gone, a pivot had failed, and the site today is a shell. His next project, Beijing Renjuren, ran a low-end jobs app, Dianzhang Zhipin. It remains online, but in 2020 China’s Ministry of Industry and Information Technology reportedly blacklisted it for illegal data collection. Two ventures, two failures—one dead, one disgraced. This is the foundation on which QuantaSing was built – not toys.

In the Silver Economy, however, Peng Li found commitment. But over time, his commitment to his business model-of-the-moment reads comically. Among his 8-K greatest hits:

• December 13, 2023 Peng Li: committed to adult learning.
  “Our commitment to adult learning services and significant growth in our personal interest courses drove another strong quarter, with our revenue and adjusted net income hitting new highs.”
  

• August 28, 2024: committed to adult learning AND vitamins:
  “By leveraging our expertise in adult learning and expanding into wellness products and experiential learning, we’re creating a comprehensive ecosystem that addresses the holistic needs of China’s growing silver demographic. Our wellness products business has demonstrated significant quarter-over-quarter growth, reflecting strong early traction and validating our approach.”
  

• Sept. 17, 2025: committed to toys:
  “The addition of our pop toy business validates our product-driven approach and positions us well in a high-growth pop toy market. We are accelerating the development of our IP matrix and executing our omni-channel strategy”

The only consistent commitment is “commitment.” What the company is committed to keeps changing.

What Next?

For QuantaSing novelty is the business model. Investors are sold a new dream each year, each pivot wrapped in earnest language about commitment and long-term value. The IPO story was AI-driven technology. The next story was wellness. The latest story is low margin toys.

What happens next is predictable. We expect sales of second-rate Labubus will not scale. Nine million dollars in toy revenue is not enough to offset hundreds of millions in vanished education revenue. 

This week the company also announced a rebrand to “Here Group, Ltd.” Might we suggest “Where Group”?

Or, perhaps “There Is No There There Group”?

QuantaSing is a moving target.

Tweet O’ The Week

Epistrophy In The News

We did a whirlwind New York City media tour on Monday, meeting with a bunch of producers, editors, bookers writers and yes, putting on some makeup and going on TV!

On Schwab Network, I explained how Micron’s (MU: NASDAQ) hiring patterns show preparation for a long AI cycle, and why investors will soon look “beyond chips” after Nvidia’s (NVDA: NASDAQ) dominance.

One two segments appearances on Yahoo! Finance tackled the question of whether today’s AI boom carries echoes of the dot-com crash, and followed trending names from Oklo (OKLO: NYSE) and Alibaba (BABA: NYSE) to Trump’s coal subsidy link.

Finally, I joined a fun Stocks in Translation podcast with Jarel Bilkre and Allie Canal and to consider what lies beyond Nvidia—and how to spot the next AI breakout.

On NewsNation, (sorry no clip) Connell McShane cut through the noise around the Electronic Arts deal and its Saudi-led takeover, the biggest private equity buyout ever… so far!

📆 of Epistrophy Events

Availability This Week

I’I’m in San Francisco for Tech Week, where a16z has turned the city into a test bed for decentralized conference-making. I’ll be meeting with see founders, investors and technologists all week long. But I’m around! Reach out!

As always: Written reports are available to clients, with video summaries on YouTube, and of course our popular summaries of the summaries on Instagram, TikTok, and YouTube Shorts.