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| Lei Jun |
At a Glance
- Age: 43
- Source of Wealth: smartphones, self-made
- Country of Citizenship: China
- Education: Bachelor of Science in Engineering, Wuhan University
- Net Worth: $1.75 billion (2013 March)
- source: www.forbes.com
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If you’re
familiar with the Chinese tech scene, chances are you are also familiar with
serial entrepreneur Lei Jun (pictured above). Recently, I had a chance to speak
to him to learn more about his story as an entrepreneur, and about his latest
venture, the disruptive phone-makerXiaomi.
His
journey goes back to 1992 when he joined software maker Kingsoft after
graduating from Wuhan University. Kingsoft back then had just five or six
people, but today the company has more than 3,000 employees. The company IPO’d
in Hong Kong in 2007. While working at Kingsoft (HKG:3888), Lei Jun ran the
site Joyo.com as a side project. Joyo started as a downloads website but later
it became an online bookstore. Success followed, and Amazon subsequently
acquired Joyo for a whopping $75 million in 2004 – now it’s today’s Amazon
China, at Amazon.cn.
After
Kingsoft went public, Lei Jun jumped full-time into angel investing which saw
him invest in over 20 startups, including browser maker UCWeb, clothing e-tailer Vancl,
and payments service Lakala. All of his investments targeted companies in the
mobile internet space. Lei Jun says that from 2007 to 2010, he has overseen
over 70 funding rounds among his portfolio companies. And through his angel
investing experience, Lei Jun became familiar with many local and international
investors which he says have helped greatly in what would be his next venture –
Xiaomi. He tells me:
We got
to know a lot of investors and know what they like and don’t like. Through many
co-investments opportunities, we have built trust among these investors. So
when it came to investing in Xiaomi, things were a lot easier.
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| Lei Jun at Office |
The
birth of Xiaomi
Through
his experience as an angel investor, Lei Jun firmly believes the mobile
internet would be the next wave. And he believed in the importance of creating
a channel, through hardware, in the mobile internet industry in China. “A phone
as a channel,” he emphasizes. That idea gave birth to Xiaomi on April 6, 201
Xiaomi was inspired by Apple, and Lei Jun pays great credit to Steve Jobs who
he believes has shaped how the world uses phones and the mobile internet. Lei
Jun saw the opportunity to create a smartphone tailored for China, a hardware
company which can ride on the mobile internet wave. Lei Jun tells me that
Xiaomi is built on three building blocks:
1. E-commerce
2. The openness of the Android platform and
Xiaomi’s own MIUI skin
3. Xiaomi’s fans
Regarding
e-commerce, Lei Jun said Xiaomi could sell phones online without having
physical stores, and that greatly reduces costs. The saved resources can be put
into making better quality phones. Before Xiaomi launched the first-gen M1
phone, the attractive and versatile MIUI, an Android ROM, had already been
in the works for a year and was already used by lots of keen Android tweakers
who flashed it onto their phones. Lei Jun says that MIUI gained the recognition
of Android fans across the world. Every Friday, there will be a new MIUI update
to keep the Android ROM updated and fresh.
In the
near future, Xiaomi aims to operate in different mobile operating systems,
which may include Windows Phone,” said Lei Jun. But that won’t come too soon,
he noted.
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| Lei Jun at Work |
Feedback
from fans about their perfect phone
Fans play
a huge part in Xiaomi’s success. What Xiaomi has become today is largely due to
fans’ feedback. For example, to test the upcoming Mi2 phone, Xiaomi invited
over 1,200 fans to provide feedback which the company could then learn from.
For example, some users of the first-gen phone, the Xiaomi M1, didn’t know that
the SIM card has to be pushed into the slot until a “click” sound is heard. In
its revamped Mi1S unveiled this summer as a cheaper alternative to the new Mi2,
Xiaomi has added in instructions to inform users that the SIM has to be pushed
in. Lei Jun says of the company’s enthusiastic fans:
Most
of the fans have ideas about their perfect phone. But many of them can’t do it
because building a phone is tough. So they would give us feedback about the
features that they think should be included in our next model. And if we
incorporated that in our new phone, they will share the good news with their
friends.
Besides
providing feedback voluntarily, Xiaomi fans also serve as an echo chamber for
the phone-maker. Lei Jun says that word of mouth marketing is perhaps one of
the company’s best promotional channels. He describes Xiaomi users as people
who are usually banded in a group. If one person starts using a Xiaomi phone,
his or her friends would most likely start using it too. And in that way, the
word spreads. Fans’ enthusiasm over Xiaomi was apparent when we attended the
recent Xiaomi Mi2 launch event in Beijing. Fans paid to be there (the ticket
revenue was donated to charity) and wore orange to show that they are fans of
Xiaomi.
No IPO
for at least 5 years
Xiaomi
has so far sold 3.52 million units of its outgoing M1 smartphone and aims to
sell over 5 million total units by the end of this year with the Mi2 soon
available – a bit later this month – in the market. Lei Jun says that his
company has already hit more than $1 billion in revenue and is expected to hit
$2 billion by the end of 2012. He also claims that Xiaomi is perhaps the
fastest company to hit $1 billion in revenue in just a year of full operations.
Xiaomi is
already a profitable company and is looking to expand to Taiwan and Hong Kong
in the near future. When asked about markets outside of Greater China, Lei
explains:
We’re
not thinking about other markets like India or Indonesia, yet. We want to stay
focused on the Chinese market first before expanding.
Lei Jun
has also communicated to all his investors that Xiaomi has no plans to IPO
within the first five years of operation. He explained that the focus right now
should be on building a world-class phone and business model around Xiaomi, and
not worry about the exit just yet. Plus, the recent Facebook IPO has shown the
negative side of being a public company. Figures and statistics have to be
revealed to investors and the public, which he believes will distract from the
company’s focus on building a great product.
Will
Xiaomi expand into tablets? The answer is “No,” says Lei. He feels that the
tablet is a very competitive market already thanks to Apple’s iPad. He
pointed to the recent iPhone 5 launch event whereby Apple’s CEO Tim Cook
revealed that the iPad has cornered 68 percent of the tablet market share, with
91 percent of all tablet web traffic coming from the iPad.
When
asked about Xiaomni’s greatest barrier, he explains that integrating software
and hardware with a beautifully crafted mobile phone design is always the
greatest challenge. To overcome that, Xiaomi’s core team members include people
who previously worked at Motorola, Google, Microsoft, and Kingsoft. Plus, the
team also has the network of contacts to attract more quality talent moving
forward.
To date,
Xiaomi has raised $347 million in total funds – the series C of $216
million was revealed this June – and the company is already profitable.
But Lei Jun insists that Xiaomi still has a long way to go before it can become
a world class product which can compete on the world stage. Things are looking
great for Xiaomi and most people in the Chinese tech industry will agree that
its selling-like-hot-cakes phone and mobile platform is a force to be reckoned
with
Source: http://www.techinasia.com/lei-jun-xiaomi-story-interview/
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