Millet mobile phone development direction is not clear Lei Jun said that within 3 to 5 years will not be profitable

37 hours of sold 400,000 units of Xiaomi mobile phone; the product was listed on the Morgan Stanley's ninth-largest mobile phone brand and the largest domestic brand in only one week of listing; it is expected that the sales volume in 2012 will reach 5 billion yuan. With gratifying achievements, Lei Jun, the founder of Xiaomi Technology, said in an exclusive interview with this reporter that in the next 3 to 5 years, Xiaomi is most concerned about the user and user experience and is not concerned about profitability.

Entrepreneurial origin

It is not too late to start a business at the age of 40

Reporter: You and Qiu Bojun founded Jinshan. Jinshan was listed in 2007. You later founded Joyo.com and sold it to Amazon in 2004. In recent years, you have invested more than a dozen companies and you have made a lot of money. Why are you still thinking about starting a business?

Lei Jun: To be honest, when I proposed to start a business, many people were puzzled, including my most important partner, Lin Bin, the president of Xiaomi. When I said that I wanted to start business with him, he was surprised and said, "You have everything, why do you want to start a business?"

When I was 18 years old, I read a book called "Fire in Silicon Valley." At that time, I dreamed that one day I would be able to do a world-class enterprise like Steve Jobs. When I was 40 years old, I sold a company, listed a company and invested more than a dozen companies. It seems that all goals in life have been achieved, but I told you that after doing this, I became even more confused.

I was asking myself if I still have the courage to start a new business. Can I still tirelessly move forward for 6 x 12 hours? The answer after thinking is that the ideal of 18 years old still exists today. At the age of 40, the second innovation, it is not too late to start again. I firmly believe that people are great because of their dreams.

Reporter: There are risks in starting a business. Have you considered the risk of failure?

Lei Jun: From 1995 to today, I used 670 mobile phones. After using so many mobile phones, I was thinking, what kind of mobile phone do I want? Can you make a cell phone that belongs to an enthusiast? Especially after doing the mobile Internet, more and more people feel that this is the trend of the future. The mobile Internet is the product of hardware and software integration experience. I had a dream and wanted to make a mobile phone for fans.

I have confidence in the prospect of mobile Internet. And I think that using the Internet as a mobile phone is absolutely subversive. However, innovation is about doing things that others have not done. 99% of these things will fail, so I am quite embarrassed.

Entrepreneurship and cooperation

Don’t want millet to become “self-employed”

Reporter: The original 56 employees of Xiaomi invested a total of 11 million yuan. You are fully capable of investing in the full amount of your own money first, and then fighting for financing. Why?

Lei Jun: It's very simple. I don't want Xiaomi to be a company with one person in mine and become a “self-employed”, and my colleagues are willing to invest. In fact, when these colleagues expressed that they wanted to invest together, I was under great pressure. I want to start a business. I must be saving money myself. It is my own thing to lose. If so many colleagues lose money together, it will be very sad.

However, from another point of view, the entire company invests money together. Everyone has a sense of ownership and enthusiasm. Some of our earliest employees had a girl who graduated from graduate school. At first I thought she might not have much savings. But she sold all of her family's stock and sent an e-mail to her colleagues saying that she had taken out her dowry money and she had been married to Xiaomi.

Reporter: You said that now Xiaomi's suppliers and foundries are world-class and serve Apple, Hewlett-Packard, etc. How did Xiaomi get their trust?

Lei Jun: In today's market conditions, no one vendor can make a good product out of the supplier. We have chosen a first-rate supplier, Qualcomm's CPU, and Sharp's display in Japan.

A high-end smart phone has nearly 900 components. Many important components are customized. Suppliers need to invest funds to develop with us. As a result, their requirements for buyers are naturally higher. When we talked to these suppliers, we hit a wall. A U.S. supplier allows us to provide financial reports for three years, and another company asks if you previously made mobile phones. In the face of these problems, my answer cannot be separated from "nothing." But we did not give up, and once we could not, we explained to them patiently twice or three times, including the risk of nuclear radiation becoming the first customer to visit Sharp after the earthquake, or asking people who are familiar with these suppliers to bring a message. Finally finally achieved their trust.

Entrepreneurship and productivity

Production capacity needs to be blended, not hunger marketing

Reporter: What is your biggest concern during the development of Xiaomi?

Lei Jun: I work six days a week, including five days in Xiaomi. I participated in the whole process of research and development. I have to log in to the Xiaomi Forum and my Weibo every day. There are many netizens and even “rice flour” messages. I’m particularly concerned about these opinions. Some good opinions, I will discuss with my colleagues to deal with.

Reporter: Do you think Xiaomi is now in what position in the mobile phone industry?

Lei Jun: Just one week after Xiaomi’s mobile phone was sold, Morgan Stanley released a report that Xiaomi is the ninth mobile phone brand in the Chinese market and ranks first among all domestic mobile phones. Let's look at the Baidu Index. When Xiaomi was just released, the Baidu Index was 360,000, and when the iPhone 4S was released, the Baidu Index was 550,000, which meant that the heat released by Xiaomi reached two-thirds of the iPhone 4S's heat. Countless iron facts tell us that Xiaomi’s mobile phone brand is already at the forefront of domestic mobile phones.

Reporter: Since Xiaomi’s mobile phone has been in short supply since its release, many netizens said Xiaomi is engaged in hunger marketing.

Lei Jun: Production needs a running-in process. This is the first time we have been making mobile phones. The first 100,000 mobile phones need a running-in process. On the one hand, production is limited by production capacity, and on the other, it is related to sales forecasts. We now have to specify the components after three months. Can anyone tell me how much the millet phone will sell after three months? The market is unpredictable, and predictions are really difficult, and purchasing components can take up a lot of money. However, as production continues to run and we are also looking for new foundries, production capacity will surely increase gradually.

Entrepreneurial profit

Millet phone does not rely on hardware profit

Reporter: Xiaomi's mobile phone is priced at RMB 1,999. I think the smartphones with similar performance in the market are basically worth more than 3,000 yuan. How high is the cost of Xiaomi in the end?

Lei Jun: Xiaomi's mobile phone is a dual-core 1.5G, 1G memory, 1930 mAh battery, 4-inch screen, 8-megapixel camera. My colleagues commented that this is the fighter in the mobile phone, so we codenamed MiG machine.

Compared with the smartphones launched by HTC, MOTO, LG, etc., we use the same suppliers, the same assembly plants, and the same tests, and their licensed mobile phones are not less than 3,000 yuan. The cost of Xiaomi’s mobile phone is a trade secret and it is not convenient to disclose it. But in fact, the price is very great for Xiaomi, because 1999 yuan includes tariffs, value-added taxes, educational surcharges, etc. There are also patent fees, so the completion of such a price is tantamount to a "jumping cliff."

Reporter: Do you mean that millet phone does not make much money on the hardware, then what profit Xiaomi rely on?

Lei Jun: Frankly speaking, I still have no way to answer you this question. Just like ten years ago, you forced Tencent’s founder Ma Huateng with a gun, and he could not tell what profit QQ can rely on. The rise of Baidu and Tencent has fully demonstrated this principle. Users are king. As long as they have users, they are not profitable.

We set up Xiaomi to create a high-performance smartphone for mobile phone enthusiasts. This group of people are opinion leaders. The opinions of one person can affect his family, friends, and colleagues, so don't underestimate the power of this group of people. Therefore, when Xiaomi made mobile phones, the first innovation was to absorb the participation of these people in the development of our MIUI mobile operating system and release a new version every week. Followed by the use of e-commerce platform to remove the burden of the traditional channels to ensure the cost-effective millet phone.

Xiaomi’s real subversion is not relying on hardware to make money. As an internet company, we are more concerned with user word-of-mouth. We hope that good user word-of-mouth can bring benefits to us.

Reporter: Risk investment institutions all hope to get an early return, so how do you account to investors?

Lei Jun: Before they invested, I clearly told them that within 3 to 5 years, I would not think of a return. Otherwise, don't vote for millet.

Reporter: Would you please tell us about the future development of millet mobile phones?

Lei Jun: We have not changed our positioning, and continue to introduce high-performance smart phones for users, but the price is not good, may be higher than 1999 yuan, it may be low. I do not want Xiaomi to launch new products frequently. It is better to launch a mobile phone in a year. However, to achieve this, it needs full confidence and strength.

Newspaper reporter Dong Changqing / text with Jia Jun / photo <br> <br> Lei Jun history

Born in 1969. During his junior year at Wuhan University, he helped develop software to become a young millionaire. He joined Kingsoft in 1992 and became the most important partner for Qiu Bojun. He became the CEO of Kingsoft Software in 1998 and stepped down in 2007. Since then, he has invested in a number of companies such as Vanke Eslite, Multi-play, and Best Vision Technology. In April 2010, Xiaomi Technology was established as chairman and CEO.