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Written by / Zhang Linyu

edit / Huang Da Road

design / Ju Jia

Lei Jun entered the automotive industry and faced a lot of challenges, especially in terms of R&D.SU7Questions about the originality of the exterior design.

The same doubts appeared more than ten years ago when he founded Xiaomi. Xiaomi was founded in April 2010 and its first mobile phone was released on August 16, 2011.

In 2014, he gave an interview.

The reporter asked: Many people believe that mobile phones are very complicated and require many years of accumulation, but Xiaomi seems like a myth in R&D.

Lei Jun replied: "I think the accumulation of technology lies mainly in people. The eight founders of Xiaomi (including Lei Jun himself) all have technical backgrounds, with an average age of 43 and an average of 20 years of work experience. Five of the eight have worked and lived abroad and in multinational companies for more than 15 years. It is very rare to see a company's executives all have technical backgrounds, and all have 20 years of experience, and most of them have returned from abroad. Do you think this company has no technology?"

"If you start as a salesperson and become a CEO, you have skills. But if eight people work for 20 years and then have no skills, I think that's ridiculous. Zhou Guangping, our mobile phone hardware R&D partner, is 58 years old this year. He graduated with a doctorate from the United States. He worked on the first generation of digital mobile phones at Motorola in 1995. In 1999, he returned to China and led the establishment of Motorola's R&D center. He has decades of experience, right?"

"In addition, our team has 100 to 200 people from Motorola, and all the best teams in Motorola China are here. All the leaders of this group are over 40 years old. I think everyone seriously underestimates our accumulation of technology."

Another issue is regarding patents.

Reporter: What do you think of patents?

Lei Jun replied: "I think patents are another more complicated issue. Patents are innovations and core technologies in the eyes of ordinary consumers. In fact, the United States is also reflecting on the abuse of patents. Today, a large number of patents are digging pits. Whoever can dig the pit will fall into the pit."

"In the era of smartphones, we are indeed new. We are a developing country, and these developed countries have dug 400,000 holes, all holes. There are not many truly valuable innovations, so ordinary consumers may not know much about this."

"Just like when Apple made the iPhone, it was sued by all the giants. Nokia's settlement was also astronomical. This is the rule of the game. Patents are indeed a good thing, but they are currently being abused. For experts in our industry, patents cannot be simply equated with technology. Many patents are used to enter the market first and use the patent rules to dig some inexplicable traps."

“So in fact, today the Western world is already reflecting on the role of patents in hindering technological innovation… Patents are a way for developed countries or established companies to deal with emerging countries and emerging innovative companies.”

Ten years later, Lei Jun once again faced exactly the same doubts from the industry when he was building a car.

This time, Lei Jun responded differently. He indirectly answered this question in his 2024 annual speech.

He said: "As a newcomer, Xiaomi's success is to be able to get on the table smoothly. When Xiaomi builds cars, it must respect the rules of the industry, stick to the right path first, then innovate, and not blindly pursue subversion. This is a collective decision made by more than a dozen executives after a 21-day meeting."

Start-up continues

"Based on Lei Jun's personality, I think his decision to build a car this time was the result of years of careful consideration, and it was not based on the reason given in his annual speech," a person in the technology industry who is familiar with Lei Jun told Automotive Business Review.

What kind of personality does Lei Jun have?

"In any occasion, he always speaks just right, being modest yet passionate, leaving room for maneuver and sharp thinking... The 41-year-old Lei Jun is a symbol of China's first generation of programmers; he is the spiritual idol of countless passionate young people in Zhongguancun; he has all the qualities to succeed. But at the same time, his personality seems to be a contradictory unity: the rationality and rigor of a programmer and the incitement of an entrepreneur; he is desperate and impulsive for his dreams, but at the same time he is cautious and hands-on, full of strong insecurity; under his humble appearance is a strong, tenacious and proud heart."

This is the description of Li Jing, a reporter of Economic Observer, in his book The Return of Lei Jun in around 2010. The return at that time referred to his return to Kingsoft to succeed Qiu Bojun as chairman. He left Kingsoft in 2007 and started to work as an angel investor.

Before entering the automotive industry, including the Xiaomi mobile phone business, Lei Jun had already started many businesses in the software and Internet fields for almost 30 years.

In November 1991, Lei Jun met Qiu Bojun at a computer exhibition. Qiu Bojun was the founder of Kingsoft Software and one of the great programmers of that era. Qiu Bojun treated Lei Jun to a roast duck meal at Quanjude Roast Duck Restaurant at the south gate of Peking University and invited him to Kingsoft.

In 1992, Lei Jun participated in the establishment of Kingsoft Software and became its CEO in 1998. In 2007, after leading Kingsoft Software to go public, he stepped down as CEO and became vice chairman. In July 2011, Qiu Bojun retired from the industry, and Lei Jun returned to Kingsoft Software as chairman. To this day, he still serves as a director or chairman of other related businesses of Kingsoft. During this period, in order to cope with the impact of the Internet on the software business, Lei Jun also founded Joyo.com in 2000, which was sold to Amazon in 2004. In order to save Kingsoft, he also led the team to develop online games.

whatXiaopengThe startup company Youshi Dongjing received angel investment from Lei Jun, which was life-saving money for Xiaopeng and another founder Liang Jie. Later, Lei Jun also became the chairman of Youshi Dongjing. The friendship between He Xiaopeng and Lei Jun began here.

Before founding Xiaomi mobile phone, Lei Jun had gone through the necessary trials for entrepreneurs.

Some of his contemporaries have retired from the business world, some have fallen ill, but he continues to create the Lei legend, one track after another.

Before 2010, Lei Jun had not yet become a public celebrity, but he was already deeply interested in self-media platforms.

He wrote microblogs in the era of microblogs. According to early media reports, in 2006, Lei Jun found that his friends were all blogging. During a break in a meeting, he asked people around him, "I have been thinking for several days whether I should also write a blog and what kind of attitude should I adopt when writing." He deliberately asked for advice from everyone.

The blog that Lei Jun wrote back then is still preserved on the Sina blog page today.

He is well aware of the exponential dissemination effect that the traffic platform created by new technologies can trigger. This is why, after founding Xiaomi, he let Xiaomi's second-in-command, marketing director Li Wanqiang, use the Internet and mobile Internet platforms to make friends with users at zero cost. This concept has always run through Xiaomi's interactive relationship between merchants and consumers. It has become a part of Xiaomi's model and Xiaomi's genes, and it is also the part that makes competitors envious and jealous.

In this process, Lei Jun himself has also become an idol, a channel or a medium. Not only him, but Xiaomi mobile phones have formed a core team self-media matrix, almost to the point where everyone is live streaming.

"The Internet is a concept, a thought, a methodology, and a complete system of thoughts. The essence of participation is the mass line, trusting the masses, relying on the masses, and mobilizing all users. Many people see social media marketing and fan economy in Xiaomi, but they don't understand that the essence of Xiaomi is based on word of mouth," said Lei Jun.

Xiaomi Model

When Lei Jun founded Xiaomi in April 2010, he spent a long time figuring out the "Seven Words of the Internet," which was his profound understanding of the Internet during Kingsoft's transformation and an important concept for running Xiaomi later. Today, it seems that the Seven Words of the Internet may continue to be used in Xiaomi's car manufacturing.

The "Seven-Word Secret of the Internet" refers to "focus, extreme, word of mouth, and speed."

"Focus" mainly refers to products. Lei Jun said: "First, a product that is clear and urgently needed by users is easier to find a clear user group; second, the selected user needs must be universal, which determines the future market prospects of the product; third, it solves fewer problems, develops faster, and is easy to control initial R&D costs and risks; fourth, products that solve clear problems are easy to explain to users and are relatively simple to promote."

In a sense, we can understand product focus, relying on one or two products to conquer the world. Based on this principle,Xiaomi MotorsThere may not be too many models launched in the short term. Different versions will be launched around SU7, and the mass production version of SU7 Ultra has been announced.

"Extreme" means unlimited mental investment, sparing no effort to strive for the best; second, unlimited pursuit of the best solution, and understanding the essence of industry and user needs. Xiaomi's series of products, especially as a user-oriented enterprise, are indeed working towards this goal in terms of communication with users. The sunscreen function of SU7 plus the three-piece sunscreen set also show the characteristics of "extreme".

Lei Jun puts "reputation" in the most important position. He believes that reputation is the core of everything, and the core of reputation is "exceeding expectations".Ideal AutoIt seems to advocate this point. Word of mouth is almost the key to the success of Xiaomi mobile phones. Li Wanqiang published a book called "Sense of Participation" in which he talked about how Xiaomi established word-of-mouth marketing.

"Fast" refers to the growth efficiency of the enterprise/business itself, as well as the expected and rate of improvement in user value.

Before founding Xiaomi mobile phone, Lei Jun had studied the business models of different companies. The Xiaomi model that everyone sees or feels today is actually a combination of four companies.

The first one is Tong Ren Tang. Lei Jun believes that the reason why Tong Ren Tang has become a century-old store is that they value products, use genuine medicinal materials, and are rigorous and serious in the brewing process. "Real materials are the cornerstone of a century-old enterprise. To put it simply, it is integrity." Lei Jun said.

The second one is Wal-Mart. Wal-Mart was founded in 1962. It was very profitable at that time, but its gross profit margin was only half of that of other shopping malls. How can Wal-Mart be cheaper than others and still make money when the cost of goods is the same?

This is a model innovation. Founder Samuel Moore Walton chose to open a shopping mall in the urban-rural fringe, or even rent an old warehouse, and started selling goods after a simple renovation. In this way, the marketing cost is much lower than that of competitors, and this part is eventually passed on to consumers. Another company with model innovation is Costco, which sells the same products at a lower price and still has room for profit.

The last company that Lei Jun referred to was Haidilao.

"Haidilao has revealed what true word-of-mouth is. Many people think that word-of-mouth means good products and cheap things. But the true meaning of word-of-mouth is to exceed user expectations. When you are better than users expect, you win. In fact, this point has made us really think through the relationship between business and customers. Traditionally, the relationship between business and customers is an antagonistic relationship. Customers want to buy good things and good things at low prices, while merchants want to make more money and increase gross profit margins. The two parties are originally contradictory dihedrons and certainly cannot be friends. But we do the opposite. The business model of Xiaomi mobile phones is to make friends with users, and my pricing is the cost price." Lei Jun said.

Based on these points, Lei Jun established several principles when he founded Xiaomi mobile phone, and "low price and high quality" became Xiaomi's label.

First, we work hard on products. We use first-class suppliers, top-level components and materials, and strive to make world-class products. Xiaomi's first innovation was in the product R&D system. They hired the best people in the industry, streamlined the team, and only made one or two products. The investment in a single product was 5-10 times that of their peers, which allowed these one or two products to sell in huge quantities, and the R&D cost of a single mobile phone was very low.

Secondly, Xiaomi mobile phone eliminated traditional marketing expenses and replaced them all with word-of-mouth communication, turning users into fans and then using social media to amplify the effect.

The third is to remove traditional channels and retail stores and only do e-commerce, or even e-commerce direct sales, which will provide the lowest cost.

"Once I have built this business model, I will have the opportunity to use the world's top raw materials and components to make good products, and sell them at less than half the price of my peers," said Lei Jun.

The first Xiaomi mobile phone was priced at 1,999 yuan. It was based on Lei Jun's three principles and achieved "low price and high quality". Judging from the official figures, this phone had become a hot-seller at the time.

However, some people have questioned whether its sales volume is fake. Their basis for this was the figures calculated by Rufeng Express, a mobile phone delivery company, and the flow of people coming to offline China Unicom business offices to buy Xiaomi.

"Xiaomi's entire business logic is a triathlon, which is the combination of hardware, software and Internet services. In fact, it is a hardware platform that uses mobile phones to enter various smart terminals. When I sell you a mobile phone, the business has just begun. I think this is the biggest difference from traditional mobile phone companies. They sell things to you, but it is better not to come to me. I hope to meet users every day, so that there will be opportunities for derivative income. Otherwise, Xiaomi will really become a charity. I have acquired a large user base through a high-performance and affordable smartphone and established two platforms. The first is the mobile Internet platform and the second is the e-commerce platform."

Impact on the automotive industry

Lei Jun is well prepared for this car manufacturing project.

"Lei Jun is a very serious person. He is a hands-on person and a perfectionist. Over the past three years, he has put a lot of thought into building cars, and he has a complete set of methodologies," a person familiar with Lei Jun told Automotive Business Review.

According to a senior industry insider, Xiaomi has obvious advantages in entering the automotive industry. First, it has capital advantages. Second, Xiaomi has become a global brand, and it has brand and reputation advantages. Third, it has rich experience in hardware manufacturing and software development. It has the ability to face the future of the intelligent era. Fourth, it has talent advantages. Based on Xiaomi's reputation, a considerable number of excellent new talents will join. Finally, Xiaomi has strong government support, which is extremely critical.

Xiaomi’s current challenge may be in the supply chain. A supply chain employee told Automotive Business Review, “Since Xiaomi’s volume is not large, the unit price of parts is relatively high.auspiciousCompared with traditional car companies, the supply chain advantages have not yet emerged. "

In terms of communication, Xiaomi has the ability to break the circle and efficiently reach end users, which is something that most automobile companies do not have.

"The entire traditional car companies' management's understanding of the Internet may still be stuck in the last era. They rely more on media channels and their understanding of how to communicate with consumers for dissemination. But because Lei Jun and his team already have media resources in the technology and Internet circles, the coverage of these media resources, their understanding and insight into consumers far exceeds that of most car media. In the traditional car circle, communication is actually a relatively closed-loop system." said a senior marketer who has been in the automotive industry for more than ten years.

Xiaomi's communication and customer-reaching efficiency is much higher than that of car companies. After fourteen years of operation, Xiaomi can basically accurately reach consumers who have a favorable impression of Xiaomi.

"Lei Jun himself has become a channel. First, he produces his own content, and second, he serves as a channel for distributing content. This is his amazing point. But Lei Jun is someone you can only encounter by chance. If in the car circle, people get tired of seeing Lei Jun, their team will quickly adjust the content and have a strong ability of self-iteration. There is no need to worry too much about whether the Lei Jun fever will pass," said the senior person.

Lei Jun once said at Xiaomi’s first technology conference at the end of 2023 that he hopes that through 15 to 20 years of hard work, Xiaomi will become one of the top five automobile manufacturers in the world.

Regarding this goal, a senior person with 20 years of experience in the automotive industry said: "Competition in the automotive industry is often not a zero-sum game. It does not mean that if Xiaomi adds new users, other brands will lack the same number of users. The automotive market is huge, and it is unlikely that one company will dominate it all.TeslaIt has been established for more than 20 years and has become the number one in pure electric vehicles, but its current market share is not the largest overall.”

Since the release of Xiaomi SU7 on March 28, Lei Jun and his core team have never stopped spreading information related to it.

In addition to Lei Jun's annual speech on the evening of July 19, he also did a return live broadcast on Douyin four days later. Four days later, Li Xiaoshuang, vice president of Xiaomi Motors, started a live broadcast of visiting the summer test team in Turpan. In recent days, Lei Jun himself flew to Paris to catch the hot spot of the Olympics and conduct various live broadcasts.

Lei Jun fever has become a reality.

(Photo source: Wall Street Journal)