China's Steve Jobs?
|Jul 3, 2013|
Xiaomi founder Lei Jun is like the Yao Ming of Chinese entrepreneurship, a man seemingly born to start companies. With a helmet of black hair, a broad smile and dimpled cheeks, Lei looks almost as baby-faced as he did when he first became CEO of the software company Kingsoft back in 1998, when he was 28.
At that point, Lei had been working for Kingsoft since 1992, when he graduated with a computer science degree from Wuhan University, an unremarkable school of more than 50,000 students.
Since that time, Lei has taken Kingsoft public, gone on to start an e-commerce site, Joyo.com, which he sold to Amazon for US$75 million, and become one of the country's leading angel investors, with stakes in online clothing retailer Vancl, shoe retailer Letao, mobile browser maker UCWeb, and communications portal YY, all of which have valuations in the hundreds of millions of dollars.
Lei started Xiaomi, a homegrown Apple competitor that makes a smartphone comparable to the iPhone but for US$400 cheaper per device, in April 2010 with Google's former Android engineering lead for China, Lin Bin, whom he met while chairman of the board at UCWeb.
Lei is unusual among China's Internet leaders for having no American education and speaking no English. But what's even rarer is that, on top of software, he is innovating on product, a big hole not only for China, but also in other emerging markets such as Brazil, Russia, and India. Xiaomi speaks to a promise that consumer goods won't always be Western creations, and that's a real threat to the West, whether you are Apple or Dolce Gabbana. If he pulls it off it'll be a radical shift for the developing world.
Lei's peers describe him as a thoughtful and calm businessman who listens well and articulates his points clearly. On stage for Xiaomi events, he comes across not as jingoistic or particularly polished in his Steve Jobs-like presentation, but boyishly excited. He hasn't quite mastered the art of public speaking - at times, he lets his speech wander and his intonation sag - but he projects an aura of self-assuredness.
He also exhibits an irritable side, proving he hasn't quite honed public relations to perfection, either. When a reporter from the Economic Observer asked Lei how much profit Xiaomi made on each Mi1, Lei raised his voice and said, "Do you think that's a polite question?"
When the reporter went on to ask what differentiates the Mi1 from cheaper local competitors, Lei slammed his phone on the table. "You are making an insult by comparing a first-class international brand to domestic products," he fumed.
That incident is one of the few times Lei has been the subject of bad press in China. And it's unlikely to harm him in the long run - it's not like the odd tantrum did anything to harm Jobs' reputation as a visionary. His most ardent supporters might suggest that such displays of intemperateness are only to be expected from a man with a clear entrepreneurial vision who is passionate about his product.
"Lei Jun is a special entrepreneur, and his combined skill set is difficult to emulate," says Robin Chan, another prominent angel investor in China. Chan, who splits his time between Beijing and Silicon Valley, founded social gaming company XPD Media, acquired by Zynga in 2010.
Chan is an investor in Twitter, Foursquare, and Square. He also has a stake in Xiaomi. He thinks Lei is central to Xiaomi's early success. "It takes a serial entrepreneur that understands the mobile Internet, e-commerce, and social media, as well as ready access to the capital markets, to grow as fast as they have."
How fast is that? Well, Xiaomi got its US$4 billion valuation from a massive Series B found of funding for a reason. (It is now valued at about US$9 billion, according to Quartz.) In just over a year, the company sold 3 million devices and became one of the most recognized handset brands in China, all on the strength of the Mi1. It spent very little on traditional advertising, instead choosing to market the product through social media. By the end of 2012, it had sold more than 7 million phones, and Lei estimated a net profit of about $200 million. Its sales target for 2013 is 15 million devices.
Investors are in love with its model, too. Xiaomi takes Amazon's approach to making money, selling the phones cheaply in order to make money from software and accessories, and Dell's approach to distribution, using its Web site as its main retail outlet.
But the most potent comparison is to Apple. Just like its now-rival in Cupertino, Xiaomi has built an entire ecosystem around its product, with a customizable user interface, an app marketplace, and a brand that resonates with a broad range of consumers.
Lei has even positioned Xiaomi as revolutionary, a word that resonates more strongly in China than in most countries. This can be seen in the company's very name, which literally translates to mean "millet," but is also supposed to invoke the so-called "millet and rifle" revolution style that helped the Communists defeat the Japanese army and the nationalist Kuomintang.
One of the slides on stage at the birthday party shows an army of Xiaomi cartoon rabbits surging forward behind a large red flag held proudly aloft. It is a direct allusion to well-known Communist propaganda.
Though he denies it, it looks as though Lei has modeled himself on Steve Jobs, right down to the austere jeans-and-black-T-shirt look. A reporter once spotted a copy of Walter Isaacson's Jobs biography on Lei's desk. In the past, Lei has bristled at the comparison. He told Forbes that Jobs is an inspiration but denied copying his mode of dress.
"I was annoyed in the beginning, very annoyed," he told the magazine, "but I don't mind anymore." One of Lei's nicknames is Lei-bu-si, a pun on Jobs' Chinese name, Qiao-bu-si, according to magazine. But Lei says he doesn't think Jobs could have succeeded had he lived in China. "Jobs was a scrupulous perfectionist, while Chinese culture emphasizes the middle path." In China, you need to make compromises.
Like Jobs, he is also prepared to fight for his product. In June 2012 Zhou Hongyi, the controversial and polarizing CEO of security software company Qihoo, took to Sina Weibo (a Chinese microblogging service) to stir up trouble.
"Just because he is wearing a black T-shirt and blue jeans, that does not make him a second Steve Jobs," Zhou said, according to a translation provided by China Daily. "The malfunctioning Xiaomi smartphone is nothing compared with the iPhone."
No surprise - Qihoo was about to announce its own smartphone that would compete with Xiaomi's devices. Lei, however, was bothered enough to respond through the media. "A lie told a thousand times becomes the truth," he told the Southern Metropolis newspaper while defending the veracity of the Mi1.
In Lei Jun, China has found an entrepreneur who not only possesses the experience, skills, and vision to drive innovation, but who can also put a face to a new era of the Internet. He's not Steve Jobs, because China's tech world in 2013 requires someone different. He is a bona fide homegrown tech revolutionary who believes in the strength of his ideas and the power of possibility. His opponents may dismiss all that as just good marketing, but his supporters think he could be the man to wake China from its centuries-long innovation slumber.
He is also proof that, despite all the challenges, the restrictions, the corruption, the conflicts, the instability, and the disadvantages, innovation does happen in China. Particularly with regard to the tech industry, it is happening in ways that are not being properly acknowledged by much of the Western world.
That may be partly because the West doesn't really pay much attention to what's happening in China. The products within China aren't typically designed for the outside world, so the outside world often doesn't realize that innovative things are happening. One world, two Internets. Even though it is a culture primed to copy, it is also the wellspring from which key Internet developments are beginning to emerge. Lei Jun and Xiaomi are just the start of it.