How did Xiaomi develop?

Nowadays, Xiaomi has become the focus of attention of Internet companies. It has grown so fast that people are overwhelmed, but its growth path is worth studying.

Xiaomi has been established for more than two years. How did it go from US$11 million when it was first established to a current valuation of US$4 billion? Is it now in its glory days or is it in danger? Facing the tiger and wolf warriors chasing after her, how will Xiaomi survive next?

Before answering this question, as a practitioner in the mobile phone hardware industry chain, I first want to summarize the experience worth learning from a startup company’s triple jump in valuation from its inception to today. It is not easy for domestic startups to succeed. There are even fewer companies that can build brands and increase added value. There are many things we can summarize from Xiaomi’s development in the past two years. Here are a few:

1. If you want to start a business successfully, you must not be high-profile at the beginning. A high profile may quickly attract the covetous attention of competitors. In a country like China where copycats are common, it is very likely that products will die before they start. Talkbox is a martyr, and so is MiLiao, a copycat of Talkbox.

2. Start small, accumulate word-of-mouth and your earliest fans, and let them help you improve your product and iterate quickly. Now that the Internet can provide a channel for direct communication between producers and consumers, please listen to their voices

3. To exceed expectations, you must have the power to subvert traditional models. The channel revolution triggered by the Internet has just begun, and there is still a lot of room for development

4. China’s entrepreneurial environment is very difficult. In addition to various practical difficulties, the public opinion environment is also quite dangerous. When you are not successful, you will be ridiculed. If you have some achievements, you will be copied, slandered, and held back by all kinds of scoldings. All you can do is listen to the voices of users, focus on making your own products, and win the hearts of users with your products.

The following is a summary of the road Xiaomi has traveled in the past two years, and a retrospective look at how Xiaomi got to where it is today step by step. (About the several stages of Xiaomi, the author "Commissioner Mao" wrote a longer article, Huxiu published another article)

The first stage: App development team period

Time period: from Xiaomi Technology was founded in April 2010 and announced its official entry into the mobile phone market in July 2011.

Marked products: MIUI, MiLiao

Financing situation: At the end of 2010, Series A, involving approximately US$41 million in venture capital from Morningside, Qiming and IDG, and the company’s valuation reached $250 million. Among them, the company’s 56 Xiaomi Technology employees invested US$11 million.

Company strategy:

A. The Android-based mobile operating system MIUI was released on August 16, 2010, but Xiaomi Technology and Lei Jun were not mentioned. MIUI was quickly recognized by flashing enthusiasts. After the internal beta version was launched in August, in September, foreign professional Android enthusiasts spontaneously produced multi-language versions of MIUI ROM on the forum.

B. The mobile chat software MiLiao was launched at the end of 2010. At this time, the domestic Android market had just started. MiLiao, which imitated the Talkbox-style instant messaging software, attracted the attention of Android users from the beginning and quickly accumulated a large number of users.

MIUI uses the power of the Internet community to carry out rapid iterations, which makes it easier for mobile phone users to have a sense of identity and is in line with the development speed of the mobile Internet. Miliao is a product that seizes the opportunity and needs in the right way. Half a year after its launch, MiLiao has accumulated 3 million registered users.

Comments: According to the market view at that time, behind MIUI and MiLiao was an App development team that could grasp the needs, have the technology, and understand the mobile Internet. But if you think that Xiaomi Technology’s idea of ??making mobile phones was formed later, you are wrong. In fact, Xiaomi has been targeting mobile phone manufacturing from the beginning, which can be seen from the composition of Xiaomi's founders. The previous MIUI and MiTalk, as well as the Series A financing, were all aimed at building popularity, users and capital for Xiaomi mobile phones.

The second stage: the initial launch period of the mobile phone Shantou Recruitment Network

Time period: from the release of Xiaomi mobile phone in August 2011 to the end of 2011 before the Series B financing.

Marked product: Xiaomi mobile phone I

Financing situation: In December 2011, it completed a Series B financing of US$90 million with a valuation of US$1 billion. Investors include Qiming, IDG, Shunwei Fund, Temasek, Qualcomm, and Morningside. Within one year, the valuation can quadruple. A major basis is Xiaomi’s online transaction volume of 300,000 units at that time mentioned below.

Company strategy:

On August 16, 2011, Xiaomi mobile phone was officially released. At this time, dual-core mobile phones have not yet begun to become popular. Xiaomi took the lead with its positioning as the first domestic dual-core mobile phone priced at 1,999 yuan. Adopting the process of pre-sale first, then production and then shipment, from October to December 2011, Xiaomi mobile phones completed the first batch of 300,000 units of online transactions.

Comment: Although during this period, due to relatively high procurement costs, Xiaomi mobile phones are only making money but not making money, but Xiaomi has transformed from an early application developer into a B2C e-commerce company. However, Only sells one product, Xiaomi mobile phone. Shantou Recruitment Network

I made a rough calculation. During this period, Xiaomi spent about US$10 million on engineer labor costs and US$25 million on production and manufacturing costs. This is the US$41 million in Series A financing. Main purpose.

The third stage: mobile phone outbreak period

Time period: from the end of 2011 to May 2012

Marked products: Xiaomi Mobile I, Xiaomi Mobile Youth Edition

Financing situation: In May and June 2012, Series C financing, the amount is unknown, and the valuation is US$4 billion. Within half a year, the valuation quadrupled again.

Company strategy: Stabilize the production of Xiaomi mobile phones, continue to speed up supply, and at the same time, begin to set up direct customer service physical stores Xiaomi Home across the country. The data announced by Xiaomi is that from October 2011 to the present, Xiaomi mobile phones have shipped 3 million units in one day.

During this period, MiLiao began to be attacked by WeChat, and domestic App developers also followed up with a large number of innovations. MiLiao has been increasingly complicated by the increasing number of social functions and has begun to receive more and more criticism. MIUI, which once promised to be updated every week, later only updated every two or three weeks, and it has been unable to provide update logs for each version.

Comment: During this period, Xiaomi reduced the development of MIUI and its applications, turned its attention to mobile phones, and became more completely a mobile phone e-commerce company that relied on religious marketing.

The fourth stage: the fighting period in the Red Sea?

Time period: June 2012~

Logo products: Xiaomi mobile phones, official refurbished phones

Company strategy: At the same time, with the expansion of production capacity and online shopping The number of consumers has reached the ceiling, and Xiaomi no longer relies solely on the sales method supported by religious marketing of rice noodles. It has begun to open up a large number of purchases, using youth version, tube replicas, mobile phones for college entrance examination students, and operator-customized machines to expand its consumer base. While clearing inventory, we are preparing for the launch of Xiaomi mobile phone II.

At the same time, Xiaomi mobile phones have begun to advertise products in building elevators. In the next step, Xiaomi should continue to strengthen the layout of Xiaomi Home, create offline channels, further expand the influence and customer base of Xiaomi mobile phones, and continue to penetrate into second- and third-tier cities. Shantou Recruitment Network

Comment: Xiaomi seems to have given up on the technological nature of a technology company, and has more completely transformed itself into a volume hardware vendor, and it seems to be preparing for a price war.

The purpose of sorting out the short history of Xiaomi is to summarize: Xiaomi has gone from a brand new and unique, with a fresh breath, relying on the integration of system software and hardware experience, to now, it has become a brand with a self-proclaimed " Are mobile phone manufacturers that have been criticized for "diaosi mobile phones", secretly competing for prices with multiple manufacturers, and giving up on soft experience a bit changed? Or is it essentially a "diaosi phone" (but it's packaged as a "top phone" or "enthusiast phone")?

Xiaomi’s misalignment

With the glorious sales of millions of mobile phones, Xiaomi is facing three misalignments:

1. Driven by fan culture To price driven?

Originally, Lei Jun has successfully created a certain fan-chasing culture for the Xiaomi brand through various means, and has generated some emotional interaction and trust between Xiaomi and users. Millions of users are following Xiaomi online and placing orders feverishly. Many of them are not only appreciative of its price of 1,999 yuan. However, the rapid price reduction of hardware has, on the one hand, gained profit space for Xiaomi, and on the other hand, it has left room for Zhou Hongyi to speak out.

When Zhou targeted Xiaomi's "profiteering" weakness, launched a fierce offensive on Weibo and public opinion, and announced that "I will truly rebate users," Xiaomi could not sit still. . If it turns a deaf ear to Zhou's cries, and the initiative of public opinion is controlled by Zhou, Xiaomi will fear that it will lose customer loyalty; if it follows the price shouted by Zhou - which is what Xiaomi is choosing, then it is playing into Zhou Hongyi's path. Son. Because first of all, Xiaomi fans will feel that they have been deceived by "Xiaomi does not make money from hardware"; secondly, Xiaomi's price reduction implies that users give up the brand and emotion and use price to measure Xiaomi and other mobile phones. At this time, Xiaomi's sales driving core has been Shifting towards "price", the brand and fan culture that Xiaomi has carefully built over the past year have suffered considerable losses.

2. Has the product experience changed from a combination of software and hardware to a pure competition of hardware?

From the above review, we can see that Xiaomi used to be a company that polished apps and systems, but now it has obviously gone from soft to hard and has completely become a hardware company. To be more precise, a company An e-commerce company that operates a single piece of hardware and pursues sales and distribution rates. In the past six months, you have been promoting Xiaomi every day on Lei Jun’s Weibo. Have you rarely seen him talk about the upgrades of MiLiao and MIUI? (This is exactly what I will talk about below - what other trump cards does Xiaomi have)

3. Finally, the mismatch between capital and reality!

For the above two questions, if Xiaomi now chooses the latter option, then how can it support Xiaomi’s valuation of US$4 billion? Because there are so many companies and talented people in China that can compete with the start-up Xiaomi in terms of hardware and price! From this perspective, if Zhou Hongyi had "attacked" Xiaomi three months earlier, it is doubtful whether the valuation could reach US$4 billion.

What other trump cards does Xiaomi have? (How Xiaomi survives)

Xiaomi is actually exploring a path for the entire Chinese mobile phone market. Once this road is paved, traditional mobile phone manufacturers and Internet companies will swarm in. But compared with traditional mobile phone manufacturers, Xiaomi also has a trump card, which is to use the speed of the Internet to achieve rapid iteration of the operating system and improve its user experience at any time. It’s not like Xiaomi has never done it before. This is something that Zhou Hongyi and the traditional mobile phone manufacturer alliance cannot do for a while, and it is also what traditional mobile phone manufacturers should learn from Xiaomi, but it is the most difficult to learn.

Lei Jun and his team may know something about this. Lei Jun said on Weibo on June 13 (this is the rare time he has talked about Miui recently):

Xiaomi not only pursues high-end hardware and cost performance, but also works hard on software and Internet services. The miui system insists on weekly updates and continuous improvement, and is called a "living system". This is also the unique charm of Xiaomi. These are the triathlons that Xiaomi pursued when it started its business.