Disruptive business model + focus on products (there are also a lot of innovation)-the Internet core is user experience + improve efficiency

Source: Internet
Author: User

Wen/Wang Yunhui public Number: Science and Technology (Keji_zatan)

These days, an article has spread widely.

The article said that Xiaomi CEO Lei June an appointment with 6 internet experts and did a 3-hour closed-door exchange, but it did not say 6 experts name, nor a word referring to expert statements.

The core of the full text, only a lei June new pot of Soul chicken soup. From why dried millet, millet current state, to Millet's future whereabouts, lei June all gave the complete logic and elaboration.

In the recent song of the public opinion of millet, this article can be understood as, lei June face outside the disguised response to doubt.

In the article, Lei June said, he made millet starting point, is to let the common people use high-quality products, and through the current "bottom", the rebound is about to start, the next six months to a year inside, "will show a brand-new millet."

But is his speech really reliable?


Aside from other attributes, lei June is at least a great speaker.

He is good at telling stories, and through the story of his own patterns, let people unknowingly be touched by his feelings, was persuaded by his arguments, and eventually completely into his logical system.

This time, he also begins by telling stories.

Lei June has talked a lot about Xiaomi's entrepreneurial story. This time, he changed a new posture, "My dream is a bit exaggerated, is to change the image of Chinese products in the eyes of the common people, so that people use high-quality products." ”

He said that, in his view, the domestic product appearance is poor, the quality is poor, the price is expensive, the American salary is six times times higher than the Chinese, the goods only half of China's price, and the quality is good and safe.

Whether the data is objective, not discussed here, but this sentiment, must be full score.

Why is that? ' There's a problem with our efficiency: The cost of the channel and the sales is too high, like a 400-dollar shirt in the store, and the constant magnification is calculated at 10 times times (the cost is only 1/10 of the price, "Lei June said.

"The U.S. retail industry, the fight is efficiency." "He used the example of Wal-Mart and Costco in the U.S. retail business to analyze the reasons why Costco did the" retail price is cheaper than wholesale ": (1) Select goods, sell only 4,000 SKUs, (2) offer products that surprise users, (3) Save money from Internet finance, (4) Reduce waiters, Save money from human costs.

In this regard, lei June came to his own conclusion:

"Millet to do, in fact, the same." First, get things done. Second, to improve efficiency, to a very low gross margin. ”

This conclusion is so abstruse that it sounds reasonable.

The question is, how do you get the product done? How to improve efficiency? How to reduce gross profit?


In this story, one of the key questions lei June doesn't explain is why use Costco's path to explain millet?

Admittedly, Costco a selection of goods, while the cost of compression, it looks like millet really close.

But in essence, Wal-Mart and Costco are retailers, the main business is to sell other people's products, and Millet is a manufacturer, the main business is to make products for others to sell. This is two completely different business logic, it is not proper to get a simple analogy.

As a channel, Costco core business model is to make the difference, the quality of goods by the upstream suppliers to empower, it only need to do a good selection of goods, to win more customers, reduce operating costs, can form a stable business cycle. In its business process, the value of the product is not value-added, it is natural to mention efficiency cost reduction.

And Xiaomi wants to ensure the quality of products, and even surprise users, we must continue to innovate.

And, and built on the code, can be high-speed iteration, small steps, at any time the Internet is different, the traditional industry innovation, not only the material, structure, technology and other basic disciplines of the long-term accumulation, but also need product-level performance balance and quality control, but also need the entire industrial chain supply and demand coordination, The replacement of products is a long process.

To have an endless supply of innovation, must have continuous research and development investment, this truth irrefutable.

Therefore, the product can never learn the channel, blindly pay attention to the low profit margin, otherwise it will inevitably form a vicious circle of bad currency, loss of lasting development ability, even if the stunning success, it can only be a blip.

This is why a reasonable price for a commodity in a market is determined by the average productivity of the entire society, not by the highest productivity.

This is the key reason why Xiaomi has plummeted from the tuyere.


Of course, lei June doesn't think so.

He said that the ideal of millet is to let every Chinese people can enjoy the fun of technology, with cheap money, enjoy the latest technology and ideas, and even for everyone in the world, can enjoy the fun of technology.

He also said that Millet does not do products, do the scientific and technological works of art. Millet is really the product when the artwork is done.

Well, let's just believe it.

But to do works of art is not the same as the work of art, it does not mean that works of art can be done. If innovation is not guaranteed, where does the latest technology and ideas come from?

How does lei June guarantee this?

He said Xiaomi has three companies to label. One is the Costco, the second is the Tong Ren Tang, choose the real material, built a century-old shop, that is, craftsman spirit; Three is the seabed fishing, learn word of mouth, marketing all killed.

This passage is too many slots, I can not help, interrupted the rhythm, first spit for fast:

(1) Sure enough, rebels still doesn't mention apples ...

(2) Good running points, why three to the standard company are not?

(3) In Lei June said this paragraph, Xiaomi is strengthening the cooperation with the offline sales channels, according to media reports, Xiaomi plans to sell 58 million smartphones in China through the cooperation with Suning, Gome, and Dee Shun and other retail channels ...

(4)"Seabed fishing You do not learn"(don't misunderstand, I just think of this bestseller name, no other meaning)

(5) Lei June back also said, "Our real business model is the non-printing products of the technology industry", but unfortunately the Muji, even the company has not been able to squeeze in. Perhaps it is because Muji is not a cheap thing?

(6) Suit + denim + slippers, put together, really good-looking?


From a strategic point of view, Xiaomi is actually a very big game in the next game.

Lei June said that Xiaomi's business model is to do the vertical integration of branded products + retail.

He said, he will be in the world, find a field of the most bull, persuade him to start a business, lei June investment accounted for small stocks, cattle accounted for large shares, let these people become bosses, direct participation in the market competition, "We pay advice, we help to dry", if the product reached the Xiaomi requirements, enter the Millet channel.

"We have invested in 55 companies in this way. "Lei June said.

This untied our doubts: Why Lei June to use the path of Costco, to explain millet, and Muji to describe their business model.

Because, in his subconscious mind, it may be that what Xiaomi really wants to do is not the product, but the channel.

So, he doesn't care to kill the price to the end, after the profit hit 0, how to ensure continuous research and development and investment. Because of these problems, it is good to give others consideration.

Lei June is only considering how to integrate more people in order to achieve the final net.

As he revealed, the core benefits of the future millet ecosystem will come from customer tips and internet revenues, such as 2017, with a chance to achieve a 10 billion net profit.

And that's just the beginning.

When all the things in the user's home are millet eco-products, the biggest goal is Lei June based on the internet of Things, the user's big data, and the continuing benefits of these data.


One of the suspense of Xiaomi's ecological future lies in how the Commons is distributed.

As Lei June said, Xiaomi shares and shares of the company, a total of 220. These enterprises together to build the vast ecological millet, supporting the Millet brand and flow.

But how will the entire ecosystem generate customer tips and Internet revenue, and how is it distributed? How will the future be distributed based on the benefits of user data?

In addition, Lei June said, Xiaomi in the past 5 years dry e-commerce Xiaomi Network, the next 5 years to dry millet home. Like Muji, there are only 50 to 100 items in the store, with 50 to 100 products conquering consumers.

According to the most optimistic understanding, this refers to the store at the same time shelves 50~100 products, means that if 220 companies also have products listed, then the proportion of the allocation to the number of places in the store will be less than 50% ...

Another issue is more important.

So far, the success of the rapid expansion of millet, rooted in the integration of cross-border resources: including Xiaomi's own channels and brands, as well as the various eco-collaborators own industry accumulation.

These accumulation, contributed to a variety of millet eco-products at the beginning of the listing in the cost-effective, but when these accumulated into the past, continuous innovation will become a huge burden on the whole millet ecosystem.

By then, Lei June will only face three options:

(1) The replacement of ecological partners, with the renewal of sharp innovators to cooperate;

(2) Re-invest in research and development, in the "Good things" and "price reduction" between the former to give higher weight;

(3) Reduce product standards.

Therefore, in the mobile phone encounter patent sniper, have to obtain patent authorization, increase research and development input and other ways, and constantly improve the technical strength of the Xiaomi mobile phone, has been the "light Company", has become more and more "heavy".

And this will be the only way for all millet eco-enterprises.

Below, share the transcript of the Lei June mentioned in the previous article:

First of all, let me tell you why I want to do millet.

2007 Jinshan After the listing I even quit the lake, sleep every day to sleep to natural wake, never about the third day of things, everything only about today and tomorrow, because too tired. so after three or four years, until the age of 40 to enter the middle age, suddenly one day I think people can not live like this for a lifetime, but also a little pursuit and dream, in case the realization of it?

My dream is a bit exaggerated, is to change the image of Chinese products in the eyes of the people, so that people use high-quality products. In my eyes, the domestic product overall appearance is poor, the quality is very poor, the price is super expensive. But Americans are six times times more likely to pay than us, and everything is half the price, and the quality is good and safe.

2010, just as I was financially free, a lot of ideas can be done, I am in this big background to do millet. I have done the internet and look back, I think the Internet + application in the traditional industry, the core is two points: one is the user experience, and the second is the use of information technology to improve efficiency.

Efficiency is a big problem. Many people may say that this is related to efficiency, we do high-end on the line, in fact, this is the efficiency behind.

For a shirt, any department store shirt looks less than 400, doesn't it? I have a good understanding of the shirt industry, the best shirt manufacturing costs 125, the difference is 15 yuan, the difference is the short sleeves, short, a pull will definitely fall out.

Why do we have to do 125 of the work to 15? Because he was in the store to sell 400 dollars, 125 of the shirts only earn three times times, calculate the channel and the cost of sales is not enough. But the fixed magnification of the shirt is calculated at 10 times times, you can only push him to dry 40 a few dollars of shirts.

With such a problem, we say that it is business ethics, and I think it is useless to criticize morally, we must first analyze what is the most essential thing behind the business. I found it was a matter of efficiency, and I've been working on the internet for so many years and I'm trying to improve the situation.

▎ The U.S. retail industry, the fight IS efficiency

So I really spent some time doing a little research, just thinking about how America's business evolved.

65 years ago, retail sales in the United States were 45%, similar to our current one. A bottle of water into the store basically to double to make money, plus less certainly lose. Information technology did not start, the United States is the same, the property is expensive, labor is expensive, into the store can not be doubled to maintain, so not expensive.

Later on we are familiar with the Wal-Mart, a slogan called "Daily low price." Today, the network criticized the millet, feel very low. Wal-Mart's low price is an upside-down mechanism, it does not earn 45%, earns 22.5%, earns half the gross profit. How to do it, it has three major innovations:

Innovation one, the shop is not open in the city center. The iron law of Retailing is called the first place, but as long as it is good and cheap, it goes to the suburbs.

Innovation two, it is directly used in warehouse renovation.

Innovation three, the introduction of a large number of it technology. This set down, Wal-Mart in the early 80 's the world first. In fact, there is no trick, if it is summed up is the efficiency of success.

But 25 years ago, a bunch of "lunatics" appeared, saying that Wal-Mart's efficiency is still not high enough. They say to the suburban Wal-Mart there are 1 million kinds of things, go in turn to be disoriented, do not know what to buy, in fact, inefficient. Is it possible to face the middle class and spend half the middle class on us? He is thinking of the middle class only, too rich and too poor are not their customers, this is the same as our internet theory, is the precise customer positioning, positioning to serve the crowd to improve efficiency.

This company is Costco, the founding of the company said that our supermarket anything can only earn 1%, the maximum cannot exceed 14%, if if 14% need CEO and board approval. And for the past 25 years, it has never been approved.

This is exactly the opposite of what the business school says. Business schools believe that the higher the margin, the better, the higher the profit is the enemy, and Costco average gross profit margin is only 6.5%. This is a true Internet spirit of the enterprise, is what we speak today the Internet, in fact, Costco has already done.

▎costco, what makes half the money in America's middle class pocket?

How crazy is it for consumers to Costco?

I was in Jinshan when senior executives went to the United States on business, the plane Hongjiang Dr. Rent a car to go straight to Costco. After coming back for a long while, he fanned out, except for all of my 9 executives.

The results come back at night everyone said things too good, I asked how good. Actually just one thing, cheap. All things are cheaper than domestic, only one-tenth, a pile of things in Beijing, more than 9,000 yuan, Costco as long as 900 yuan.

So the next morning I went to Costco, stood for 15 minutes I said I understand, just like I think the same thing!

I think it's essentially the same pattern that I did when I was doing it. In fact, just a few:

First, a selection of items, only 4,000 SKUs are sold. You want to know Wal-Mart at least hundreds of thousands of kinds, Costco Select to how far? His partner said that all of the things I sold were chosen by me and used at home, and I felt good before I sold them. For example, there are two kinds of TV, but the quality and experience are very good. Because of the few varieties sold, with the upstream manufacturers desperately pressure unit price, plus 6% direct to the final store, like the wholesale price is much cheaper than others.

Second, to have a surprise. Is that every 10 things to have a surprise you: there is such a good thing! So we all become Costco fans.

I was on the spot to investigate our company's returnees, some people said that I spent my life only in Costco shopping, Costco did not go to other stores. Its 6.5% gross profit would have been no money, but the United States has a very good tip culture, he said everyone to tip, that is, membership income. It now earns $2 billion a year for its members, so the gross profit margin is 11%.

Third, internet finance. Call its users to use Costco credit card, it can be divided into one or two points, the actual profit is mainly from the membership fees and credit cards.

Four, the waiter is very few. Save labor cost, retail price is cheaper than wholesale.

Costco This mode is difficult to where? Because it does not make money, so it does not melt. In a financial crisis when in fact it is almost closed, the company sold to a VC, the founder of today's company is no any equity.

But this founder is still in the company management, his dream is to make a great company, he does not care whether the company is his own. It took him 15 years to let the American people believe in Costco, because everyone felt no business, you must be blindfolded me. Into the Costco, do not pick, do not look at the price, as long as close your eyes to buy, this is a kind of "faith."

Millet to do, in fact, the same. First, get things done. Second, improve efficiency, very low gross margin.

This is my biggest driving force of millet, is to do things well.

▎ does not talk about theory, stirring like a catfish.

Founded Xiaomi, we have three company to mark. The first, just talked about the Costco, the second house, Ren Tang, choose the real material, built a century-old shop, in essence, is the Craftsman spirit; third, the seabed fishing, learn word of mouth, the marketing all killed.

I this person a kind of axis, today this meeting I originally said forget, not everyone, wait 15 years later to use steel generally hard facts, show that we really did something different. I said that my contribution to the Chinese society, may wait for me to die can print the epitaph, I changed China, at least changed the Chinese manufacturing industry, this is my life ideal. I do not want to see anyone today, is to seriously do things well, I believe that time can prove everything.

I don't think China can talk about theory, you have to be like a catfish, and they live when you get in there. Let's go in and stir up an industry with a live industry, of course, we were scolded by countless people, said we are nonsense, not, we are to use this way to activate the entire industry.

First we made the phone, because the mobile internet era began. Xiaomi 4.5 before entering the mobile phone market, 1.5 time to become China's first. At present, Xiaomi's biggest contribution is to promote the entire mobile phone industry progress, mobile phone to do better, and the overall price is getting lower and higher, the rapid increase of China's smartphone penetration.

Again such as power strip, the market sells the best, open to see is the heap line is what, are 30 years ago the craft, even packaging is to make a plastic bag, do not understand where the ingenuity. If you look at the Millet power strip, have you ever seen a power strip that is packaged like this? I gave it to someone, and at first they said it was not an Apple Watch because it was so beautifully packaged. Open, with three high-speed USB port, 49 dollars, for doing this to do 1.5 of the time.

We are very serious, really is when the art is doing, by making achievements to promote the progress of the industry. We entered a lot of industries, but also called the curse, and I said to the internal colleagues, was scolded that our products are not good enough, if it really beat others to die, others scold not move , I just hope the product to the extreme.

▎ allows everyone to enjoy the fun of technology

We sometimes do not know how to express millet, we sometimes do not know what millet is doing. We made a mobile phone, mobile power, air purifier, rice cooker, electric fan, feel very not focused, in fact, in a different angle to see the millet, you will feel that the company is extremely focused.

Our ideal is to allow every Chinese to enjoy the joy of technology, with cheap money to enjoy the latest technology and ideas, and even for everyone in the world to enjoy the joy of technology. That's just the first thing we want to say.

On the second floor we are going to represent the progress made in China. How do you do it? is to enter 100 industries. What you see is the product, actually millet does not do the product, do is the scientific and technological works of art.

We have worked in the past 5 years e-commerce Xiaomi Network, the next 5 years we will do millet home. Like Muji, there are only 50 to 100 items in the store, with 50 to 100 products conquering consumers.

We are in fact extremely focused, air purifier dry two years only two models, the first model has not been sold, water purifier has only done one, the fan is also, so we shop as long as 50 to 100 goods, 250 square meters.

Domestic home appliances store average single shop 5000 square meters, the average single store sales should be more than 40 million yuan. Xiaomi's goal is 250 square meters, the average single shop to do 50 million, now the highest day to 1.43 million. Xiaomi's home is a sea of faces when it's not working.

I now open 5 to 10 each month, 3-4 years of time to open 1000 stores, may be 400 to 50 billion of the retail price, and do not join, not listed, I request is 100% of their own management, because only like me so hard and pure heart, can do this thing well.

We must understand that our real business model is the Muji of the technology industry, we do retail brands. People think of Muji how many things, it also do refrigerators, washing machines, suitcases and so on. Business model we are doing brand products and then with retail, is a vertical integration of the model.

So in this retail platform, we need 50 to 100 kinds of goods to pull the passenger traffic, if only sell mobile phone insufficient, insufficient passenger traffic to lead us to the same as the traditional manufacturers, 1000 pieces of money to sell 35,000 dollars, the cost is very high, this is not China's future. This goes back to what I said earlier that China's future is an efficient revolution.

▎ Xiaomi to avoid becoming a big company

Finally, the third layer of meaning, millet is not a charity, even if Lei June do not want to make money, but we colleagues, these families how to do.

Thanks to the great Internet invented the long tail theory, so our core revenue will come from the customer tips and the Internet revenue, the Internet revenue we published a few figures, now active tens of millions of Xiaomi's own app has 9, the monthly active tens of millions of 43, this must not be a small income , there is a chance to see the net profit of 10 billion next year.

About the Millet model I would also like to say that it is now 8500 people, and then we have a stake in the company and a total of 220 companies, which is a huge ecological.

We also have industrial and financial two-wheeled drive, we use the method of investment to avoid millet into a big company, our ecological chain products is how to do it? For example, I want to do power strip, I will find the most cattle in the world, persuade you to start a business, I invest in small stocks, you accounted for large stocks, your products to meet the requirements of Xiaomi, and then I help you into my millet channel.

I said here may not be enough to persuade you how much we have done, we have invested 55 companies in this way, in exchange for large companies is actually 55 departments, the 55 companies only 170 people in the management, is almost from idea to structure, software, hardware, is a huge incubator. if I want to make fifty or sixty departments, I will be exhausted, I have to turn them all into the boss, so Millet is a fleet .

Like now do relatively large, millet bracelet is very big, the world's second smart wearable device, to do the balance of the car Ninebot world first, purple rice to do charging treasure is also the world's largest scale, are in two or three years of time into a huge scale.

Using this model is because I do not want to become a big company, big companies inefficient, let them all become bosses, direct participation in the market competition, we pay advice, we help to do. First you succeed, then the success of our millet. It also enters 100 industries and activates 100 industries.

These 55 companies are called smart hardware eco-chain, and many are all kinds of services. For example, you use a bit of information we share, for example, Video category of the top three Youku, Iqiyi art We are shareholders, including you use the Thunderbolt we are also shareholders.

So in the IoT domain, we're actually pretty strong, we end-to-end solutions. The whole millet mobile phone MIUI itself is an internet platform, to carry a lot of content, we will pursue cooperation and win all work together.

This time period is one of our bottom, this year we have three months supply chain is extremely out of stock, there are many negative reports, but I think the rebound immediately began fully.

Whether it is product sales, business size, or the perfect business model, including Xiaomi accumulated in the past two years of various technologies released, in the next six months to a year, will show a new millet.

because in the past we have done a lot of innovation, but in our disruptive business model is covered up, or our innovation is not enough to impress you, but I will be in the next year, may show a lot of completely different things, I have enough confidence.

I saw Feng Xiaogang last time, he said Millet you do not have to introduce, our family almost everything is millet. When all the things in the family are millet, everyone's understanding of millet may be different from the present.

My overall goal is Xiaomi to achieve the ultimate product, when the user's home can be armed with millet armed, know how strong we are, this is an exciting new start for millet.


Disruptive business model + focus on products (there are also a lot of innovation)-the Internet core is user experience + improve efficiency

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