Lei and Lenovo Origin: Learning from the Tong Ren Tong

Dear President Zhu Linan, Distinguished CEO:

Thank you very much for giving me such a chance to share some of my thoughts.

First of all, I would like to talk about the origins of Lenovo.

Zhu Linan is my leader, Big brother, 17 years ago, he represented Lenovo Group invested Jinshan Software, become the largest shareholder, and I was the CEO of Jinshan. Then I formed a network of excellence, but also became the first case of June Lian investment. Therefore, my relationship with Lenovo is very deep.

I, like everyone else, adore Mr. Liu, the big parent of our association. I believe you can join the Lenovo family and feel a lot of things from here. Lenovo, the company, for my personal growth and development of the greatest help, Mr. Liu also gave us a lot of life inspiration.

Next, I want to share with you some of my thoughts before I founded Millet.

To the Tong Ren Tong Study: To do products to the real material, but also have faith

Liu had recommended a book, called "Evergreen", is about how to establish a century enterprise. So I asked myself, how to do a century enterprise? My first thought was, in China, who did it for centuries.

The first one I thought of was the Tong Ren Tong.

In the study of Tong Ren Tong, I found that the most important thing is its Si Xun: "Taste although expensive will not be able to reduce material, although the processing is not dare to save labor," meaning to do products, materials, even if expensive also want to use the best, the process is cumbersome can not be lazy. In other words, real material. Imagine, if everyone did, would our society be poisoned with rice, melamine, haze?

But it's easy to say and it's hard to do. Therefore, the ancestors of the Tong Ren Tong said the second sentence: "The repair is not seen, deliberately have days to know." "Everything you do, only your own conscience and God knows." This sentence is about how to ensure that the first sentence is carried out.

It made me very shaken. I was thinking, why did China, in the global concept of the more than 30 years of reform and opening-up, produce inferior products? Sometimes people joke that we Chinese are too clever. In fact, like to take shortcuts, like cutting corners, so that everyone has the impression. If we want to be evergreen, then the real material, and to stick to it, we must turn the real material into faith.

I think to be evergreen, we must do two: the first real material, second to the conscience.

When I think of this, I ask, is there a millennium enterprise? Actually, religion. Religion is actually faith. Therefore, no matter how many years, want to become a continuous and eternal cause, must have the idea, and to turn this idea into faith.

After thinking about this, I would like to go a different way when millet: we make the material of the product, should all use the best in the world. Exaggeration to say, we "only buy expensive, do not buy the right", the expensive certainly makes sense. This is not easy for a company founded on Zero because it means our costs are a lot higher than others. But we did, the processor with Qualcomm, the screen is sharp, and finally assembled to find the world's largest platform-Foxconn.

I find that what we Chinese need, first and foremost, is good things, not just cheap things. To do that, we have another question, who is willing to work with a start-up? Originally I thought that does the handset and does the PC to buy the component to be OK, later discovered is not, the handset inside most is the electronic piece, this means our cooperation business needs invests the research and development resources, must undertake the huge risk. So every supplier is unusually cautious when choosing partners.

Assembly, I went from the first to the fourth place, no one to ignore me, and finally I persuaded the fifth of the Anglo-Dakota, is a subsidiary of the British group. I talked to their general manager in Nanjing three times, he thought my idea is reliable, so chose to gamble with us. Today, our assembly is mainly for two suppliers, WA and Foxconn.

What I want to say is that when a startup starts from scratch, a lot of people don't believe you can do it. It took me about nine months to find a major supplier of mobile phones. It's not easy to be a good thing.

Three years ago, when our first product was made, it cost as much as 2000 yuan. At that time, domestic mobile phones are five hundred or six hundred Yuan, 2000 yuan mobile phone how to sell? There is absolutely no confidence inside us. Originally our price is 1499 yuan, a mobile phone to compensate 500 yuan, certainly is not. The week before the product was released, I thought of a sleepless night, and the next evening, with several partners, decided to price 1999 yuan. We have to believe that something good is worth 1999. A week later we released it and got a big success.

I find that what we Chinese need, first and foremost, is good things, not just cheap things. Today's China is already the era of product surplus, if do not seriously to do the product well, that is not a lie?

In order to ensure this, millet in the initial 1.5, no market department, also did not send a PR draft, and asked all the confidentiality, even can not say the company is Lei do.

At first, we started with the software we were good at and did the MIUI based on Android. April 6, 2010, we founded the company, August 16 released the first version of MIUI. The product was released with only 100 users, but the second week turned out to be 200, the third week was 400, and the week doubled. In October, we were recommended by the Global Developer Forum XDA to get the best product nomination for Android from an international lit up.

So, to seriously do a good product, to believe in Word-of-mouth, and Word-of-mouth is a part of faith.

Our each cell phone, even if is only sells 599 yuan red meter 4G, also uses the domestic top supplier. And in order to do a good job, we only have one or two mobile phones a year. Up to today, 4.5 only made six phones. And I guarantee that every cell phone is my own use of half a year. I know where the phone is, and I know where my product is.

I did 25 years of technology, if this thing I have no use, I do not feel good, I can stand here to sell you?

Millet, I was 40 years old in financial freedom after the founder of the company. The biggest advantage of this is that I will not do anything for money, this thing is I like, I am satisfied. So the first thing millet to do is genuine.

Maybe a lot of people, including most of the people here, used to be Apple Samsung, but now I believe that there are already a lot of people using domestic mobile phones. Three years ago, almost no use of domestic mobile phones, today, in the led by millet, more and more domestic mobile phones better.

This is the first story that I share with you, the story of the Tong Ren Tong.

Learn from the bottom of the sea: Word of mouth comes from exceeding expectations

The second story I want to share is the bottom of the sea.

Seven or eight years ago, I bought a book at the airport bookstore, "You can't learn from the bottom of the sea", but after watching for three or four hours, I found that I learned. I found that the secret to the bottom of the sea is actually only two words: Word-of-mouth.

How can the word of mouth do well? Many people quickly think of Word-of-mouth marketing, but once you think of marketing, this thing is dead, you first want to think, what kind of things have word-of-mouth.

I finished the book and went to the bottom of the sea. Like other hotpot shops, the seabed is noisy. But to my surprise, the bottom-trawling waiter has a heartfelt smile.

Other service industries, such as the civil aviation industry, are more beautiful than the sea-bottom, and the uniforms are better, but they are often a smile state. By contrast, the smile of the undersea waiter can really impress people.

I asked the bottom-trawling waiter, "What's so funny about you being a waiter?" "She said to me:" I was more than 40 years old Laid-off workers, has been unable to find work, the result of the seabed fishing hired me, seven or eight years ago to my monthly salary of 4,000 yuan, I sleep in a dream will laugh awake. ”

I am very touched by this, the seabed fishing even employees are moved. So I decided that the Millet customer service, in Beijing first can be higher than the average wage 30%, 4,000 yuan, at the cost of the highest to 10,002. If I can't be good to the staff, what will the employees do to our customers?

A few years ago, there was a very good story on Weibo. A guest in the seabed after eating after dinner, want to eat after eating watermelon pack away, seabed fishing said not. But when he finished the account, the waiter carried a not cut watermelon said to him: "You want to pack, we prepared a complete watermelon for you to take away, cut the watermelon to bring back unsanitary." ”

Wow, the customer moved at that moment. So here, you know what is called Word-of-mouth?

In fact, I went to the sailing hotel, then I went to Dubai with great reverence. A sailing hotel, feeling resplendent, as if it really pasted gold, but the modern aesthetic will not feel that it is luxurious, but the earth.

So I feel very disappointed, is this the best hotel in the world? I think it's because I'm expecting too much. In retrospect, the sailing restaurant was amazing, but my expectations were so high that I was really disappointed.

The core of Word-of-mouth is beyond the user's expectations. Sailing Hotel services must be better than the bottom of the sea, but he did not exceed the user's expectations, the seabed fishing shabby, into the noisy, but including the waiter's smile, many details conquered every customer, so the bottom of the mouth fishing is invincible.

With such an invincible reputation, do you still need to advertise? So Millet company was established early, I did not set up the marketing department, also did not do PR. When I started MIUI only 100 users, I had to be able to live hold.

I believe that word-of-mouth, I think the best product is marketing, the best service is marketing, good things will be willing to help you promote.

In the early days, we do not believe that we do MIUI practice a great success. Advertising this thing, half effective half invalid, but more effective than advertising is word-of-mouth.

Why do we feel that health care products are annoying, because they boast every day, advertising more people upset, consumers are gradually unwilling to believe. Without advertising, you will sincerely treat every user, everything you do is beyond expectations.

For example, I saw a user in the microblog complained that "battery two weeks after the charge does not go into the electricity", just when I intend to reply, but found that some colleagues have answered his question. The next day I found the user posted a tweet saying he had "received a new battery from a millet colleague for free".

A lot of manufactured industrial products can not make a mistake, but when the user complained, the average person will only recommend rework, and our staff sent him a new battery, the last user is very grateful.

Another example is the double 11, one o'clock in the morning the single, the next day six o'clock in the morning arrived. Users say that the logistics of millet is insane, just bought a few hours later, the goods have been sent, this is a can impress the small details of the user.

So I want to talk to you about the second is that the core of Word-of-mouth is hyper-expectations, when you go to business reputation, I believe that your reputation will certainly improve.

Word of mouth is not new media marketing, its essence is to carefully ponder how products and services can impress consumers, I think this is the key.

This is the second company I refer to.

Learn from Wal-Mart and Costco: Low margin, high efficiency is kingly

After talking about the Tongren temple and the seabed fishing, I would like to say that the third company is Wal-Mart.

52 years ago, old Sam started a grocery store in his hometown. He found that the average gross profit margin of the American circulation industry was 45%, which was actually very dark. Sam thought, I can only earn half of the money, only 22% gross margin? Every day parity, sales can be several times the others, will certainly be able to earn money.

So he put "every day parity" into a Wal-Mart founder of the slogan.

But think carefully, when other chain stores earn 45%, only do 22%, theoretically is definitely not make money, and is very bad, this is the principle of market competition.

Old Sam thought for a long time, thinking that as long as 100 dollars cheaper, Americans would like to drive to 10 miles away. So he was not in the city center, but found an old warehouse, all the costs to the lowest, even if the gross margin is only 22%, he also has a few points of net profit.

As a result, Wal-Mart has become the world's first in 30 years, which is high efficiency.

Our business school teaches a bunch of misconceptions, including US investors, who are always asking, "Can we have higher gross margins?" Of course, to deceive the user Bai! Either cut corners, or the price increases, there are other ways to improve the gross margin?

I now invest, I do not like the high margin. Everything on the Chinese market is ridiculously expensive, something a little better is expensive.

Three years ago, I went to the United States with a bunch of Golden Hill executives. At that time our CEO Zhanghongjiang, is back from the United States, the original Microsoft's Engineering Academy Dean. He took a plane, he rented a car straight to Costco (good city, the United States, the largest chain of store stores), and then seven or eight of the same person went, and came back excited.

I feel very strange, cheetah mobile fu Give me an example, two new beautiful brand of large box, usually in the domestic sales of more than 9,000 yuan, Costco as long as 150 U.S. dollars, 900 yuan.

American houses, land, labor and so on, but these two boxes, the price is only 1/10 of the domestic. Why is it that our people, with their 1/6 and 1/10 wages in the United States, "enjoy" the smog, but pay 10 times times the price?

I later studied Costco found that the company was really bad. Their creed is: all things, priced only 1%~14% gross margin.

Any price to more than 14% of the gross margin, must be approved by the CEO, but also through the board approval, very troublesome. I saw their earnings, 7% of the average gross profit margin, in the United States to do large retail chain, which is not to make money. So they make a profit by membership fees, and they have to be members to buy things. More than 20 million of the members, each 100 dollars a year. Costco's store is probably only 1/4 of Wal-Mart, each with only two or three brands, is super good, also super cheap. As a result, we all became Costco members.

So I would like to explore a problem is that the higher the gross margin of a company, the more real good? High gross margin of the company, the efficiency must be very low.

In the case of low margin, how to work efficiently is a serious place.

Millet just started is 0 gross profit, rely on large-scale production, probably can have 10% gross profit margin. Our key point is that the overall operating costs of millet control within 5%. The year before that was 4.1%, last 4.3%, and not modestly speaking, we are the most efficient companies in the world.

So we must not hire a lot of people, must not do a lot of things. Our philosophy is: Less is more, we must focus. Our model is too complex, simple is our core competitiveness. We are complicated first, then we make the complicated things simple.

The experience that Wal-Mart and Costco have given me is that low margins are kingly. Only low margins can force you to improve your operational efficiency. and millet to close to the cost of pricing, efficiency is kingly, no efficiency, the company will lose a mess.

I have been thinking, why do e-commerce losses so big, to burn so much money? Millet is also e-commerce, we also make money. I do not remember where I read a word, said that enterprises do not make money is a crime, corporate social mission is to make money to improve efficiency. But like the Amazon myth, only Bezos did it, and the average person couldn't. And since we do not want to pit users, but also to make money, we can only use all the wisdom to improve efficiency.

Increasing efficiency is not tantamount to deducting employees. Millet has 7500 people, 5000 people are the service sector, research and development operation of only 2500 people, with our projected turnover of 75 billion to 80 billion yuan this year, I think it is invincible, what kind of operational efficiency?

So, when we hire everyone, we need to choose carefully.

For example, our Tiger brother, Hugo Barra, vice president of Android products, Google's global vice president. It took me more than three years to persuade him to work in millet. In fact, it is easy to work in millet, because the current situation of millet is stronger than people, difficult is to persuade him to leave Silicon Valley to work in Beijing.

We all know that Tiger brother is in a good position in Silicon Valley and inside Google. He also knows the risks, and if millet dries up, he may not be the Vice-President of Andrew, who now accounts for 80% or 90% of the world's smartphone market share. He's in Silicon Valley himself.

Great influence, when you join Millet, all the commercial magazines are the whole edition of the report.

He went to Beijing last October and I talked to him last month when I was working here for a year, and he still thought it was an exciting business.

This time, Sina's former editor-in-chief Chen also joined the millet. His resignation, the fire was a mess, and he joined the millet, the heat is equivalent to his resignation of 90%.

So, we are at all costs to attract the top talent. People are our most important asset for an efficient company like ours. We try to hire less people, but there is a requirement for these people: the first two hundred or three hundred people, all over ten years experience. Because only this kind of experience can make a company develop rapidly without overturning.

Finally, the overall summary, before the establishment of millet, Lenovo's things are already in my DNA. When I was a small rice, I really learned about these companies: Ren Tong, seabed fishing, Wal-Mart and Costco.

We are like the Tang Ren Tong to do products, genuine, have faith. Everything is my own use of good things, if not done well, please forgive, because we have only been working for three years, it will take time.

Here is a blast, our next generation of products will take a big step. The competition of smartphones is the most intense competition in the world, which is quite difficult. Our company is always compared to apples, and I am better than Apple every year. Apple 600 billion dollar market capitalisation, if I am better than Apple, I should be worth 800 billion dollars, so I am sure not as good as Apple, do not compare.

We don't talk more than apples for five years. The more you know, the more awe you will have, but that doesn't mean our market share cannot be bigger than Apple.

2nd, to the seabed to learn User services, do a more than expected Word-of-mouth. Today's time is very short, will not start to speak.

3rd, to the company such as Wal-Mart, Costco operating efficiency. We are electric business, is industrial, involving industry, I think the efficiency of winning. Of course, there are two ways to improve efficiency, one is the twist of the towel Mr. Liu said, I agree, but I use another, model optimization-the middle channel, the retail store all kill, less work, with the smartest people to simplify the process.

For example, to do mobile phones, in fact, the establishment of national sales channels, flagship store these do not need to do a good job, open a website, such as users door-to-door buy, is the best mode. Millet NET, originally called millet. com, then internationalization, and spent more than 20 million yuan to build a mi.com, I think the value.

Millet uses a lot of model innovation to improve efficiency, only in this way, the cost can be greatly reduced. In the consumer electronics industry, from manufacturing costs to retail costs, the rate is basically two to three times times, coupled with channels, retail outlets profit, customers buy things Price is the cost of manufacturing two to three times times.

Why are traditional mobile phones so expensive? Or why are traditional services so expensive? Efficiency is not enough. The reason why China's electricity dealers have such rapid growth rate is mainly our traditional commercial backwardness. Costco are also all entity chains, but efficient. Jing Dong's financial results show that Jingdong spent 10% of their turnover, if Costco as long as 7%, you think Costco will be affected by the East Beijing? I don't think it's a big problem.

So the key is how to improve efficiency, the core of the electricity business is efficiency. This model has advanced, superiority, but if not manage the good cost, it is difficult to earn money.

This is the few companies I have consulted.

The canon of the Internet "seven-word tactic": the Mass Line

Finally, I talk about Internet thinking.

I talked about the internet seven Words: "Focus, extreme, word-of-mouth, fast", but today do not talk about this. There is also an important part of the Internet thinking-the mass line, the "deep masses, believe in the masses, from the masses, to the masses," is the Internet open source community model. The internet has the lowest organization cost and allows users to participate.

What is the biggest selling point of millet?

I always have a dream, make a good mobile phone, the user has good opinion, I can change immediately. So I designed this model: the establishment of millet community, every day 3 million people visit, make various suggestions. After absorbing the proposal, we have a new operating system in one weeks. This is actually a world-class problem, because the operating system is more complex, especially to consider how to do something wrong, reliability requirements are high.

For example. For example, I do not know Han or Wang Lodan mentioned that a lot of fans to give them the trouble of the phone, ask if you can do a telephone address book only function? Then millet has this function. Another example, a leader told me that his phone will be 24 hours to boot, night 12 o'clock a dozen can not sleep well. Later, we set up a VIP phone, only the VIP can be 24 hours to make a pass.

Functions like this are invented by the people, because we are not in that scene, unexpected. In fact, the Millet mobile phone launched a mass movement.

At this point, we are in fact a completely different design idea from iOS. We are "easy to start", it looks as simple as iOS, but "difficult to master", the function is very much, the synthesizer. Even in design, we have a famous saying "Let users have the fun of discovering."

"My deepest understanding of Internet thinking, in addition to the seven-word tactic, is the mass line, the open source community." The internet is a kind of thought, an advanced productivity and advanced guiding ideology. If you can think through this model and apply it to any business, that business will be different.

Today, I would like to share with you the four points of thinking about millet. Millet in front of the road is still very long, we have made some achievements this year, mainly thank you for your support, more is that we catch up with the smartphone in China, the time point, so there will be "flying pig theory."

But for what we have to do, Millet has just begun. I want to bring our Chinese products according to this philosophy to the world, so that everyone around the world can enjoy the scientific and technological innovation from China.

I believe that in the next ten years, the millet will be like the 70, 80 's Sony to drive the entire Japanese industry, like the 90, 21st century Samsung led South Korea's industry, driving China's industry.

Millet's goal is to become China's national brand, Millet's dream, will eventually become China's future.

Thank you!