To all Xiaomi employees:
Tomorrow will be a historic day. After 8 years of hard work, we will list on the Main Board of the Hong Kong Stock Exchange.
Since its establishment, Xiaomi’s journey has been a miracle underpinned by courage and trust. Looking back, I can vividly recall the past eight years of trials and tribulations. We founded Xiaomi in a small office in Zhongguancun in Beijing on April 6, 2010. I can still remember that there were only 13 employees at the time. The team included Bin Lin, Ali, KK and me as four cofounders, in addition to nine other members of the original founding team, including Fan Dian, Liu Xinyu, Wang Haizhou, Li Ming, Qu Heng, Qin Zhifan, Li Weixing, Sun Peng and Guan Yingzhi, who are all still active in important roles at Xiaomi today. On that first day, we drank a bowl of millet porridge (called xiaomi porridge in Mandarin) and went straight to work. No one expected that this unremarkable, small company would go on to have such an epic and exciting entrepreneurial journey.
We have relentlessly moved forward, undeterred by the challenges involved in entering the smartphone industry, arguably one of the most competitive industries in the world, especially for a young start up. When we started, Apple and Samsung were colossal companies on the global stage, while Huawei and Lenovo had a big lead in the China market. In contrast, Xiaomi was a small company with only 10-20 employees with no hardware industry experience. We depended entirely on our courage and innovation to beat all expectations to reach No. 1 in China within three years. Thereafter, it only took us 3.5 years to become No. 1 in India.
In the past eight years, we have experienced countless highs and lows, and have consistently proved that we are an unyielding and indomitable team. We charge forward relentlessly, never giving up, constantly creating miracles.
In these eight years alone, China’s inferior-quality copycat phones have been completely eliminated, in large part due to Xiaomi’s contributions. The quality of China’s smartphones and smart hardware is constantly improving, while prices continue to lower. Chinese companies are expanding rapidly across the world, with an increased emphasis on design and user experience, winning over hearts and minds of consumers. The rapid spread of mobile internet applications has deeply penetrated our daily lives. Xiaomi has also become the world’s fourth-largest smartphone manufacturer, and has changed more than 100 industries through our ecosystem of consumer IoT and lifestyle products. Xiaomi has comprehensively improved business efficiency, entering 74 countries and regions worldwide, and built the world’s largest consumer IoT platform. In addition to phones, more than 10 of our other product lines have also become No. 1 in China, including Mi TVs, Mi Bands, Mi Power Banks, electric scooters, and more. In each category, we have continuously validated the advanced nature of Xiaomi’s model.
The numbers speak for themselves. In 2017, we achieved annual revenues of 114.6 billion RMB, with 67.5% year-over-year growth. It only took us 7 years to cross this major milestone of 100 billion RMB. In Q1 2018, we achieved over 85.7% year-over-year growth, with our e-commerce and new retail platforms accounting for 63.7% of revenue. Last year, our internet services accounted for 8.6% of revenue, reaching an astonishing number of 9.9 billion RMB, while our Q1 2018 internet service revenue increased to 9.4% of revenue. This fully validates our ability to monetize internet services, proving that we can convert the traffic generated by our hardware and e-commerce channels into revenue and profit.
Tomorrow, Xiaomi will become a public company. At this historic moment, together with all my colleagues, we are excited beyond words.
- First, given the recent fluctuations of the capital market, the Xiaomi’s IPO is itself a great success.
The IPO price of Xiaomi is 17 HKD, with a valuation of 54.3 billion USD, which has already become one of the top three IPOs in the history of global technology stocks. Moreover, this is the first example of a weighted voting rights structure with dual-class shares in the Hong Kong capital markets. This success belongs to all Xiaomi employees and shareholders!
After eight years of hard work, all Xiaomi entrepreneurs will soon enjoy the fruits of our labors. As of today, we have more than 7,000 employees holding stocks or options, and after the IPO, we will soon see the response from the capital markets.
This huge success also belongs to the investors who trusted and supported Xiaomi along the way. Our earliest VC investment, which was 5 million USD at the time, has now earned a return of over 866 times!
I believe that Xiaomi’s story will inspire and encourage even more entrepreneurs. When people evaluate Xiaomi 100 years from now, I hope that their perception is that the most important value from Xiaomi is not how many devices we sell, or how much profit we make. Rather, I hope they see our value in changing people’s lives and exploring new ways of doing business, including being friends with our users, and making sure that our business goals are fully aligned with those of our users. We have proved that we can be successful if we have the courage to relentlessly innovate, diligently persevere, and be generous and steadfast in our values.
2.Second, our IPO also comes with huge challenges and heavy responsibilities.
At this critical moment in Sino-US trade relations, the global capital markets are continuously changing. We still have more than 100,000 investors who have actively participated in the purchase of Xiaomi stock, including Li Ka-shing, Jack Ma, Pony Ma, and other industry leaders. This is a validation of the trust they have in Xiaomi’s management team and employees. We can only repay this trust if we continue to relentlessly forge ahead.
In the future, we will always insist on being friends with our users, and relentlessly focus on building amazing products with honest prices, always placing the highest standards on both innovation and quality. Innovation determines how high we can fly, and quality determines how far we can go, and will always be our lifeline. We are fully committed to building a world-class and respected Chinese brand around the globe.
- Third, the listing is only a new beginning in Xiaomi’s journey.
The world will ultimately reward people who are diligent and generous. Tomorrow, Xiaomi will be a public company, but this is just a new beginning in our journey, and a public listing has never been our ultimate goal. We work tirelessly not because we want to become a public company. Instead, we have become a public company because it allows us to strive more to achieve our mission. A successful listing is only the first chapter of Xiaomi’s story, and the second chapter will be even more splendid and dazzling.
Our management team has gone through multiple rounds of discussions, and we believe we still have nearly limitless room for growth in the future. First, our smartphone business ranks fourth in the world, and the smartphone market is still an enormous opportunity. We must strive to ensure sustained high-speed growth and enter the top three in the world as soon as possible. Second, we will systematically expand our product categories, as there are still many market categories with over 100 billion RMB in value waiting to be unlocked by Xiaomi. Third, the vast potential of our global markets is promising beyond measure. In Q1 2018, our global business accounted for 36% of total revenue. We must further promote the globalization of our business, and make sure that global revenues surpass 50% of total revenue as soon as possible. By focusing on these 3 strategies, we can ensure Xiaomi’s future growth potential.
Great companies are born during great times, and new companies arise during times of great change. Today, China has entered a golden era for entrepreneurs, and has created a group of leading global companies. As a new breed of internet services company, Xiaomi is quite fortunate to be able to thrive in this environment and create a rarely seen combination of e-commerce, hardware and internet services. We have big ambitions for the future, and are excited to allow everyone to enjoy a better life through innovative technology.
At this moment, I am excited beyond words. A phrase from one of our creative campaigns from a few years ago keeps resonating in my mind.
“Our name is ‘youth.’ As we pursue our dreams, we keep moving forward fearlessly. We explore, we change, and we strive, so the world can see us for who we are. Our time is now!”
I love Xiaomi, and I’m proud of Xiaomi!
I also love our Xiaomi employees, and I’m proud of all of you!
Tomorrow, let us witness this great milestone together!
July 8, 2018