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- [00:02]
A
Hi, everybody. Tune in to this short version of the podcast, which we do every Friday. For the long version, tune in on Wednesdays. Hi, everybody, and welcome to In Good Company. I'm Nicola Tangen, the CEO of the Norwegian so On wealth fund. And today I'm in a particularly good company with the CFO of Xiaomi, Alain Lem.
- [00:20]
B
Hello, Nicola. Thanks for having me.
- [00:22]
A
Now, ala, Xiaomi is just an incredible company with phones, cars, humanoids. You know, we are the lucky owner of more than 1% of the company. So just tell us, what do you do and how did it all happen?
- [00:43]
B
Well, thanks, Nicola. Thanks for the question and good to be here. So, first of all, Xiaomi is still a very young company. We just turned 16. We founded on April 6, 2010, and since then we have done a lot, as you mentioned, but ultimately I think we think of ourselves as a global technology company. Obviously we have smartphones, we have a lot of smart devices, plus recently we have smart electric vehicles and we are into manufacturing. But underlying all of these is our technology, whether it is our operating system, our semiconductors, our AI. I think those are the stuff that we built underneath all of our ecosystem. Right? I think we built a pretty comprehensive, what we call a human times, car times, home ecosystem, ranging from all your personal devices to all your home devices and now with your mobility solutions. So that's where we are. But, you know, we've achieved quite a bit, you know, over the last 15 years. You know, obviously last year we have over 450 billion RMB in terms of sales and, you know, and we achieved, you know, pretty good profitability.
- [02:02]
A
It's just such an incredible story. So I'm not quite sure even where to start, but why don't we just go through it chronologically? The first product you had in know, just how did you just, how did it start?
- [02:14]
B
We actually started off building the operating system for smartphones and that was in 2010 when we founded the company. We want to do a, you know, operating system on top of the Android ecosystem and then try to offer it to smartphones. But eventually we decided to get into the smartphone ourselves. And our first smartphone, which we call Xiaomi One, we sold it at 1999 RMB in China. And that became a huge success because as you remember back in the days, there were a lot of products out there that were low quality but high prices.
- [02:53]
A
How long time did it take you to develop the telephone?
- [02:55]
B
So we launched our first smartphone in 2011. So one year after we found it.
- [03:00]
A
How is it possible to have such a short cycle time.
- [03:03]
B
Yeah, because at that time, I think there is a lot of, you know, the supply chain is obviously quite advanced in China, but the problem in the market for that at that time was there was a lot of expensive products with very low quality. Right. And the philosophy for the, for the company is that can we do a smartphone that is much better quality and can, you know, and we can offer to users at much more affordable prices. And that's something that you see permeated in the history of our products. Right. We try to offer very high quality solutions to our users at affordable prices.
- [03:40]
A
And then you decided to make a car. Correct.
- [03:43]
B
We decided to get into the car industry in 2021, and then we launched our first car in 2024.
- [03:52]
A
So how is that possible?
- [03:56]
B
So a little bit over less than three years, we launched our first car, we designed it, and it would build a factory as well. So China speed.
- [04:05]
A
Tell me about China speed.
- [04:07]
B
So look at the beginning. The car industry to us is not that foreign. Xiaomi, as a company has already invested in some of the EV manufacturers in China before. So we have an experience of seeing them develop, helping them develop over time. But then we decided to do it ourselves. And as you know, we've done a lot of due diligence in the industry the moment we decided to get into this industry. And I think the ultimate solution is, ultimate conclusion, I should say, is that, you know, you know, if you believe that a car evolution is going to be another piece of consumer electronics, and that's something that we have a lot of experience in, whether it is managing the software, hardware integration, whether it is managing the supply chain. I think those are the stuff that, you know, we have experience working with so many consumer electronics products before. I mean, obviously car is a little bit of a different animal because you need to consider about safety, you know. But, you know, again, I think the supply chain in China has been relatively well developed on the EV industry. So as we go into that, I think what we said was, look, can we spend 10 times more investments to build the first car? Right. I think that's, that's also a very important philosophy as well, is instead of going into all these different directions, making multiple cars, we decided to spend all of our efforts on one single car.
- [05:41]
A
How far behind is Europe when it comes to EVs? Now?
- [05:46]
B
Look, we still look up to the, you know, a lot of the OEMs, the traditional OEMs. We still think that there's a lot of things to learn from them. The way that they build a brand, they work the way that they build the drivetrain, the way, the way that they give people a real good driving experience. Those are the stuff that we still look up to A lot of the European OEMs, what we think that they are lacking, number one, I think the smartness of the car. I think they are trying to implement a lot of the smart features into the car right now. But I think in that sense they are probably behind what we are seeing in China right now. And then the second is kind of the whole new energy vehicle development. I think that they were a lot of the focus were on electric at that time. But really I think when we look at our E.V. we call it a smart electric vehicles. Right? And I think that some OEMs may look at electric to, you know, to focus on electric, but less focused on smart. Right. I think that, that, that that's one thing that you know, the users right now really want, especially given the Xiaomi advantage is how do I link it with all of our ecosystem products, how do I work better with my smartphones, how do work better with my IoT devices, things like that, that I can create not just a ev, but also a smart life ecosystem.
- [07:17]
A
Beyond the ev, you also developed your own language model?
- [07:21]
B
Yes, we just launched it two weeks ago. So we launched our own large language model two weeks ago and it has performed pretty well. I mean if you look at public scoring systems like OpenRouter.com you know, you can see that we have been ranked, you know, very highly on that, on that, on that table. So we're very glad that we have a large language model that people like
- [07:50]
A
and people use and at much lower costs than the likes of Claude.
- [07:57]
B
Well, I mean these costs are never disclosed publicly disclosed information. So I don't quite know the cause of it. But our price that we offered are lower than corp, but much higher than the other models from China that are being offered right now.
- [08:14]
A
What are the cost advantages you have when it comes to the utilization of these models, giving lower energy costs, model structures and so on?
- [08:30]
B
We did try to innovate a bit on the infrastructure of the model. So obviously we have the benefit of seeing how other people do it before and then we try to optimize our path. So in terms of infrastructure, we have done some innovations, although we didn't talk too much publicly about that, number one. Number two is if you think about the, the model development right now, I think there's still a long way to go. The good thing for Xiaomi in a way is I already have a big ecosystem that we can use to test. We can collect data from those user behavior and we can refine our model. Last thing is obviously, as you know, that we put it as an open source model. So we're also trying to invite the best mind globally to help improve that model as a result.
- [09:22]
A
So let's say five, ten years from now, when you have integrated, you know, all your, all your products with the latest AI models and so on, what is the, what's the vision of the world? What is it going to look like
- [09:34]
B
as we think about how AI is going to change the world and how do we fit into our own ecosystem, right? We think about the more in the physical AI world, right? How do we get AI into our phone, how do we get AI into our spot appliances, how do we get AI into our car? And then how to interconnect these things to make users lives more efficient, much better. I think that that's kind of how we see this, right? And obviously other people are using AI to serve the coder community, the coding community. Other people are trying to use AI to make very useful chat box for the users so that they can use the chat box to help them manage their life better. But for us, for Xiaomi, because we have over a billion connected devices globally, we have over 800 million mobile smartphone users globally. How do we interconnect these devices so that we'll enhance people's productivity in the physical AI world? I think that that's something that we are looking.