In his quest to build a better phone, Lei Jun visited hardware manufacturers from around the world. At Nokia, the head of R&D agreed with many of ideas, but had no ability to implement them. In the end, all of his hosts listened politely, but Lei Jun had nothing to show for it. Instead, he decided to build it himself.

The rest is already a part of history: Xiaomi Technology is likely the fastest growing tech company ever. In its first full financial year, Xiaomi generated $2.1 billion in revenue. That dwarfs the $713.4 million that Groupon did in its second full year of business, when it was said to be the fastest-growing company in history. In its second full year, Lei Jun, CEO of Xiaomi, expects the company to generate $4.5 billion.

But it’s fan participation, not revenues, that had Lei Jun most adrenalized in an interview at the GMIC conference (all translations of his Chinese are my own).

Lei Jun was most animated when discussing Xiaomi's model of fan participation. Image source: Caixin

Lei Jun was at his most animated when discussing Xiaomi’s model of fan participation. Image source: Caixin

Lei Jun’s eyes shone and he leaned forward from his chair: “The current model doesn’t support this kind of participation. You have no idea what Apple is doing with iOS 7.” He spoke for over 10 minutes straight to explain this one point, Xiaomi’s model of fan participation.

He appealed to us foreign journalists: “Please, please don’t label us an Apple copycat. I’m an Apple fan too, but I believe there’s no way to imitate Apple. So I want to build a completely different company.” This came as a surprise for me. I’ve owned the Xiaomi 1S phone and always thought of the product as a ‘cheap iPhone for China’.

Lei Jun is eager to set the record straight among foreign media, who he thinks have largely missed this point. Fan participation is what truly sets Xiaomi apart from everybody else. ”Our goal isn’t to make a cheap phone in China. We’re building a toy for our fans,” says Lei Jun.

The MIUI OS, Xiaomi’s heavily-modified version of the Android operating system, is the star example of fan participation in design. MIUI has a hyperactive forum that the product team watches like a hawk. The best ideas rise to the top by a voting system and are frequently tested in the next build of the system.

Here’s an example of Xiaomi’s fan-driven design in-action: MIUI recently made changes to its sound recording app on the basis of suggestions by a group of journalists. First, the phone is now muted when recording. Second, incoming calls don’t interrupt the recording. Lastly, MIUI is considering a feature to upload recordings to the cloud in real-time, so that a journalist won’t lose his recording even if someone snatches away his phone, as is apt to happen when a journalist is reporting upon a sensitive topic in China.

These aren’t your run-of-the-mill customers who participate in the forums. ”Our customers are picker than those who buy iPhone or Samsung. If they encounter a problem, the first thing they do isn’t to go repair it, they first curse us. Our users are extremely demanding,” says Lei Jun. If Xiaomi can satisfy these rabid fans, then they figure they can satisfy anyone.

To accommodate fan participation, MIUI has a new approach to OS development. Instead of releasing once in a blue moon at a major press conference as iOS and Android do, MIUI pushes out a new version every single week. It’s similar to a web app: development is highly iterative and updates are frequent and seamless.

There are three pillars to Xiaomi’s business model, according to Lei Jun:

  1. Fan participation in the design of the product;
  2. Sell the phone directly to the fanbase;
  3. Keep distribution costs low (50% of the competition) through business model innovation (e-commerce). 

It’s a model that Lei Jun believes can be applied to many different products, not just the Xiaomi phone.

“Every user becomes your R&D. Every user becomes your salesman. And every user becomes your friend. That’s the company we want to build.”

I was sold by Lei Jun’s daring concept. I walked out of the conference carrying a newly purchased Xiaomi 2S.

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  • Michael A. Robson

    If nothing else, it sounds like a really fun process. Eventually they’ll nail it.

    So v1, designed by Apple
    v2, designed by… Chinese amateur designers (eg. our customers).
    v3, designed by, trained Industrial Designers and Engineers?

    Also, I love how “we’re gonna sell this online only” is called ‘business model innovation’. Ever heard of Dell?

  • Elina

    So how did you like Mi2s?