Chapter 1405
, Part 3
Jun'er has actually had millet porridge several times.
At the company's pre-opening party, eight people drank millet porridge together after the meal, one bowl for each person.
Then came the famous group photo of 13 people taken on the company's opening day. They even brought a rice cooker and cooked a big pot of food to share.
I don't know if this planted the seed for making rice cookers later.
Actually, a total of 15 people came on the opening day.
The simplest logic is that if there are 13 people in a group photo, someone has to take the picture.
The person who took the photo was Xiaomi's 14th employee, the first female employee who was brought in as a clerk and initially had doubts about whether this small workshop could succeed.
The last person not in the group photo was Liu Qin, a partner at Morningside Venture Capital, one of Xiaomi's initial investors.
They gave Jun'er $500 million in exchange for nearly 18% of the shares.
This investment became Morningside Venture Capital's most profitable investment, with a return of approximately 900 times when it was sold.
But Jun'er himself still owns the largest share, because he is also the one who has invested the most money.
Jun'er is a man of principle; when he had nothing, they gave him 500 million, in US dollars.
Therefore, Morningside is the only company among all investors with a 12-month lock-up period.
That means that 12 months after Xiaomi goes public, the other party can start selling shares to the market.
The remaining subsequent investors will all be subject to a 36-month lock-up period.
Of course, you can also use collateral or other means during the lock-up period, but the price of a legitimate sale is much higher than that of an illegitimate one.
So Jun'er is a person with some feelings; he's not the particularly cold-blooded type of capitalist, and in fact, he's quite a decent person.
The most ruthless group of people were actually the bosses who stole state-owned assets through illegal means in the early days of reform and opening up; those were truly vicious.
So now, there are a total of 15 people who have drunk millet porridge.
Zhang Yuan's meaning was very clear: I want to be the 16th person.
The words "millet porridge" echoed in the airplane cabin, attracting the attention of the remaining two Xiaomi executives.
These two are also Xiaomi shareholders.
Lin Bin owns 13% of the shares because he is the president and a former employee of both Microsoft and Google.
Li Wanqiang and several other top tech experts each hold about 3% of the shares, while three or four others each hold just over 1%.
Once the company goes public, even 1% of the shares can make you instantly financially free.
Jun'er currently holds approximately 60% of the shares.
He plans to release a portion of the funds gradually during subsequent rounds of financing.
However, Jun'er is very smart and a veteran in investment and entrepreneurship, far superior to someone like Wang Wei.
Xiaomi has adopted a VIE structure from the very beginning, which is a special structure that allows Chinese companies to list overseas while complying with Chinese regulations.
So Jun'er originally wanted to list on Wall Street.
It also adopted the AB share model, with shares divided into two categories, A and B, with the same value but different voting ratios.
Class A voters have 5 to 10 times more voting rights than Class B voters.
This is to ensure that even if he cannot have absolute control, he can still have absolute authority in the company.
Jun'er was quite shrewd; he had planned everything from power to his future long ago.
Faced with such a formidable person, Zhang Yuan was extremely cautious.
This is why he recognized him earlier but didn't press the issue further.
He's not one of those desperate entrepreneurs who'll agree to anything as long as they get money.
He usually refuses money from people.
Moreover, even though there are no prototypes yet, Xiaomi's valuation has already soared because of the launch of MIUI.
They don't even need their own hardware support; their software assets alone are already impressive.
Morningside Ventures invested $500 million, and six months later, MIUI was launched, prompting Qiming Venture Partners to provide a second round of funding of $4000 million.
After the Xiaomi 1 phone is launched, the third wave of investment will come from DTS, a professional international internet investment company headquartered in Moscow, Russia.
They gave us $5 million in one go!
In other words, Xiaomi's funding increased 100 times in just one and a half years after its founding.
Compared to Jun'er, even Youku and Tudou are inferior.
So Zhang Yuan's idea was, "If I do this one job well, I can live off it for the rest of my life."
As long as I can drink millet porridge, I'd be happy to live in a mansion, eat gourmet meals, and play with different girls every day for the rest of my life!
The Blessing.
Xiaomi is now in the second step, which is negotiating a $4000 million funding round with Qiming Venture Partners. The negotiations are almost complete.
Jun'er is experienced and won't resort to fundraising like some novice entrepreneurs do when they run out of money.
After completing this round of financing, we need to start the next round of financing plans so that we won't be taken advantage of.
Therefore, he intends to proceed to the next round.
He then raised his eyelids slightly at Zhang Yuan.
But I still hesitated.
The temptation to put a logo on a Mercedes F1 race car is huge!
In his own words... that was incredibly frustrating!
But he wasn't quite excited enough to make him lose his head.
"Well... if you want some porridge, you can come anytime. We serve it in our office every day at noon."
"Treat this as your own home, come every day."
He pretended to be confused, deliberately steer the conversation towards simply drinking porridge.
I'm such a glutton, I just want to mooch a bowl of your porridge.
Even Zhao Liying wouldn't be so easily angered.
"Of course I want to treat Xiaomi like my own home, it just depends on whether CEO Lei will give me a workstation and employee number," Zhang Yuan replied with a smile.
"Well then, I'm a straightforward person, please forgive me."
"To be frank, I have my own investment company, just like you. You should have known that by now."
"I'm still a beginner when it comes to investing."
"But I understand one thing: what's valuable isn't the company or the industry, but the people in the industry!"
Zhang Yuan straightened his back.
"Just like my decision to abandon potatoes and go to Youku, the reason is that Wang Wei is far less wise and experienced than Mr. Gu Yongqiang."
"And I also have a good impression of you. I think you are a person who does things well and is capable of great things."
"I want to follow you and walk forward together."
"I don't have much ambition or grand aspirations. I just want to make a little money and live a peaceful and contented life."
A few billion is fine, tens of billions is acceptable, and if it's hundreds of billions, I won't refuse...
He stated that he didn't want anything else, he just wanted to make a little money.
The reason I chose Xiaomi is not because of any ambition, but entirely because of my trust in you, Mr. Lei.
"In addition, my recent investment in Youku has yielded considerable returns."
"I'll let you in on a little secret: I have a share buyback agreement with Mr. Gu, so a large sum of money will be coming into my account soon."
"At least over 100 million, or even several hundred million US dollars."
Upon hearing this, the two eavesdroppers were taken aback.
Jun'er, standing in front of him, was also taken aback.
At first, I thought that since you're an artist who made your fortune, it would be quite impressive if you had over 100 million RMB.
This is also why Jun'er laughed it off.
The money is too little, what am I supposed to do with it?
I have hundreds of millions of Chinese Yuan myself.
The title of "Cash King of Beijing" is no exaggeration.
But if it's hundreds of millions of US dollars, that's a different story!
This is on another order of magnitude.
Jun'er never expected that Zhang Yuan would make so much money from Youku.
At that time, the Xiaomi 1 had not yet been launched. The company's senior executives expected that the sales of the unborn first-generation product would be considered to have achieved the goal if it exceeded 100 million units during its life cycle.
Based on this expectation, their further financing target is not that high.
It was only after Xiaomi 1 sold nearly 800 million units that they significantly raised their financing standards.
Its sales were almost the same as the later Huawei Mate 70, and this was the startup's first product.
Running a business is like climbing a building; you have to climb one step at a time.
Goals and ambitions are also increased step by step.
Just like Jun'er now, he is still honest and doesn't talk much. It's not that people who are old later on don't talk much.
Hearing that it's worth hundreds of millions of US dollars, I'm still interested.
With so much money involved, plus the help in publicity, there's definitely something to it. Plus, they really put in a lot of effort this time, so I can't refuse any longer out of courtesy.
Jun'er bit her lip and thought for a while. Instead of mentioning making money, she brought up losing money.
"Zhang Yuan, I'll tell you the truth too."
"Our company's current goal is to lose money."
"Especially after the first generation of products came out, we planned to lose money to gain market share."
"If we lose 100 per product, we'll lose 100 million for 1 million products."
"Therefore, the company's early financial reports may not look very good. As for investment returns, we need to look at the long term."
Zhang Yuan nodded, agreeing with what he said.
Not only in the early stages, but also in the later stages of developing small home appliance products, Jun'er adhered to the principle of exchanging price for market share.
Young people's first air conditioner, first refrigerator, first television, first car... it's all because they're cheap.
Moreover, as a startup, the prices of raw materials, components, and contract manufacturing are definitely higher than those of large manufacturers, resulting in higher costs.
He also wanted to exchange prices for market share, and the claim of losing money wasn't unfounded.
Although the Xiaomi 1 was ultimately priced at 1999, its configuration already swept the competition.
Forget about the system and whether the user experience can compare with big companies, just ask yourself if it's cheap or not.
At that time, Samsung and HTC dared to sell phones with similar specifications for over 4000 yuan.
But this wasn't Jun'er's limit. His initial target price wasn't 1999, but 1599...
He planned to use his first product to completely dominate the Chinese mobile phone market.
However, after calculating the costs, it was discovered that the price was not enough to cover the losses.
Further research revealed that consumers' acceptable range is not that low.
Another important point, and a crucial aspect of pricing strategy, is initial price positioning.
Just like Tesla, a group of Chinese people think that this brand is high-end and a cut above domestic electric cars.
Besides being a foreign brand, another point is that Tesla first manufactures vehicles priced in the millions before moving down to the consumer market.
This is similar to how even though a Mercedes-Benz A-Class only costs around 20 yuan, people still perceive it as a high-end car just by seeing the Mercedes-Benz logo.
First, establish a high-end brand image, then release affordable products to fleece consumers.
Those leeks driving unfinished cars are praising "simplicity".
In fact, Tesla's low-end cars not only have interiors that are inferior to those of domestic brands, but also in terms of body materials, batteries, and even energy efficiency.
Moreover, Tesla can actually be considered a "domestic car".
A prime example of the opposite is Bosideng, which relentlessly raised prices in an attempt to position itself as a luxury brand, drawing widespread criticism from consumers.
Bosideng did this not to increase profits, but to increase its stock price.
Because the stock prices of textile brands and luxury brands can differ by more than five times, even if the products are exactly the same.
This is brand positioning.
Therefore, after careful consideration, Jun'er changed the price to 1599, leaving the lower-tier market for future products.
That's how Redmi came about.
He is now openly discussing topics such as being prepared to lose money, long-termism, and the lack of short-term profits, which is actually somewhat like "testing the mind of Zen by the Four Sages".
See if your claim of trusting me and choosing me is genuine.
If you truly trust me, you'll accept it even if I say I have to lose money.
Because I will eventually earn this money back, after all, I am the biggest investor myself.
But what if you get angry as soon as you hear this!
Then I'm sorry, we have different paths and cannot work together.
If you get so easily angered, you'll be furious when you actually lose money later.
I'm not saying I'm just asking for trouble at the company.
But when he finished speaking, Zhang Yuan remained expressionless, not even moving an eyelash.
"Understood, thank you for letting me know."
"But isn't financing meant to be spent?"
"The problem is that startups don't spend money; losing money isn't the problem."
Zhang Yuan spread his hands, his face full of composure.
This reaction was unexpected for Jun'er, but upon closer reflection, it made perfect sense.
This wasn't his first time making investments.
But he does have guts, quite a lot.
Then, there was a long silence.
He was thinking.
Finding investors boils down to these few things.
You need to be able to get along with them, have money, preferably a good relationship, and also have the ability.
Zhang Yuan accomplished the first few things, at least passing the minimum standard.
As for his abilities... being able to handle Sharp is certainly good, as he helped solve a major problem.
But the company is now facing more than just problems with Sharp.
Sharp is a bit more difficult to deal with, being an overseas company with the added added risk of nuclear leaks.
Zhang Yuan drank his wine and ate snacks, showing no sign of being in a hurry.
As the plane approached the vicinity of the capital and prepared to descend, Jun'er spoke again.
"I've been quite busy lately."
"The new round of financing has just been negotiated."
"How about this, let's schedule another meeting in a few weeks and have a proper discussion?"
Zhang Yuan glanced at the other party; things might change over time.
This is like when a girl confesses her feelings to you, and she says she'll think about it, or that she'll talk about it after her final exams or after she gets into university.
Can we wait?
Yes, but it's risky.
Once you get into university, if you try to find someone again, they might already be stuffed into cream puffs by the start of the semester.
What are you waiting for? Are you waiting for someone else's full moon celebration?
"I might not be in the country in a few weeks."
"To be honest, I'm quite busy too."
"I have a bunch of people working for me, and as the boss, I still have to go abroad to work and earn money."
"In addition to what I told you about, the product placement in that movie."
"The film is about to start shooting. If we wait any longer, I'm afraid we won't have the chance."
Zhang Yuan's attitude became slightly tougher.
Or should I open the cabin door and let you do a parachute jump without parachutes?
"You said you've been busy lately."
"What are you busy with?"
"If I can help, I might be able to speed things up a bit."
"Whether it's the company's progress or the progress of our conversations."
Jun'er was about to say that as an artist, you might not be able to help.
But then I thought, Sharp's side was handled by someone else.
We can't treat him as just a celebrity; that's prejudice and it's wrong.
The question is, was his ability to handle Sharp purely by chance, or is he truly that capable...?
Jun'er thought about it for a moment and decided to tell the truth.
"Mobile phone accessories are not just about the screen."
“There are other things as well.”
"Besides the components, there's also the production process, and a telecommunications license also needs to be applied for."
“We’ve been running around these places lately, but it’s the same as going to Sharp.”
“We are seen as a small workshop, which makes it difficult to negotiate and we are often turned away.”
This is a congenital "flaw" of Jun'er, because his family does not have a strong background, so he cannot contact the scattered upstream and downstream companies.
Unlike some people, whose father can call any official or supplier needed to run a business and have them all come over for dinner with just one phone call, this person is different.
"Okay, okay." Zhang Yuan nodded repeatedly, while rolling his eyelids in thought.
"I understand."
"Since that's the case, I might as well help them to the end and see them through to the end!" (End of Chapter)