The SU7 Ultra. My future car.

 

 

Here is Lei Jun’s office (I think)

 

 

Here are some photos from Unitree. And the G1 kungfu robot.

 

—––

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• Two Lessons from My Visit to Tencent Cloud (1 of 2) (Tech Strategy)
• Tencent Cloud and Mini Programs Go International. Lessons from My Visit to Tencent HQ. (2 of 2) (Tech Strategy)
• How Amap Beat Baidu Maps. My Summary of the Alibaba Playbook. (Tech Strategy – Podcast 252)
• Scale Advantages Are Key. But Competitive Advantages Are More Specific and Measurable. (Tech Strategy)

From the Concept Library, concepts for this article are:

• n/a
• n/a

From the Company Library, companies for this article are:

• Xiaomi
• Unitree
• iQIYI

———transcription

Episode 267 – Xiaomi.1
[00:00:00] Welcome. Welcome everybody. My name is Jeff Towson, and this is the Tech Strategy podcast from Techmoat Consulting. And the topic for today, lessons from my visits to Xiaomi, unitree, and IQIYI. A couple weeks back, we did a tour of Beijing, Hangzhou Shanghai, visited a lot of companies, did a lot of lecturing, all that, pretty awesome.
Um, really had a good time, a lot of fun. But I, I also think it was probably the best tour we’ve ever done. We do about one, usually two of these per year. In this case, it was for an executive, uh, management team of an e-commerce related company. I think this was the best one. Like I think we’re getting better at it.
So, I don’t know. I’m looking at the feedback and the comments and it was really an interesting sort of mix of, it’s almost like a mix of three things. It’s like, yes, we visit companies and that’s important cause you learn a lot. You see a lot. Um. Especially at the right companies [00:01:00] and you got to kind of know who they are and you also got to know who to meet at those companies.
cause there’s a lot of people. But it’s also kind of a class. Like it almost turns, I’m almost like back in professor mode and we just sort of do lectures all during the week, every time before we get to a company, we’ll do maybe 20, 30-minute lecture on the history of the company, what they’re doing. Yeah.
That that’s kind of good. And then maybe it’s a bit of consulting as well. cause that naturally turns into, well how can we use this in our company? What should we do? It’s kind of a mix and I was looking at the comments and yeah, that’s pretty much people said it was like kind of a mixture of lectures and visits and all of that.
So anyways, I feel pretty good about it. It was great. And I’ll, I’ll sort of give you the takeaways from the company specifically, which were, they were fantastic. Had a good old time. So anyways, that’s going to be the content for today, mostly about Xiaomi. cause that’s kind of. You know, a big company. Anyways, that’ll be it for today.
Uh, let’s see. Standard stuff. If you can go over and give a like on. You know, iTunes or wherever [00:02:00] you’re listening, that would actually be helpful. Um, you know, reviews actually do make a difference. I’m trying to sort of boost this, uh, podcast up over time, which I haven’t really been paying attention to, which is not good.
But, you know, anyways, if you could do that, I would appreciate that. And standard disclaimer, nothing in this podcast to my writing or website is investment advice. The numbers and information for me and any guests may be incorrect. The views and opinions expressed may no longer be relevant or accurate.
Overall investing is risky. This is not legal investment or tax advice. Do your own research. And with that, let’s get into the content. Now, I don’t really have any big concepts for today that I think are necessary or useful to talk about, but I will kind of say I’ve been sending out kind of a lot. In depth content over the last one to two months.
You know, kind of, I, I’m afraid like the message is getting lost cause it’s kind of too deep into the weeds. But I actually think it’s important, like more than normal for me at least. [00:03:00] cause there’s kind of three topics I’ve been hitting on. Number one is just this idea of AI strategy. That it’s different than digital strategy, that the cost structures are different.
What you can do with it is different. And that kind of teed up the second talk topic, which was understanding AI infrastructure. So, I’ve been talking about the nature of the compute, how these data centers are built, who’s building them, why that’s kind of key. cause a lot of the cost, just the whole cost structure of this.
Is different than what we’ve seen for software or what we’d call data technology in the past. So, a lot of the business models, a lot of the economics we’re used to a lot of what it can do and can’t do. It’s just fundamentally different. And it all follows from the infrastructure that, from the nature of the compute, from the nature of the databases in the storage, and you know, ultimately these massive data centers that are being built, which are really just.
They’re really just the [00:04:00] infrastructure of intelligence and it’s being built out right now. So, I kind of been doing deep dives into that. I’ve got a bunch more of that coming. So those two topics go together. AI strategy, AI infrastructure. And then the third one, which I’ve been doing the last week, is, okay, how does that play out in e-commerce?
And this is super important. I sent out an article about this to subscribers, uh, in the last day or so. I did a podcast on it. Man, it just turns out that agents in particular, not just generative ai, but really AI agents, it’s just going to change the nature of how we do e-commerce. If you’re a merchant or a brand or a retailer, you got to start looking at this stuff.
I mean, really, if you would just have a webpage of any kind, like AI’s changing the nature of search, because it turns out it’s not humans doing the searching. More and more it’s AI agents or AI itself. And then when we’re talking about buying and selling goods, well. There’s going to be a lot of agents doing that.
That’s just different. And the ecosystem’s [00:05:00] changing, and there’s a big risk of getting intermediated basically cut off from your customers to a significant degree. They isn’t going to be coming to your website like before. They isn’t going to be coming to the apps, which means you’re not, you know, if your whole strategy’s based on, you know, serving your customers, gathering data, getting engagement.
Creating new features, improving your experience, all of that gets harder when it’s no longer your customers who are actually showing up at your webpage, but their agents so huge deal. So those three topics I’ve written about a lot, I’m going to do a lot more of that in the next month. But yeah, put, I would put that on the front of your brain as like, yeah, that’s really important.
So anyways, I’ll talk, uh, more about that going forward. So, no concepts, but think about those. And let’s see. Feedback. Alright, let’s just start with it now. I like IG Uh, for those of you who aren’t familiar, this is sort of, it’s sort of over-the-top streaming service number one in China, owned by Baidu, but it’s been independent for the most part for a long time. [00:06:00]
And you know, I always say, people always say it’s a combination of YouTube and Netflix because, you know, they have sort of the viewing platform, the YouTube like experience. Uh, but really, really, that’s not that big of a deal for it. China, when they started to get into online video, this is 2010 Ish, you know, there were a couple big problems with this.
Like, number one, the digital revenue was not there, there wasn’t digital marketing back then. Uh, it was a very nascent sort of business back then. So, you couldn’t make money doing digital ads. This is why companies like Tencent. You know, when they were doing gaming, they came up with micro transactions and selling little, you know, skins and weapons in there for small amounts of money.
That’s how they went after their revenue. cause you couldn’t really make that much on marketing back then. And you know, that changed over time. It’s better now, but back then it was problematic. And the other problem was consumers just weren’t in the idea of we [00:07:00] pay for video. Video was free, it had always been free or next to nothing.
cause you could see stuff online for free. You could get pirated DVDs on every street corner in China, pretty much. So, you had to sort of convince consumers like, hey, you should actually pay for subscriptions and things, which was a new idea. So anyways, for a long time they had sort of a, a revenue problem and.
The other half of the problem was the three leaders, 2D IGE, and Tencent video, they all sort of had undifferentiated products. So, they all shifted into we have to create our own proprietary in-house content, TV shows, dramas, uh, movies. So, they all quickly became sort of versions of Netflix, or I’m sorry, not Netflix, HBO.
Or you know, doing in-house production as a way of differentiating, and this was a tremendous amount of spending. So, when you looked at the financials of it, [00:08:00] chi, which is public, you can go back to 2015 and what you’ll see is slowly increasing revenue and massive amounts of money being spent on in-house productions and licensing deals and partnerships.
So, the economics were not awesome. Uh, but that’s why even today IG looks a lot more to me, like HBO Max in that they do their own movies. They do their own TV shows, lots of dramas, and they’re the highest quality, you know, they win the awards. Their shows are arguably the best. The others have some good shows too, but that’s where they sit.
Plus, a little YouTube stuck on top. That’s how I see them. And, you know, they’ve reached, they’ve sort of fought their way to profitability, which they hit a couple years ago. And the revenue really comes from three places. It comes from subscriptions, it comes from advertising, which has gotten better and it has come from intellectual property, monetization merchandise.
You know, if you have a hit TV show, you can put things on backpacks and toothbrushes and [00:09:00] all of that. So, it’s an interesting business and I think there’s a lot of cool lessons. Um. Before I tell you what we did at the thing, I mean the two lessons I take away from IQIYI is how much their choice of a customer base has shaped their entire business.
Now they, they sort of went after, let’s go after middle class, upper middle-class consumers who will more likely pay. For subscriptions and who also are more valuable to advertisers. So, the choice of the customer base played into the fact we, this is where we make our money now, to get that customer base, that sort of locks you into a certain strategy, which is.
Look, how are we going to get these people? Well, what do they care about? They, they care about cultural trends. They care about the TV show that everybody’s talking about this month. [00:10:00] So it, you know, position themselves on higher quality video TV shows and movies, especially dramas. Um, they, they position themselves in the higher quality category like HBO, and they also position themselves to sort of stay on the cultural frontier.
So, they want to have the show that everyone’s talking about. Because when you have the hot show that everyone likes and it thinks is cool, well who shapes culture? Usually, it’s the middle and the upper middle class. So, they’re on that sort of cultural trending frontier that makes it easier to get subs and advertising.
cause you’ve got the hit show. It also ties into monetization of ip. So, when you look at their TV shows. You know, you’ll see a lot of these interesting, uh, period dramas with empresses and things like that. My girlfriend watches I Chi all the time, like every time I come home I Chi’s on there. And that’s interesting because they’ve expanded [00:11:00] out of, into Southeast Asia, which is a new thing I’ll talk about.
But yeah, there’s this interesting choice of once you choose your customer base, your kind of locked into a revenue model and you’re, you’re locked into a cost structure. So, they have huge production facilities creating these high-quality dramas. They are, you know, building IGE Land, which is like a Disney like theme park.
Okay? If you have high quality stuff, you can build theme parks and you can monetize their merchandise. If you’re building lower, there’s no Netflix theme park. Right. Netflix is pretty low-quality content. Generally speaking, you’ll find a good show every now and then, but most have made that good. No, if you’re, if you’re going more HBO max more Disney ish, you want to own the intellectual property, and then you can do things like more valuable licensure of your IP into backpacks, tv, you know, whatever, uh, clothing.
But you can also do things like theme park, which they’re building. It’s supposed to be open in a month or so. I’m going to go out and visit it when it opens. Um, we’ve been [00:12:00] talking about me doing a visit, so that’s sort of on the horizon, which I’m looking forward to. So that, that’s kind of where they sit, which is, I think is interesting.
Um, other things to think about in terms of their business model. When you’re sort of the HBO max of China, one of the things you’re tied into very tightly is the manufacturing base. So, if they get a hit show. They can roll out new merchandise within about nine to 14 days. There’s a very tight feedback loop between what people are watching and the ability to put items on shelves.
That’s pretty cool. Actually. The other thing they’re doing right now is they’re expanding into Southeast Asia. So, if you’re in Thailand, Philippines, you’ll see IGE and their dramas and their shows. They don’t, you know, they’re not as popular as K-Pop and Korean tv, but they’re getting pretty popular. And then they’ve got these sort of joint production deals they’re doing in Thailand and the Phil, where they’re, they’re starting to create local content as opposed [00:13:00] to importing Chinese content.
So, they’re, they’re doing that sort of Netflix going global strategy. Southeast Asia’s the first stop and there, they’re growing pretty well. Yeah, you’ll see it. It’s, it’s pretty interesting. The last bit to think about for them is they have pretty impressive technical capabilities. Because, you know, they’re owned by Baidu.
That would be like HBO being owned by Google. Now you, you just have access to greater technological resources, and they do. And so, what they’re doing is, one, they’re in generative AI in a major way. They’re building language models, uh, generative AI tools for video, for photos. But they’re doing it at a level that no one else is really doing it, which is they’re not trying to make short, quick videos that are funny.
They’re trying to use generative AI to make the highest quality TV shows and movies out there. You know, [00:14:00] can you make an entire season of Game of Thrones? Not the last season, because that sucked, but every season before that, can you create an entire season using generative ai? Can you create, you know, those high-quality shows that everyone talks about, that’s what they’re going for.
So that involves script analysis, studying previous movies, uh, dialogue analysis, character development, character, video generation, image generation, all of that. It’s pretty impressive what they’re doing. And they’re basically doing virtual production where they’re digitizing all their characters, all their assets.
They’re putting ‘me in a big library. So, you have a big library of digital assets, and then you can start to pull from those to do mostly virtual production. And they’re building a big library. Now, I keep asking if they’re going to license these assets and these tools that they use to external parties so that anyone can sort of access their production duals, which are mostly online, and uh, make their own [00:15:00] movies and TV shows.
And I think that’s coming, but they haven’t done it. So that would be more like the Epic Games model. You’re very good at making video games, but you also make your tools available to anyone who wants to make their own video games. I think that’s where they’re going anyway, so those are sort of the, the takeaways I have in terms of business strategy for them and thinking it’s a cool company.
I keep a close eye on it, especially their technical tools. And what we did to visit them is we didn’t go to the headquarters this time, which is sort of up in Beijing and um, the. You know the Chow Yang district, for those of you who are familiar with San Lito area, they’re up there. We went to a new facility they have up at the 7 9 8 District.
7, 9, 8 is, um, you know, it used to be a big factory complex in the northeast of Beijing. You, you got to drive out of town a bit and they’ve basically converted it into an art district. So, all the old factories now, it’s all art studios by lots of individual artists and it’s fantastic. And there’s [00:16:00] coffee shops everywhere.
It’s a lot of fun to walk around and see all the artists working and all their products, and then you have a cup of coffee. It’s, it’s great. I mean, I really like going out there. It’s one of me. Sort of favor places and you, your kind of, it reminds you that even though everyone thinks China was a big com country of factory workers and then engineers, no, it’s, it’s a big country of artists and it’s always been a big country of artists, um, you know, going back forever.
So, there’s a lot of that culture there. Now, within that district, IGE basically built a virtual reality experience. And it’s based on one of their most famous shows, which I don’t really know that well, it’s called Strange Tales of the Tang Dynasty. Uh, super popular. I don’t really know the show that well.
But, you know, you go into their VR set and you know, you basically enter that world. You walk in, they’ve redecorated it like you’re going into an old tea house, and then you put on the VR stuff and you walk through this world. In a group so you can see [00:17:00] the other people next to you and they put you on a bit of a ride, which it, it’s amazing.
Like, it’s absolutely amazing. You, you’re flying like down this river on a boat. It goes down the waterfall, the, you know, the boat is buckling in shape, you know, but you’re not really moving that much, but it feels like it. Then you go up into the castle and you climb to the top and there’s. Dancing everywhere in fireworks, and then you get in a hot air balloon and you fly across and it, it’s recreating all the scenes of some of the scenes from the famous TV show.
And it’s, it’s really stunning. It’s, it’s up there on my list of sorts of tech experiences that I think are great, are like, the sphere in Las Vegas is amazing and this, so that’s kind of what we did. And we sort of talked about how they’re. You know, they’re using technology not just to do better production, which I mentioned.
They’re using it to change the user experience. That’s everything from being able to watch your, the shows on your phone or your TV or whatever, [00:18:00] but it includes vr. And this is, yeah, keep an eye on how fast sort of the entertainment side of China is moving in terms of technology. It’s pretty amazing. So that’s what we did and everyone left and you know, we were all kind of stunned.
I hadn’t done that before. I really recommend you do it. So, 7, 9, 8, you should definitely go to in Beijing. It’s super fun. Yeah, do it thing. Okay, let me switch gears to unit tree. I’m, I’m supposed to be going faster here, but I’m not. Unit tree was short. This is in Honjo. It’s kind of in the eastern side of the city.
It’s this, you know, office building that you’d never even notice. It’s not a nice office building. It’s like class B to Class C, real estate, you wouldn’t even know it. And you drive by and that’s their headquarters. And yeah, we went in there, I was there about six months ago and. Pretty basic, um, facility, but they have a showroom and you can go and play with the, you know, the robot dog.
When I [00:19:00] went six months ago, they had the robot dog, which can run around on wheels, or it can zip up and down, you know, rivers or mountain sides or staircases. And there’s videos all over the internet for this. But six months ago, they also had their first humanoid, which was a small version. They always create sort of a smaller version and then a larger version.
And the larger versions are industrial. Professional use case, the smaller versions, sort of like a toy to get people into, you know, just playing with these things. And the price changes based on how programmable it is. If you want the fully programmable, smaller version, about $24,000. If you want the one that doesn’t program as much, it’s about 16,000 for the robo dog.
The small one, not the professional one. You know, they started $1,500 now, so. They’re doing this China playbook, which is be on the frontier in terms of capability and come in with a price that [00:20:00] shocks people, which is what BYD is doing. It’s what, you know, it’s been the China playbook for a long time. Uh, usually the, the sort of pitch was, you know, get a refrigerator from us, get an ultrasound machine from us.
You know, we’re not as good as the Western or European ones. About 80% performance, but it’s a half or less of the price. That used to be the pitch in 2005. Now the pitch is our robots are as good or better than everyone else, and they’re cheaper. That’s the BYD pitch, uh, which is pretty impressive. Anyway, so the OID they had back in March, it couldn’t do much.
It could walk a little bit. If you put out your hand, it would slowly reach out to shake your hand. And you could push it around, it wouldn’t fall down. But it didn’t do that much. It was the first humanoid they had done. Well, the humanoid I saw two weeks ago, it was amazing. I mean, it can do kung fu, it can do [00:21:00] flips and not awkward, smooth, fast, like the agility level is moving up so fast.
It’s pretty crazy. I put. I’ll put a link to it. I put some videos online if they’re, you know, they’re higher performance humanoids, they can do kung fu at almost full speed, and now they’re starting to be able to work in the home and do things and yeah, it’s really pretty stunning how. Quick, this is advancing.
So that’s kind of one is to keep an eye out, uh, for just the agility and performance level of these things. But you know, the big move is coming, and we can see this happening right now, is when you start to, right now these things are mostly programmed in a virtual space. You know, you train them there, you create programs, then you download them into the robot, and then you have a controller.
And when you want it to do the kung fu move, you trigger that program. Give it a go, it will do it. Okay. But the big [00:22:00] move is when you move general ai, you know, basically AI into the robot itself, and it starts learning on its own and it can do things on its own. So, you know, for those of you who use like AI companions like Annie on gr, which I use, you know, I talk to it all the time.
And I ask it questions, and increasingly, I, I can just turn on my camera and point the camera and I say, what is this? What street am I on? And Annie would say, oh, you’re on this street. I recognize where you are. So, it’s the ability to sort of perceive and understand the world is increasing, but it’s still stuck on a smartphone.
Well, pretty soon it’s going to be in the robot, and that’s where Elon Musk is right now. We’re right there. Give it another couple month and it’ll happen. I think. So that’s what they’re doing next is they’re starting to put AI into these robots and, you know, they can walk around your house and pick things up with their hands and, um, you know, learn like a child does.
So, like the big thing everyone’s talking about, at least online, [00:23:00] is the hands. You know, perception is pretty good. Computers see with eyeballs quite well; hands are the problem cause that’s when you pick things up and you move them around. And that’s what Elon Musk talks a lot about. I mean, he kind of said in a podcast a couple weeks ago, I think it was the All-In podcast, you know, he’s spending most of his time on the Android, they’re working on the humanoid.
And the biggest thing was getting the hands to work. cause once you get the eyeballs. The brain and the hands. That’s kind of 80% of what a human is. Most of the other stuff in a human is pretty basic. Arms, legs, back, pretty basic. It’s all about hands, eyeballs in the brain and that’s what they’re working on.
So yeah, I think unit tree’s going to make some big announcements. I think a lot of Chinese firms are right there because they have the manufacturing base, which the West really doesn’t have. And they have the ai, which the us, it’s kind of neck and neck right now. So, I think they’re going to put it together and that’ll be a big deal.
But anyways, unit tree. [00:24:00] Really fun. Awesome. Um, worth keeping an eye on their videos because they release them all the time and they’re fun to watch. I post ’em all the time cause they’re cool. Anyways, it’s not a lot to talk business wise for this company. It’s mostly about the product. So we went, they’ve sort of expanded their showroom.
It’s a little bit more, you know, developed their facility than it was a couple months ago. But yeah, you basically go and play with the robots and uh, yeah, it’s a lot of fun. Okay, let’s get to Xiaomi and I think this is where there’s the most business thinking to talk about. Um, I’ve talked about Shomi before.
I’ve written about them for years. Not a huge amount, but if you, if you go back, you can find podcasts and articles taking apart their strategy and particularly their strategy for EVs. Which is an interesting contrast to what BYD is doing and what Tesla is doing. There’s basically three different business models.
Um, you could call Elon Musk and Tesla, the sort of AI first business model he’s building, basically building [00:25:00] AI robots. That’s where, that’s what he’s best at, right? He’s, he’s far better at software than he is at manufacturing. That’s not historically his background, but he, you know, he’s building AI robots and the first robot just so happened to be a car, but then the truck came pretty quick.
The robot taxis on the way the humanoid robots are coming, so he’s leaning into the AI intelligence side. Basically, he’s solving the problem of real world ai. Fine. BYD comes at it from a bit of another strength. They’re a manufacturing powerhouse and they’re a batteries powerhouse and they have vertically integrated where they own everything related to the manufacturing of their cars and everything related to the manufacturing of their batteries, which turn out to be a, you know, a huge part of the car.
And you know the founder, he’s very much like Elon Musk, but Elon Musk is a physicist and an engineer. The founder of BYD is an applied [00:26:00] materials person. He’s a chemistry person. He is. He knows how to build batteries in a way that I think Tesla simply doesn’t. They’re good at it, but they’re not at his level or his team’s level.
So, it makes sense that they lean into their strength of batteries. And it also helps that China controls a lot of the rare earth’s, uh, processing, which you need for the batteries and other parts of the car. So, they’re more of a manufacturing first company, and you can see this in their strategy. We’re not going to make.
Three or four cars like Tesla, we’re going to make 20 or 30 different models. Everything from a $9,000 ev the seagull up to the, you know, 200, $300 and $300,000 supercar. So, it’s much more of a manufacturing for strategy, and we’re going to have constant innovation, lots of products, and at a price that nobody can match.
Now, on top of that, they’re also doing ai. But they’re not as strong. They’re just like, Elon Musk is doing manufacturing, but it’s not [00:27:00] his biggest strength. So, they’re leaning into what they do best. Well, Shomi is another strategy. Shomi is a consumer ecosystem strategy. Um, they’re not, you know, real deep in manufacturing of cars.
In fact, they just have one factory, which is in the sort of the south of Beijing. You know, they didn’t have this two years ago. It’s the first thing. And they weren’t in cars at all four years ago. So, they’re new into this world. Um, and they’re also ai okay, they’re doing that, but that’s also not their strong suit.
They have their LLMs moving, they have their OS that they’re doing, uh, fine. But again, they’re, they’re not at, at Tesla level. Or GR level. But what they’re very good at, in which they’ve been doing for 15 years is they’re very good at building an integrated consumer ecosystem with lots and lots of devices.
You know, and the, the way they talk about it is, um, [00:28:00] basically person, home car, that’s the phrase they use, or human home car. They have a fairly wide range of products that. Or for the human. So, smartphone is obviously number one. Laptop is another one of their core products, but they have other things.
They have VR glasses, they have earbuds. Um, pretty much anything you’d have watches, anything that would be on the person. And this is the business they’ve been taking internationally for quite a few years. So, you’ll find these products in Europe, you’ll find ’em in Southeast Asia, places like that. Now the other bucket, the human home car, well.
Home is a huge category for them. And this has been mostly in China up until this year. Now they’re making this sort of go international. So, this is sort of the next wave of their internationalization is in the home category. And man, there are products everywhere. Uh, smart air conditioner, uh, smart air [00:29:00] purifier, smart toothbrush, smart razor, um, smart treadmill.
Um, smart walking treadmill. Lots of purifiers by the way, so you can sort of do. Smart Bedroom is a big category, but then you can look at, they have smart bathroom, um, smart toilets, smart uh, hair dryers. I’ve mentioned the toothbrush. I mean, I’m clicking through them right now. Smart living room. Products, speakers, lots of speakers.
Uh, robot cleaners, they have televisions. Uh, they have little cameras, they have printers, they have smart thermostat, they have smart clocks. They have little LED lights that sink and all of that stuff. Um, curtains, of course lights. You know, you walk into your living room, you give it a command, the light, you know, the curtains open, the lights go on, your TV comes on, the music comes on.
All of that is controlled. Uh, this is all under them. [00:30:00] All their home products are under Meja. That’s the brand for this Smart Kitchen products. There’s a ton of these. There’s smart rice cookers; there’s smart espresso machines. There’s a smart, uh, video screen you can talk to interact with. There’s a smart refrigerator.
There’s a smart oven. I mean, pretty much everything you can see in the kitchen, you can add the word smart in front of, and they have it. Smart Office products, same thing. So, there’s a long list of products that would go under this category of me job. And the way they’ve always done that is they basically have an ecosystem where they have lots and lots of partners who manufacture these things and they put in the smart component.
Now, some of ’em, they do in-house, the core products, the smart phones, the laptops. I think the TVs are now done in-house too. Those they keep in, but the rest are done by partnerships. And if you’re in China. It’s, you know, you can build a manufacturing ecosystem. So, they have this big wave of products. [00:31:00] And then the third bucket, which is the cars, the EVs, well they have three brands now.
They have the SU seven, they’re sort of cool sports card that looks a lot like a Porsche. They have the SU seven Ultra and which is even cooler. And then they have the YU seven, which is the, um. SUV that was launched a couple months ago. So, they have three products there and you, you should expect this to go international.
You know, after the home comes, the car and I, I’ve heard that’s 2027, they’ll start taking those out. They’re still building up their factories and basically focused on China. But that’s next. So, you’ve got these, this long list of products that all go under the category of a consumer ecosystem, and. They tie together, they all link together.
They have their Hyper OS operating system that connects ’em and they basically make it easier for all these things to work together, which is really what Apple was trying to do, but they never really executed. There’s still a [00:32:00] handful of products, but you know, your home is not full of Apple products.
There is no Apple car. Well, I mean, they tried to do this strategy, I just don’t know why they didn’t or couldn’t. But Xiaomi basically executed on this strategy very, very well. And they have lots of good numbers on this stuff. Like, you know, in their product categories, they try to be first or second or third in the market in lots of countries, uh, which they basically are.
Um, there’s big. A chart on this. I’ll see if I can read some of it. You know, they’re first in 1, 2, 3, 4, 5, 6. They’re first in about 10 countries. Mostly you’re talking about smartphones. Number two, there’s probably about 30 to 40 companies they’re involved in, and they basically say in within top one to five, they’re in that category for 68 different countries around the world.
So, they’re going international. They’re pushing all their products and then when you buy one product, they get you to buy another. And most of their consumers own [00:33:00] 2, 3, 4 products by Shomi that all link together. So, I have, you know, multiple products. I have a smartwatch by Shomi. I have a couple air purifiers by Shomi.
I would definitely buy an air conditioner by Shomi if I could. Uh, so they’ve got this sort of ecosystem first strategy, but the tech in their devices is not cutting edge. Um, the price is not super low. They come in with about a mid-tier price, and the quality’s pretty good. So, if you’re looking at smartphones, you know, top smartphones would be Samsung, Huawei, apple, lower end smartphones would be OPO vivo.
Or if you’re in Africa transient. Uh, but in between those would be Xiaomi. They’re, they’re, they’re better than oppo, they’re better than vivo, uh, but they’re not quite apple. They’re not at that level. And then they have their secondary brand red meat, which goes below that. So basically, it’s an ecosystem first strategy that’s very consumer facing and very good. [00:34:00]
So that’s kind of takeaway number one for them. Takeaway number two is if you’re going to do this strategy. Um, what they talk about a lot cause their management is very good, is the need to continually thrill customers. They know you’re only going to buy a smartphone every couple year maybe. So, they have to find ways to keep you constantly engaged coming into the store.
And they talk about the need to constantly thrill their customers. That’s their phrase. So that people always want to stop into the Shomi store and see what’s new. Oh, a smart toothbrush. That’s kind of interesting. Ooh, there’s a new little smart scooter. There’s a smart backpack. So, this sort of business, which is you can’t do the consumer ecosystem unless you got to have one of two things.
You either have to control the operating system, which Apple does, or you have to continually thrill your customers and get them coming back, coming back, coming back, and that’s how you lock them in. Keep them coming back, tie [00:35:00] your devices together. Now Apple controls the ecosystem by the operating system.
Xiaomi doesn’t really do that. They have, you know, they’re doing Android, um, version, they don’t have as much control there, so they’ve got to sort of do this the, the hard way, which is keep thrilling your customers, keeping the back. And I think that’s a lot of the reason why Apple doesn’t do this stuff.
They’re too lazy with their powerful operating system that they don’t do this game. So, Xiaomi has a harder set of cards to play. In the consumer ecosystem business. So that’s sort of number two. And third point is because it’s a harder, uh, path. Their management is very, very good. It’s this, it’s this weird sort of, uh, karma aspect to business is if you have a powerful business model, uh, you tend to get weak management over time because yeah.
Why work so hard? We’re good. If you have a harder business model, which xiaomi does, [00:36:00] you tend to get better management. You know, it’s, it’s the difference between being born rich and being born poor. People who are born poor, work a lot harder. They’re, they’re scrappier, they’re more resilient. People who grew up with trust funds, statistically speaking, not as much.
You know, that’s Xiaomi. Their management is outstanding, in my opinion. I think they’re one of the highest quality management teams anywhere. Um, so when they said they’re going into cars, when Apple said they’re going into cars, I was pretty skeptical. Eh? We will see Tim Cook and his team haven’t invented anything in a decade, more than a decade.
But when Xiaomi said they’re going into cars, I said, okay, this could be interesting if any group is going to surprise us. It’s this group and I referred to them as the Dark Horse of EVs for a couple years, and sure enough, they released a car. And it’s cool. However, the car, it’s not the highest quality ev, but the price is pretty good.
It’s probably about $20,000 ish the last time I checked. So, it’s that same price [00:37:00] point, but they’re cool. And this gets me to my last point. Well, second again, the last point. They’re very good at being cool. Their products are cool. They’re very good at sort of gorilla marketing tactics. You know, phones are phones, smartphones are phone, you know, fine.
But the X me phones are pretty cool. There’s a lot of EVs. The X me EVs are cool. They look better than the other EVs. They don’t even sell them well. The colors are like yellow and green. And sort of canary blue, and there’s a hot pink one. If you want a gray, black or white one, you have to pay more. They don’t sell those colors sort of stock.
They want you to buy the blue one and the green one. So, they’re very good at sort of marketing. And when you get, you see these announcements like, Ooh, the Xiaomi car sold out 20,000 in one hour. You’ll see press releases like this. I can remember back in 2011 when they released their, their first [00:38:00] smartphones, it was the same thing.
They’d be like, we sold out, you know, 200,000 phones within 24 minutes. All these sorts of gorilla marketing tactics that they do. They’re very good at that stuff. They’re good at branding and they’re good at Gorilla Marketing. You’ll also hear about their Xiaomi fans. The me fans, they have sort of, uh, because they’re cooler.
Kind of like Apple used to be. They get a lot of sorts of enthusiasts and they have these mi fans. Uh, those are the people that show up to buy, you know, 10,000 of their new iPhone or their new phone within 20 minutes. Those are the mi fans, and they use that to sort of generate hype and enthusiasm. They also use them for feedback.
It’s a very good, it’s almost like a community. So that gorilla marketing aspect, the community aspect and the cool branding aspect. Yeah, those are kind of my takeaways for them. They’re also working on the foundation models and their operating system that will, you know, you got the consumer [00:39:00] ecosystem.
They’re clearly going to build foundation models and companions into that, which they’re doing. So that’s on the way anyways, that’s how I think about it business wise in terms of our visit. Man, it was pretty great. I hadn’t been to the Xiaomi headquarters before. I’d been to the factory where they make their EVs, but I hadn’t been to the headquarters.
Pretty awesome. It’s out sort of in the western side of Beijing. It’s not that far from my old office at Peaking University, actually. Uh, yeah. So, we went out there, sort of, um, walked around, uh, looked at all their products, obviously. Uh, the cars, of course, you have to look at the cars. I took a bunch of photos.
Uh, the yellow. SUV Ultra. Yeah, I got to get this car. I really, I mean, it’s ridiculous. It’s, you know, it’s kind of a sports car. It looks just like the Porsche. They’re going to start selling them in Southeast Asia, probably let’s say. I asked, they say 2027. Who knows? That may be true. You know, I, I don’t think it’s been decided, but they’re doing sort of [00:40:00] X Me Home is going international right now, so if you’re in Southeast Asia, Europe, go down to the store and look at all the Mejia products.
They’re pretty cool. Anyways, cars will be coming in the near future. Looked at all the products, lot of fun. Uh, we went to the Xiaomi lab, which I couldn’t take photos of or share any of that. I’ll put some photos in the show notes of Xiaomi. But the lab is where they do all their testing for things like audio quality, um, camera quality, um, you know, how much shaking, shaking, stabilization that’s built into the phone.
All those things that they use to test. And they do this with a lot of partnerships. They obviously have partnerships with the telecommunications companies to make sure you’ve got good signal all the time. Good. You know, the antennas are working fine. So, lots of sort of the technical side of, mostly the smartphones.
I asked about, you know, where is the testing for the cars? These are basically testing laboratories for the most part and they say, oh, it’s not here. We, you know, it’s not nearby. I [00:41:00] said, well, is there a humanoid being built somewhere? Right. Okay. You’ve done the smartphones, you’ve done all the home products, you’ve done the cars, you must have robots coming.
Is there a humanoid being tested somewhere like a home companion? And I, I got a no comment. I suspect they’re going to release a robot. Um, you know, EVs, then robots, but they haven’t said that, so who knows? Um, and I did, I did try to find Le June’s office, the CEO. I couldn’t go up there obviously, but. It’s on the 17th floor of one of the buildings, the building we were in.
So, I have a picture of me pointing to the office, like the two offices I’m trying to get into are like the executive offices of Xiaomi and Deep Seek. And I haven’t gotten, I haven’t gotten into either, but I’m, I’m, you know, I’m crafty, so I’m, I might at least show me I might have a chance. To, um, to get there one day and sort of sit down, maybe do an interview or something.
But who knows? I tried to get into Tesla too and I got, I got turned around at the [00:42:00] gate. I didn’t get very far and deep seek, just forget it. No muddies getting into deeps seek these days. So anyways, that’s on my list. So, I took a photo. The closest I got for Deep Seek was I was at the Family mart, you know, the seven 11 down in the lobby.
Of their, uh, where they are. So, I, I was hunting for like the CEO there. No, I got a photo of the family mart me. I got a, I got a photo outside below the 17th floor. So anyways, give me a year or two. I might get there, but we’ll see. This is just me being a bit of a fan boy, so. Anyways, that’s kind of it for the content to, for today.
We visited a bunch of other companies too. I’ll, I’ll talk about those as well. Jd, Alibaba and kind of a who’s who of China. It was a pretty great trip overall. Yeah, as for me, I’m, I’m back and I’m sort of resting a bit. Uh, I fell behind on content articles and, uh. Not podcasts, but articles I’m behind. So, I’m, I’ve been catching up.
So, for the subscribers, I think I already sent you three articles this week. There’s probably four more [00:43:00] coming this week. So, I’m, I’m kind of in, in writing mode. You’ll probably get more content than you ever, uh, wanted. But yeah, that’s all on the way. I’ll be caught up by the end of this week, and then I’m back on the plane.
I’m flying around in about a week, so, yeah. It’s been great. I’ve been having a good time. That’s pretty much it for me. I hope this is helpful. If you have any questions about these companies or others to look at, give me a, give me a note or actually if you have any questions you think I should dig into or maybe visit, um, that would be good.
I’ve, I’ve got kind of a long list I’m working on and uh, yeah, any suggestions would be great. That’s it for me. I hope everyone is doing well, and I’ll talk to you next week. Bye-bye.

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