The intellectual origins of Xiaomi trace to a conversation between Lei Jun and a small group of Chinese technology entrepreneurs in a Beijing hot pot restaurant in late 2009. Lei Jun had recently stepped down as CEO of Kingsoft, the Chinese software company he had led for sixteen years and taken public in Hong Kong in 2007. He was 40 years old, financially comfortable from a string of angel investments that included an early stake in e-commerce giant Jingdong (JD.com), and by most external measures had already achieved more professional success than the vast majority of his contemporaries in China's nascent technology industry. What he was not was satisfied.
Lei Jun had become obsessed with a specific question: why couldn't Chinese consumers buy smartphones that were as good as the iPhone at a price point accessible to a much larger population? The iPhone 3GS had launched in China in 2009 at a price equivalent to two months' average white-collar salary, placing it effectively out of reach for the consumers who most wanted it. The Android smartphones available at accessible price points were uniformly compromised: slow processors, low-resolution screens, poor cameras, and software so bloated with carrier and manufacturer pre-installations that performance was degraded before the box was opened. Lei Jun believed the gap between what was technically achievable and what was commercially available represented a market opportunity of historic scale.
The co-founders he assembled around him were not accidental choices. Lin Bin had been a VP at Google China and at Microsoft China before that—a pedigree that brought software architecture sophistication and institutional credibility. Li Wanqiang had led the user interface and branding team at Kingsoft and shared Lei Jun's conviction that Chinese technology products had been selling themselves short on design quality. Hong Feng had been a principal engineer at Google and brought search and cloud expertise. Wang Chuan had been a senior executive at TCL, giving the founding team its only genuine consumer electronics hardware manufacturing experience. Liu De, who had studied industrial design at Art Center College of Design in Pasadena, California, brought the product design sensibility that would define Xiaomi's physical identity. Zhou Guangping and Huang Jiangji contributed deep mobile chip and antenna engineering expertise that would prove essential in building competitive hardware.
The decision to name the company Xiaomi—'little rice' in Mandarin, a name selected partly for its humble, accessible connotation and partly because it was short enough to work as an app icon label—was deliberate in its anti-corporate modesty. This was a company that wanted to signal to consumers that it was on their side: not a faceless corporation extracting maximum margin, but something closer to a community of technology enthusiasts who happened to also know how to manufacture phones.
Xiaomi was formally incorporated in April 2010. The company's first product was not a phone—it was a mobile operating system. MIUI, launched in August 2010 as a custom Android ROM that users could flash onto existing Android handsets, built Xiaomi a community of technically enthusiastic early adopters before the company had manufactured a single piece of hardware. MIUI's weekly update cycle, which incorporated community-voted feature requests, was genuinely unprecedented in mobile software at the time and created a participatory relationship between Xiaomi's development team and its user base that generated the kind of organic word-of-mouth advocacy that traditional advertising budgets cannot purchase.