Hello, everyone. Today is my third annual speech.
Over the past three years, the world has undergone enormous changes that have profoundly affected every one of our lives and our work.
Faced with these continuous and sweeping changes, many people have felt lost, and even deeply anxious.
In today's speech, we will not talk about Xiaomi. Instead, I want to discuss something different: how I made my way through the lowest points of my life, and what important lessons I gained from them.
I will share three stories. The first is about how, when I was very young, I faced a crisis in which a product failed, the business collapsed, and the company nearly shut down.
The story begins thirty years ago.
During the DOS era, WPS was extremely popular and installed on almost every computer in China. Kingsoft was at the height of its success.
At the same time, there was a major hidden danger: Microsoft had already entered the Chinese market with Windows and Office. We had to develop new office software as quickly as possible if we were to have any chance of competing head-on with Microsoft Office.
Like young people who fear no tigers, we did not think too much about it. We simply got to work and gave the project a grand, imposing name: Pangu. We hoped that Pangu would create a new world on the Windows platform and take WPS's glory to a new level.
For a small Chinese company to challenge Microsoft was extraordinarily difficult. To pursue this grand dream, we put almost all our resources on the line and reassigned nearly every programmer. We worked day and night for three full years. In April 1995, Pangu was finally released.
After three years in seclusion, waiting for the day of a great success, we had even carefully prepared our celebration banquet in advance.
01
A Matter of Life and Death
1.1 The Setback of Pangu
But no one expected sales to be so dismal. They came to less than one-tenth of what we had expected.
My morale collapsed instantly, and my colleagues' spirits plunged from the clouds to the bottom of a valley.
There was nothing I could do but keep trying to motivate everyone and encourage them to work harder. We held on through the end of 1995 and the beginning of 1996, but Pangu still showed no sign of improvement.
The bigger problem was that WPS was no longer selling either, and our revenue fell sharply.
The company reached a life-or-death moment.
I was twenty-six that year and general manager of Kingsoft Beijing. It was the first time I had faced such a predicament, and I felt completely helpless.
Every payday was the hardest time for me. I remember that at our worst, there were only a little over one hundred thousand yuan in the company account, and it looked as if we would not be able to pay salaries the following month.
My colleagues were desperate too. Many left, and the office began to look empty. At that time, I often could not sleep all night. I still remember sitting alone on the sofa on many evenings, quietly looking out the window, watching helplessly as the lights in the building opposite went out one by one, then watching the sky slowly grow bright. Only people who have experienced it can truly understand that kind of pain.
1.2 The Story of Selling Software in a Store
How could a prestigious brand like Kingsoft and such a good product as Pangu fail to sell?
I could not understand it. I made up my mind to get to the bottom of the problem and go to the front line to find out what was really happening.
I decided to sell the product in a store myself. At first, I was full of confidence. I deliberately chose the largest software store in Zhongguancun at the time. Although I had no sales experience, we had made the product ourselves. I believed that I would have no problem and could definitely handle it.
Whenever a customer entered the store, I would greet them as if they were a family member, receive them warmly, and explain everything carefully. Sometimes I could talk nonstop to a single customer for half an hour. I did this again and again for eight hours a day, until my mouth was dry and I was exhausted and dizzy. When I got home that night, I did not even feel like eating. I simply lay down on the bed and fell asleep.
I was a programmer who sat in front of a computer writing code every day. On my first day selling in a store, I stood for eight hours. You can imagine how exhausting it was.
After such a hard day, how were my results?
I am embarrassed to say that I did not sell a single copy.
"It must just be bad luck," I told myself to keep my spirits up. It was my first time, after all. No problem; I would work hard again the next day.
The next day, after standing for another eight hours, I still had not sold a single copy. I began to feel bewildered.
On the third day, I still sold nothing. Seeing the other salespeople close one deal after another made me doubt myself. I realized that sales was truly not easy.
On the fourth day, I stopped selling altogether. What did I do instead? I watched how other people sold. I followed the best salesperson in the store for the entire day and really learned a lot. For example, whenever I saw a customer, I would talk nonstop. He, by contrast, did not say much. He first listened to what the customer was thinking and then responded accordingly. I understood technology and always wanted to explain it clearly, but that often made the issue more complicated. He would simply hold up the product or a brochure and explain it in a few words, and the customer understood. What I envied most was how naturally he communicated with customers. For me, talking to strangers had always been a huge challenge.
On the fifth day, I practiced while thinking things through, and by noon I finally made my first sale.
At that moment, I was as excited as if I had won the whole world.
I gradually found the feel of communicating with customers, and my confidence began to return.
My results gradually improved on the fifth and sixth days.
On the seventh day, I actually became the store's top salesperson. It was unbelievable.
1.3 What I Learned from Selling in a Store
At this point, you may think I am telling the story of how a salesperson mastered the job in seven days.
In fact, it is the story of a head of R&D who, after a product failed, went deep into the sales front line and spent seven days selling in a store.
Selling in a store was exhausting, but the rewards were immense.
Let me give you an example. Computers were just beginning to become widespread at the time. During those days in the store, several customers would come in every day and immediately ask whether there was any software for learning the basics of computers.
I could not understand it. If you wanted to learn about computers, why not just buy a book? Why buy software to teach you? I would patiently tell them, "There really is no such software. Turn left when you leave and you will find a bookstore. Just buy a book and learn from it."
After being asked this many times, I finally had an epiphany: if so many people wanted it, why not make one? To be honest, compared with Pangu, this kind of software did not involve much technical sophistication. We developed one immediately, called Computer Basics, and rushed it to market. It was a huge success and quickly climbed the software bestseller charts.
During those seven days of selling in a store, I learned that as an engineer, you must make products that users need, rather than products that merely look grand and impressive. As long as you can make something users want, sales will not be a problem. Once I understood this, making products became easier. Later, we released more than ten successful software products, including Kingsoft PowerWord and Kingsoft Antivirus.
Looking back at Pangu, the reason for its failure was very simple: we had built it behind closed doors.
I am very grateful that, without this crisis, I might never have had the chance to learn such a crucial lesson.
This experience of selling in a store also became the most valuable asset of my later career.
After selling in a store, I saw stores in a completely different way.
When I visited a store, I was no longer looking only at the products. I also studied the store itself: its decoration, customer flow, shelves, displays, posters, and more. I began to feel like an insider who could see the principles behind the details. From then on, no matter how busy I was, I always made time to visit stores. Even when traveling abroad for work, I would do everything I could to visit the best local retailers and learn from them. I gained a certain understanding of the retail industry.
In this way, Kingsoft found a way to survive.
But I myself fell into a new kind of confusion and began the darkest period of my life.
02
Lost and Confused
2.1 Going to Bars
At the time, I remained immersed in the emotions surrounding Pangu's failure and was extremely depressed.
There was no hope at all of defeating Microsoft. If all I did was run a company that struggled merely to stay alive, that was absolutely not what I wanted.
I had completely lost my ideals. At the end of April, I submitted my resignation. Qiu Bojun repeatedly tried to persuade me to stay, and in the end we decided that I would take six months off and see what happened afterward.
Faced with such adversity in life, let me ask you a question: how do you relieve stress?
At the time, my way was to go to bars frequently with a few friends. Dancing in clubs was very popular then, and we could dance wildly all night without much of a break.
It was also during this period that I began to enjoy heavy metal rock. I had never been able to accept it before, but now things were different. Immersing myself in music let me temporarily forget all my troubles.
Since I spent so much time in bars, I even seriously wondered whether I should change careers and open a bar in Sanlitun.
2.2 BBS Forums
Before long, I found something even more interesting: BBS forums.
I had plenty of time and spent all day on the CFIDO BBS. The internet had not yet become widespread. CFIDO was a network created by enthusiasts through dial-up telephone connections, and it brought together a large community of geeks across China. On a BBS, you could communicate freely with friends far away. At the time, that felt truly magical, much like the metaverse feels today.
That was how I found a new source of purpose.
Posting on a forum required quite a lot in those days. Everyone used dial-up internet, and the connection fees were very expensive. If you kept posting low-quality material, people would certainly berate you. I had plenty of time to prepare every post carefully. I also had a major advantage: I could type extremely fast. At my busiest, I could write one hundred posts in a day. My longest post took me from evening until dawn and was about ten thousand Chinese characters. Even today, you can still find several of the posts I wrote back then online.
As a result, my number of posts often ranked near the top of the site's posting leaderboard. There were quite a few people as crazy as I was. I met one friend on the forum who also posted more than one hundred times a day. He typed very quickly too, but he could not touch-type. He used only two fingers, moving them like flying piano keys, and was nicknamed the "Two-Finger Zen Master." People said he had worn out several keyboards.
After writing so many posts, I became a moderator. Do not think a moderator has a small title and little work. It was a bit like being the owner of a group today. First, you had to post yourself. Then you had to bring in a large group of friends and keep the atmosphere lively. Most difficult of all, people often argued because they held different views, so resolving disputes among users became the moderator's most important job.
To be a good moderator, I often went online at seven in the morning and stayed busy until after midnight. It seemed even more tiring than going to work, but it was deeply fulfilling.
Some friends thought I was escaping reality and neglecting my proper work. Some even felt sorry for me and believed I was wasting my life. I was grateful for their concern, but I did not entirely agree.
For those six months, I had no particular goal. I played purely for the sake of playing, and I had a wonderful time.
In that relaxed atmosphere, my emotions gradually recovered.
2.3 An Unexpected Benefit
It was only many years later that I understood the true value of that experience.
When I founded Xiaomi in 2010, the first thing we had to do was build a good forum. We succeeded very smoothly, and in less than a year it had become the most popular forum for mobile-phone enthusiasts. How did we do it? There was nothing mysterious about it. We simply used the few techniques I had learned when I was a BBS moderator.
Many people always believe that reading novels, going online, and playing games can only distract you and ruin your ambitions.
My personal experience is that as long as you have a certain amount of self-discipline, entertainment can also be a very good way to learn.
When you learn without a particular purpose, it can actually feel especially easy and happen especially quickly.
But you should make something worthwhile out of your play. Do not play aimlessly; aimless play is simply a waste of time.
Back then, I also met many friends on the BBS. Some of them went on to become very successful:
One was a programmer at a pager company called Ruxun. His name was Ma Huateng.
Another was an engineer at the Ningbo Telecommunications Bureau. His name was Ding Lei.
I never asked why they had so much enthusiasm and so much time to spend on forums.
But I believe that experience had a decisive influence on their later careers.
After immersing myself in the forum for six months, I gradually recovered. In November 1996, I ended my half-year break and officially returned to Kingsoft.
The main reason was that I could not let go of the honor and dream of creating Chinese software.
We resolved to fight Microsoft a war of attrition: on the main battlefield of office software, we would fight Microsoft to the end; at the same time, we would make various application programs and games to support ourselves and sustain the fight.
A small company that had nearly shut down rose again after more than two decades of painstaking work.
Today, WPS has more than 500 million monthly active devices.
I am especially proud of what WPS has achieved.
We found an interview video from nearly twenty years ago online. Let us watch it together.
03
Missing the Internet Revolution
3.1 The Environment Changed
While I was burying myself in rebuilding Kingsoft, the outside world had already been turned upside down:
Across the ocean, Netscape went public in 1995 and Yahoo went public in 1996. The first wave of the internet was already flourishing.
Soon it began in China as well. NetEase was founded in 1997, Tencent in 1998, and the first wave of China's internet came crashing forward.
I was busy making software and, without realizing it, missed that wave.
It was not until October 1998 that I truly realized this wave could not be stopped. I persuaded the board that we could move quickly by making acquisitions.
Over the years, there have been many rumors online. Some say that when Ma Huateng was starting Tencent, he wanted to sell QQ to me and I did not buy it. Others say that when Jack Ma was starting out, he asked me to invest and I did not. These rumors make me look as if I had no business sense at all. Let me clarify: neither of them ever approached me. Those stories are all false.
The only acquisition I seriously discussed was NetEase.
At that time, NetEase had been founded for just over a year. It had only about five or six people and mainly provided personal homepage hosting. It was doing extremely well and had even built an email system for Guangzhou Telecom.
I offered 10 million yuan. That was a considerable sum at the time, but Ding Lei rejected it quickly.
Just two months later, NetEase raised US$10 million and reached a valuation of more than US$60 million, or roughly 500 million yuan at the exchange rate then.
It was a crazy era. I could not understand it, but I was deeply shocked.
3.2 Excellence.com
When the acquisition failed, we had to do it ourselves. After trying for about a year, we developed a certain understanding of internet businesses.
At the time, I thought I had figured everything out: "The internet is a tool. Every company will use it in the future, and e-commerce has the brightest prospects."
So we decided to do e-commerce.
In May 2000, Excellence.com officially went online, selling mainly books and audiovisual products.
This time, I was overflowing with confidence and determined to win. I insisted on funding it myself. Just then, the global internet bubble burst and the capital market entered a winter. That did not shake our resolve. Our first investment, about 20 million yuan, came entirely from Kingsoft's shareholders.
E-commerce is essentially retail, so I applied all my experience from selling in stores: product selection, pricing models, store layout, and more. We quickly adapted all of it to e-commerce.
At the same time, we worked hard on management. The core of e-commerce is operations, and every detail must be handled with great care.
Every morning when I arrived at work, I first checked every banner advertisement and product link on the homepage. I could always find a few broken links. This reminded me of the most important principle I had learned from software engineering: "Anything that can go wrong will go wrong."
Every evening, we insisted on reviewing and summarizing that day's business before going home.
Every week, I placed many orders on Excellence.com to test our product selection and logistics. As a result, my bookshelves filled with books, films, television series, and music CDs, many still in their original packaging. During that period, my colleagues especially liked holding meetings in my office. When they left, they would take a few things from the shelves.
Excellence.com also pioneered many innovations, including some of the earliest multi-location warehouses and one of the earliest self-built logistics systems. We even offered four-hour delivery in Beijing, Shanghai, Guangzhou, and Shenzhen. It is hard to imagine that these services already existed twenty years ago.
Starting from zero, we became the largest B2C e-commerce company of the time in just two or three years.
Many friends still remember buying A Chinese Odyssey, The Little Prince, and Tokyo Love Story on Excellence.com. These were among the first blockbuster products in Chinese e-commerce.
3.3 Financing
Excellence's business was progressing very smoothly. There was only one problem: we did not have enough money. E-commerce platforms burn an enormous amount of cash.
After the global internet bubble burst, the capital market was depressed and financing became extremely difficult. At that time, most venture capital firms were foreign-owned. As a local entrepreneur who had never studied abroad and did not speak English well, I found it even harder to raise money. We spoke with at least thirty firms and approached almost every VC we could find, but not a single one was willing to invest. In the end, we had no choice but to raise US$1 million from friends. Kingsoft's shareholders had to add another US$1 million, and that barely completed the financing. But we burned through it again in just one year.
The history of Excellence.com was a history of desperately looking for money. It was extremely painful.
By September 2004, we simply could not hold on any longer. We had no choice but to sell Excellence.com to Amazon, and it became Amazon China.
No one expected that just over six months later, a new internet boom would arrive and B2C e-commerce would enter an era of comprehensive takeoff.
Excellence.com was founded after the internet bubble burst and fell before e-commerce fully took off.
It was truly an unforgettable experience.
3.4 Learning from the Pain
Many people have asked me whether I regretted selling Excellence. I gritted my teeth and said no.
Selling Excellence.com was a major blow to me, and I was in tremendous emotional pain.
First, emotionally, it felt like losing my own child. During that period, I tried hard to sever my ties with Excellence.com. I forced myself not to visit its office, not to buy things there, and not to meet my former colleagues whenever possible.
Even more painful was that, as an entrepreneur, I had missed the entire internet era.
In the midst of that painful struggle, I kept asking myself where we had actually lost. It seemed as if we had simply been terribly unlucky.
First, Excellence.com was founded after the internet bubble burst. We lost at the starting line because we had missed the best moment.
Next, Excellence.com fell before e-commerce fully took off. We lacked the ability to raise financing, and without money we also lacked the confidence to hold on until the moment victory arrived.
Entrepreneurship does require luck and an accurate grasp of the larger trend. That is why I later placed such emphasis on the "windfall," or the right opening in the market.
It took me more than six months to slowly recover and finally understand some things.
"The internet is not merely a technological revolution; it is also a revolution in ideas. In the future, the internet will merge with every industry."
What I came to understand was essentially what people later called "internet thinking" and "internet plus."
With this perspective, my way of looking at many problems changed dramatically. I used a completely new lens to scan the industry for new opportunities. For example, in 2005 there were constant rumors that 3G networks would soon launch. I vaguely saw a major opportunity.
04
The Mobile Internet
4.1 The Next Opportunity
After in-depth research, I became increasingly convinced that the mobile internet era was about to arrive. The next ten years would be the decade of the mobile internet, whose scale would be ten times that of the PC internet.
Once I understood this, I made a decision: act immediately.
I did two main things.
First, I wanted to become one of the earliest genuine users.
There is only one way to truly understand the mobile internet: use it yourself. It is a "stupid" method, but it is also the best one.
More than ten years ago, the market was dominated by feature phones and wireless networks were still 2G.
With such a tiny screen and internet speeds so slow they were almost unbearable, does using a phone to go online not sound maddening?
Anyone with a computer would never want to use a phone to access the internet. But no matter how difficult it was, I made up my mind that from then on I would do everything on my phone and use a computer as little as possible.
Through this painful process, I gained a deeper understanding: wherever users have a pain point, there is an opportunity for an entrepreneur.
That is where the ideas for the various mobile internet products I later made came from.
Second, I wanted to become one of the earliest participants in this wave.
The fastest way was to invest in a group of startups as an angel investor. A few months later, I invested in the first one, and eventually invested in more than ten.
The best known among them was UC Browser.
Through this process, I became increasingly certain that a completely new era on a grand scale had truly arrived.
4.2 Leaving Kingsoft
In 2007, Kingsoft finally went public.
After that, I left the company where I had spent sixteen years working and began a different life.
Over the next three years, I worked as an angel investor while systematically reflecting on and summarizing my past experiences.
This series of reflections thoroughly prepared me for the next journey.
4.3 Always Believe That Good Things Are About to Happen
Today I have shared three stories from the lowest points of my life.
In the face of these setbacks and failures, I too have felt lost, wavered, and even given up.
Without these setbacks and the accumulation they brought, I would not be the person I am today.
No one likes setbacks and failure, but everyone will inevitably experience them. Many people may even be going through them right now.
Since this pain is difficult to avoid, all we can do is face it directly, keep moving forward through it, and let it shape us into better people. That is the meaning of pain and the gift of setbacks.
Every setback and failure you experience, even those seemingly meaningless activities that merely seem to consume your time, will become your most valuable assets.
Life is long. Whatever happens, let us hold on to our faith and always believe that good things are about to happen.
05
Lei Jun's First Book on Business Thinking
The Publication of Xiaomi's Entrepreneurial Thinking
The three experiences I mentioned today—selling in a store, spending time on forums, and building Excellence.com—were all crucial preparation for founding Xiaomi. On April 6, 2010, in an unremarkable office in Zhongguancun, Beijing, I founded Xiaomi with more than ten colleagues over a bowl of millet porridge.
In the blink of an eye, Xiaomi is already twelve years old.
When Xiaomi celebrated its tenth anniversary, we carried out an in-depth internal review lasting six months. We gained a great deal from it. At that time, I began to think that I should write down these thoughts and conclusions so that more Xiaomi colleagues could understand them and so that I could share them with everyone who cared about Xiaomi.
But the task was more complicated than I had imagined. We worked extremely hard and spent two years on it. It was not published until today. This is Xiaomi's Entrepreneurial Thinking.
The book contains many of my thoughts from before and after Xiaomi's founding, as well as Xiaomi's entrepreneurial journey, methodology, and practical case studies. It has just gone on sale across the major e-commerce platforms, so if you are interested, you can buy a copy now.
Do you remember Xiaomi's three iron rules? "Technology is our foundation, value for money is our guiding principle, and we make the coolest products."
We have always attached the utmost importance to investment in technology. Last year, our R&D investment was RMB 13.2 billion, and this year it is expected to reach RMB 17 billion.
Over the next five years, our R&D investment will exceed RMB 100 billion.
It is precisely our spirit of never-ending innovation and our steadily increasing R&D investment that ensure we can continue to develop the coolest products.
Later, I will bring you major new products, as well as some of our latest advances in exploring technology.