“We’re using our entire platform to lift these companies to the next level,” De said in the interview.
Xiaomi’s first successes came from the rise of smartphones and its early understanding of e-commerce. Now De says another wave is coming. The Internet of Things, he believes, could be bigger than phones. “Every electronic device you use in your life could also become smart,” he says. Xiaomi started exploring the idea in 2013, and quickly realized no single company could dominate the entire sector. Consumers own one phone but will have dozens, even hundreds, of connected devices.
Instead of trying to build them all, Xiaomi went shopping. It has invested in 77 companies, giving them access to its designers, marketers, and massive supply chain in exchange for a 10- to 20-percent stake and the right to brand and sell those products. “We’re using our entire platform to lift these companies to the next level,” De says. It has sold more than 50 million connected devices under that strategy, and seen four of its portfolio companies hit a market cap over $1 billion. The Mi Air Purifier, the most popular air purifier in China, emerged from a small startup under Xiaomi’s watchful eye. Xiaomi proclaims itself to be the world’s most successful hardware incubator.
This outsourced-but-integrated approach could make Xiaomi among the first to offer a complete portfolio of connected devices, controlled by a single app—Mi Home. It wants to be The Everything Company. And because it sits right next to some of the world’s biggest manufacturers, Xiaomi just might pull it off. No waiting weeks or months for prototypes to come back, no sending engineers and product designers on expensive trips to faraway factories. “It’s a unique model that I haven’t seen before, and that I think is only viable for a company that comes from China,” says Hugo Barra, the company’s global VP and English-speaking spokesman. Xiaomi isn’t alone in thinking this way, either. LeEco, Huawei, and Lenovo are among the companies who’ve found they can do more, faster, than competitors in the US and Europe.