I came across a detail about Lei Jun that stuck with me: he named his company after a grain. Not a Greek god, not his own initials, not some abstract word meant to sound futuristic. "Xiaomi" translates roughly to "little rice" or millet, a nod to Buddhist teaching about how something as small as a rice grain can be as powerful as a mountain. That's an odd choice for a man who was already a millionaire, already a successful executive, and already 40 years old when he made it.
That contradiction is what pulled me in. Lei Jun didn't found Xiaomi out of necessity. He'd already had one exit, one IPO, and a stack of profitable angel investments. He came back to entrepreneurship on purpose, older and with more to lose than most founders ever risk. I wanted to understand why, and what that decision ended up meaning for the people who eventually bought the stock.
The Beginning
Lei Jun was born on December 16, 1969, in Xiantao, a city in Hubei province in central China. Both of his parents were teachers, a profession that had lost social standing and financial security in the years following the Cultural Revolution. Money was tight. By several accounts, his father earned only a few dollars a month.
What Lei Jun did have, from an early age, was curiosity about how things worked. He liked taking apart radios and putting them back together, a habit his father encouraged rather than discouraged. In a household with little disposable income, that kind of hands-on tinkering was less a hobby than an education.
He tested well. In 1987 he graduated from Hubei Provincial Mianyang High School and enrolled at Wuhan University to study computer science. By most accounts he was an unusually driven student, finishing his coursework well ahead of schedule and graduating with a bachelor's degree in 1991.
The First Business
Lei Jun's career didn't start with Xiaomi, and it didn't even start with founding something of his own. In 1992, a year after graduating, he joined Kingsoft, a Beijing-based software company known at the time mostly for word-processing tools. He started as an engineer.
What happened next is the part of his career that rarely makes it into the short version of his story. Lei Jun spent sixteen years at Kingsoft. He rose from engineer to CEO by 1998, and over the following decade he helped pull the company out of a difficult position (competing against Microsoft Word with a domestic word processor was not a fight Kingsoft was obviously going to win) and pushed it into new categories, including video games and security software. In 2007 he led Kingsoft through an IPO on the Hong Kong Stock Exchange that raised close to $100 million.
Then, at the height of that success, he stepped away. On December 20, 2007, Lei Jun resigned as Kingsoft's president and CEO, citing health reasons. He was 38.
He didn't disappear from business. During the same period he had been building something else on the side: Joyo.com, an online retailer he founded in 2000 that sold books, videos, and other media. In 2004 he sold Joyo.com to Amazon for $75 million, giving Amazon its entry point into Chinese e-commerce. After leaving Kingsoft, Lei Jun spent a few years as an angel investor, putting money into companies including UCWeb and YY (a live-streaming and social platform later renamed JOYY). His roughly $1 million investment in YY, made in 2005, was reportedly worth well over $100 million by the time the company went public on Nasdaq in 2012, a return in the neighborhood of 100 times his stake.
By the standards of almost any investor, Lei Jun had already made it. He could have stayed retired.
The Decision That Changed Everything
The original founding team of Xiaomi Corporation. From left to right: (Back row) Wang Chuan, Lin Bin, Lei Jun, Zhou Guangping, Liu De; (Front row) KK Wong, Li Wanqiang, and Huang Jiangji. (Photo: Xiaomi Corporation)
In April 2010, at age 40, Lei Jun founded Xiaomi with seven co-founders, including Lin Bin, a former engineering director at Google. He later described the choice as an "unfinished dream," the idea of building hardware, not just software or an online storefront, and doing it in a way that could compete directly with the biggest phone makers in the world.
The way Xiaomi actually started is instructive, because it wasn't with a phone. The company's first product was MIUI, a custom Android-based operating system, released before Xiaomi built or sold a single device. The team recruited an initial group of about 100 enthusiast users, shipped software updates weekly, and built a relationship with that small community that would later become central to how the company marketed everything else.
Only in August 2011 did Xiaomi release its first smartphone, the Mi 1, priced at ¥1,999, a fraction of what flagship phones from established brands cost, while matching much of their spec sheet.
The bet underneath that pricing was structural, not promotional. Xiaomi sold almost entirely online, skipping the retail markups that ate into competitors' margins. It spent little on traditional advertising, leaning instead on direct engagement with users through social media and its own community forums. And in 2018, as the company prepared for its Hong Kong IPO, its board formalized something unusual for a hardware company: a public pledge that overall net profit margin on hardware would not exceed 5% in any given year, with anything above that returned to users. In 2025, the company reported a hardware net margin of 2.3%, comfortably inside that promise.
That pledge is worth sitting with for a moment, because it's the clearest statement of Lei Jun's actual strategy. Xiaomi was never trying to make its money on the phone itself. It was trying to get a phone, and later a smart speaker, a vacuum, a rice cooker, or a car, into as many hands as possible, and make its money on the software, services, and ecosystem built around that hardware instead.
How Xiaomi Became an Empire
The strategy worked faster than almost anyone expected. By 2014, Xiaomi's valuation had passed $46 billion, making it briefly the most valuable technology startup in the world, and it overtook Samsung to become the top-selling smartphone brand in China. That April, Xiaomi sold 2.1 million phones online in twelve hours, a record for single-day online phone sales at the time. In 2013 the company had hired Hugo Barra away from Google's Android team specifically to push Xiaomi's expansion beyond China, into India, Southeast Asia, and eventually Europe.
Xiaomi founder Lei Jun hits a gong at the company's initial public offering launch on the Hong Kong Stock Exchange. | Skynews
Xiaomi went public on the Hong Kong Stock Exchange on July 9, 2018, raising about $4.7 billion and valuing the company near $54 billion. The listing used a weighted voting rights structure, a dual-class share setup that let Lei Jun and his co-founders retain outsized control of the company relative to their economic ownership. That kind of structure was increasingly common among Chinese and U.S. tech IPOs but still new to Hong Kong at the time.
From there, the company kept widening its footprint rather than deepening its bet on any single product. It built out an "AIoT" ecosystem (smart home devices, wearables, robot vacuums, air purifiers, televisions, laptops) connected through a shared app and, eventually, a shared operating system called HyperOS. By the end of 2025, Xiaomi reported more than a billion connected IoT devices on its platform, excluding phones, tablets, and laptops.
Then, in 2021, Lei Jun made a bet nearly as large as the original decision to found Xiaomi: the company would build electric cars. Skepticism was widespread. Plenty of technology companies, including Apple, had explored automotive ambitions and quietly abandoned them. Xiaomi's first vehicle, the SU7 sedan, launched in March 2024. It sold over 200,000 units in its first year and, in some months, outsold Tesla's Model 3 in China. By 2025, the SU7 series was the top-selling sedan priced above RMB 200,000 in mainland China. A second model, the YU7 SUV, launched in June 2025 and pulled in nearly 300,000 pre-orders within its first hour of sales.
The Risks and Setbacks
None of this came without cost, and 2025 was the year that made that plain.
On March 29, 2025, a Xiaomi SU7 traveling in the company's Navigate on Autopilot driver-assistance mode collided with a highway barrier in Anhui province and caught fire, killing three young women. The car had issued a collision warning seconds before impact, but the system had not detected the roadwork barrier in time. Questions followed almost immediately: whether the doors had locked automatically during the crash, whether the driver-assistance system had been marketed in a way that overstated its capabilities, and whether Xiaomi, a company with only a few years of car-building experience, had been ready to carry the responsibilities that come with it.
Social media footage of the crash, obtained by CarNewsChina
Xiaomi's Hong Kong-listed shares fell sharply in the days that followed, at one point losing more than HK$125 billion in combined market value over a single disastrous week. Lei Jun posted condolences to the victims' families the night after the crash, but then went largely quiet on social media for roughly five weeks, a departure from his usual daily posting habits that drew its own round of criticism, given how closely his public persona was tied to the brand. When he finally addressed the incident directly in mid-May, in an internal address to employees that was later leaked publicly, he described it as the hardest stretch of his career since founding the company, and said Xiaomi would aim to build the safest cars in their class.
The SU7 controversies didn't end there. A software update that throttled the high-performance SU7 Ultra's output from 1,548 horsepower down to roughly 900 horsepower outside of a special "track" mode drew backlash over transparency, and Xiaomi reversed the change. Separately, several hundred SU7 Ultra owners sought refunds after bloggers demonstrated that the car's optional carbon-fiber hood, sold as a functional air-cooling component, provided negligible airflow benefit. Xiaomi acknowledged the marketing had overstated the feature.
These are not minor missteps for a company whose reputation had, until that point, been built substantially on the idea that Lei Jun personally stood behind every product Xiaomi sold. The events tested that reputation directly, and the company's response, including an investigation, recalls tied to separate safety findings later in the year, and a public commitment to slower, more careful expansion into markets like Europe, has become part of how investors now weigh Xiaomi's automotive ambitions against its consumer electronics track record.
How the Founder Built Wealth Through Ownership
It's worth being precise here, because the numbers involved are easy to conflate. Lei Jun's personal wealth, Xiaomi's market capitalization, and Xiaomi's underlying business value are three different things, and they move for different reasons.
Lei Jun does not draw his fortune from a salary. It comes almost entirely from his ownership stake in Xiaomi, held through a mix of Class A and Class B shares (Class A shares carry greater voting power, part of the dual-class structure the company used at its 2018 IPO to preserve founder control). As of a share purchase disclosed in November 2025, in which Lei Jun personally bought roughly HK$100 million of additional Class B shares through Team Guide Limited, an entity he wholly owns, his stake stood at approximately 23.3% of Xiaomi's total issued shares. Co-founder Lin Bin holds a significant stake as well, around 8.8%.
Because Lei Jun's wealth is tied up in stock rather than cash, it rises and falls with Xiaomi's share price, sometimes dramatically. His estimated net worth has been reported anywhere from roughly $9 billion to over $35 billion at different points over the past several years, not because his shareholding changed much, but because Xiaomi's stock price did. That November 2025 purchase itself is a useful case study in incentives. It came after Xiaomi shares had fallen more than 30% from a summer peak, and the disclosure of Lei Jun buying more stock at depressed prices helped spark a rally in the shares the following day, a fairly direct, real-time illustration of how a founder's own capital allocation decisions can move the stock apart from anything happening in the underlying business that week.
This is also where it's useful to separate three ideas that get blurred together in casual conversation about founders: the company's intrinsic value (what its future cash flows are actually worth), its market capitalization (share price multiplied by shares outstanding, which reflects what public investors are currently willing to pay, not necessarily the same thing), and Lei Jun's personal net worth (his ownership percentage multiplied by that market cap, again denominated in a currency and market that both move independently of Xiaomi's operations). None of these figures should be treated as interchangeable, and none of them are a substitute for looking at what the business itself actually earns.
The Business Behind the Stock
For anyone considering Xiaomi as an investment rather than simply a phone brand, the company breaks down into four reporting segments, and their relative importance has shifted substantially in just the past couple of years.
Smartphones remain the largest single category by revenue, but growth has stalled and margins have thinned. In 2025, smartphone revenue fell slightly to roughly RMB 186.4 billion, and gross margin on that segment compressed to under 11% for the year, falling as low as 8.3% in the fourth quarter, largely because of a sharp rise in memory chip prices that hit the entire industry, not just Xiaomi. Xiaomi still ranks among the top three smartphone makers globally by shipment volume, and it has been gaining ground in the premium price tiers in China, where its brand was historically associated with budget devices.
Internet services, advertising and value-added services layered on top of Xiaomi's software and hardware base, is smaller in absolute revenue but by far the highest-margin segment, with gross margins consistently above 75%. This is the part of the business that most resembles a typical technology platform company rather than a hardware manufacturer.
IoT and lifestyle products, everything from smart TVs and robot vacuums to large home appliances like air conditioners and refrigerators, has become a genuinely high-margin, fast-growing business, reaching a record RMB 123.2 billion in 2025, up more than 18% year-over-year, with margins above 23%. This is the segment that most directly reflects the "ecosystem" strategy Xiaomi has pursued since its earliest MIUI days: get a user attached to one Xiaomi device, and the odds rise that their next several purchases across categories are Xiaomi as well.
Smart EV, AI, and other new initiatives is the newest and, in 2025, the fastest-growing segment by a wide margin: revenue surged over 220% year-over-year to more than RMB 106 billion, and the segment posted positive operating income for the first time. It's also the segment carrying the most risk, given the crash, the recalls, and the intensely competitive Chinese EV market Xiaomi is now fighting in against BYD, Tesla, NIO, and a long list of domestic rivals.
Chinese electronics company Xiaomi's first electric vehicles 'Xiaomi SU7 model' are seen on display at a launch event in Beijing on March 28, 2024. China is the biggest electric vehicle market in the world, a battle royale featuring both established carmakers as well as upstarts such as Xiaomi, which launched its first EV on on March 28. AFP / Michael Zhang
Put together, Xiaomi reported total 2025 revenue of RMB 457.3 billion (roughly $66 billion), up 25% year-over-year and crossing RMB 400 billion for the first time, with adjusted net profit up nearly 44% to RMB 39.2 billion. Research and development spending reached RMB 33.1 billion for the year, and the company has committed to spending more than RMB 200 billion cumulatively on R&D over the next five years, a signal that management expects the EV and AI push to keep consuming capital rather than throwing off easy profit in the near term.
Xiaomi does not pay a dividend. Consistent with the reinvestment pattern that has defined Lei Jun's approach since Xiaomi's founding, plowing capital back into growth rather than returning it to shareholders, the company has instead used share buybacks at points when management judged the stock undervalued, alongside continued heavy investment in R&D and manufacturing capacity.
Where the Company Stands Today
As of Xiaomi's most recent full financial disclosures (fiscal year 2025, reported in March 2026, with the most recent quarterly update covering the second quarter of 2026), Lei Jun remains founder, chairman, and CEO, and continues to be Xiaomi's largest individual shareholder at roughly 23% of shares outstanding. Lin Bin serves as vice chairman, and Lu Weibing, who joined Xiaomi through an earlier acquisition and has become one of its most visible executives, serves as group president and leads the smartphone division.
Headquarters in Haidian District, Beijing - Photo from Wikipedia
The company's center of gravity is visibly shifting. A year earlier, smartphones and the broader AIoT segment had accounted for roughly 91% of total group revenue; in 2025, that share fell to under 77%, as the EV and AI business scaled rapidly. Management has signaled plans to expand SU7 and YU7 sales into Europe in the second half of 2027 and into right-hand-drive markets in early 2028, a far more cautious international rollout than the company's smartphone expansion followed a decade earlier, likely reflecting lessons learned from the 2025 safety controversies as much as the practical challenges of entering regulated auto markets.
Risks that any investor should weigh include continued memory chip cost inflation pressuring smartphone margins, intensifying EV competition inside China, the reputational and regulatory fallout still working through the SU7 safety issues, and the broader geopolitical environment facing Chinese technology companies operating in Western markets. Against that, the company's balance across four increasingly distinct businesses, a mature but slowing phone business, a high-margin and growing IoT business, a very high-margin services business, and a large, early-stage but now cash-generating EV and AI business, gives it more than one lever to pull if any single segment underperforms.
What This Story Made Me Think About
A few things stood out to me while putting this together, and they're less about Lei Jun personally than about the pattern his choices trace.
Retirement was a strategic pause, not an ending. Lei Jun stepped away from Kingsoft at 38 with money and options most founders never get. Instead of coasting, he spent three years as an investor, effectively studying dozens of other companies' successes and failures with his own capital on the line, before starting Xiaomi. That's a very different kind of preparation than most first-time founders get.
The 5% margin pledge is a real signal, not a marketing line. A public, board-approved commitment to cap hardware profit margins is an unusual thing for a company to bind itself to. It tells you the actual profit engine was always meant to be services and ecosystem lock-in, not the device sale itself, and it's a useful lens for judging whether new product categories, like EVs, are being priced to win market share rather than to maximize near-term margin.
Reinvestment has been the constant, not the industry. Software, e-commerce, phones, smart home devices, cars: the products have changed completely, but the underlying discipline of pouring profit back into growth rather than extracting it has stayed consistent across three decades and at least four different businesses.
Ownership concentration cuts both ways. A 23% stake with weighted voting rights gives Lei Jun the ability to make long-horizon bets, like a multi-year, multi-billion-dollar EV push, without needing to win over a fragmented shareholder base every quarter. That same concentration means the company's direction is unusually dependent on one person's judgment and public standing, which is exactly what got tested during the SU7 crisis.
A crisis reveals what the reinvestment was actually protecting. Xiaomi's response to the SU7 crash, a leaked internal address, a public commitment to safety investment, a slower international rollout, reads like a company trying to protect trust it had spent fifteen years building, more than trying to protect a single quarter's numbers.
Diversification wasn't a hedge against failure. It was the growth plan. Xiaomi didn't add IoT, services, and EVs because smartphones were dying. It added them because the ecosystem strategy only works if there's an expanding set of things to sell into it. That's a different mentality than defensive diversification, and it shows up in how aggressively the company has funded categories, like EVs, where profitability was years away.
Final Thoughts
Lei Jun named his company after a grain of rice because the story he wanted to tell was about starting small and growing through patience rather than force. Fifteen years later, that company sells cars that outsell some of the most established names in the Chinese auto industry, ships more connected devices than almost anyone else on earth, and generates the kind of R&D budget that most governments would recognize as serious industrial policy. It has also, in the space of a single difficult year, been forced to confront exactly how much responsibility comes with selling products that can put people's lives at risk, not just their weekend plans.
Investors who buy Xiaomi stock today aren't buying a phone company anymore, and they're not simply buying into Lei Jun's personal story either. They are buying into a business whose entire operating philosophy, margin structure, and growth strategy still trace back fairly directly to decisions one 40-year-old former software executive made about how much money to leave on the table, and how long he was willing to wait to make it back.
Rich is the founder of FinMarkets Asia, where he serves as the Chief Editor and financial markets educator. With extensive experience in the trading industry, he has worked with several leading brokerage firms as a Market Analyst, Trading Educator, and professional trader. Throughout his career, Rich has been committed to empowering traders through high-quality financial education, in-depth market analysis, and practical trading insights. His mission is to help aspiring and experienced traders develop the knowledge, discipline, and confidence needed to navigate today’s global financial markets.
