Nicolai Tangen: Hi everybody and welcome to In Good Company. I'm Nicolai Tangen, the CEO of the Norwegian Sovereign Wealth Fund, and today I'm in a particularly good company with the CFO of Xiaomi, Alain Lam.

Alain Lam: Hello Nicola, thanks for having me.

Nicolai Tangen: Now Alain, Xiaomi is just an incredible company with phones, cars, humanoids. You know, we are the lucky owner of more than 1% of the company. So just tell us, what do you do and how did it all happen?

Alain Lam: Well, thanks, Nicola. Thanks for the question. And good to be here. So, first of all, Xiaomi is still a very young company. We just turned 16. We founded in April 6, 2010. And since then, we have done a lot as you mentioned. But ultimately, I think we think of ourselves as a global technology company. Obviously we have smartphones, we have a lot of smart devices. Plus recently we have smart electric vehicles and we are into manufacturing. But underlying all of these is our technology whether it is our operating system, our semiconductors, our AI. I think those are the stuff that we built underneath all of our ecosystem, right? I think we built a pretty comprehensive what we call a human x car x home ecosystem ranging from all your personal devices to all your home devices and now with your mobility solutions. So that's where we are but you know we've achieved quite a bit over the last 15 years. Obviously last year we have over 450 billion RMB in terms of sales and we have achieved pretty good profitability.

Nicolai Tangen: It's just such an incredible story so I'm not quite sure even where to start but why don't we just go through it chronologically. The first product you had, just how did it start?

Alain Lam: We actually started off building the operating system for smartphones and that was in 2010 when we founded the company. We want to do a operating system on top of the Android ecosystem and then try to offer it to smartphones. But eventually we decide to get into the smartphone ourselves, right? And our first smartphone which we call Xiaomi 1, we sold it at 1999 RMB in China. And that become a huge success because I mean as you remember back in the days there were a lot of products out there that were low quality but high prices.

Nicolai Tangen: How long time did it take you to develop the telephone?

Alain Lam: So we launched our first smartphone in 2011. So one year after we...

Nicolai Tangen: How is it possible to have such a short cycle time?

Alain Lam: Yeah, because at that time I think the supply chain is obviously quite advanced in China but the problem in the market for that at that time was there was a lot of expensive products with very low quality right. And the philosophy for the company is that can we do a smartphone that is much better quality and we can offer to users at much more affordable prices. And that's something that you see permeated in the history of our products, right? We try to offer very high quality solutions to our users at affordable prices.

Nicolai Tangen: How do you think about your supply chain? How much of that is Chinese sourced and how much is sourced outside?

Alain Lam: Well, I mean, at the beginning, I think there's still a lot of reliance on foreign technologies. But over the last 15 years, for a smartphone, frankly, most of the content now is localized. You can find local solutions for that in most of our component. It is important because the local, frankly speaking, if you think about the foreign products a lot of them are more standardized solutions off the shelf right whereas the local partners are willing to work with you developing products that are more customized to what we want. And as a result it's not just faster but it's also our ability to offer much more customized solutions that fits better into our smartphone, that fits better into what we want and as a result, we are able to offer products to our customers that offer something that they really want.

Nicolai Tangen: So, you are now at model 17. Um, you've aligned with the Apple kind of numbers. You had a setback in 16. What happened then?

Alain Lam: Well, I think there was such a big leap between 15 and 17 that we think that it's beyond one generation in terms of improvement from our Xiaomi 15 to our Xiaomi 17 and hence we name it Xiaomi 17. The innovation comes when you look at the smartphone, it offered a back panel. So instead of having a front panel like most smartphones do we actually offer the back panel as well so you can use both sides effectively and that's something that has proven to be very groundbreaking and a lot of our users like it.

Nicolai Tangen: How important has the internet of things or your connectivity with home appliances been?

Alain Lam: It is important because I think in this world a lot of our users like intelligent solutions right. Think about air conditioners, washing machines, refrigerators. The technology have existed for 30-50 years but that hasn't changed for a long time. What we offer to our users is a smart solutions. Now you can upgrade your software over the air in your devices as opposed to buying a new machines. Plus the fact is can you make your whole lifestyle, whole ecosystem much smarter by connecting everything together so that they can do things for you. Not just using your smartphone as a remote control but smart intelligence solutions that they understand who you are they understand your behavior and they can try to offer customized solutions for you every day. For example, smart lock. Not just you can look at who's outside of your door, you can offer specialized password for people to enter your apartment so that you don't leak your secrecy. But also, if you interconnect it with other devices at home, for example, when you open your smart lock, your AC will automatically be switched on, right? And those are the smart solutions that we like to think that our users need.

Nicolai Tangen: And then you decided to make a car.

Alain Lam: Correct. We decided to get into the car industry in 2021 and then we launched our first car in 2024.

Nicolai Tangen: How is that possible?

Alain Lam: So a little bit over less than three years we launched our first car, we designed it and then we built a factory as well. So China speed. At the beginning the car industry to us is not that foreign. Xiaomi as a company has already invested in some of the EV manufacturers in China before. So we have an experience of seeing them develop. But then we decided to do it ourselves. The ultimate conclusion is that if you believe that a car, a EV is going to be another piece of consumer electronics and that's something that we have a lot of experience in whether it is managing the software hardware integration or managing the supply chain. Obviously car is a little bit of a different animal because you need to consider about safety but again the supply chain in China has been relatively well-developed on the EV industry. What we said was, can we spend 10 times more investments to build the first car. Instead of making multiple cars we decided to spend all of our efforts on one single car.

Nicolai Tangen: And it's a pretty fast car right because now you set the record for the quickest round on Nürburgring last year.

Alain Lam: Yeah. As we look into this EV industry, we think that there are certain things that are core to the EV technology that we want to own and develop ourselves. Things like the electric motors, things like how do you pack the battery, things like smart driving, assisted driving, etc. Those are the stuff that we spend real time on developing our proprietary technology. The rest I think we can rely on other people. We have around 3,000 people to develop the first car which is probably 10 times more than other peers because our chairman has the philosophy that we want to spend a lot of effort initially to catch up with our peers.

Nicolai Tangen: Now you sold 50,000 cars in 30 minutes.

Alain Lam: Yeah. Obviously we are very new entrant to the EV business but we already have a very established brand in China. We have over 180 million people in China that are using our smartphones every day. At the beginning when we decided to develop a EV a lot of our users saying that if Xiaomi wants to make a car we'll buy it. 20 plus% of our initial buyers haven't even test driven the car or seen the car in real life. They just see us launching the car and they put an order in. That's a testament to the loyal users that we've built up.

Nicolai Tangen: How do you get people to love you?

Alain Lam: It goes back to our philosophy, right? If you look at our mission, we want to build amazing products with honest prices to let everyone in the world enjoy a better life through innovative technology. We want to build amazing products at honest prices and we want to do a global business and be innovative. We make the coolest products, we make a lot of friends with our users, we stay engaged and listen to the feedback. So those are the stuff that we built a very good rapport with our users over time. They know that whenever they walk into our store, they are getting the best pricing possible.

Nicolai Tangen: What are the similarities between making a phone and a car?

Alain Lam: Some similarities, a lot of differences obviously. In the phone industry before 2024 we did not have a smartphone factory. We were using outsourcing it to the Foxconn of the world, the BYD of the world. For the car business we undertook the task of building an entire new factory in Beijing. That's our first real large scale factory. But there's a lot of similarities because increasingly the software drive the hardware in the EV just like they're in the smartphone. In smartphone we stack up a lot of chipset into a very small form factor, in the car is similar we have to stack up a lot of components. Especially in the EV world the software becomes very important. How do you manage battery power? How do you manage the software to drive the car in a safe manner? Managing the supply chain is also very important. We have a lot of suppliers that are the same between the smartphone business as well as the EV business.

Nicolai Tangen: How far behind is Europe when it comes to EVs?

Alain Lam: We still look up to a lot of the traditional OEMs. There's a lot of things to learn from them—the way that they build the brand, the drivetrain, the driving experience. What we think that they are lacking are number one, the smartness of the car. I think in that sense they are probably behind what we are seeing in China right now. And second is the new energy vehicle development. We call our EV a smart electric vehicle. Some OEMs may focus too much on electric, but let's focus on smart. How do I link it with all of our ecosystem products? I can create not just a EV but also a smart life ecosystem beyond the EV.

Nicolai Tangen: And how long time do you think it would take the western brands to catch up on that particular element?

Alain Lam: A lot of people are learning and studying how the Chinese EV development has become so advanced. We have received quite a lot of European OEMs who come to visit us for experience sharing. I think you already seen a couple of the European collaboration with the Chinese players as well. I think it was the CEO of Ford who used your SU7 for a little while. He said he couldn't get rid of it after 6 months of driving it because he loved it too much.

Nicolai Tangen: Let's move on to robotics and humanoids. I've just seen your latest models and it's pretty mind-boggling.

Alain Lam: We've been doing robotics for five six years now. I think we are beginning to see the inflection point in this market. A combination of the hardware getting better as well as the software getting better i.e. AI that is driving the brain of the robots. The way that Xiaomi internally is thinking about it is we are making these humanoid robots to enhance our own manufacturing capability and efficiency. We haven't launched any 2C robots. All the humanoid robots we are developing right now are used in our own manufacturing scenario. But still I think that's a long way to go because the AI right now is mostly focusing on learning from the text data and voice data, but then the physical data are still quite a way behind in terms of the collection and the interpretation. When you develop the large language model for physical AI right now, what we still lacking is a lot of data that don't exist, right? So you have to stimulate it.

Nicolai Tangen: Can you tell us about the improvement in the grip functionality in your latest model?

Alain Lam: The hand is very similar to a human hand size now, and also the degree of freedom that it offer. The second problem that we're trying to solve is the cooling. Once it get heated, the performance will degrade. So we're trying to introduce a cooling system. When do you think you'll have this for consumers? That's not the focus of Xiaomi right now. We want these humanoid robots to be able to improve our manufacturing efficiency first and maybe to recreate our entire manufacturing processes.

Nicolai Tangen: What's next?

Alain Lam: AI is going to be very important for the next wave of innovations and it will impact all of our businesses. Today our software engineers use it for coding. Second is improving sales efficiency, predicting sales for each store. Even in the manufacturing process, when we talk about our car, we have a big giga press, the material we use for that rear floor was stimulated over 100 plus formulas and use AI to predict performance. And each piece manufactured went through an X-ray room and we use AI to diagnose whether this piece is good or not. You don't use humans anymore. We also launched our own large language model two weeks ago and it has performed pretty well on public scoring systems like openrouter.com.

Nicolai Tangen: And at much lower costs than the likes of Claude.

Alain Lam: Our price that we offered are lower than Claude. The good thing for Xiaomi is I already have a big ecosystem that we can use to test and collect data from user behavior and refine our model. We put it as an open source model to invite best minds globally to help improve that. For us, because we have over a billion connected devices globally, our goal is how do we interconnect these devices so that we will enhance people's productivity in the physical AI world.

Nicolai Tangen: I have to ask you a question about the founder Lei Jun who is kind of considered a mix of Bill Gates, Steve Jobs and Elon Musk. How is it to work with him?

Alain Lam: Mr. Lei himself is a serial entrepreneur, but he's also a product person. When we get into the car industry, we decided that he should be the CEO of the car business. He has personally driven 150 different models of car himself and take detailed notes. You can find very few CEOs that have this real dedications. He make all the management team—like I personally driven 3,000 kilometers before the first car was launched—his philosophy is that you have to understand the product and love your product. He make us all take professional racing car licenses in order to know how to drive properly.

Nicolai Tangen: What does it mean to work hard in your book?

Alain Lam: Work hard and work smart. Obviously we have a very complicated business—smartphones, IoT, car, AI, operating system, in over 100 plus countries. You can spend a lot of time doing daily jobs. But what we need to do is work smart—what are the three important things we want to achieve this quarter, this month, this year? We focus on those three things that matters as opposed to getting immersed into a lot of small tasks.

Nicolai Tangen: What is your advice to young people?

Alain Lam: The world is evolving very fast. Having the interest to learn about the latest developments is very important. How is AI going to change the job market and how people are doing things in the future? Young people do need to catch up on the latest trends because if they don't, they may face job security issues. At the same time, I do like to read about history, about what other businesses success or failure because you can always learn something from history. One of our chairman saying many years ago which resonate a lot with me was "99% of the problems there's already a solution out there. You just need to find it." And maybe with AI you can find it fast enough.

Nicolai Tangen: Well, you for sure have found a solution to very many problems and big thanks for all your hard work. We are so happy to be shareholder in your group and good luck with everything going forward.

Alain Lam: Thank you.