Dialogue with Li Xiang: The most terrifying thing in life is two things

Interview with | "China Entrepreneur" reporter He Yifan Ren Yafei

Text| Ren Yafei Editor| Ma Jiying

Source of header image| respondent

On the first day of the Spring Festival in 2023, Li Xiang released a letter to all employees, in which he recalled that the ideal won four "firsts" in 2022 and threw out four guiding directions, namely the ideal mission, vision, values and code of conduct.

As the founder, chairman and CEO of Ideal Auto, Li Xiang believes that only by constantly improving awareness and continuing to fight against inertia can he truly control his own destiny. "For myself, in fact, the most terrible thing is two things, the first is not knowing that I don't know, and the second is not being able to seek truth from facts." In an interview with China Entrepreneur in January, Li said.

Born in 1981, Li Xiang is not only the youngest entrepreneur in the automotive industry, but also a serial entrepreneur. Before building cars, he founded Bubble.com and Autohome. He once summed up his three entrepreneurial experiences as follows: the first venture only focused on competition, and in the end he did not win; The second time to start a business, pay more attention to users, and then win this market; By the third time I started my business, I paid more attention to the organization.

In 2022, the first echelon of the new car-making force "Wei Xiaoli" has reached a critical period of intensive replacement of the first generation of products, and with the rapid expansion of the company's business and personnel scale, the challenges of organizational management have also doubled.

Li Xiang showed a strong ability to think systematically, and in January 2023, China Entrepreneur had an in-depth conversation with him.

Key takeaways include:

1. The biggest difference between people is the use of tools. You use a gun, I use a knife, I can't beat you.

2. Culture is not something that is missing to make up, but something that you are really good at, something that can help you succeed, and something that everyone swears to defend.

3. For myself, in fact, the most terrible thing is two things, the first is not knowing that I don't know, and the second is not being able to seek truth from facts.

4. When the scale is small, speed is efficiency, and when the scale is large to a certain extent, quality is efficiency.

5. Stage mismatch is the biggest problem of many enterprises, without this stage of life, get this stage of disease.

6. I have no way back, I can't go back to a job after I fail, because I've never worked for anyone else.

7. The core of strategy is trade-offs, I never believe that less is better, but I invest more than others in every battle.

8. I live to control my destiny and challenge the limits of growth, so I will definitely choose the largest industry and the most difficult field to do, and verify the results.

The following is a dialogue arrangement (with deletions and modifications):

The next 3 years will be extremely brutal knockouts

"China Entrepreneur": Li Bin and He Xiaopeng both mentioned that 2022 is the year of driving on curves, do you agree with the statement of driving on curves? How do you feel about 2022?

Li Xiang: First of all, the growth rate of the entire new energy vehicle in 2022 is higher than the increase of the three new forces, which is a very significant phenomenon, and the root cause is twofold, one is because the automobile is a long-term industry, a lot of accumulation takes time, on the other hand, it is closely related to hard work, both effort and time, these two are indispensable.

Second, in 2022, the three new forces are releasing second-generation products, but for various reasons, there is also the problem of our own lack of preparation, and the complete delivery that should have been completed in the third quarter has been postponed to the fourth quarter. Some companies are delayed, but the pace of climbing has changed, and some delays have even missed a market opportunity. Therefore, the problems that arise at the same time of the three new forces are all slow in the pace of the second-generation products, but the reasons and effects of the slow pace are different.

In short, there is a mismatch between the rhythm of the three new forces and the explosive growth of the industry. But for ideals, I think 80% is still a problem of their own ability and management.

China Entrepreneur: You said that 80% of it is related to yourself, what kind of review did you conduct? What behaviors could be changed for the better?

Li Xiang: I think that there is no way for automobiles to change a specific behavior industry, because smart electric vehicles are a more complex management and operation system than traditional cars. Since 2017, we have looked at the company's problems with a product-centric cross architecture.

The first is the brand, the brand contains two aspects, one outward, how to explain to users who you are, the other inward, is our mission, vision, values, how to explain to the team who they are. What does the strategy of such a complex system mean? It means that I have a clear brand and cultural positioning, and a series of complex and sophisticated work around this positioning. In fact, in this wave of new forces, many companies lose on the first point, because they do not know who they are, they do not know how to tell consumers who they are, and they do not know how to explain who they are to employees.

The second is the product, which must build a very strong professional system and be guided by the brand. For example, the ideal is to serve the family, there is a trade-off, but many companies do not know how to choose, because they do not understand who to serve. In addition, I think that any product must do a good job in three dimensions. The first dimension is the sense of yearning, users must have a sense of yearning to buy a new era of products. The second is the sense of value, and even rich users also care whether the seat is ventilated, whether the ventilation is blowing air or suction. In China, the number of people who can buy more than 200,000 cars is actually tens of millions, and these people must be mostly rational. The third is security, because a car carries a family. This also includes hardware and software, hardware must be super user needs, software to meet user needs.

Further down is the business model, there are three business models for cars, one is the manufacturing business model, and there is about 10 points of gross margin. The second is the business model of consumer goods, for cars, a gross margin of 10 to 20 points is already very high. The third is to become a technology company, then you need to reach a gross profit margin of more than 20 points to support the R&D investment of technology companies. The difficulty, system, and input of these three business models are different, and different business models also determine the input of different resources.

You can understand the brand as my "head", the product is my "body", and the business model is my "blood". Next, in the product-centric cross architecture, how does the product extend to the left and right?

I think one extension is R&D. There are three layers of research and development, one is product research and development, and like traditional car companies in the past, it is mainly integrated. The second layer is platform research and development, in the past, traditional cars, because they are not so complicated, so automatic driving is mainly done by those super-large first-tier suppliers, but today their software capabilities and artificial intelligence capabilities are not enough, we can only do it ourselves. Especially for the core platform of intelligence and electric vehicles, we actually do better than suppliers. The third is the research and development of the underlying system, our supercomputing, cloud services, operating systems, etc., are the same as the underlying capabilities that Apple does later. Over time, we will eventually become a three-layer R&D investment like Apple and Tesla, because in the end, everyone competes with R&D capabilities, and each layer down your ability is stronger.

In addition to R&D capabilities, it is a delivery capability and a comprehensive capability. This ability we are divided into three parts, the first is commercialization ability, how to manage multiple models and complex areas, one car and multiple cars The difficulty is not the same, only do the first and second tier cities and the third and fourth tier cities, the difficulty is also different, and even the management method has to change. The second is supply capacity, without its own core parts production base, is your bottleneck, but this is a very complicated, long-term construction of things, today we see the results are actually three years ago. The third is organizational ability, which is the most difficult because it is not something that can be solved with effort.

China Entrepreneur: Often the harder you try, the bigger the mistakes you make.

Li Xiang: Yes, so according to this cross structure, our strongest must be product capabilities, and the business model has long been determined, so we must supplement our own brand culture capabilities and supplement research and development capabilities. For example, we now have a system of platform research and development, but system research and development has just begun, our commercial capabilities are still much worse, our supply capacity is much worse, and our organizational ability is much worse, but these are all opportunities.

"China Entrepreneur": There is a new situation in 2022, there is Tesla, BYD, and a lot of chasers below, Wei Xiaoli is caught in the middle, has this sense of pressure changed?

Li Xiang: I think the market is different, and the long-term value is different. If you are doing a relatively cheap market, such as a ride-hailing market, in fact, it is a bit similar to the early smartphones, when those thousand-dollar machines sold well, but whether they can support to really become a complete smart phone, there is still a clear difference. The market down there is definitely bigger, it's a pyramid structure, but I think it's better to take a longer-term view.

Photo by Deng Pan

China Entrepreneur: What do you think of 2023? Or if we extend the time, to a 3-year or 5-year cycle, what kind of state do you think the competition in the industry will enter?

Li Xiang: I think the three years from 2023 to 2025 are extremely cruel knockouts. Because I don't think you need that many companies.

China Entrepreneur: What will the landscape look like in 2025?

Li Xiang: I will not make this assumption, our core is still in the passenger car market of more than 200,000, occupying 20% of the market share.

The biggest difference between people is the use of tools

China Entrepreneur: In the face of such a complex business system of car manufacturing, there are actually two words that are particularly important, that is, trade-offs.

Li Xiang: So we have to answer "who we are?" This is the most important question.

China Entrepreneur: How long did it take you to think about "who is the ideal"?

Li Xiang: At the beginning, I actually had a relatively good teacher, that is, Qin Zhi (former CEO of Autohome). Qin Zhi first helped us set up a system, and then sorted out the entire organizational management system, I think this is really beneficial, and this thing is really useful.

In addition, we will look at some good companies, I think among the most successful companies in the world in the past few years, Microsoft is definitely number one, Steve Ballmer managed Microsoft, it was when Microsoft culture was lost, but Satya Nadella re-established the culture, did both the cloud and AI, OpenAI did new things that basically brought Google to a point of life and death.

"Chinese Entrepreneur": Nadella broke through the "curse" that Microsoft can't do hardware.

Li Xiang: And to change Microsoft from a company that everyone hates to a company that everyone likes, the first thing Nadragan did was to reshape Microsoft's culture with Bill Gates.

Source: Respondents

China Entrepreneur: When you just said that when you determined "who the ideal is", Qin Zhi provided a lot of help, it was in the stage of Autohome, and later when you actually built a car, how did you think clearly about the question of "who am I"?

Li Xiang: At which point in time to do culture, which point in time to do brand, I think Qin Zhi provided the greatest help. Qin Zhi provided us with a very good best practice at that time, and this best practice was divided into two stages, the first stage was to do it by instinct. Because you come up and talk about a lot of things, people don't believe it, how to answer who you are, you have to really be you, you and others are different, and this difference can help you continue to succeed. But this thing has to be verified, so Qin Zhi pulled the employees of Autohome to sort it out at the time, and he wrote on the blackboard "What key choices have we made in the past so many years that have helped us succeed", and then asked everyone to vote.

The first is to put the interests of consumers first; The second is to do the right thing and not do the easy thing; The third is to do 60 points first, and then do 100 points.

At that time, everyone gave countless cases, and at this time everyone believed it. Because culture is not what is missing, but what you really have, what can help you succeed, and what everyone swears to defend, these are your real culture.

China Entrepreneur: I once discussed a problem with Ali's friends, when you have a brick in your hand, you tell others that my brick is built for a church instead of a pigsty, because everyone wants to play with a person who wants to build a church, and then the problem comes, why do you make others believe you?

Li Xiang: The first stage is actually to rely on toughness. Because the initial stage of an enterprise must be centralized, it must be decided by the core management team at the top, so at this time there is not much room for negotiation, you just do it, and finally once it is done, when everyone comes to summarize, it is easy to see the same law.

China Entrepreneur: So winning the battle is the best team building.

Li Xiang: If you can't win the battle, you can't survive, I think the first stage is to survive, concentrate resources, concentrate decision-making, and extract the key elements that occur in this process, and everyone will believe it. At the beginning, everyone thought that the ideal ONE could only sell 1,000 vehicles, but when you achieve 10,000 vehicles, let's talk about serving families, right? Surely, you've surpassed the needs of your users.

Everyone found that the first point in your guidelines is to put user value first, not demand first, and everyone will believe it. In this process, your values will determine you to choose different tools, if only to solve the problem is easy, but we solve all the problems is very systematic, we use Toyota TBP (Toyota Business Practices), need to go through eight steps, do a complete analysis, planning, problem solving and generation process. At first, everyone didn't believe it, but as I made discoveries, it was too easy for the whole company to communicate and collaborate. I think the biggest difference between people is the use of tools. You use a gun, I use a knife, I can't beat you.

"Chinese Entrepreneur": No matter how skillful you are in using primitive weapons in the primeval jungle, once you get out of this jungle, you will be killed in seconds.

Li Xiang: Right. But all the tools a company chooses, summed up, are consistent with its values.

Source: Respondents

The biggest challenge to organizational change is cognition

"China Entrepreneur": In fact, for the new forces of car manufacturing, the difficulty of organization and management is very large, because it has the Internet part, the manufacturing part, and the upstream and downstream part, the entire industrial chain is very long, the complexity of this organization can be said to exceed the vast majority of companies at present, and it is difficult to find a management benchmark, what is your thinking about the organization?

Li Xiang: I think the core problem encountered by an enterprise is that from you don't know that you don't know, to you know that you don't know. To analyze an organization from a certain angle is to look at the openness, convergence, complexity, controllability and uncontrollability of the organization. Openness is the use of external resources, convergence is my own ability, controllable is that although things are very complicated, I can control them, uncontrollable is such as ecology, you can't do it through planning. We were fortunate to catch a better rhythm.

First define software 1.0 and software 2.0, software 1.0 is our own rules, our own programming, and finally the program for our own use, today's Internet, terminal equipment, APP are done in this way. Software 2.0 is that machines learn from humans, machines program themselves, make their own rules, and use them themselves, neural networks, AI are like this. We use a robot, but we don't use any specific functions of the robot, the robot is autonomous. It's a two-time thing.

When we were at Autohome, we would do APP and the Internet, so we had experience in management software 1.0. When we make a car, we have to do sales service, but in our opinion, it is relatively open, controllable, and within the logical range. Then we have to supplement industrial capabilities, so we have to learn, we learn Toyota, learn GM, learn standard automobile research and development, experimentation, manufacturing processes, focus on recruiting experienced talents in traditional automobile factories, and even learn Toyota with problem-solving tools, so we have mastered industrial capabilities. In this process, we actually encountered some problems, such as the teams on both sides did not know how to collaborate, and we introduced OKRs, everyone should align and understand each other.

Then we go to solve the ability of multi-model platform, then we have to see how the systematic company does, so we first introduced the IPD (Integrated Product Development, Integrated Product Development) research and development system, the most important problem we had to solve at that time was how to integrate product development and platform development, otherwise there will be many problems of automobile manufacturers, research and development is research and development, research institute is research institute, and finally can not be combined together.

After slowly completing the abilities mentioned above, what is the next challenge? It is software 2.0, the intelligent driving and intelligent cockpit we do today, in fact, it is still the way of software 1.0, when it really becomes software 2.0, it is uncontrollable, and this challenge has not really come.

I think another challenge for organizations is scale, because different sizes determine how you manage. For example, when the scale is small, it can be managed in a functional way, but how can you achieve both certainty and flexibility in a long-term enterprise like ours that involves various complex factors such as software and hardware and AI? Then you have to study the most successful companies in the world.

At the beginning, we have been walking in the misunderstanding for a while, always feeling that we are different from others, in fact, because we have not studied others enough.

For example, what has been a special entanglement in us from 2020 to 2022? Our favorite company is Apple, but everyone thinks Apple is a functional organization, so we wasted more than two years thinking about whether to turn to a matrix organization. Fortunately, we made an attempt at matrix organization in 2021, that is, according to the matrix in product development, and the effect was very good. Later, it was discovered that apples are typical matrix tissues, how did I find out? It was cross-reading three books, "Steve Jobs", "Jonathan", and "Tim Cook", only to find that Apple is a matrix organization.

Source: Respondents

China Entrepreneur: Which practice has been successful?

Li Xiang: IPD, our L9 and L8 are strictly in accordance with IPD.

China Entrepreneur: What are the indicators of success?

Li Xiang: It's sales. Because everyone always says that the ideal tries its luck in the market segment, whether it can succeed later, and whether it can continue to hit the market. Now you see that L9 is, L8 is, L7 will be, and you believe it. It is to go from chance to necessity.

China Entrepreneur: I remember you mentioned before that when you first started promoting OKRs in the company, you faced some confusion, and then after reading a book, you really understood what a real OKR should do.

Li Xiang: The book I first read had a problem, called "OKR Work Method", which is about a very small company, only a dozen people, and the size of the company is completely different from ours. It happened that for a while I was sick at home studying another book called "This is OKR", which said that we must use the online system, we must have weekly meetings, we must do reviews, and we will strictly follow the things in the book, and our whole collaboration has become particularly good in 2019.

China Entrepreneur: Actually, I verified a little bit in you, reading books is useful. Especially for people who do business, even if there is a bookcase behind them, it is difficult to integrate knowledge and action, but I find that a lot of your knowledge is obtained from reading. The point is that it is difficult to read the book, and you can still use it after reading it, how did you do this?

Li Xiang: I often talk about two things internally, the first thing is that the difference between people is the ability to obtain information and the ability to process information. In addition, as we study more advanced companies, we find that there are two ways to obtain information, one is through consciousness, and the other is through powerful tools. All kinds of advanced management tools all over the world, the logic is basically the same, it will let you know earlier that you don't know.

China Entrepreneur: What are the challenges you face in the process of organizational change?

Li Xiang: The biggest challenge is my own cognition. For example, in the first stage, we always think that we are different from others, we are special, because you have not yet understood people. The second stage is when you go out and look at it, but you don't see it deep enough, and if you ask some top consulting firm to help you see it, it's different from your own. This is the same as seeing a doctor, many times I only know what is uncomfortable, but in fact, it is difficult to have diagnostic ability, so I have to use external forces to diagnose, such as reading, attending classes, consulting good consulting companies, and communicating with good companies.

China Entrepreneur: How do you feel different from others?

Li Xiang: I think this may be a common problem of Internet companies. Because China's traditional business system was not mature in the past, Internet companies did a good job and felt that they were different from others. In fact, when you reach a certain scale, the way the organization is managed is the same, there is no difference. Because the problems we encounter today, people have encountered, especially when you don't have income, feel different, when you have income, what is the core? Income and expenses. Isn't the cost your use of resources? Your use of resources reflects how your organization is doing, and you also have R&D expenses, sales expenses, and management expenses, all the same.

"China Entrepreneur": There is a very interesting point, when you are seriously studying Apple's product model, Apple's car building plan is not so clear, when you apply its model to the ideal, Apple's car manufacturing path begins to gradually clear, do you have a more in-depth study of Apple's car manufacturing plan?

Li Xiang: From the perspective of the industry, I think Apple's car manufacturing must be the number one topic in the world. Apple has very strong foundational capabilities, but I think it will also face a big challenge, also in terms of organization. Apple is successful because its culture and system are very suitable for the kind of product it is making now, but when it faces a more complex product, it will actually have two serious baggage, one is organizational baggage and the other is idol baggage.

In the face of organizational baggage, it has two options, one is to upgrade the current organization so that it can adapt to the car, but its current organization is so successful that the person who makes the mobile phone will say, why such a change? The second is to incubate another organization, and at this time there will be a problem, especially for a company with a very strong cultural brand, it will find that if this "child" looks like it, it doesn't matter if it is dismantled or not; If this child is more suitable for smart cars and intelligent driving, he will look more and more different from Apple. It's as if two white couples suddenly give birth to a black child, and it is certainly unacceptable.

The idol baggage is that the product is made, you need to go through from 0 to 1, from 1 to 10, many people will say that Apple does not sell 1 million vehicles, there is a problem, so it does not recognize you, beat your stock price down, it is even more hesitant.

China Entrepreneur: When you really dig deeper into Toyota and look at manufacturing companies with a long history, you may be more shocked, but you may not have felt that way before.

Li Xiang: I have always respected them, such as Toyota's lean working method. You start thinking that TBP is just a solution to manufacturing problems, but then you find that everything can be solved, and even help you solve problems in life. They succeeded because they built powerful productivity tools, just as they had guns, cannons, and cars.

China Entrepreneur: When a company has several different cultural genes, we often say that it is an amphibian, and in the case you just mentioned, in fact, amphibious is not enough, you may need three ambians, four ambians.

Li Xiang: This is the ability to correspond to different organizations, in fact, it is not a culture, our culture is still very, very unified.

China Entrepreneur: But sometimes this ability will cause some cultural confusion, such as the openness or extensive growth of the Internet, corresponding to this lean control and stable output on the manufacturing side, do you feel this sense of tearing in the process of change?

Li Xiang: I think Qin Zhi did two things that were particularly good at that time. The first thing is to tell you why, why do we use the Internet to manage the way? Because no one is dumber than anyone, but he didn't see it in the past, he doesn't know that he doesn't know, and when he knows, he will make the same judgment and choice as you. Although we are a manufacturing team, we embrace data more actively than the Internet team, so the intelligence and dataization of the entire factory are unbelievably high. Who wants to refuse to master a stronger tool on their own? Can't I wear body armor when I have a gun? So let everyone know that it is our obligation to manage the company.

The other one also learned from Qin Zhi and unified the language. Why did we use Toyota's tools at that time, because we recruited people from various car companies, you have to know that even if you describe the same term, the general definition and the definition of Ford are different. At this point, everyone feels that they are right, then we can't manage it. What did I do at the time? Call the director level and above, everyone jointly analyze what is the best in the world, list the mainstream management methods such as GM, Ford, Motorola's Six Sigma, and Toyota, everyone to study, after the study, everyone votes, and finally everyone chooses Toyota's (management) method. To this end, we also specially recruited people from Toyota and invested a lot of money in training, which established a problem-solving system.

China Entrepreneur: Why do you still think that Toyota's system and tools are better after looking at so many companies?

Li Xiang: In fact, many times you just need to read and study which company has more books, it must be because it is more advanced. And you can read what the Japanese write, read what the Americans analyze, read what Chinese analyze, and you can also pull Toyota people over and tell you about it, because Toyota wants to export these things to the outside world.

I have always believed in one thing, that is, there are not so many differences between people, and when everyone can see the whole picture, it is easy to make the same choice.

"China Entrepreneur": The biggest difficulty here is that you have to break your own attachment, and let the team break the self-attachment, don't think that what you see is already the world.

Li Xiang: Yes. I think this is the biggest game of the enterprise, and it is also the biggest growth of the enterprise. For myself, in fact, the most terrible thing is two things, the first is not knowing that I don't know, and the second is not being able to seek truth from facts.

Stage mismatch is the biggest problem for many companies

China Entrepreneur: In fact, organizational transformation is not only a difficult and correct thing, but also a difficult and correct and long-term thing, which is difficult to achieve overnight. Because an organization is like a living organism, it will change, it will encounter new challenges, and it will be more mobile.

Li Xiang: We have not done such a scale in the past, in 2019 to catch up with the epidemic at the end of the year, we only sold for less than half a month, from 2020 we have formal income, in 2020 we did more than 9 billion, in 2021 we did more than 20 billion, in 2022 we have more than 45 billion in revenue. One of my great feelings over the years is that in fact, many times the upgrading and change of the organization is always there, and it is impossible to achieve it overnight. Moreover, the upgrading of organizational capabilities is closely related to scale. When the scale is small, we ourselves say that speed is efficiency, but when the scale is large to a certain extent, quality is efficiency, because any low-quality decision, low-quality products, low-quality manufacturing management capabilities, may make you lose billions, tens of billions, and even make your company go bankrupt directly.

In short, there are some dynamic adjustments, but more importantly, learn what the company has done at the corresponding scale stage, and don't learn wrong.

China Entrepreneur: This is very critical, for example, many people now learn Huawei.

Li Xiang: Yes, many companies learn from Huawei, Samsung, and Apple, but they actually have serious problems. On the surface, the key component of the organization is the process, and the process is like your product. Many companies only learn this part is actually problematic, at least based on our current understanding, the organization has four rings, interconnected. The first ring is that you have to have culture and unified values, the second ring is the process, the third ring is the talent system, and the fourth ring is the incentive system.

China Entrepreneur: You also went to Lakeside University to study at Lakeside University for organizational adjustments, right? Did you gain a deeper understanding of organizations at Lakeside University?

Li Xiang: What was the biggest problem we encountered at that time? At the end of 2017 and the beginning of 2018, we announced that our first product had failed. So I think the creation of Ideal Car began with a strategic failure. At that time, my idea was that I was going to study strategy, and I would find the best people to learn strategy, and we talked internally, saying that the best strategy in China was Professor Zeng Ming, who was the education director of Lakeside University at that time, so I firmly went to Lakeside University.

China Entrepreneur: What was your process of communicating with him? Are there a few words that make you feel like you've broken a layer of window paper?

Li Xiang: Professor Zeng taught us three things, the first is that strategy is not thought up by a few people, it is co-created, and the core purpose of co-creation is to let everyone see the world together, as long as you see it, many times you know how to plan.

The second is to help us sort out what to do from 0 to 1, what to do from 1 to 10, and what to do from 10 to 100. Because stage mismatch is the biggest problem of many enterprises, without the life of this stage, get the disease of this stage. For example, when he mentioned that from 0 to 1, it is actually to verify your survivability, and from 1 to 10 is to carry forward what you have verified. But many companies are not willing to do things from 0 to 1, but want to do things from 10 to 100 as soon as they come up, then it must be folded.

Third, help us design a diagnostic method of organizational structure, whether it is more open or more convergent, more controllable or more uncontrollable.

China Entrepreneur: Was there such a mismatch of ideals at that time?

Li Xiang: After learning it, there is no more, so I think the core thing is to know that we don't know.

"Chinese Entrepreneur": Often you will only realize that you have not suffered a loss.

Li Xiang: So the failure of a strategy that did not let us die is very important to us.

China Entrepreneur: Under normal circumstances, 70% of companies fail to pass this hurdle after a failed strategy. Do you now think back to what was the reason why the first product survived failure and bottomed out?

Li Xiang: First, we can face failure very well. When we stopped SEV, the company had 1,100 employees, and I spent many days communicating with each of them, probably less than 100 people in a conference room, and had more than a dozen meetings to explain to everyone why they stopped, including what problems were encountered in terms of policy and what problems were encountered in terms of scale. I thought that as long as everyone saw the same problem, they would make the same choice, so many employees wiped their tears at that time and continued to do the ideal ONE.

The second is related to myself, I have no way back, I can't go back and get a job after I fail, because I have never worked for anyone else. Of course, it is also a good thing for entrepreneurs like us, many entrepreneurs have left too many retreats for themselves, but in fact, it has become a problem.

China Entrepreneur: Why did you talk to more than 1,000 people in ten times instead of having a big meeting?

Li Xiang: If you can't talk about it thoroughly, you must talk to everyone face to face. Changzhou's employees came by train and plane to listen.

China Entrepreneur: How long is the show?

Li Xiang: It's basically two hours.

China Entrepreneur: So you have to talk about the same question ten times in a row.

Li Xiang: Yes.

Source: Respondents

NIO is like Haidilao, ideally prefers Starbucks

China Entrepreneur: There are still many people who think that the range extension route is a phased and transitional product, when you also want to make pure electric models, what do you think of this evaluation?

Li Xiang: I think we still have to solve the biggest problem in the industry, if we can solve the problems of the industry, we will become the leader in the industry, if we can solve the problem of competition, we can win in the competition. The biggest problem in the industry has not changed as my initial judgment, one is the charging problem, the other is the battery cost problem.

The most fatal reason for the charging problem is the slow charging speed, not the short cruising range, and the series of consequences of the slow charging speed are that the user's experience is extremely poor, followed by the business model does not work, and does not have commercial circularity. The problem to be solved here is that if the speed is fast, it will be infinitely close to the experience of fuel vehicles, I have been waiting for the arrival of the 800V era, which is equivalent to changing from 2G to 4G, and if you can charge a car in ten minutes, the turnover rate is six times higher, and countless people have entered this industry to invest, because he has money to earn. So behind this is a generational change in technology.

Another is the difference in battery costs, the core is how to use less battery cost under the effective number of kilometers.

Why these major problems should be solved is to be able to replace fuel vehicles on a large scale. Range extension first meets this demand, and high-voltage pure electricity also meets this demand, so we have never stopped the research and development of high-voltage pure electricity.

China Entrepreneur: You are a kind of backward effect-based way of thinking, not based on the attachment to range extension or a certain model, but ultimately to solve the fundamental problem of users.

Li Xiang: On the contrary, we believe in our own hearts that today's pure electric vehicles with slow charging speed and 400V are the shortest transition period, and they will soon be transitioned.

China Entrepreneur: What is the current thinking about supply chain? How deep should the vertical supply chain be?

Li Xiang: We divide the supply chain into four modules. The first module is that there is no difference between traditional cars and new energy vehicles, such as seats, mirrors, etc., choose to cooperate with mature suppliers, and do not build their own factories. The second module is related to chips and computing units, and chooses to cooperate with chip manufacturers, develop their own, and will not build their own factories. The third module, the battery, also chooses to design and develop the battery pack together with supply chain partners, but does not touch the cells. The fourth module is solved by self-built, such as our silicon carbide factory in Suzhou, drive motor factory in Changzhou, and range extender factory in Mianyang.

This does not include batteries, because we think the battery industry will be a scale market in the future, and the larger the scale, the higher the efficiency.

There are two judgments when we do what we do and what we don't do, one is to say I have to do it, I don't do it, no one does it for me, the other is that if I am more closed and efficient, I will do it myself, if the more open and efficient, I will leave it to others to do.

China Entrepreneur: Talk about your thinking about user operation, Wei Xiaoli has very distinctive characteristics in user operation.

Li Xiang: I think it is closely related to the company's own values and the life experience of the team. For example, if Li Bin asks me to eat and chat, the places he goes to are basically similar to NIO House. I will choose Starbucks to provide you with professional coffee, and the rest is self-service. We think the ideal is more like Starbucks, that is, I can do almost it, but I can ensure that you are fast and convenient enough, efficient enough, and you solve the problem yourself.

So you see the way we build stores, including decoration costs, large stores are referring to Starbucks Reserve, and ordinary stores are referring to ordinary Starbucks.

"Chinese Entrepreneur": Your analogy is particularly good, both ways are correct, Li Bin may pay more attention to the sense of ritual.

Li Xiang: (NIO is) the Haidilao of the automotive industry, but we like Starbucks, and we have recruited a lot of people from Starbucks, mainly related to the service system.

I never believed that less is better

China Entrepreneur: We have communicated at several key times, and I feel that your personal changes are still great, because sometimes it is a particularly difficult thing for a person to kill his past self, and I have seen your iteration in you. What do you think is the difference between being a CEO of a $1 billion company and being a CEO with a $5 billion valuation and a CEO with a $10 billion valuation?

Li Xiang: It's still cognition. In the face of the same difficulties, there are actually three kinds of relationships between us and difficulties, one is to be pressed by difficulties, life is better than death, pain is not to live, one is to face with difficulties to play with each other, and the other is to stand on the top to see this difficulty, treat the difficulty as a game, as a project to solve. These three relationships are actually determined by cognition, when the cognition is low, you are pressed by the problem below, when the cognition is higher, you and the problem face to face to play with each other, when the cognition is high, you will find that it is not a problem, let's solve it. And as you scale up, the difficulty and challenges of the problems you face are different.

China Entrepreneur: You have been talking about cognition, if you go further, after reaching the scale of 100 billion US dollars, what do you think is the challenge to your cognition?

Li Xiang: I think it has never changed, in fact, it is three layers.

The first layer is the philosophical level, which is the mission, vision, and values of the enterprise, answering "who am I" and "where am I going".

The middle layer is related to the industry, one is the system that supports the business, the other is the system that supports the organization, and what I'm most afraid of is that I don't know that I don't know, so I'm always fighting against this matter, how to use more "external brain" consulting companies, in the tools to ensure that everyone can perceive.

At the bottom, I think any business has a bottom line, one of my two bottom lines is to seek truth from facts, so we are very concerned about data, because these things are not deceptive, I don't want to tell me stories, don't give me PPT, don't do Excel sheets, I look at the real thing, take the data in the system to see. The second is actually inclusive collaboration, we can't do everything by ourselves. We need to have stronger and stronger senior teams, and our partners need to become stronger and stronger. Once we were closed, we died.

China Entrepreneur: What has changed you from car building?

Li Xiang: There are three important changes to building a car for me.

First, when you find that all kinds of problems are emerging, you really have to think about some philosophical problems. Its biggest benefit is that it helps you jump out of the box and look at these issues. Otherwise you will be very painful, painful, because it is too complicated, too painful, and problems are constantly emerging. Later you find out that none of these things are aimed at you, it is the same problem for everyone.

The second is how to face complexity. If you don't have a particularly good method, complexity will also become your pain, when you can see all kinds of advanced tools and advanced management methods around the world, in fact, you see not complexity, but richness. How to turn complexity into richness, how these world's most powerful companies and organizations do, I think this is what I learned.

The third is the perception of scale. We used to say why Microsoft, Apple, and Huawei were so complicated, but later found that this matter was only related to scale. Because the scale that each person can drive is limited, you can be 10 times taller than others, but you can't be 100 times taller. So why do these companies have to engage in complex processes, because the process is to solve the bottom line, without the bottom line, there will be chaos.

Source: Respondents

China Entrepreneur: Which year is more difficult for you in 2019 or 2022?

Li Xiang: 2019 is even harder, and the blood is about to run out. The first thing Wang Xing told us after investing in 2019 was that you should invest in the supply chain in advance, and I understood what he said at that time, but why didn't he do it? This little money is only enough to survive, not enough to invest at all, and people are poor and short-sighted. Why did you decide to invest later, after the financing, there were tens of billions on the account. The reason why we can change now, the first is that the enterprise is developing healthily, and the second is that there is still money.

"China Entrepreneur": So everyone says that among the three new forces in car manufacturing, ideal cost management is the most extreme, and even uses "door-picking" to describe you.

Li Xiang: We are not as complicated as everyone thinks, the core is actually to concentrate resources and make a hole. At the heart of strategy, I never believed in winning more with less, but I invested more than others in every battle.

China Entrepreneur: It seems that Wang Xing also has a great influence on you?

Li Xiang: The first is to "supply blood" to us, and it is to send charcoal in the snow, which must be a lifelong favor. The second is that Wang Xing has given me a lot of inspiration from the cognitive level a lot of times, and I think these are the two biggest helpers he has given me.

China Entrepreneur: It's rare to see founders so active on social platforms now, relatively speaking, you speak a lot, of course, there will be a lot of criticism of you. My feeling is that if someone criticizes the ideal product as bad, it must have touched your backscale. Do you realize you're going to make a change?

Li Xiang: I will still try to change myself, hoping to express my views without causing them (the PR department) too much trouble.

I'm angry because there are actually two bottom line issues. The first is because it denies our values, and it is untrue, which I can't help but because I want to defend the bottom line of our values. The second bottom line is, you don't spread rumors about my organization, because organizations are also our products. The organization is an internal product, and the business is an external product, I think these two must be resolutely defended, otherwise everyone will turn rumors into habits, which is not allowed.

China Entrepreneur: Finally, what do you think about Li Bin and He Xiaopeng?

Li Xiang: The pursuits of the three of us are actually different.

I think Li Bin's characteristic is that he wants to build a grand concept and verify it through the operation of the enterprise. These characteristics are related to his major, his life experience, and his ability to do these things with words and deeds, and his team truly believes in these things.

Xpeng's biggest core is technology, whether it is voice or automatic driving, Xpeng is the first to invest, and very firm, he wants to verify the world through technology.

I feel that ideals are my personal reflection. I live to control my destiny and push the limits of growth. Growth and challenge are the key, so I will definitely choose the largest industry and the most difficult area to do, and use the results to verify.

In this process, I feel that I have a stronger sense of purpose than the two of them, because the goal is a verification of growth, and I don't set any upper limit for myself. So, at least at this stage, the three companies reflect the thinking and projection of the founder's personality.