Early on, Carl Pei understood that China, consumer tech, and e-commerce would change the world. During a visit to China as a teenager, Pei discovered things that would eventually draw him into the booming world of consumer tech. Before he’d even managed to finish his bachelor’s thesis at university, Pei had run out of patience.
“China was mentioned zero times, the big tech companies zero times, and we learned nothing about e-commerce,” the Swedish-Chinese entrepreneur once said of his timeat the esteemed Stockholm School of Economics.
At 21, Pei dropped out and moved to China to pursue his passion for gadgets.
Fast-forward a few years, and his company, OnePlus, is raking in $1 billion a year. In the process, it revolutionized the world of the Android smartphone and established itself as a serious challenger to giants like Apple and Samsung.
Founded in Shenzhen, China, by Pei and CEO Pete Lau in 2013, OnePlus introduced a premium Android phone to rival the iPhone but for much less. The cheap price tag was achieved by cutting out middlemen and using e-commerce as the primary sales channel.
Business Insider recently caught up with Pei to get the latest on OnePlus, the company’s new challenger to the iPhone X, and why the entrepreneur is sending Swedish students to China for a first-hand peek at the “Wild East.”
Tom Turula: What are your thoughts on the reception of the OnePlus 6? You’ve so farsold more than 1 million units in less than three months.
Carl Pei: It took our first model about a year to reach 1 million units sold — this time it took 22 days. For each phone we launch, we keep selling faster and a bigger amount of phones. The OnePlus 6 is our best phone so far, and the sales are going very well.
Turula: What has been the customers’ favorite feature?
Pei: People like the overall experience, but especially the camera. Indeed, the camera is one of the most important functionalities for smartphone users, and we’ve made some great progress with the OnePlus 6.
Turula: How important is customer feedback?
Pei: The community is very important for our product development. In Sweden, we recently arranged an event for gathering product and customer-relationship feedback. Then we brainstormed some action points around this feedback in order to improve our offering.
Turula: So it’s an ongoing part of your product development, to listen to customers?
Pei: To listen, yes, but also to filter — what do our customers really want? Their wishes aren’t always compatible with reality, so you need to understand their core problem and what they really mean by their feedback.
For instance, with the OnePlus One, many customers protested against a 5.5-inch screen and though it too big. But we made sure to round out the corners, which gave the phone the feel of a 5-inch phone.
Turula: Why is word of mouth such an important marketing tool to OnePlus?
Pei: It’s more genuine and efficient to make a good product and have your customers spread the word instead of spending on banners and TV ads. That’s what we’ve always bet on.
Turula: Why did you originally decide to start OnePlus and challenge the likes of Apple and Samsung?
Pei: We’re trying to build the most balanced smartphone and the best user experience. When we started out, there were many Android makers who wouldn’t pay attention to the product. There were unnecessary features like heart-rate monitors. They were made of plastic and overall not good phones. We thought that there must be Android users who wanted a neat product, just like Apple fans do. We’re always trying to create what we think is the best possible Android phone out there.
Turula: Business Insider recently drew parallels between your new OnePlus 6 and the iPhone X, albeit for a much cheaper price. What would you say on that?
Pei: It’s really the features and not the product that were inspired by the iPhone. Apple spends a lot of time and energy on quality, design, and user experience. That’s what we’re also striving for. Apple today is No. 1, and it’s not a surprise that people make comparisons with them. I’m not super happy about that — I believe we can stand out on our own.
Turula: Nevertheless, part of your success has been that you’ve combined some of the strengths of an Apple phone with the affordability of the Android range. How important is price?
Pei: We’re out to build what we think is the best possible product, and then we determine the price accordingly. Actually, we are part of the more expensive end of the flagship-phone market, but we still want to be cheaper than the premium phones.
Retail is expensive for manufacturers, as you need to pay rent and sales staff. We don’t have that — we have a relatively small team for a smartphone maker. Our marketing mainly takes place on the internet, which is much more efficient than buying big banners or TV ads.
We can reinvest the money we save in making a better phone, but also in a better price for the consumer. To be low-cost is nothing we strive for. In Europe, the average smartphone costs €200 ($235), so we’re in fact part of the higher-end flagship market. There’s a lot of room for growth, especially in Europe, where a higher proportion of people can afford flagship phones.
Turula: You’re originally from China but grew up in Sweden. What are the challenges of expanding in China?
Pei: If you have a good product, then it will be a good product whether you’re in Sweden or in China. Take Apple, for example, or Swedish watchmaker Daniel Wellington — both are selling extremely well in China. Of course, there are challenges, especially as it is a completely different marketing and internet ecosystem. Foreign companies may want to get used to marketing on WeChat and to learn how you play the local market.
Turula: China is moving fast, and you’re passionate about communicating this to your home country, Sweden. Do you have an example of how fast-paced China is?
Pei: Things happen really fast over there. For instance, Shenzhen recently said thatall taxi cars in the city need to be electric by the end of the year. In one more year, all cars will have to be electric. When something gets decided, it really happens fast.
The service sector is also more fast-paced due to stiffer competition. For instance, I recently used a service for repainting the walls in my apartment. Despite me being away in Europe, it took just days. The painting firm created a WeChat group, where they posted photos of the apartment so I could follow the progress from afar. So when I was back, all the furniture was back, and my walls had a different color. In Sweden, this would take two months during the holiday season.
Turula: You recently launched a new exchange program for Swedish students to spark their interest in Chinese business and tech. Tell us more about the thinking behind this initiative.
Pei: Until recently, Sweden had the highest proportion of Fortune 500 companies per capita. The country’s been very successful, but if we don’t keep up with developments and start taking cues from China, we risk falling behind.
I’ve lived in China for a long time now and have seen the rapid development of the tech sector there, but whenever I visit Sweden I notice people aren’t taking notice. Swedes are still mostly following what’s going on in the United States, but at the same time, the US is starting to look at what happens in China. So I’m quite worried that Sweden won’t be able to keep building unicorns simply because the world is changing faster than [the West] understands.
“Explore China” will take 16 promising Swedish students and send them over for an immersive tour of Chinese tech. Over two weeks, they will visit companies including Tencent, Baidu, and Alibaba, as well as local Swedish entrepreneurs, across three cities: Shenzhen, Shanghai, and Beijing. They’ll get to test mobile payments with WeChat, try out dockless bikes, and then they’ll be able to return to Sweden and spread that knowledge and inspiration to other people.
Hopefully, the students can become a bridge between Sweden and China — people who understand both cultures. So when they found the next Spotify, they’ll be able to see China as a massive growth market.
Turula: What entrepreneurial advice would you give the students in your cohort?
Pei: Pursue something that you love. It may sound like a cliché, but to achieve something important will take so much time and effort, you need to make sure you enjoy what you’re doing. Otherwise, it’s easy to give up.
Turula: How much do you work each day?
Pei: A bit less compared to when we first started out. I would guess around 10 to 12 hours per day.
Turula: What’s the one signature skill of Carl Pei?
Pei: I’ve been fortunate enough to be exposed to both Western and Asian culture. That means I’m able to see connections between the two continents. Other than that, I don’t think I’m special. But since I’m exposed to more information, I can more easily put together new ideas.
Turula: There are plenty of people who say the smartphone will die and be replaced by VR. Do you agree?
Pei: It won’t happen. VR was also supposed to replace smartphones, but it didn’t happen either. Nobody is using VR right now. Even if you have goggles, they’re collecting dust on the shelf because there’s no real cases to use them right now. We haven’t seen that happen for VR either, despite many years of hype.
Turula: So we won’t be living immersed inside a pair of glasses after all?
Pei: Smartphones are still the center of peoples’ digital lives and will be so for the foreseeable future, at least for the next decade.
Turula: Is it a coincidence that you pursued smartphones to fulfill your ambitions?
Pei: I’ve always been interested in smartphones. Back in the day, I created themes for Sony Ericsson’s T610, the candy-bar phone, so I’ve always had a keen interest for technology and phones. It’s the most impactful product for all of humanity. Everybody uses it every day, and it makes up the single biggest technology market available today.
Turula: Your father was very worried when you dropped out of university. What does he have to say today?
Pei: Nothing, except that he’s happy and perhaps a bit proud too.
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