Smartphone maker a millionaire factory

Eight years ago, before China’s Xiaomi had sold a single smartphone, 56 of the earliest employees pulled together US$11 million to invest in the start-up. Rankand-file workers dipped into savings and borrowed from parents. One receptionist tapped her dowry.

Today, they’re the Lucky 56. Xiaomi is t he f ourth- l argest smartphone maker in the world and is preparing for an initial public offering. Their stake in the company may soon be worth US$1 billion ($1.44b) to US$3b, depending on the stock sale. That works out to US$36m each at the midpoint.

The fortuitous decision began with workers like Li Weixing, an engineer who was employee number 12.

When word spread that Lei Jun and his co-founders were chipping in their own money, Li and others wanted to join them.

Li had around 500,000 yuan (now $113,000) saved up. “It wasn’t enough to buy a house, so he asked if he could invest in Xiaomi instead,” said CEO Lei. “We said, we can’t let only Weixing invest, so we let everyone in.”

Some early Xiaomi employees were already wealthy, but many staffers in those days had to scrape together cash to participate. Employee number 14, who was then a receptionist, contributed her dowry of 100,000-200,000 yuan. That stake could be worth between US$1m and US$8m.

The group of 56 stands to gain as much as US$3b if Xiaomi floats 15 per cent of the company at a US$100b valuation when it goes public in Hong Kong this year, according to calculations based on Xiaomi’s prospectus. A more conservative estimate would yield a US$1.4b payout for the 56 employees if Xiaomi floats 25 per cent of the company at a US$50b valuation.

Employees stand to make roughly 200 times their original investment. Five of the workers are poised to become newly-minted billionaires, according to Bloomberg calculations.

Xiaomi’s listing this year may be the biggest IPO since Alibaba Group’s 2014 debut.

Silicon Valley is known for its secret millionaires, who were early joiners at companies like Facebook. Among the more famous examples is Bonnie Brown, a massage therapist who bargained for stock options to accompany the US$450 a week she was making at her part-time job at Google. She retired a millionaire after five years at the company.

— Bloomberg