Xiaomi IPO Will Make 56 of Their Workers Millionaires

Xiaomi IPO Will Make 56 of Their Workers Millionaires
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Eight years ago, before Xiaomi had sold a single smartphone, 56 of the earliest employees pulled together $11 million to invest in the startup, according to Bloomberg. Rank-and-file workers dipped into savings and borrowed from parents. One receptionist tapped her dowry.

Today, they’re the Lucky 56. Xiaomi is one of the most successful smartphone makers in the world and it’s prepping a blockbuster initial public offering. Their stake in the company may soon be worth $1 billion to $3 billion, depending on the stock sale. That works out to $36 million each at the midpoint.

The fortuitous decision began with workers like Li Weixing, an ex-Microsoft engineer who was employee No. 12. Back in 2010, staffers were working seven days a week out of a bare-bones Beijing office park to get the unknown mobile phone maker up and running. When word spread that Lei Jun and his co-founders were chipping in their own money for a venture financing round, Li and others wanted to join them.

Li, who helped create Xiaomi’s mobile operating system, had around 500,000 yuan ($79,000) saved up. Some early Xiaomi employees were already wealthy, including Lei who made his first fortune leading software developer Kingsoft and investing in startups. But many staffers in those days had to scrape together cash to participate. Li and others preferred investing in an effort they knew rather than the uncertain stock market. Now Li stands to make $10 to $20 million, depending on Xiaomi’s IPO value.

It was employee No. 14, a receptionist now working in Xiaomi’s human resources office, who contributed her dowry of around 100,000 to 200,000 yuan ($16,000 to $31,000). That stake could be worth between $1 million and $8 million. Xiaomi declined to make her or other early employees available for interviews. Li declined to comment.

The group collectively stands to gain as much as $3 billion if Xiaomi floats 15 percent of the company at a $100 billion valuation when it goes public in Hong Kong later this year, according to calculations based on Xiaomi’s prospectus. A more conservative estimate would yield a $1.4 billion payout for the 56 employees if Xiaomi floats 25 percent of the company at a $50 billion valuation. Employees stand to make roughly 200 times their original investment. A greater number of Xiaomi’s workers should be enriched through stock options, which don’t require capital upfront.