Xiaomi CEO loses $149 million on a bet
A billion yuan or $149 million, whichever you like best. That's the "insignificant" amount of money that Lei Jun, CEO and founder of Xiaomi, might have to pay out after losing a bet he made back in 2013. Will he deliver and pay?
Despite the fact that the profits of the Chinese giant in 2018, some 956 million dollars, were nearly the same as the size of the bet isn't the interesting thing here. Lei Jun is facing a not inconsiderable loss is he pays the bet, but the part to focus on is how this came to pass in the first place.
There is no denying that we can all show a bit of overconfidence at times. This seems to be what happened to the founder of Xiaomi in 2013 on a Chinese national television program. In a moment of rapture, he bet in front of the entire audience that in 5 years Xiaomi's revenues would exceed those of the long established Chinese company Gree Electric Appliances. And it got a little out of hand. What at the time seemed like madness - in those days Xiaomi was not even a shadow of what it is now - is not so far-fetched today. Still, he didn't make it.
"Let the whole nation be our witness, if our income exceeds Gree's in five years, President Dong, please pay me a yuan," Lei Jun commented on the program. To which Dong replied, "Let's bet a billion."
Gree Electric Appliances has just released its 2018 financial results and its earnings rose to 198 million yuan, about 20 billion more than Jun's company pocketed in the same year. So close, and yet, the bet was still lost.
Our Bloomberg colleagues have contacted both Xiaomi and Gree to find out what's going on, but they haven't got a response. Will Xiaomi's CEO pay out after the wager? Will it all just be a TV anecdote? Place your bets, ladies and gentlemen... In any case, gambling in China is prohibited.