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Lenovo-backed ZUK Co-creates Smartphones With Millennials

by Major

September 7, 2015

ZUK
Chang Cheng, CEO of ZUK

Unlike parent company Lenovo, ZUK is trying to woo youngsters and blaze its own path. To do that it is immersing its engineers in their environment and involving youngsters in the conceptualization and design process.

Lenovo’s smartphone business is undergoing major changes. Last week, the company announced its decision to shift its mobility division under Motorola’s umbrella. Chen Xudong, Lenovo’s Senior Vice President in charge of the overall smartphone operation, said in a statement that the company will keep both brands and “play [to] their respective advantages in different markets”.

What is not influenced by this shift is Lenovo-backed start-up ZUK (the company is introducing new investors, but so far Lenovo remains the dominant shareholder). The company, founded in October last year, released its first smartphone Z1 on August 11, 2015. Priced at $281, the Android phone features a 4100 mAh battery, a multi-functional home button called U-touch and an optimized operating system that the company says, “will never be choppy”.

ZUK aims to sell the phone to college students, and the company can’t stress enough the importance of involving those youngsters in different aspects of the company. Instead of inviting celebrities for the launch event (like many other phone companies do), ZUK arranged for a group of fans to sit in the front row as VIPs; Chang Cheng, CEO of ZUK, then started his keynote address by calling out some of their names, leaving the rest of the audience confused.

ZUK’s involvement with its target user base goes way beyond those shout-outs to fans at the launch event. The 44-year-old Chang has a following of 3 million on the Chinese social media site Weibo, where he spends at least four hours everyday communicating with his followers. Chang has also invited dozens of his hard-core fans to visit ZUK to take part in the design process of Z1. Besides that, ZUK’s engineers have also visited more than 30 universities across the country on a mission to identify students’ daily needs, Chang said.

Why is ZUK so dedicated to woo college students? And has it cracked the code of communicating with millennials? In this interview, Chang Cheng explains how ZUK is trying to win over the hearts of the very young consumers in China.

Edited excerpts:

Q. It is clear that the main target audience of ZUK is college students. Why did you choose this group?

A. We have to. It’s very hard for us to build a brand in an older population—they have formed their habits and have ingrained brand recognitions, and it’s very hard to change them. But the young generation is very accepting of new things and they want to try out different things. They are the future for new companies like us.

Traditionally, Lenovo’s image was probably more like a middle-aged uncle—very mature and it won’t do anything outside the box. But ZUK wants to be a fashionable and cool brand among youngsters… a brand that resonates with them. Therefore, we’ve spent a lot of time with young people, and we are pretty confident that we know what they want.

Q. Can you share some details about how you involve them in the product development process?

A. It’s now quite common among Chinese smartphone makers to involve users in product design. But I think it happens mostly in software design. We are a step closer—we involved them in the hardware design as well. The first thing we did was that we invited a group of people last November to the office and asked them to choose the hardware specifications that they wanted. And we asked them to put price tags on their choices too. That process gave us a good sense [of what they wanted] and at that point we were 70% or 80% sure about what kind of phones we should make.

After that, we started sending our engineers to universities across China to study what the students’ needs are. They spent a lot of time with the students—in dorms, in classrooms, in libraries… basically following them everywhere. We visited at least 30 universities and discovered many interesting consumer needs. One example is that we found out that in their dorms, the power strips are usually very crowded, so we designed a very slim charging connector. This research process put to rest a lot of internal debate we had before [over what consumer demands are].

And finally on June 19, we invited 16 young people to our office and we showed them the real phones that we made for more feedback. The level of transparency we gave them is really unique. Some of them even ended up joining our company after graduating from college.

Q. How do you arrive at a balance between what consumers want and what you are able to make in a real world scenario?

A. It’s always a challenge to find balance between different conflicts, and you have to be very skillful about how to listen to what consumers want. For example, the group we invited last year unanimously wanted the fingerprint detection function, so we believe that it’s a true demand. But we didn’t just stop there by adding that function to our home button. We wanted to go beyond their expectations; we wanted them to say, “Hmm, I didn’t know that it can work like this.” So we added other functions, like “tap to go back” and “swipe to switch apps”, onto the button. That’s how we developed the U-touch system.

And we said “no” to some requests as well. For example, many users said that they wanted to see a lot of information displayed on the lock screen, like the weather, QQ and WeChat messages. But we believe that a simple and elegant lock screen is better, and it turned out that yet others love our lock screen design.

Q. Did you have any difficulties communicating with the 20-year-olds? How do you approach them so that they can trust you and open up to you about their true thoughts?

A. First of all, I don’t have any ‘gaps’ with them mentally. My daughter was born in 2000, and I learned a lot from her. You can’t look at young people from above; you need to look at them horizontally, as equal friends. You need to respect them.

And secondly, you have to tailor your communications specifically for them. [Keep in mind that] we were all students at some point, and we had a lot of confusions at that age, and we appreciated guidance and help. For example, I attended an event in the city of Shi Jiazhuang with almost a thousand students a few months ago. The theme was smartphones and what ZUK wanted to do. But it turned out that most of students there were girls and they weren’t very interested in what I wanted to say. So later I changed the subjects to things like how to maintain a relationship, and how to get a job at a big company like Lenovo. The atmosphere suddenly improved, and the students started to ask all kinds of crazy questions. My Weibo followers increased a lot after that event.

Q. Can you summarize a little bit what the features of this young generation of consumers are? How are they different?

A. They have very independent thoughts and ideas. And compared with previous generations, they have more resources to actually realize their ideas. And they love new things, and they can accept new things very quickly. Once they start liking something, they can be very loyal to it as well. And finally they care a lot about equality. They want to be respected and treated fairly.

Q. You are very active online in terms of communicating with young consumers. How did you gather so many followers on social media?

A. Many of my followers were actually criticizing us at first. When I was doing smartphones for Lenovo, they would come to my Weibo page to complain. But I responded to each of them, and because I was in charge of many development teams at Lenovo, I could actually make some changes sometimes to fulfill their needs. So as time went by, they probably started to feel that I was quite sincere, which turned them into, kind of my fans eventually.

And at some point, my PR team tried to take over my account and manage it on my behalf. But I eventually said no. I think I should still manage it myself, because my writing style is quite special, and people will know that the post is not written by me.

Q. As your brand grows, how can you keep in such close touch with consumers?

A. It’s my responsibility to stick to the principles. You have to curb your desires [to expand excessively]. I’m a very simple person—I get up at five everyday and I eat ramen everyday. My life is very simple, and I think my team gets it. And when the team follows you, the message will be passed on—that’s how you build a brand—to send a consistent message.

Q. The smartphone market is very crowded now. Is it too late for ZUK to grab market share?

A. It’s never too late. I really don’t think so. Xiaomi was successful because of the smartphone market boom, and now the opportunity is in upgrading—people will have to buy new phones to replace old ones. And while there are a lot of new options today, there aren’t many very good options. Apple is great, but it’s really expensive. There are many cheap phones, but the user experience sucks.

So when a market becomes saturated, companies will start to dig vertically. It’s the same logic in the e-commerce business. Our entry point is students because the user base is big and it’s fixed—there are always a large number of students in school, year after year. So what we need to do is be thorough. We want to go to different scenarios in their lives to study their needs, and then we develop our products to fulfill those needs.

Going forward, we’ll probably explore other opportunities by looking at different age groups, or different user bases. If we identify an entry point, we’ll proceed. But if we think the opportunity is small, we’ll just give it up.

Q. Can you talk more about the “blind crowd-funding” you did on JD.com? It seems to be a risky move.

A. We wanted to do a regular crowd-funding campaign first, but we concluded that it was undoable because smartphones are not peculiar gadgets, and it was very likely that we would miss our funding goal and fail. So we discussed with JD.com and we decided to do a “blind” crowd-funding. We didn’t reveal any pictures or full specifications of our phone, we only told people a few features of the phone, like a large battery and the U-touch, then we had a few options (RMB 99, RMB 299 and RMB 9,999) for people to choose from. The final amount we raised is eight times of our target.

(Note: RMB 99 and RMB 299 include accessories like a smart cover and a power bank, as well as a priority code to buy Z1 online. The amount will eventually be deducted from the phone price if the funders decide to buy the phone. So essentially users get a discount and free gifts when they buy the phone later. The RMB 9,999 option includes four Z1 phones, accessories and some books.)

It’s a risky move but we had confidence in our product. I think what we were raising was not just funds, but also people’s trust. Once you earned their trust, you need to deliver your promise. It’s like tightrope walking, the key is to not fall off.

Q. You wept a little at the end of your product launch event when you were reading a few lines from Kevin Kelly’s New Rules for the New Economy. Why?

A. (The lines were “Trust is a peculiar quality. It can’t be bought. I can’t be downloaded. It can’t be instant—a startling fact in an instant culture.”)

When I first read the book, the feeling was that I was about to drown in a sea of blood, and a very wise man suddenly appeared and said to me, “Dude, there’s a boat right there.” The book was a game-changer for me. It taught me how to do business in this era—the most important thing is how to impress people. And for us the key is trust. Before this book, I didn’t know how to compete with Xiaomi or Huawei. I can’t go and ask (Xiaomi CEO) Lei Jun, “Hey, how can I beat you?” And I can’t ask Yuanqing (Lenovo CEO Yang Yuanqing) either. But after this book, everything became so clear and easy.

[And I was very emotional] because I felt I was making up for my previous sins—I feel that I’m responsible for [the relatively poor performance of] Lenovo’s smartphone business. We didn’t make the best product we could at Lenovo, and I definitely have to take some responsibilities.

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