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How China’s Realme sold 50 million phones in just over 2 years

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Starting a new phone brand in 2018 might seem too late in an already crowded market, but Sky Li was convinced that consumers between 18-25 years old were largely under-served — they needed something that was both affordable and cool.

A few months after Li founded Realme in May that year, the smartphone company organized a product launch at a college campus in India, the world’s second-largest smartphone market. It brought its own production crew, built a makeshift stage and invited local rappers to grace the event.

“I was amazed. No one was sitting down and it felt like a carnival, a big disco party,” Chase Xu, Realme’s 31-year-old chief marketing officer, told me at the firm’s headquarters in Shenzhen.

“No foreign company had ever entered the campus. They didn’t think it was possible. Why would a university let you do a launch event there?” Xu, clad in a minimalist, chic black jacket from a domestic brand, recounted with enthusiasm and pride.

“Realme became widely known thanks to the event. People found it very interesting that it was mixing with students. It didn’t just launch a product. It was showing off a youthful, flamboyant attitude.”

Within nine quarters, Realme has shipped 50 million handsets around the world with India as its biggest market, even larger than China. The target this year is to double last year’s target to 50 million units, a goal that’s “nearly complete” according to Xu. It’s now the world’s 7th biggest smartphone brand, trailing only after those who have been around for much longer — Samsung, Huawei, Xiaomi, Apple, Oppo and Vivo, according to a Q3 report from research firm Canalys.

Realme didn’t accomplish all that from scratch. It’s yet another smartphone brand rooted in BBK Group, the mystic electronics empire that owns and supports some of the world’s largest phone makers Vivo, Oppo, OnePlus, and now Realme.

Oppo family

In 2018, former Oppo vice president and head of overseas business Sky Li announced he was resigning from Oppo to start Realme as an independent brand, similar to how OnePlus started in 2013. Today, Realme, OnePlus and Oppo all belong to the same holding group. That entity, together with Vivo, sits under BBK, which started out in 1998 selling electronic dictionaries in south China and has been diversifying its portfolio ever since.

While Realme and OnePlus operate independently, they get access to Oppo’s supply chain, a model that has allowed them to have lighter assets and consequently fewer costs.

Realme’s pop-up store in India / Photo: Realme

“Realme has an advantage because we share a supply chain with Oppo. We are able to get very good resources from the supply end, stay ahead globally and obtain what we should have,” said Xu.

For instance, the nascent phone maker was among the first to get Qualcomm’s new Snapdragon 865 chips and put four cameras into a handset. Priority isn’t always guaranteed, however, because “there is definitely competition between us and our peers to fight to be the first,” Xu admitted. “Of course, it also depends on the progress of each team’s research and development.”

The light-asset strategy also means Realme is able to offer competitive technologies at relatively low prices. In India, its 8GB RAM, 128GB phone cost less than 1,000 yuan ($152) and its notch screen one was under 1,500 yuan ($228).

Realme isn’t concerned about increasing margin in the “growth stage,” Xu said, and the firm has “been profitable from the outset.” On the other hand, the phone maker is also introducing a slew of IoT gadgets like smart TVs and earphones, categories with higher markups.

The smartphone-plus-IoT strategy is certainly not unique, as its siblings in the BBK family, as well as Xiaomi and Huawei, have the same vision: smartphones and smart devices from the same brand will form a nicely interconnected ecosystem, driving sales and data collection for each other.

Another way to cut costs, according to Xu, is to avoid extravagant outdoor advertising. The company prefers more subtle, word-of-mouth promotion like working with influencers, throwing campus music festivals and fostering an online fan community. And the strategy seems to be clicking with the young generation who like to interact with the brand they like and even be part of its creative process.

The most enthusiastic users would sometimes message Xu with pencil sketching of what they envisioned Realme’s next products should look like. “They have very interesting and excellent ideas. This is a great generation,” the executive said.

Chinese brands go global

A Realme event during Diwali / Photo: Realme

Realme’s India chief executive Madhav Sheth is equally adored by the country’s young consumers. A former distribution partner of Realme, he made an impression on Realme founder Li, who “understands the Indian market very well despite not speaking fluent English,” according to Xu.

“Sheth is very charismatic and good at public speaking. He knows how to excite people,” Xu spoke highly of Sheth, who is an avid Twitter user and has garnered some 280,000 followers since he joined in the spring of 2018.

The Indian boss’s job is getting trickier as India becomes warier of Chinese influence. In June, the Indian government banned TikTok and dozens of other Chinese apps over potential national security risks, not long after it added more scrutiny on Chinese investments. Anti-China sentiment has also soared as border tensions heightened recently.

Against all odds, Realme is seeing robust growth in India. In Q3, it grew 4% from the previous quarter and currently ranks fourth in India with a 10% market share, according to research firm Counterpoint.

“During the start of the quarter, we witnessed some anti-China consumer sentiments impacting sales of brands originating from China. However, these sentiments have subsided as consumers are weighing in different parameters during the purchase as well,” the researcher wrote in the report.

“Of course the India-China conflict is not something we want to see. It’s a problem of international relationships. Realme doesn’t take part in politics,” Xu assured. “There will always be extremist users. What we can do is to expand our fan base, give them what they want, and leave the extremists alone.”

Next year, Realme is looking to ramp up expansion in Europe, Russia and its home market China. None will be a small feat as they are much-coveted markets for all major phone makers.

Realme’s onion-inspired model designed by prominent Japanese designer Naoto Fukasawa

Part of Realme’s effort to associate itself with what Gen-Z around the world considers “cool” is to work with prominent designers. Xu’s eyes lit up, raising his hand in the air as if he was holding a ball. He was mirroring Naoto Fukasawa, the renowned Japanese industrial designer who came up with the onion-inspired color and pattern of the Realme X model.

“The afternoon sunlight slanted through the large windows. [Fukasawa] gave me a playful look, took an onion from beneath the table, and told me that was his inspiration,” Xu recalled. “He slowly turned the onion in the sun. I was dumbfounded. The veins, the pink, gold color, the texture. It was so beautiful. You wouldn’t think it was an onion. You’d think it was craftwork.”

Lyron Foster is a Hawaii based African American Musician, Author, Actor, Blogger, Filmmaker, Philanthropist and Multinational Serial Tech Entrepreneur.

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Does Tor provide more benefit or harm? New paper says it depends

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Does Tor provide more benefit or harm? New paper says it depends

Enlarge (credit: Westend61 / Getty Images)

The Tor anonymity network has generated controversy almost constantly since its inception almost two decades ago. Supporters say it’s a vital service for protecting online privacy and circumventing censorship, particularly in countries with poor human rights records. Critics, meanwhile, argue that Tor shields criminals distributing child-abuse images, trafficking in illegal drugs, and engaging in other illicit activities.

Researchers on Monday unveiled new estimates that attempt to measure the potential harms and benefits of Tor. They found that, worldwide, almost 7 percent of Tor users connect to hidden services, which the researchers contend are disproportionately more likely to offer illicit services or content compared with normal Internet sites. Connections to hidden services were significantly higher in countries rated as more politically “free” relative to those that are “partially free” or “not free.”

Licit versus illicit

Specifically, the fraction of Tor users globally accessing hidden sites is 6.7, a relatively small proportion. Those users, however, aren’t evenly distributed geographically. In countries with regimes rated “not free” by this scoring from an organization called Freedom House, access to hidden services was just 4.8 percent. In “free” countries, the proportion jumped to 7.8 percent.

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EV bus and truck maker The Lion Electric to take SPAC route to public markets

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Canadian electric truck and bus manufacturer The Lion Electric Company said Monday it plans to become a publicly traded company via a merger with special-purpose acquisition company Northern Genesis Acquisition Corp.

The combined company, which will be listed on the New York Stock Exchange, will have a valuation of $1.9 billion. The companies raised $200 million in private investment in public equity, or PIPE, and hold about $320 million in cash proceeds.

The deal is the latest example of an electric automaker opting to go public via a SPAc merger in an aim to access the level of capital needed to become a high-volume vehicle manufacturer. Arrival, Canoo, Fisker, Lordstown Motors and Nikola Corp., have all announced SPAC mergers in 2020.

In Lion’s case, the combined net cash will be used to fund the company’s growth, notably the planned construction of a U.S.-based factory and to further develop its advanced battery systems. Lion is evaluating more than 10 potential brownfield plant sites in nine states, including California, Illinois, Indiana, Michigan, New York, Ohio, Oregon, Pennsylvania, Washington and Wisconsin. The company told TechCrunch it plans to to pick a site and complete its industrialization plan by the end of the year. Production at this yet-to-be named factory is expected to start in the beginning of 2023.

Lion is already producing all-electric medium and heavy-duty urban trucks and buses at a 2,500-vehicle-per-year manufacturing facility. Some 300 vehicles are on the road today and the company has plans to to deliver 650 trucks and buses in 2021. It even landed a contract with Amazon to supply the e-commerce giant with 10 electric trucks for its ‘middle mile’ operations.

Completion of the proposed transaction is expected to occur in the first quarter of 2021. Lion is expected to be listed on the NYSE under the new ticker symbol “LEV.” Lion’s CEO and founder Marc Bedard will continue in his role. The combined company will have a board of directors consisting of nine directors, including Bedard, Pierre Larochelle from Power Sustainable as Chairman, and five other existing Lion board members, as well as Ian Robertson and Chris Jarratt, who are co-founders of Algonquin Power & Utilities Corp.

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Daily Crunch: Facebook acquires Kustomer for $1B

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Facebook makes a billion-dollar acquisition, we learn more about Twitter’s Clubhouse-style feature and Moderna applies for emergency authorization for its COVID-19 vaccine. This is your Daily Crunch for November 30, 2020.

The big story: Facebook acquires Kustomer for $1B

Kustomer says it can give customer service teams better data and a more unified view of the people they’re interacting with. So with this acquisition, Facebook can improve its offerings for businesses that have a presence (in some cases, their primary digital presence) on the social network.

The terms of the deal were not disclosed, but TechCrunch has confirmed that the deal price was around $1 billion.

Facebook isn’t the only social media company making acquisitions to improve its customer service features. Earlier this month, Snap bought Voca.ai, a startup creating AI-based voice agents for call centers.

The tech giants

Alphabet’s DeepMind achieves historic new milestone in AI-based protein structure prediction — The advance in DeepMind’s AlphaFold capabilities could lead to a significant leap forward in areas like our understanding of disease, as well as future drug discovery and development.

Twitter’s Audio Spaces test includes transcriptions, speaker controls and reporting features — Earlier this month, Twitter announced it would soon begin testing its own Clubhouse rival, called Audio Spaces.

With an eye for what’s next, longtime operator and VC Josh Elman gets pulled into Apple — Elman said he will be focused on the company’s App Store and helping “customers discover the best apps for them.”

Startups, funding and venture capital

HungryPanda raises $70M for a food delivery app aimed at overseas Chinese consumers — HungryPanda makes a Mandarin-language app specifically targeting Chinese consumers outside of China.

Materialize scores $40M investment for SQL streaming database — CEO Arjun Narayan told us that every company needs to be a real-time company, and it will take a streaming database to make that happen.

Curio Wellness launches $30M fund to help women and minorities own a cannabis dispensary — The new fund, started by the Maryland-based medical cannabis company Curio Wellness, aims to help underserved entrepreneurs entering the cannabis market.

Advice and analysis from Extra Crunch

DoorDash aims to add $11B to its valuation during public offering — The delivery platform gave a range of $75 to $85 per share.

Strike first, strike hard, no mercy: How emerging managers can win — Investors at Fika Ventures argue that “Cobra Kai” offers valuable lessons for VC.

The road to smart city infrastructure starts with research — The right technology can upgrade any city, but we need to understand its impacts.

(Extra Crunch is our membership program, which aims to democratize information about startups. And until November 30 — that’s today! — you can get 25% off an annual membership.)

Everything else

Moderna claims 94% efficacy for COVID-19 vaccine, will ask FDA for emergency use authorization today — If granted the authorization, Moderna will be able to provide it to high-risk individuals such as front-line healthcare workers.

FCC Chairman Ajit Pai will step down to make way for the Biden administration — Pai’s tenure has been a controversial one.

Original Content podcast: Just don’t watch Netflix’s ‘Holidate’ with your parents — But if you avoid parental awkwardness, it’s a perfectly adequate holiday-themed romantic comedy.

The Daily Crunch is TechCrunch’s roundup of our biggest and most important stories. If you’d like to get this delivered to your inbox every day at around 3pm Pacific, you can subscribe here.

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