For the most part, the cheaper smart phones market is dominated by Android. With Windows Phone 8, however, Microsoft targeted one of Android's biggest weaknesses — performance. As powerful and customizable as Android is, it has a track record of poor performance on phones with lower specs.

"In building our company, we wanted to challenge the status quo," Pei explained in an interview. "By selling directly to consumers and utilizing social media and our online community to create interest, we were able to put a lot more value back into the device itself."

Unlike most other phones, the OnePlus One can only be bought online after receiving an invitation from the company or a friend who's purchased the phone. The system does the double duty of generating buzz around the device and allowing OnePlus to maintain a careful, cost-effective balance between supply and demand. Pei says OnePlus' focus isn't necessarily on its competition. It's on how people are purchasing their phones.

"Increasingly, people are starting to understand the true cost of signing a contract, and we want to make it easier to purchase a high-end device without having to give a large portion of money to a middleman," Pei said. "We're here to show everyone what's possible once you step outside of the traditional rules of the smartphone market."

The traditional rules of the smartphone market are what burned Amazon's ill-fated Kindle Fire Phone earlier this year and drove the company to discount the phone to a more reasonable $199 off-contract price. Today more Americans are buying smartphones under $200, and the market is responding.

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