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Tencent: The Battle Toward Success

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From friends chasing after dreams and their ambitions, to immense success.

This is the story of how a single entrepreneur takes one idea and turns it into a thousand others until their dream has been achieved!

From the wish to talk and spread ideas, to a company worth billions despite endless troubles, Pony Ma is truly one of the best entrepreneurs of the digital age.

Read the story of Tencent and how it turned from a simple idea, into an internet giant:

The Early Days of Pony Ma

Pony Ma was born in 1971 in China. At that time, the country was detached from the rest of the world, as western cultures didn't influence the populace.

Since a very young age, Pony was known to be very shy and to-himself. When he was 13, his family decided to move to the city of Shenzhen in Guangdong province. Ma had a keen interest in astronomy, and all his relatives predicted that he would one day become a 'big fish'. During his high-school days, Pony started learning a lot about computer technologies and very often got lost in the world of numbers and information.

Being an excellent student with great scores on his Chinese college entrance, Ma had the opportunity to enroll in any Chinese university. Because of the political crisis in the country in 1989, Pony decided to stay close to his family and apply to the University of Shenzhen. Unfortunately, the university didn't offer any studies for astronomy - which was his biggest dream. Hence, he switched to computer engineering instead.

What Pony Ma didn't know is that this decision would pave his way to a bright future.

Heading the Right Way

Through his college days, Pony still kept to himself and didn't come out of his comfort zone much. He's described to have been industrious, high-achieving, and always behind his computer, laying lines upon lines of code. He was also known as the 'master hacker' and a huge fan of the C programming language.

When he was 22 years old, he had an internship at a company named Liming. During this program, he created one of his first meaningful projects - a stock market analysis tool. This type of tool wasn't revolutionary, but the interface caught the attention of other computer engineers. Pony managed to sell the software for 50,000 Chinese yuan, which was far from modest for that time.

In 1993, after graduating, Pony started a job at Runxun, where he devoted 5 years in developing products and even reached a managerial role. Although working in Runxun was fine, he had bigger ambitions, and the one thing that seemed to satisfy him the most was selling software he developed with his friends.

In 1995, Pony was active in the Chinese FidoNet community, which is where he met Ding Lei, who would later on become the founder of NetEase. The young programmers became friends, and Ding shared his ambitions of one day wanting to start a company. A few years later, after traveling around China, Ding and some of his college friends saw the potential of electronic mail and started NetBase. The company profited by selling services to Chinese telecom enterprises.

Pony was inspired by Ding's actions and remembered that his ambitions were the same, so in 1998, he met with his friend Zhang Zhidong and proposed to start a company.

The Start

In the late '90s, pagers were wildly popular. They were small wireless communication devices that allowed people to communicate in a certain geographical area. Ma had the idea to combine the internet with the pagers and allow people to send emails, news, and other things through them. To turn the idea into a start-up, they brought in their other friends Xu Chenyi, Chen Yidan, and Zeng Liqing. With Pony Ma leading the way - Tencent was born.

But, the time when the start-up was founded was specific for many other milestones in the world of the internet.

Namely, Netscape and Internet Explorer were in the midst of the 'browser wars', while at the same time the Java programming language was being released. Steve Jobs launched the iMac, sparking a lot of curiosity, and Baidu was released and reached new heights in the search engine industry, while JD.com and Alibaba were getting a lot of attention.

It was the time when Chinese entrepreneurs rose to and became influential in the internet world. The Tencent team was inspired by all the success they were seeing around them, but compared to the others - it was hard to get the spotlight on themselves. Tencent was getting lost in all the innovations, and the success of wireless pagers was becoming more uncertain as time went by. But people still wanted to send short messages to each other, and the company's momentum was far from gone!

The Rise of Instant Messaging

In 1996, the internet got introduced with ICQ - a communication tool developed by an Israelian team. By the end of 1998, they got acquired by AOL, becoming popular among internet enthusiasts. In China, there were many close versions of ICQ, but Pony noticed that none of them had any actual strategy nor branding.

That's when Tencent split into two areas: wireless paging and OICQ - their version of the communication tool. The team put all their efforts into OICQ, but what they didn't know was that the success of the tool was a double-edged sword.

By 1999, OICQ had 500 users, and the tool started consuming all their money. This continued, and soon enough as OICQ gained users, Tencent was more in danger of dying out. All of this escalated when by the end of 1999, Tencent received a letter from AOL who was suing them for theft of intellectual property. Tencent didn't have the funds to go through the process, although at that point they were counting a million users on OICQ.

Pony knew they had two options: raise capital or sell Tencent. Surprisingly, they first tried to sell the company but didn't manage to do it as nobody could understand how the company could be profitable. After many efforts, the Tencent team failed and it seemed that their company was close to their end.

They managed to set up a meeting with IDG, who at the time was a famous venture capital firm in China. After a few meetings, they saw that Pony was a down to earth type of a leader and that the Tencent team could be trusted. The stars aligned in their favor when another investor took an interest - Yingake, a fund led by one of Asia's richest people.

After negotiations, both IDG and Yingke invested $2.2 million and each owned up to 20% of the company. If the funding had been delayed, Tencent wouldn't have lived to see another month of work.

Growing Big

The team used the money to invest more in the now newly-named QQ, so they added more servers and optimized the operations as much as they could. Soon enough, QQ had around 100 million users, and Tencent continued to search for buyers, getting declined by Yahoo, Sohu, and other big names. Again, monetizing QQ seemed impossible.

But Pony didn't stop looking for a way to make it work, and luckily the popularity of QQ among users brought him to Wang Dawei. As a representative of MIH in China, Wang had the habit of visiting internet cafes in different locations. He noticed that everyone had been using QQ and that it was indeed popular among the Chinese population. He met with the Tencent team and started a conversation about investment and collaboration.

All of this resulted in one of the greatest deals in venture capital. Yingke gave up 20%, IDG conceded 12,8%, and was left with 7.2%. MIH would wound up with 32,8% of the company.

In 2002, with a fresh start and stronger than ever, Tencent found a way to monetize QQ. They introduced QQ Show - a feature that allowed users to create avatars with personalized outfits, facial expressions, hairstyles, etc. Users had to purchase 'Q coins' which they could use to obtain avatar components. By the end of the year, because of the feature, QQ had 5 million users playing QQ Show and contributing financially each month.

This changed the game for Tencent, and after that, they kept on growing!

There's Only Up

After the immense success throughout the years, Tencent didn't stop. In 2010 they introduced WeChat - another messaging tool. It wasn't long until people started noticing it and using it more and more. By 2012, WeChat had 100 million users - reaching a record for the fastest user growth in social media history.

Through the years, Tencent has become one of the most influential companies in the world, even being named the 8th most valuable company in 2017. Tencent has crossed business paths with giants like The Lego Group, Snap Inc, L'Oreal, and many more. The company has reached many milestones since the struggling days - one of the most significant being Tencent becoming the second Asian company to surpass a $400 billion market cap.

The hard work, consistency, and trust in their abilities and ambitions made the few friends of Tencent some of the most successful businessmen in the world!