Tencent Biography 1998-2016: Evolution of Chinese Internet Companies
Chapter 4 Life and Death: Struggles in the Bubble Burst
Chapter 4 Life and Death: Struggles in the Bubble Burst
If you're not thinking about the customer, you're not thinking.
-- Ted Levitt (American strategic thinker)
You are really out of money, so you don't have to pay it back, but I don't want your stocks.
——A friend told Ma Huateng
"A pixie reincarnated from starvation"
When OICQ was launched, Xu Chenye had not resigned from the Shenzhen Telecom Data Communication Bureau. During the day, he worked in the value-added business group. One of the tasks of this group was to manage the telecommunications room.The server Tencent rented from Shenzhen Telecom is less than 10 meters away from his desk. "Zhang Zhidong and the others ran to the computer room every now and then to adjust the servers. We didn't dare to be too intimate, so we secretly winked and made faces at each other. My colleagues were also a little strange. No tenant had ever been so busy."
The reason for being busy is simple: the number of users is increasing too fast, and the server is on the verge of limit again and again.
Compared with their American counterparts, Chinese Internet companies in the early stage have a big difference in the use of servers: in the United States, labor is very expensive and servers are cheap, so programmers do not consider server optimization when designing architectures , the capacity is not enough, just buy a few more.But in China, on the contrary, the server is very expensive and the labor is very cheap. In order to increase the system capacity, programmers will put a lot of energy into server optimization, including the exquisiteness of the algorithm, reducing CPU consumption, and moving some operations to a higher level. The underlying database and so on.For Zhang Zhidong, there is almost nothing to learn from these technologies, because Americans don't need to do that, and even domestic telecommunications service providers and financial service providers with deep pockets don't need to do that.And it is through such honing that Tencent's programmers have gradually formed their own unique core competencies.
More than two months after its launch, OICQ's user growth trend has shown a parabola, and it is a very steep parabola.For a while, the number of users increased by 90 times every 4 days, which completely exceeded the original expectations of Ma Huateng and Zhang Zhidong. "Hua Jun Software Park" is one of the earliest software download sites in China. According to the founder Hua Jun's recollection: "As soon as OICQ was launched, we put it on the site. Within half a year, it became the most downloaded software among all software. , its download speed is fast, and user reputation has been quickly established.”
By September, the server of Shenzhen Telecom was completely unbearable, and a new one had to be purchased, but a server with better configuration would cost at least 9 to 6 yuan. Ma Hua couldn't afford the money, so Zhang Zhidong went to Huaqiangbei Market After buying a bunch of parts, I assembled a "cottage machine". Of course, its performance cannot be compared with the brand-name machine.Because the website always goes wrong, there must be a programmer who can arrive at the first time. Xu Gangwu volunteered to rent a small apartment less than 400 meters away from the company. Within minutes, he arrived at the office, where he lived until around 2004.Several other important programmers, such as Wu Xiaoguang, Li Haixiang, etc., must "keep their pagers close to their bodies."Li Haixiang recalled: "For several years, we were afraid to go swimming for fear of receiving news of a breakdown at that time."
With the skyrocketing number of users, the performance of the client also needs to be gradually improved, and the technical team is forced to the corner again and again.
In the early days of Tencent, there was such a joke: in the first more than a year, Tencent did not consider security issues. The communication protocol of OICQ is not encrypted, the protocol is fragile, and it is transmitted in plain code. If hackers want to make trouble, they can adjust it arbitrarily. Get the user's information.Later, Ma Huateng discovered that this was a problem, so he ordered programmer Huang Yejun to develop encryption software.More than two weeks later, Ma Huateng wanted to see what stage the program had reached, so he ran to Huang Yejun.Huang Yejun happened to be out to play, so he was not on his seat, and a book called "Principles of Encryption" was upside down on the table.Ma Huateng picked up the book, turned it over, and couldn't help but turn pale with shock—Huang Yejun was reading the first section of Chapter 1, titled "What is Encryption".
Wu Xiaoguang, who was sitting next to him, witnessed this scene. When he was interviewed by me later, he told the story with a smile, and then said: "In the first few years of starting a business, all of us were learning by doing. Looking back now, I feel a little scared, but at that time, I felt that it should be like this, otherwise what else could it be?"
In order to feed the fast-growing OICQ, Ma Huateng and Zeng Liqing had to pick up jobs everywhere. They helped some local governments build websites, helped companies design webpages, and fed the tens of thousands of yuan they earned or even just a few thousand yuan to them. The OICQ that called "Didi". "For a while, when we heard the sound of 'Didi', we would tremble with fear. It seemed to be an elf reincarnated from a starving ghost." Xu Chenye said jokingly.
Ma Huateng was running around every day to make Tencent "survive", and he no longer had time to maintain the "horse station" on Huiduo.com, and his career as a webmaster ended quietly.
birth of a penguin
The Logo (trademark) of OICQ was originally a pager.When the technical department was preparing for the third version upgrade, someone suggested whether to design a more interesting image.
An artist drew drafts of several small animals such as pigeons and penguins. These icons are very vivid in large sizes, but it is difficult to be vivid when applied to 16×16 and 32×32 pixels.In an internal discussion meeting, everyone argued a lot about this. Ma Huateng, who had a deep "pager complex", suggested: "Let's use the original icon, and everyone will know what OICQ is for at a glance." However, other founders People mostly tend to switch to the penguin icon.After some quarreling, Ma Huateng came up with a new idea: "Otherwise, we will put the two icons on the Internet and let users decide for themselves."
This is the first time that a Chinese Internet company has given the right to decide on the brand logo to users.In the first round of voting, most users voted for "pager".The original penguin icon was black and white realistic, very close to the penguin image of Linux, and looked a lot like a logo of a technology company.In the next few days, Tencent’s artists added a few interesting dynamic penguin pictures. Gradually, users’ opinions began to change. More and more votes were cast for a black body, white face, thin eyes, and a slender figure. penguin.In this way, "penguin" replaced "pager".
In October 1999, Shenzhen City held the first China International High-tech Achievements Fair, and Tencent rented a counter to participate in the exhibition.In order to attract visitors, Chen Yidan asked someone to burn a ceramic piggy bank with the image of 10 penguins.When entrusting the processing, the production company felt that the penguin icon provided by Tencent was too "thin", and the piggy bank would not be able to stand up, so it took the initiative to make the penguin slightly fat and round, and it was still on its neck. Added a black scarf.Unexpectedly, this penguin piggy bank was very popular at the high-tech fair.At the beginning, it was free delivery, but there were too many people who came to collect it. Chen Yidan sold it at a price of 1000 yuan a piece, and later increased it to 5 yuan a piece, but they were all sold out. The money he earned was just enough to cover the rent of the exhibition counter sold out.
Seeing that people liked the image of the fat penguin more and more, Tencent entrusted a professional cartoon production company, Donglixing, to redesign the logo. Liqing Zeng sat by the computer and brainstormed ideas with the designers. The designers asked him: "Penguins live in the Antarctic Circle and are the least afraid of the cold. Why do you put a scarf around its neck?" Zeng Liqing said with a smile: "This is a good question. This penguin remembers."
The newly designed image of the penguin has a chubby figure, big eyes, thick lips, and a naive look. The scarf around the neck has also changed from black to bright red.Donglixing has completed a complete set of visual identification system (CI system) for the penguin image, and added several supporting image designs such as Qmei, Hanliang, Duoduo, and Xiaojuzi, forming a large family of cartoon characters.
Another interesting thing is that during the design process, Dong Lixing felt that the cartoon image of Tencent’s penguin had a promising market, so he proposed to buy out the right to develop derivative products of the penguin image at a price of 30 yuan. In October 2001, Donglihang opened the first "Q-GEN" store in Guangzhou, selling clothing, toys and watches under the Tencent Penguin brand. Tencent can draw a 10% authorization fee from the sales revenue.In the following three years, Donglihang opened 10 specialty stores one after another.This business has made Ma Huateng proud for a long time: "As soon as we come, throw us a few 3 yuan, which can not only help us promote, but also receive authorization fees." At one point, he even imagined that Tencent Penguin would be like Mickey Mouse or as popular as Hello Kitty.However, judging from the later situation, it seems that this is not a good business. Not too many users are willing to put a silent fat penguin beside them when chatting with OICQ.
"You don't have to pay back the money, but I don't want your stock"
In 1999, there were not many happy things like the authorization of Donglixing. On the contrary, Ma Huateng was troubled by one trouble after another.
Just in October when participating in the High-tech Fair, Tencent suddenly received a thick letter package from the United States. When I opened it, it turned out to be an English lawyer’s letter from America Online. Intellectual property rights of ICQ, requiring Tencent to stop using OICQ.com and OICQ.net domain names, and return them to AOL.After receiving this lawyer's letter, Ma Huateng called the other four founders together to discuss countermeasures that night. Everyone looked at each other in blank dismay, not knowing how to respond.
Chen Yidan, who has studied law, said to everyone: "We don't have the money to fight this lawsuit. Even if we do, it will be more or less ominous. It will rain and my mother will get married, so we have to let it go." They also agreed , this news must be kept secret.
By November, Ma Huateng was sitting in his small office, Zhang Zhidong and Chen Yidan walked in at the same time.They sat across from him with good news and bad news:
The good news is that, just 9 months after the date of release, OICQ has more than 100 million registered users, and it is time to put a seven-digit user number. CICQ, PICQ and Internet Elf are all far behind later.
The bad news is that Tencent only has 1 yuan in cash left in its account.
With no hope of open source, there are only two things Ma Huateng can do at this time: one is to increase capital and reduce salary, and the other is to sell Tencent.
The shareholders unanimously agreed to increase the share capital from 50 yuan to 100 million yuan. The founders had only worked for a few years and did not have much savings themselves, but they all gritted their teeth and invested again. The monthly salaries of the five people were also halved. In the past year, Ma Huateng and Zhang Zhidong received 5 yuan a month, and the other three received 5000 yuan. Now they have been reduced to 3 yuan and 2500 yuan respectively. In Shenzhen at that time, it was only enough Fill the stomach.
Selling the company may be a happier way than increasing capital and reducing salary.Ma Huateng's asking price was 300 million yuan, and he and Zeng Liqing began to look for people who were willing to pay.In the future, Ma Huateng and others were reluctant to talk about this very unbearable experience, but the embarrassment at that time can still be seen from the memories of many people.According to incomplete statistics, at least six companies refused to buy shares in Tencent.
Among the first batch of investors that Ma Huateng sought was Shenzhen SEG Group, the landlord of Tencent.Jin Haitao, the deputy general manager of SEG Electronics at the time, recalled: "Ma Huateng approached us several times, but he didn't vote at that time. What's the reason why he didn't vote? I don't understand this stuff. If he voted back then, the value would have increased by at least several thousand. times, then I will be very happy." Zeng Liqing found his old company - Guangdong Telecom, and Ding Zhifeng, who once served as a senior manager of the 21CN business department under Guangdong Telecom, asked Lin Lin, the author of "15 Years of Boiling" Jun recalled a plot: At that time, Tencent applied for an acquisition to 21CN, and it was Ma Huateng and Zeng Liqing who came to negotiate. "When the two of us walked into the conference room, all of us mistook Zeng Liqing for Ma Huateng, obviously because Zeng Liqing had more style. Even during the discussion, Zeng Liqing was more powerful than Ma Huateng. It is aggressive, more like a person who makes up his mind." In the eyes of Jin Haitao or Ding Zhifeng, OICQ may seem to be a project that seems to be growing rapidly, "However, no one in the world knows how it makes money."
In addition to the local enterprises in Shenzhen, Ma Huateng also went to Beijing and Guangzhou, and successively found 4 companies to negotiate the purchase of Tencent.
Zhang Zhihao later served as the general manager of Tencent Beijing. At that time, he worked in the largest paging company in North China - Zhongbei Paging Group.Zhongbei purchased a set of network paging system from Tencent, and Ma Huateng personally went to Beijing headquarters to debug the equipment as an engineer.In the computer room, Ma Huateng taught Zhang Zhihao how to use OICQ by the way. Zhang Zhihao, who had studied computer applications, intuitively felt that this might be a huge market opportunity, and it was also a good direction for the transformation of Zhongbei Paging Group.He recommended OICQ to the group's top management and encouraged them to buy Tencent. "But they thought I told a joke that wasn't too funny."
Almost all the companies that have received Ma Huateng or Zeng Liqing said that they "do not understand the value of Tencent's technology and intangible assets", and some pointed out that they can only buy according to Tencent's "how many computers, desks, chairs and benches". value, the most out to 60 yuan.Ma Huateng later said dejectedly: "When I was negotiating to sell Tencent, I felt very complicated and frustrated. I talked with four companies in a row, but none of them reached the bottom line we expected."
When the cash was almost cut off, the founders had to go around asking friends to borrow money with embarrassment, and they borrowed money from everyone they knew a little bit in Shenzhen.At least two wealthy friends lent Tencent 20 yuan and 50 yuan, respectively.Ma Huateng asked them whether they could use Tencent's stock to repay the debt, and they all politely refused.One even said generously: "You are really out of money, and it's okay if you don't pay it back, but I don't want your stocks."
Chen Yidan also approached the bank to ask about the feasibility of the loan. The bank asked if there was any fixed property that could be mortgaged. However, after looking at several depreciated servers, the road to loan could only be "a drop in the bucket".
After selling the company with nowhere to go, Zeng Liqing proposed to Ma Huateng to talk to a different group of people.
"We used to look for companies and people in the information industry. They can't see the future. Now we need to find some crazier people. What they want is not a company that makes money now, but a company that can make a lot of money in the future. Companies, they don’t benefit from immediate profits, but go public or resell to arbitrage in the capital market. They call this VC, Venture Capital, venture capital.”
This is the first time Ma Huateng's team heard the term "venture capital".
Help IDG and Yingke
In the Chinese business circle, the term "venture capital" suddenly became popular at the end of 1999.This high-risk, high-yield investment model invented by Americans entered China around 1994. However, due to unsuitable policies and industrial environments, it has not been developed. With the rise of Internet companies, venture capital has finally A suitable object has been found.
Among the few venture capital companies in China at that time, the most well-known one was IDG, an American International Data Group.This small and medium-sized investment company in the United States started business in China as early as 1991. In 1996, IDG appointed Wang Shu to Shenzhen to find projects.He spent the whole day looking for projects in science parks in Shenzhen, Zhuhai, Zhongshan and other places. When he arrived at the science parks, he opened up the company roster and visited all companies with the word "technology" in their names.It was embarrassing to him at the time that the meeting with entrepreneurs often starts with the origin of venture capital and the most basic common sense.In more than two years, Wang Shu has successively invested in Zhongkejian, Kingdee and other enterprises.
Zeng Liqing quickly contacted Wang Shu through an intermediary. "My Hunan University alumnus Liu Xiaosong, who founded A8 Music, came to my door and said that a company called Tencent had developed the first ICQ with a 'Chinese flavor'. Because there is no charging model, and there is no money to buy servers, the company will soon be unable to survive.” Wang Shu decided to take a look.
Zeng Liqing knew that the negotiation with IDG might be the straw to save Tencent. He wrote a 20-page business plan, which was eloquent, but when it came to the profit forecast, he couldn’t understand how to write it. He revised it six times. , is still unclear.He also promised Liu Xiaosong that if the match is successful, he can give him 6% of Tencent shares.On the day they agreed to meet with Wang Shu, Ma Huateng had a herniated lumbar disc and was lying in bed. Zeng Liqing forced him to get out of the bed.
It was a very dramatic meeting.Not long after sitting down, Wang Shu quickly realized that this was a project with an uncertain future. "If we IDG don't give money, Tencent may die immediately; if we give money, the future is not clear." While flipping through the business plan, he asked Ma Huateng casually: "How do you see the future of your company?" Sick The sleepy Ma Huateng was silent for a while, and said, "I don't know either." Zeng Liqing's face changed drastically.Many years later, Wang Shu recalled that it was Ma Huateng's answer that made him look at Ma Huateng differently: "From this, I judge that this is a very real leader who is trustworthy and cooperative."
After the Tencent project was reported to the IDG Beijing headquarters, Wang Gongquan, a senior partner, led a team to the south for investigation. He recalled: "We flew to Guangdong together, sat there, and forced Ma Huateng to talk about how this thing made money. At that time, everyone at OICQ They are all in use, but the user doesn’t know where or who the user is, so how do we collect the money? A few of us tortured Ma Huateng all night, and it was past the early morning. He just said that he knew that everyone liked this thing, but I don’t know who to charge money to.”
In the end, there are two reasons that prompted IDG to venture into Tencent: first, OICQ is indeed a popular good, although no one knows how it makes money; second, and perhaps more importantly, in March 1999, The thriving AOL bought Israel's ICQ for $3 million.As China's most successful ICQ imitator, OICQ may really be worth some money.
At the same time that IDG expressed its investment intention, Zeng Liqing, through Hong Kong businessman Lin Jianhuang, got on Hong Kong Yingke, which was founded by Li Zekai, the second son of Li Ka-shing, the richest Chinese man. It was famous for the Cyberport project at that time.Yingke has been trying to enter the mainland market, investing in Tencent may be one of the pawns that can be tested.
In the business plan for IDG, Ma Huateng and Zeng Liqing valued Tencent at US$550 million and were willing to sell 40% of the shares, which means raising US$220 million.And that has little basis for profitability.
Wang Shu asked Ma Huateng: "Why is Tencent worth $550 million?"
Ma Huateng replied: "Because we are short of 200 million US dollars."
Ma Huateng later explained: "We estimated based on the funds needed for the next year. The purchase of servers plus salary is estimated to cost 1000 million yuan. This is how much the company's valuation is calculated. We do not want to lose control of the company. , so the maximum amount of shares that can be sold is half. What Zeng Liqing wrote was 200 million US dollars, so I gritted my teeth and added another 20 US dollars, because I still have to give some shares to two middlemen."
The whole financing negotiation went smoothly. Zeng Liqing traveled to Shenzhen, Guangzhou and Hong Kong, told IDG that Yingke was very active, and told Yingke that IDG was about to sign. "Yingke was rather hesitant, with an attitude of whether to invest or not. In contrast, IDG was still active. In fact, they couldn't see clearly, so they encouraged each other, saying that one invested, and the other followed suit. At the last moment, Wang Shu proposed a VAM clause. After the agreement is signed, half of the funds will be invested first. We must reach a certain number of users within one year, otherwise the other half of the money will not be given, and they still occupy 20% of the shares. We I agree." Zeng Liqing said.
In the process of finalizing the agreement, Tencent's account has been exhausted.Wang Shu recalled: "I still remember that because various legal documents have to be drafted, and the company's money is overseas, it needs to be reported to the SAFE for approval when entering China. The procedures are very complicated, and it takes at least one month for the money to arrive. I couldn’t wait any longer, so I asked a friend in Guangzhou to advance 450 million yuan to Tencent for emergency.”
The investment agreement was signed in April 2000. The three parties did not sit together to hold any ceremony, but signed each other through fax machines.That day, the five founders silently gathered in front of the fax machine, watching the agreement passed page by page. Ma Huateng asked Zeng Liqing: "Is that how you signed it?" Zeng Liqing urged: "Just sign it like this. It's too late."
It's really too late.
The moment when IDG and Yingke invested in Tencent was the "window time" when the Internet world turned from sunny to cloudy.
Over the past year or so, the Internet economy has suddenly become the hottest investment concept in the global capital market.The Nasdaq Composite Index, which is mainly composed of Internet company stocks, was only 1991 points in April 4. After crossing the 500-point mark in July 1998, it suddenly embarked on a wave of hearty New Year’s Eve market. By 7 On March 2000th, the Nasdaq index broke through 2000 points impressively, and the world was full of joy. The prosperity of the market pushed people's enthusiasm for the Internet to a boiling point.American business strategist Gary Hamel proclaimed like a prophet: "Now is the golden opportunity to rewrite the rules of the game."
In response to the world capital market, China's stock market also experienced a blowout on May 1999, 5. In less than two months, the Shanghai Composite Index rushed to 19 points in one fell swoop, an increase of more than 1700%. The famous "50 Quotes".The only few Internet companies in China have also been favored by North American investors. On July 5, 19, China.com, founded by Hong Kong businessman Ye Keyong, was the first to be listed on Nasdaq, raising US$1999 million.Apart from acquiring several domestic Internet companies, CDC has not done much. However, it has gained popularity in the U.S. stock market by relying on its "Chinese concept". In November 7, China and the United States reached a WTO access agreement, and the stock price of China.com soared 14% in one day. Its stock price was once pushed up to an astonishing US$9600 per share. The market capitalization of manufacturing giant Ericsson at the time. On April 1999, 11, Sina, China's largest web portal, was approved to be officially listed on Nasdaq, raising US$75 million.NetEase and Sohu will also be listed in the next three months (they landed on Nasdaq on July 300 and July 50, respectively).There are even conclusive news that the Shenzhen Stock Exchange is in full swing planning "China's Nasdaq" - ChiNext, when China's Internet companies will have the opportunity to obtain financing opportunities in the local capital market.It can be said that IDG and Yingke decided to invest in Tencent, which has no profit model, in just three or four months, which is just a very small episode in this super heat wave.
However, the crash happened at a moment that no one expected.
From the second week of April 2000, the Nasdaq index, which had been soaring proudly all the way, suddenly turned around and fell without warning. The composite index fell by 4% from the highest point of 5132 within half a year. $8.5 trillion in corporate market value evaporated, more than the annual revenue of any country in the world except the United States.AOL alone lost $1000 billion in paper assets.Almost all well-known Internet companies suffered heavy setbacks. Cisco's market value fell from $5792 billion to $1642 billion, Yahoo fell from $937 billion to $97 billion, and Amazon fell from $228 billion to $42 billion.
In this round of stock market crash, several Chinese companies listed on Nasdaq were not immune. Sina's share price fell to a low of 1.06 US dollars, Sohu fell to 60 cents, and NetEase was even worse. Its share price was only 53 cents at one time. Cents, was issued a "delisting warning" by the exchange.The bubble burst.The winter of the Internet will last until May 2001, during which there will be many sorrows and sorrows.
Many years later, looking back on this experience, several founders of Tencent still have lingering fears.
From the funding crisis in November 1999 to the completion of financing in April 11, at the same time, the Nasdaq bubble burst, leaving only six months for Tencent.In these 2000 months, if Ma Huateng and Zeng Liqing did not find IDG and Yingke in time, if IDG was unwilling to take risks, if Yingke was not so rich, and even if Wang Shu had not "exceeded responsibility" before signing the agreement 4 million yuan was set aside—at that time, many investment agreements were invalidated during the implementation process. Perhaps, Tencent, which lost its blood, would fall in the Internet stock market crash in 6.In all business stories, luck is the most mysterious part. Almost half of the entrepreneurs "die" on luck, and you can't explain it.
From OICQ to QQ
Ren Yuxin joined the company when Tencent was most short of money.He joined the company in January 2000 and was strictly the first employee recruited from the society.
Ren Yuxin, born in 1975, grew up in Chengdu, Sichuan. He learned computer programming in the Children's Palace as early as the fourth grade of elementary school.When he was in the second grade of junior high school, he wrote a flying shooting game software, which was published in a computer newspaper and received 20 yuan for the manuscript.After graduating from the Computer Department of Chengdu University of Electronic Science and Technology, he went south to join Huawei as a programmer.
In December 1999, a middle school classmate of his who also worked at Huawei wrote a chess and card game software, and wanted to sell it to Tencent, which had just become popular, and put it on OICQ.On a Saturday night, Ren Yuxin accompanied him to the Tencent company in the SEG Technology Pioneer Park to actively sell. At that time, Ma Huateng and Zhang Zhidong had no interest in games, and the four of them sat on the desk and talked about it.Zhang Zhidong asked: "How do you manage Huawei?" Ren Yuxin said: "We are never allowed to sit at the desk." Before breaking up, Ma Huateng suddenly asked Ren Yuxin: "Would you like to come to work with us?" Early the next morning , Ren Yuxin, who stayed up all night, called Ma Huateng and said, "I am willing."
In Ren Yuxin's memory, when he first arrived at Tencent, there were two things that impressed him the most.
The first is that there is no concept of time at work.Huawei implements militarized management. Ren Zhengfei, who came from a military background, requires every system to be implemented as strictly as the army, but it is very different in Tencent.On the first day Ren Yuxin went to work, she arrived at the company on time at 9:10 as informed, but found that the door was locked. After waiting for more than half an hour, someone came late, and Ma Huateng did not show up in the office until after 5:10.When it was off work time at [-]:[-] pm, no one in the entire company left. Xu Chenye and Chen Yidan, who had not officially joined the company, came to the company to handle affairs at this time. Ma Huateng usually worked until after [-]:[-], and many people accompanied him.
The second is that there is no hierarchical concept of appellation.No one in the company is called "President", everyone has an English name, Ma Huateng is called Pony, Zhang Zhidong is called Tony, Zeng Liqing is called Jason, Chen Yidan is called Charles, Xu Chenye is called Daniel, Wu Xiaoguang is called Free, everyone Call him by his first name.Ren Yuxin also gave herself an English name, Mark.This has become a tradition in Tencent. Every Tencent employee has an English name. If the name of the newcomer is the same as that of the old employee, a Chinese surname will be added, such as Mark Li and Tony Liu.
Ren Yuxin was assigned to the development team led by Zhang Zhidong, responsible for writing Tencent's first web-based BBS community software.At that time, Tencent was struggling on the verge of life and death, and several early employees left the company one after another, including "Night Cat" and others. Three months later, Ren Yuxin became the group leader of the Web group.
It was also around this time that the National Arbitration Forum (NAF) made its ruling on AOL's arbitration case against Tencent. On March 2000, 3, the arbitrator James Carmody signed the arbitration judgment, ruling that Tencent should return the OICQ.com and OICQ.net domain names to AOL.For Tencent, this is not an unexpected result. After receiving the lawyer's letter in October 21, Zhang Zhidong started the development of the new version.What makes everyone distressed is what new name will be used to replace OICQ.
According to the memories of several founders, the birth of the new name is as follows: One day, Wu Xiaoguang heard two netizens chatting about their OICQ number on the bus, and called it QQ.After he returned to the company and talked about this matter, Ma Huateng immediately responded, "It's called QQ", and it was named after that.
However, when I checked the newspapers of the year, I also found another possibility. On September 2000, 9, "Southern Metropolis Daily" published a press release titled "Continue Chatting to the End". The reporter wrote: "It is the Internet chat software that supports thousands of Internet bugs. ICQ and OICQ are the most famous among the similar software, so the chat software is naturally called QQ by some people in the industry." That is to say, in the early period, QQ was the informal collective name of all chat software, and it was later called Tencent boldly "take it as its own".
In November 2000, Tencent launched the QQ 11 version. OICQ was officially replaced by the simpler QQ. The original www.oicq.com domain name was also abandoned and replaced by the new www.tencent.com.
QQ 2000 version is a classic version in the history of QQ iterations. In this version, multiple levels of confidentiality options are adopted for the first time, personal data and confidential information functions are enhanced, and QQ News and Tencent Browser (Tencent Browser) are launched. Browser), which means that QQ has quietly transformed from a pure instant messaging tool to an information portal and virtual community, and various changes in QQ in the future are based on this concept.In addition, Zhang Zhidong also eliminated a legal hidden danger: in the previous version, Tencent unscrupulously used Disney cartoon characters such as Donald Duck, Popeye, Mickey Mouse, etc., and this time they were all removed, and replaced by Dong Lixing's design. Penguin series cartoon image.
MIH's Accidental Entry
Throughout 2000, Tencent's situation was still worrying.In the shadow of the bubble burst, investors gradually lost confidence.
IDG was the first to think about quitting.In the past three years, IDG has successively invested in more than 3 entrepreneurial companies, with a total investment of about US$80 million, that is, each company invested about US$1 to US$50 million. The company's Kingdee case was considered a success. The company was listed on the Growth Enterprise Market of the Hong Kong Stock Exchange in February 150.The rest of the dozens of Internet companies invested in have been hit hard in this severe winter, especially the e-commerce website 2001, which has invested heavily, fell on the last threshold before going public.No one mentioned the GEM of the Shenzhen Stock Exchange, which was originally expected.In the darkest of times, IDG needed a cashout to survive.
In IDG's view, Tencent's business model is not favored by the mainstream capital market, and it burns too much money.Ma Huateng used almost all of the funds raised from the financing for the purchase of servers. However, while the number of users increased rapidly, profits were still in the foreseeable future.By the end of 2000, Tencent had another financial crisis. Zeng Liqing kept asking Wang Shu to meet, hoping to increase investment.Negotiations have come to an impasse several times. Ma Huateng insists that the entrepreneurial team must maintain control, while IDG and Yingke do not believe that under the current situation, Tencent still has room for additional issuance at a premium.
Therefore, Wang Shu proposed a compromise plan. The two shareholders provided Tencent with a loan of 200 million US dollars, which was executed in the form of convertible bonds.But everyone knows in their hearts that if the money is spent, there will be no additional investment. IDG began scrambling to help find new buyers.
"At that time, I felt that the most likely buyers were those portal websites that had already been listed. IDG went to Zhang Chaoyang from Sohu, but was rejected. Zhang Zhidong and I went to Beijing and went to Wang Zhidong and Wang Yan from Sina, but they were also rejected. Yes. From the perspective of the technologists in the Internet industry, they can do Tencent’s work themselves, so why spend millions of dollars to buy it? And at that time, the stock price of Nasdaq fell sharply, and no one could do it. Don't dare to act rashly." Ma Huateng said.
In addition to Sina and Sohu, IDG also approached Yahoo China, but was rejected.Ma Huateng went to visit Kingdee, which is also in Shenzhen and also invested by IDG, but was rejected.Zeng Liqing also found the famous Lenovo Group. At that time, Lenovo was working with America Online to promote the portal website FM365, but of course he refused to buy it.
Another investor, Yingke, also joined the rescue of Tencent.They negotiated with Zhonggongwang, which has a state-owned background, and tried to invest in Zhonggongwang, and let it acquire Tencent to achieve business integration. This plan was aborted.Then, Yingke recommended Tencent to TOM.com, which is controlled by itself, but was rejected by the management.Yingke even recruited the famous Hong Kong director Wang Jing to combine Tencent's users with the film industry to see if there is an innovation in the profit model.
In the fourth quarter of 2000, the number of users of Tencent is still increasing rapidly, and the number of registered users is likely to exceed 1 million within half a year. However, there is no one in China. willing to buy its shares.
Seeing the end of the mountain, Ma Huateng's good luck began to "failure" again.
In January 2001, an American and a Chinese suddenly appeared in the Tencent office of SEG Science and Technology Pioneering Park. He spoke fluent Chinese and introduced himself as Wang Dawei, who was from the China Business Department of MIH in South Africa. The vice president, accompanied by the president of 1Vianet, a Chinese company invested by MIH.Ma Huateng and Zeng Liqing heard the name MIH for the first time.
In China, no more than 100 people know about MIH.This is an investment group company headquartered in South Africa. It is the largest pay TV operator in South Africa. At that time, it was a listed company in Nasdaq and Amsterdam. It has invested in new media in emerging countries for many years. One of the largest media investment groups". In 1997, MIH entered China and invested in Beijing Youth Daily and Pulse.com.
Wang Dawei discovered Tencent by accident. "Every time I go to a Chinese city, I go to the local Internet cafes to see what games the young people are playing. I was surprised to find that almost all Internet cafes have OICQ programs on their desktops. I think this should be A great Internet company. At the end of 2000, I contacted the general managers of several companies that wanted to accept investment, and found that their business cards all had their own OICQ numbers printed on them. This made me even more excited, and I wanted to see what kind of company it was Such a company."
Intuition is a shortcut to truth.Under the guidance of intuition, Wangdawei found Tencent on the fourth floor of the East Building of SEG Technology Pioneer Park.
Sitting in front of the computer, Ma Huateng asked Wang Dawei to look at the user growth curve of QQ (the new version was launched at this time, and OICQ has been renamed QQ—editor’s note), and told him that there are about 50 new registered users every day, which is equivalent to Population of a city in Europe.The ongoing "Monternet" project between Tencent and China Mobile has made NetU vaguely aware of the possibility of making profits—we will describe this in detail in the next chapter.
The two sides will soon enter substantive negotiations.Wangdawei offered two conditions: first, MIH valued Tencent at US$6000 million, and MIH was willing to exchange shares of [-]Vianet; second, MIH hoped to become the largest shareholder.
Regarding these two items, several founders immediately disagreed.In terms of shareholding ratio, their bottom line is never to give up control.However, what makes them happy is that "at least the first time such a high valuation price has come out", Tencent's valuation is 11 times higher than a year ago.
Two months later, Wangdawei made a concession that MIH's investment will be paid in cash. However, in terms of equity ratio, it hopes to get help from Tencent.
IDG was overjoyed when it heard MIH's quotation. It only invested in a project for less than a year, and it was able to get an exit premium of 11 times. This is an incredible result in the Internet winter. IDG Beijing headquarters agreed to sell all 20% of the shares, but Wang Shu from Shenzhen raised objections. Under his insistence, IDG sold 12.8% and retained 7.2%.
Yingke hesitated again and again. It neither wanted to increase investment nor sell shares. MIH "raised prices" made it a dilemma.Ma Huateng and Zeng Liqing went to Hong Kong to meet "Little Superman" Li Zekai.
"That day, 'Little Superman' was entertaining guests in the restaurant of the Citi Building, and many people gathered around him like chasing stars. We found a table next to him and sat down. He flew away as well. He was too busy, he was simply the 'Andy Lau' of the business world." Zeng Liqing recalled.By June 2001, Yingke had incurred huge losses for two consecutive quarters due to excessive debts due to the acquisition of Hong Kong Telecom, and then had to sell all 6% of its shares to MIH, cashing out US$20 million.
In this way, the suffocating Tencent equity transaction case was settled.MIH, who broke in by accident, became Tencent's second largest shareholder with 32.8% of the shares.Tencent is valued at $6000 million, the same amount Sina raised on Nasdaq.Tencent, which has received investment, has since been freed from the problem of shortage of funds.
Compared with the success of the second financing, there are several things worth recording: In May, the Nasdaq index bottomed out this month, and the Internet’s severe winter is coming to an end; also in this month, the registration of QQ Users reached 5 million.
This is Tencent in its 20th month of entrepreneurship: after a detour, it has found its core product, has a like-minded team and a lovely brand image, it does not know how to make a profit yet, but there are already people who are willing Pay for its future.In a sudden snowstorm, it was favored by fate and struggled to survive the line of life and death.
(End of this chapter)
If you're not thinking about the customer, you're not thinking.
-- Ted Levitt (American strategic thinker)
You are really out of money, so you don't have to pay it back, but I don't want your stocks.
——A friend told Ma Huateng
"A pixie reincarnated from starvation"
When OICQ was launched, Xu Chenye had not resigned from the Shenzhen Telecom Data Communication Bureau. During the day, he worked in the value-added business group. One of the tasks of this group was to manage the telecommunications room.The server Tencent rented from Shenzhen Telecom is less than 10 meters away from his desk. "Zhang Zhidong and the others ran to the computer room every now and then to adjust the servers. We didn't dare to be too intimate, so we secretly winked and made faces at each other. My colleagues were also a little strange. No tenant had ever been so busy."
The reason for being busy is simple: the number of users is increasing too fast, and the server is on the verge of limit again and again.
Compared with their American counterparts, Chinese Internet companies in the early stage have a big difference in the use of servers: in the United States, labor is very expensive and servers are cheap, so programmers do not consider server optimization when designing architectures , the capacity is not enough, just buy a few more.But in China, on the contrary, the server is very expensive and the labor is very cheap. In order to increase the system capacity, programmers will put a lot of energy into server optimization, including the exquisiteness of the algorithm, reducing CPU consumption, and moving some operations to a higher level. The underlying database and so on.For Zhang Zhidong, there is almost nothing to learn from these technologies, because Americans don't need to do that, and even domestic telecommunications service providers and financial service providers with deep pockets don't need to do that.And it is through such honing that Tencent's programmers have gradually formed their own unique core competencies.
More than two months after its launch, OICQ's user growth trend has shown a parabola, and it is a very steep parabola.For a while, the number of users increased by 90 times every 4 days, which completely exceeded the original expectations of Ma Huateng and Zhang Zhidong. "Hua Jun Software Park" is one of the earliest software download sites in China. According to the founder Hua Jun's recollection: "As soon as OICQ was launched, we put it on the site. Within half a year, it became the most downloaded software among all software. , its download speed is fast, and user reputation has been quickly established.”
By September, the server of Shenzhen Telecom was completely unbearable, and a new one had to be purchased, but a server with better configuration would cost at least 9 to 6 yuan. Ma Hua couldn't afford the money, so Zhang Zhidong went to Huaqiangbei Market After buying a bunch of parts, I assembled a "cottage machine". Of course, its performance cannot be compared with the brand-name machine.Because the website always goes wrong, there must be a programmer who can arrive at the first time. Xu Gangwu volunteered to rent a small apartment less than 400 meters away from the company. Within minutes, he arrived at the office, where he lived until around 2004.Several other important programmers, such as Wu Xiaoguang, Li Haixiang, etc., must "keep their pagers close to their bodies."Li Haixiang recalled: "For several years, we were afraid to go swimming for fear of receiving news of a breakdown at that time."
With the skyrocketing number of users, the performance of the client also needs to be gradually improved, and the technical team is forced to the corner again and again.
In the early days of Tencent, there was such a joke: in the first more than a year, Tencent did not consider security issues. The communication protocol of OICQ is not encrypted, the protocol is fragile, and it is transmitted in plain code. If hackers want to make trouble, they can adjust it arbitrarily. Get the user's information.Later, Ma Huateng discovered that this was a problem, so he ordered programmer Huang Yejun to develop encryption software.More than two weeks later, Ma Huateng wanted to see what stage the program had reached, so he ran to Huang Yejun.Huang Yejun happened to be out to play, so he was not on his seat, and a book called "Principles of Encryption" was upside down on the table.Ma Huateng picked up the book, turned it over, and couldn't help but turn pale with shock—Huang Yejun was reading the first section of Chapter 1, titled "What is Encryption".
Wu Xiaoguang, who was sitting next to him, witnessed this scene. When he was interviewed by me later, he told the story with a smile, and then said: "In the first few years of starting a business, all of us were learning by doing. Looking back now, I feel a little scared, but at that time, I felt that it should be like this, otherwise what else could it be?"
In order to feed the fast-growing OICQ, Ma Huateng and Zeng Liqing had to pick up jobs everywhere. They helped some local governments build websites, helped companies design webpages, and fed the tens of thousands of yuan they earned or even just a few thousand yuan to them. The OICQ that called "Didi". "For a while, when we heard the sound of 'Didi', we would tremble with fear. It seemed to be an elf reincarnated from a starving ghost." Xu Chenye said jokingly.
Ma Huateng was running around every day to make Tencent "survive", and he no longer had time to maintain the "horse station" on Huiduo.com, and his career as a webmaster ended quietly.
birth of a penguin
The Logo (trademark) of OICQ was originally a pager.When the technical department was preparing for the third version upgrade, someone suggested whether to design a more interesting image.
An artist drew drafts of several small animals such as pigeons and penguins. These icons are very vivid in large sizes, but it is difficult to be vivid when applied to 16×16 and 32×32 pixels.In an internal discussion meeting, everyone argued a lot about this. Ma Huateng, who had a deep "pager complex", suggested: "Let's use the original icon, and everyone will know what OICQ is for at a glance." However, other founders People mostly tend to switch to the penguin icon.After some quarreling, Ma Huateng came up with a new idea: "Otherwise, we will put the two icons on the Internet and let users decide for themselves."
This is the first time that a Chinese Internet company has given the right to decide on the brand logo to users.In the first round of voting, most users voted for "pager".The original penguin icon was black and white realistic, very close to the penguin image of Linux, and looked a lot like a logo of a technology company.In the next few days, Tencent’s artists added a few interesting dynamic penguin pictures. Gradually, users’ opinions began to change. More and more votes were cast for a black body, white face, thin eyes, and a slender figure. penguin.In this way, "penguin" replaced "pager".
In October 1999, Shenzhen City held the first China International High-tech Achievements Fair, and Tencent rented a counter to participate in the exhibition.In order to attract visitors, Chen Yidan asked someone to burn a ceramic piggy bank with the image of 10 penguins.When entrusting the processing, the production company felt that the penguin icon provided by Tencent was too "thin", and the piggy bank would not be able to stand up, so it took the initiative to make the penguin slightly fat and round, and it was still on its neck. Added a black scarf.Unexpectedly, this penguin piggy bank was very popular at the high-tech fair.At the beginning, it was free delivery, but there were too many people who came to collect it. Chen Yidan sold it at a price of 1000 yuan a piece, and later increased it to 5 yuan a piece, but they were all sold out. The money he earned was just enough to cover the rent of the exhibition counter sold out.
Seeing that people liked the image of the fat penguin more and more, Tencent entrusted a professional cartoon production company, Donglixing, to redesign the logo. Liqing Zeng sat by the computer and brainstormed ideas with the designers. The designers asked him: "Penguins live in the Antarctic Circle and are the least afraid of the cold. Why do you put a scarf around its neck?" Zeng Liqing said with a smile: "This is a good question. This penguin remembers."
The newly designed image of the penguin has a chubby figure, big eyes, thick lips, and a naive look. The scarf around the neck has also changed from black to bright red.Donglixing has completed a complete set of visual identification system (CI system) for the penguin image, and added several supporting image designs such as Qmei, Hanliang, Duoduo, and Xiaojuzi, forming a large family of cartoon characters.
Another interesting thing is that during the design process, Dong Lixing felt that the cartoon image of Tencent’s penguin had a promising market, so he proposed to buy out the right to develop derivative products of the penguin image at a price of 30 yuan. In October 2001, Donglihang opened the first "Q-GEN" store in Guangzhou, selling clothing, toys and watches under the Tencent Penguin brand. Tencent can draw a 10% authorization fee from the sales revenue.In the following three years, Donglihang opened 10 specialty stores one after another.This business has made Ma Huateng proud for a long time: "As soon as we come, throw us a few 3 yuan, which can not only help us promote, but also receive authorization fees." At one point, he even imagined that Tencent Penguin would be like Mickey Mouse or as popular as Hello Kitty.However, judging from the later situation, it seems that this is not a good business. Not too many users are willing to put a silent fat penguin beside them when chatting with OICQ.
"You don't have to pay back the money, but I don't want your stock"
In 1999, there were not many happy things like the authorization of Donglixing. On the contrary, Ma Huateng was troubled by one trouble after another.
Just in October when participating in the High-tech Fair, Tencent suddenly received a thick letter package from the United States. When I opened it, it turned out to be an English lawyer’s letter from America Online. Intellectual property rights of ICQ, requiring Tencent to stop using OICQ.com and OICQ.net domain names, and return them to AOL.After receiving this lawyer's letter, Ma Huateng called the other four founders together to discuss countermeasures that night. Everyone looked at each other in blank dismay, not knowing how to respond.
Chen Yidan, who has studied law, said to everyone: "We don't have the money to fight this lawsuit. Even if we do, it will be more or less ominous. It will rain and my mother will get married, so we have to let it go." They also agreed , this news must be kept secret.
By November, Ma Huateng was sitting in his small office, Zhang Zhidong and Chen Yidan walked in at the same time.They sat across from him with good news and bad news:
The good news is that, just 9 months after the date of release, OICQ has more than 100 million registered users, and it is time to put a seven-digit user number. CICQ, PICQ and Internet Elf are all far behind later.
The bad news is that Tencent only has 1 yuan in cash left in its account.
With no hope of open source, there are only two things Ma Huateng can do at this time: one is to increase capital and reduce salary, and the other is to sell Tencent.
The shareholders unanimously agreed to increase the share capital from 50 yuan to 100 million yuan. The founders had only worked for a few years and did not have much savings themselves, but they all gritted their teeth and invested again. The monthly salaries of the five people were also halved. In the past year, Ma Huateng and Zhang Zhidong received 5 yuan a month, and the other three received 5000 yuan. Now they have been reduced to 3 yuan and 2500 yuan respectively. In Shenzhen at that time, it was only enough Fill the stomach.
Selling the company may be a happier way than increasing capital and reducing salary.Ma Huateng's asking price was 300 million yuan, and he and Zeng Liqing began to look for people who were willing to pay.In the future, Ma Huateng and others were reluctant to talk about this very unbearable experience, but the embarrassment at that time can still be seen from the memories of many people.According to incomplete statistics, at least six companies refused to buy shares in Tencent.
Among the first batch of investors that Ma Huateng sought was Shenzhen SEG Group, the landlord of Tencent.Jin Haitao, the deputy general manager of SEG Electronics at the time, recalled: "Ma Huateng approached us several times, but he didn't vote at that time. What's the reason why he didn't vote? I don't understand this stuff. If he voted back then, the value would have increased by at least several thousand. times, then I will be very happy." Zeng Liqing found his old company - Guangdong Telecom, and Ding Zhifeng, who once served as a senior manager of the 21CN business department under Guangdong Telecom, asked Lin Lin, the author of "15 Years of Boiling" Jun recalled a plot: At that time, Tencent applied for an acquisition to 21CN, and it was Ma Huateng and Zeng Liqing who came to negotiate. "When the two of us walked into the conference room, all of us mistook Zeng Liqing for Ma Huateng, obviously because Zeng Liqing had more style. Even during the discussion, Zeng Liqing was more powerful than Ma Huateng. It is aggressive, more like a person who makes up his mind." In the eyes of Jin Haitao or Ding Zhifeng, OICQ may seem to be a project that seems to be growing rapidly, "However, no one in the world knows how it makes money."
In addition to the local enterprises in Shenzhen, Ma Huateng also went to Beijing and Guangzhou, and successively found 4 companies to negotiate the purchase of Tencent.
Zhang Zhihao later served as the general manager of Tencent Beijing. At that time, he worked in the largest paging company in North China - Zhongbei Paging Group.Zhongbei purchased a set of network paging system from Tencent, and Ma Huateng personally went to Beijing headquarters to debug the equipment as an engineer.In the computer room, Ma Huateng taught Zhang Zhihao how to use OICQ by the way. Zhang Zhihao, who had studied computer applications, intuitively felt that this might be a huge market opportunity, and it was also a good direction for the transformation of Zhongbei Paging Group.He recommended OICQ to the group's top management and encouraged them to buy Tencent. "But they thought I told a joke that wasn't too funny."
Almost all the companies that have received Ma Huateng or Zeng Liqing said that they "do not understand the value of Tencent's technology and intangible assets", and some pointed out that they can only buy according to Tencent's "how many computers, desks, chairs and benches". value, the most out to 60 yuan.Ma Huateng later said dejectedly: "When I was negotiating to sell Tencent, I felt very complicated and frustrated. I talked with four companies in a row, but none of them reached the bottom line we expected."
When the cash was almost cut off, the founders had to go around asking friends to borrow money with embarrassment, and they borrowed money from everyone they knew a little bit in Shenzhen.At least two wealthy friends lent Tencent 20 yuan and 50 yuan, respectively.Ma Huateng asked them whether they could use Tencent's stock to repay the debt, and they all politely refused.One even said generously: "You are really out of money, and it's okay if you don't pay it back, but I don't want your stocks."
Chen Yidan also approached the bank to ask about the feasibility of the loan. The bank asked if there was any fixed property that could be mortgaged. However, after looking at several depreciated servers, the road to loan could only be "a drop in the bucket".
After selling the company with nowhere to go, Zeng Liqing proposed to Ma Huateng to talk to a different group of people.
"We used to look for companies and people in the information industry. They can't see the future. Now we need to find some crazier people. What they want is not a company that makes money now, but a company that can make a lot of money in the future. Companies, they don’t benefit from immediate profits, but go public or resell to arbitrage in the capital market. They call this VC, Venture Capital, venture capital.”
This is the first time Ma Huateng's team heard the term "venture capital".
Help IDG and Yingke
In the Chinese business circle, the term "venture capital" suddenly became popular at the end of 1999.This high-risk, high-yield investment model invented by Americans entered China around 1994. However, due to unsuitable policies and industrial environments, it has not been developed. With the rise of Internet companies, venture capital has finally A suitable object has been found.
Among the few venture capital companies in China at that time, the most well-known one was IDG, an American International Data Group.This small and medium-sized investment company in the United States started business in China as early as 1991. In 1996, IDG appointed Wang Shu to Shenzhen to find projects.He spent the whole day looking for projects in science parks in Shenzhen, Zhuhai, Zhongshan and other places. When he arrived at the science parks, he opened up the company roster and visited all companies with the word "technology" in their names.It was embarrassing to him at the time that the meeting with entrepreneurs often starts with the origin of venture capital and the most basic common sense.In more than two years, Wang Shu has successively invested in Zhongkejian, Kingdee and other enterprises.
Zeng Liqing quickly contacted Wang Shu through an intermediary. "My Hunan University alumnus Liu Xiaosong, who founded A8 Music, came to my door and said that a company called Tencent had developed the first ICQ with a 'Chinese flavor'. Because there is no charging model, and there is no money to buy servers, the company will soon be unable to survive.” Wang Shu decided to take a look.
Zeng Liqing knew that the negotiation with IDG might be the straw to save Tencent. He wrote a 20-page business plan, which was eloquent, but when it came to the profit forecast, he couldn’t understand how to write it. He revised it six times. , is still unclear.He also promised Liu Xiaosong that if the match is successful, he can give him 6% of Tencent shares.On the day they agreed to meet with Wang Shu, Ma Huateng had a herniated lumbar disc and was lying in bed. Zeng Liqing forced him to get out of the bed.
It was a very dramatic meeting.Not long after sitting down, Wang Shu quickly realized that this was a project with an uncertain future. "If we IDG don't give money, Tencent may die immediately; if we give money, the future is not clear." While flipping through the business plan, he asked Ma Huateng casually: "How do you see the future of your company?" Sick The sleepy Ma Huateng was silent for a while, and said, "I don't know either." Zeng Liqing's face changed drastically.Many years later, Wang Shu recalled that it was Ma Huateng's answer that made him look at Ma Huateng differently: "From this, I judge that this is a very real leader who is trustworthy and cooperative."
After the Tencent project was reported to the IDG Beijing headquarters, Wang Gongquan, a senior partner, led a team to the south for investigation. He recalled: "We flew to Guangdong together, sat there, and forced Ma Huateng to talk about how this thing made money. At that time, everyone at OICQ They are all in use, but the user doesn’t know where or who the user is, so how do we collect the money? A few of us tortured Ma Huateng all night, and it was past the early morning. He just said that he knew that everyone liked this thing, but I don’t know who to charge money to.”
In the end, there are two reasons that prompted IDG to venture into Tencent: first, OICQ is indeed a popular good, although no one knows how it makes money; second, and perhaps more importantly, in March 1999, The thriving AOL bought Israel's ICQ for $3 million.As China's most successful ICQ imitator, OICQ may really be worth some money.
At the same time that IDG expressed its investment intention, Zeng Liqing, through Hong Kong businessman Lin Jianhuang, got on Hong Kong Yingke, which was founded by Li Zekai, the second son of Li Ka-shing, the richest Chinese man. It was famous for the Cyberport project at that time.Yingke has been trying to enter the mainland market, investing in Tencent may be one of the pawns that can be tested.
In the business plan for IDG, Ma Huateng and Zeng Liqing valued Tencent at US$550 million and were willing to sell 40% of the shares, which means raising US$220 million.And that has little basis for profitability.
Wang Shu asked Ma Huateng: "Why is Tencent worth $550 million?"
Ma Huateng replied: "Because we are short of 200 million US dollars."
Ma Huateng later explained: "We estimated based on the funds needed for the next year. The purchase of servers plus salary is estimated to cost 1000 million yuan. This is how much the company's valuation is calculated. We do not want to lose control of the company. , so the maximum amount of shares that can be sold is half. What Zeng Liqing wrote was 200 million US dollars, so I gritted my teeth and added another 20 US dollars, because I still have to give some shares to two middlemen."
The whole financing negotiation went smoothly. Zeng Liqing traveled to Shenzhen, Guangzhou and Hong Kong, told IDG that Yingke was very active, and told Yingke that IDG was about to sign. "Yingke was rather hesitant, with an attitude of whether to invest or not. In contrast, IDG was still active. In fact, they couldn't see clearly, so they encouraged each other, saying that one invested, and the other followed suit. At the last moment, Wang Shu proposed a VAM clause. After the agreement is signed, half of the funds will be invested first. We must reach a certain number of users within one year, otherwise the other half of the money will not be given, and they still occupy 20% of the shares. We I agree." Zeng Liqing said.
In the process of finalizing the agreement, Tencent's account has been exhausted.Wang Shu recalled: "I still remember that because various legal documents have to be drafted, and the company's money is overseas, it needs to be reported to the SAFE for approval when entering China. The procedures are very complicated, and it takes at least one month for the money to arrive. I couldn’t wait any longer, so I asked a friend in Guangzhou to advance 450 million yuan to Tencent for emergency.”
The investment agreement was signed in April 2000. The three parties did not sit together to hold any ceremony, but signed each other through fax machines.That day, the five founders silently gathered in front of the fax machine, watching the agreement passed page by page. Ma Huateng asked Zeng Liqing: "Is that how you signed it?" Zeng Liqing urged: "Just sign it like this. It's too late."
It's really too late.
The moment when IDG and Yingke invested in Tencent was the "window time" when the Internet world turned from sunny to cloudy.
Over the past year or so, the Internet economy has suddenly become the hottest investment concept in the global capital market.The Nasdaq Composite Index, which is mainly composed of Internet company stocks, was only 1991 points in April 4. After crossing the 500-point mark in July 1998, it suddenly embarked on a wave of hearty New Year’s Eve market. By 7 On March 2000th, the Nasdaq index broke through 2000 points impressively, and the world was full of joy. The prosperity of the market pushed people's enthusiasm for the Internet to a boiling point.American business strategist Gary Hamel proclaimed like a prophet: "Now is the golden opportunity to rewrite the rules of the game."
In response to the world capital market, China's stock market also experienced a blowout on May 1999, 5. In less than two months, the Shanghai Composite Index rushed to 19 points in one fell swoop, an increase of more than 1700%. The famous "50 Quotes".The only few Internet companies in China have also been favored by North American investors. On July 5, 19, China.com, founded by Hong Kong businessman Ye Keyong, was the first to be listed on Nasdaq, raising US$1999 million.Apart from acquiring several domestic Internet companies, CDC has not done much. However, it has gained popularity in the U.S. stock market by relying on its "Chinese concept". In November 7, China and the United States reached a WTO access agreement, and the stock price of China.com soared 14% in one day. Its stock price was once pushed up to an astonishing US$9600 per share. The market capitalization of manufacturing giant Ericsson at the time. On April 1999, 11, Sina, China's largest web portal, was approved to be officially listed on Nasdaq, raising US$75 million.NetEase and Sohu will also be listed in the next three months (they landed on Nasdaq on July 300 and July 50, respectively).There are even conclusive news that the Shenzhen Stock Exchange is in full swing planning "China's Nasdaq" - ChiNext, when China's Internet companies will have the opportunity to obtain financing opportunities in the local capital market.It can be said that IDG and Yingke decided to invest in Tencent, which has no profit model, in just three or four months, which is just a very small episode in this super heat wave.
However, the crash happened at a moment that no one expected.
From the second week of April 2000, the Nasdaq index, which had been soaring proudly all the way, suddenly turned around and fell without warning. The composite index fell by 4% from the highest point of 5132 within half a year. $8.5 trillion in corporate market value evaporated, more than the annual revenue of any country in the world except the United States.AOL alone lost $1000 billion in paper assets.Almost all well-known Internet companies suffered heavy setbacks. Cisco's market value fell from $5792 billion to $1642 billion, Yahoo fell from $937 billion to $97 billion, and Amazon fell from $228 billion to $42 billion.
In this round of stock market crash, several Chinese companies listed on Nasdaq were not immune. Sina's share price fell to a low of 1.06 US dollars, Sohu fell to 60 cents, and NetEase was even worse. Its share price was only 53 cents at one time. Cents, was issued a "delisting warning" by the exchange.The bubble burst.The winter of the Internet will last until May 2001, during which there will be many sorrows and sorrows.
Many years later, looking back on this experience, several founders of Tencent still have lingering fears.
From the funding crisis in November 1999 to the completion of financing in April 11, at the same time, the Nasdaq bubble burst, leaving only six months for Tencent.In these 2000 months, if Ma Huateng and Zeng Liqing did not find IDG and Yingke in time, if IDG was unwilling to take risks, if Yingke was not so rich, and even if Wang Shu had not "exceeded responsibility" before signing the agreement 4 million yuan was set aside—at that time, many investment agreements were invalidated during the implementation process. Perhaps, Tencent, which lost its blood, would fall in the Internet stock market crash in 6.In all business stories, luck is the most mysterious part. Almost half of the entrepreneurs "die" on luck, and you can't explain it.
From OICQ to QQ
Ren Yuxin joined the company when Tencent was most short of money.He joined the company in January 2000 and was strictly the first employee recruited from the society.
Ren Yuxin, born in 1975, grew up in Chengdu, Sichuan. He learned computer programming in the Children's Palace as early as the fourth grade of elementary school.When he was in the second grade of junior high school, he wrote a flying shooting game software, which was published in a computer newspaper and received 20 yuan for the manuscript.After graduating from the Computer Department of Chengdu University of Electronic Science and Technology, he went south to join Huawei as a programmer.
In December 1999, a middle school classmate of his who also worked at Huawei wrote a chess and card game software, and wanted to sell it to Tencent, which had just become popular, and put it on OICQ.On a Saturday night, Ren Yuxin accompanied him to the Tencent company in the SEG Technology Pioneer Park to actively sell. At that time, Ma Huateng and Zhang Zhidong had no interest in games, and the four of them sat on the desk and talked about it.Zhang Zhidong asked: "How do you manage Huawei?" Ren Yuxin said: "We are never allowed to sit at the desk." Before breaking up, Ma Huateng suddenly asked Ren Yuxin: "Would you like to come to work with us?" Early the next morning , Ren Yuxin, who stayed up all night, called Ma Huateng and said, "I am willing."
In Ren Yuxin's memory, when he first arrived at Tencent, there were two things that impressed him the most.
The first is that there is no concept of time at work.Huawei implements militarized management. Ren Zhengfei, who came from a military background, requires every system to be implemented as strictly as the army, but it is very different in Tencent.On the first day Ren Yuxin went to work, she arrived at the company on time at 9:10 as informed, but found that the door was locked. After waiting for more than half an hour, someone came late, and Ma Huateng did not show up in the office until after 5:10.When it was off work time at [-]:[-] pm, no one in the entire company left. Xu Chenye and Chen Yidan, who had not officially joined the company, came to the company to handle affairs at this time. Ma Huateng usually worked until after [-]:[-], and many people accompanied him.
The second is that there is no hierarchical concept of appellation.No one in the company is called "President", everyone has an English name, Ma Huateng is called Pony, Zhang Zhidong is called Tony, Zeng Liqing is called Jason, Chen Yidan is called Charles, Xu Chenye is called Daniel, Wu Xiaoguang is called Free, everyone Call him by his first name.Ren Yuxin also gave herself an English name, Mark.This has become a tradition in Tencent. Every Tencent employee has an English name. If the name of the newcomer is the same as that of the old employee, a Chinese surname will be added, such as Mark Li and Tony Liu.
Ren Yuxin was assigned to the development team led by Zhang Zhidong, responsible for writing Tencent's first web-based BBS community software.At that time, Tencent was struggling on the verge of life and death, and several early employees left the company one after another, including "Night Cat" and others. Three months later, Ren Yuxin became the group leader of the Web group.
It was also around this time that the National Arbitration Forum (NAF) made its ruling on AOL's arbitration case against Tencent. On March 2000, 3, the arbitrator James Carmody signed the arbitration judgment, ruling that Tencent should return the OICQ.com and OICQ.net domain names to AOL.For Tencent, this is not an unexpected result. After receiving the lawyer's letter in October 21, Zhang Zhidong started the development of the new version.What makes everyone distressed is what new name will be used to replace OICQ.
According to the memories of several founders, the birth of the new name is as follows: One day, Wu Xiaoguang heard two netizens chatting about their OICQ number on the bus, and called it QQ.After he returned to the company and talked about this matter, Ma Huateng immediately responded, "It's called QQ", and it was named after that.
However, when I checked the newspapers of the year, I also found another possibility. On September 2000, 9, "Southern Metropolis Daily" published a press release titled "Continue Chatting to the End". The reporter wrote: "It is the Internet chat software that supports thousands of Internet bugs. ICQ and OICQ are the most famous among the similar software, so the chat software is naturally called QQ by some people in the industry." That is to say, in the early period, QQ was the informal collective name of all chat software, and it was later called Tencent boldly "take it as its own".
In November 2000, Tencent launched the QQ 11 version. OICQ was officially replaced by the simpler QQ. The original www.oicq.com domain name was also abandoned and replaced by the new www.tencent.com.
QQ 2000 version is a classic version in the history of QQ iterations. In this version, multiple levels of confidentiality options are adopted for the first time, personal data and confidential information functions are enhanced, and QQ News and Tencent Browser (Tencent Browser) are launched. Browser), which means that QQ has quietly transformed from a pure instant messaging tool to an information portal and virtual community, and various changes in QQ in the future are based on this concept.In addition, Zhang Zhidong also eliminated a legal hidden danger: in the previous version, Tencent unscrupulously used Disney cartoon characters such as Donald Duck, Popeye, Mickey Mouse, etc., and this time they were all removed, and replaced by Dong Lixing's design. Penguin series cartoon image.
MIH's Accidental Entry
Throughout 2000, Tencent's situation was still worrying.In the shadow of the bubble burst, investors gradually lost confidence.
IDG was the first to think about quitting.In the past three years, IDG has successively invested in more than 3 entrepreneurial companies, with a total investment of about US$80 million, that is, each company invested about US$1 to US$50 million. The company's Kingdee case was considered a success. The company was listed on the Growth Enterprise Market of the Hong Kong Stock Exchange in February 150.The rest of the dozens of Internet companies invested in have been hit hard in this severe winter, especially the e-commerce website 2001, which has invested heavily, fell on the last threshold before going public.No one mentioned the GEM of the Shenzhen Stock Exchange, which was originally expected.In the darkest of times, IDG needed a cashout to survive.
In IDG's view, Tencent's business model is not favored by the mainstream capital market, and it burns too much money.Ma Huateng used almost all of the funds raised from the financing for the purchase of servers. However, while the number of users increased rapidly, profits were still in the foreseeable future.By the end of 2000, Tencent had another financial crisis. Zeng Liqing kept asking Wang Shu to meet, hoping to increase investment.Negotiations have come to an impasse several times. Ma Huateng insists that the entrepreneurial team must maintain control, while IDG and Yingke do not believe that under the current situation, Tencent still has room for additional issuance at a premium.
Therefore, Wang Shu proposed a compromise plan. The two shareholders provided Tencent with a loan of 200 million US dollars, which was executed in the form of convertible bonds.But everyone knows in their hearts that if the money is spent, there will be no additional investment. IDG began scrambling to help find new buyers.
"At that time, I felt that the most likely buyers were those portal websites that had already been listed. IDG went to Zhang Chaoyang from Sohu, but was rejected. Zhang Zhidong and I went to Beijing and went to Wang Zhidong and Wang Yan from Sina, but they were also rejected. Yes. From the perspective of the technologists in the Internet industry, they can do Tencent’s work themselves, so why spend millions of dollars to buy it? And at that time, the stock price of Nasdaq fell sharply, and no one could do it. Don't dare to act rashly." Ma Huateng said.
In addition to Sina and Sohu, IDG also approached Yahoo China, but was rejected.Ma Huateng went to visit Kingdee, which is also in Shenzhen and also invested by IDG, but was rejected.Zeng Liqing also found the famous Lenovo Group. At that time, Lenovo was working with America Online to promote the portal website FM365, but of course he refused to buy it.
Another investor, Yingke, also joined the rescue of Tencent.They negotiated with Zhonggongwang, which has a state-owned background, and tried to invest in Zhonggongwang, and let it acquire Tencent to achieve business integration. This plan was aborted.Then, Yingke recommended Tencent to TOM.com, which is controlled by itself, but was rejected by the management.Yingke even recruited the famous Hong Kong director Wang Jing to combine Tencent's users with the film industry to see if there is an innovation in the profit model.
In the fourth quarter of 2000, the number of users of Tencent is still increasing rapidly, and the number of registered users is likely to exceed 1 million within half a year. However, there is no one in China. willing to buy its shares.
Seeing the end of the mountain, Ma Huateng's good luck began to "failure" again.
In January 2001, an American and a Chinese suddenly appeared in the Tencent office of SEG Science and Technology Pioneering Park. He spoke fluent Chinese and introduced himself as Wang Dawei, who was from the China Business Department of MIH in South Africa. The vice president, accompanied by the president of 1Vianet, a Chinese company invested by MIH.Ma Huateng and Zeng Liqing heard the name MIH for the first time.
In China, no more than 100 people know about MIH.This is an investment group company headquartered in South Africa. It is the largest pay TV operator in South Africa. At that time, it was a listed company in Nasdaq and Amsterdam. It has invested in new media in emerging countries for many years. One of the largest media investment groups". In 1997, MIH entered China and invested in Beijing Youth Daily and Pulse.com.
Wang Dawei discovered Tencent by accident. "Every time I go to a Chinese city, I go to the local Internet cafes to see what games the young people are playing. I was surprised to find that almost all Internet cafes have OICQ programs on their desktops. I think this should be A great Internet company. At the end of 2000, I contacted the general managers of several companies that wanted to accept investment, and found that their business cards all had their own OICQ numbers printed on them. This made me even more excited, and I wanted to see what kind of company it was Such a company."
Intuition is a shortcut to truth.Under the guidance of intuition, Wangdawei found Tencent on the fourth floor of the East Building of SEG Technology Pioneer Park.
Sitting in front of the computer, Ma Huateng asked Wang Dawei to look at the user growth curve of QQ (the new version was launched at this time, and OICQ has been renamed QQ—editor’s note), and told him that there are about 50 new registered users every day, which is equivalent to Population of a city in Europe.The ongoing "Monternet" project between Tencent and China Mobile has made NetU vaguely aware of the possibility of making profits—we will describe this in detail in the next chapter.
The two sides will soon enter substantive negotiations.Wangdawei offered two conditions: first, MIH valued Tencent at US$6000 million, and MIH was willing to exchange shares of [-]Vianet; second, MIH hoped to become the largest shareholder.
Regarding these two items, several founders immediately disagreed.In terms of shareholding ratio, their bottom line is never to give up control.However, what makes them happy is that "at least the first time such a high valuation price has come out", Tencent's valuation is 11 times higher than a year ago.
Two months later, Wangdawei made a concession that MIH's investment will be paid in cash. However, in terms of equity ratio, it hopes to get help from Tencent.
IDG was overjoyed when it heard MIH's quotation. It only invested in a project for less than a year, and it was able to get an exit premium of 11 times. This is an incredible result in the Internet winter. IDG Beijing headquarters agreed to sell all 20% of the shares, but Wang Shu from Shenzhen raised objections. Under his insistence, IDG sold 12.8% and retained 7.2%.
Yingke hesitated again and again. It neither wanted to increase investment nor sell shares. MIH "raised prices" made it a dilemma.Ma Huateng and Zeng Liqing went to Hong Kong to meet "Little Superman" Li Zekai.
"That day, 'Little Superman' was entertaining guests in the restaurant of the Citi Building, and many people gathered around him like chasing stars. We found a table next to him and sat down. He flew away as well. He was too busy, he was simply the 'Andy Lau' of the business world." Zeng Liqing recalled.By June 2001, Yingke had incurred huge losses for two consecutive quarters due to excessive debts due to the acquisition of Hong Kong Telecom, and then had to sell all 6% of its shares to MIH, cashing out US$20 million.
In this way, the suffocating Tencent equity transaction case was settled.MIH, who broke in by accident, became Tencent's second largest shareholder with 32.8% of the shares.Tencent is valued at $6000 million, the same amount Sina raised on Nasdaq.Tencent, which has received investment, has since been freed from the problem of shortage of funds.
Compared with the success of the second financing, there are several things worth recording: In May, the Nasdaq index bottomed out this month, and the Internet’s severe winter is coming to an end; also in this month, the registration of QQ Users reached 5 million.
This is Tencent in its 20th month of entrepreneurship: after a detour, it has found its core product, has a like-minded team and a lovely brand image, it does not know how to make a profit yet, but there are already people who are willing Pay for its future.In a sudden snowstorm, it was favored by fate and struggled to survive the line of life and death.
(End of this chapter)
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