Dragon Story: The Legend of Tencent (I)
In the past 30 years, China has become one of the most potential and innovative markets in the World. Moreover, with the development of the Internet, there are a series of Internet companies in China had achieved great success, like Tencent, Alibaba, JD.com, NetEase and so on.
Among these companies, we already know their name and what they are good at. But, we barely understand how these companies are established and what are the stories behind them.
The Dragon Story series is a new project that Dragon Social team are planning to present. In this series, we would like to invite you with us to explore the stories behind these companies and their founders.
Also, we are extremely appreciated that you can visit our website to read our articles and leave your comment about your inspirations and thought about marketing in China.
Table of Content(Click to read)
1. Ponny Ma and His First Startup Read Now
2. The Success of OICQ and the Birth of QQ Read Now
Ponny Ma and His First Startup
In the year 1984, 76 years later, Halley’s Comet appeared at the sky of the earth once again. Meanwhile, a 15-year-old high school student in Shenzhen said he is the first in his school to witness Halley’s Comet.
As the chairman of Shenzhen High School’s astronomy club, Ma Huateng 马化腾, also known as Ponny Ma, loves observing the night sky since he was a little boy. He kept this habit until now.
Like other ordinary high school students in China, Ponny Ma participated in the National Higher Education Entrance Examination of China in 1989 and he finally entered Shenzhen Univerisity as a student major in computer science.
Interestingly, during his years in university, Ponny Ma got interested in C++ Program Language, which was a new thing at that time, for the first time. In his efforts, Ponny Ma became a programming expert in his sophomore year.
Ponny Ma recalled many years later that he and his friends often developed different kinds of the computer virus to lock public computers in the university just for fun.
In 1993, Ponny Ma joined Runxun Digital Service Ltd. as a technical supervisor after his graduation from Shenzhen University. After two years, Ponny Ma noticed a new invention called the FidoNet, it is a new program for establishing BBS website.
FidoNet depends on the modem for people to log in and share their ideas with other users. Most of its users are programmers. At that time, the GreatWall.net in TaiwanThe very first FidoNet in great China area. Ponny Ma is one of the most active users on GreatWall.net.
Shocked by FidoNet, Ponny Ma comes up an idea to develop a FidoNet website for mainland China. In 1995, Ponny Ma launched his first FidoNet website called Ponysoft.net. This is Ponny Ma’s first startup.
The Success of OICQ and the Birth of QQ
On December 11 of 1998, Ponny Ma resigned from Runxun Digital Service Ltd. and called some of his friends, Zhang Zhidong 张志东, Chen Yidan 陈一丹, Xu Chenhua 许晨晔 and Zeng Liqing 曾李青 together to discuss the idea of establishing a was company.
After a few hours of discussion, Ponny Ma proposed the name of this new company, Tencent 腾讯. More importantly, they decided their business direction that Tencent will be a company focusing on Internet and real-time messaging.
In the first few months, Tencent was doing outsourced business, like developing the programs, optimizing search engine, etc. for a living. In many peoples’ mind, Tencent was only a small technology company.
An opportunity came at the end of 1998 when Ponny Ma was surfing on the internet someday. Ponny Ma noticed a program called ICQ in America. Later, he realized this is the opportunity that Tencent need for their own right now.
Soon, Tencent developed a program called OICQ, means the Open ICQ, in just a few months. Then, Tencent published this product on February 11, 1999.
In order to meet the habit of Chinese users, OICQ had a series of adjustments. The most important two adjustments are cooperating with China Telecommunications Corporation for their support on infrastructures and choose the pip voice of bleeper as the warning tone of OICQ.
In just 8 months after OICQ was published, its user growth is unbelievably fast. In every 90 days, OICQ’s users increased 4 times than before. To celebrate their success, Tencent chose a penguin with a red scarf as their mascot.
However, this prosperity did not last for a long time. In 2000, ICO sued Tencent for their intellectual property infringement asked for a 10-million- dollar penalty. Tencent came to its critical juncture now.
Besides the legal dispute, Tencent was also facing the change of the general environment at this moment. At the turn of the century, lots of companies suffered a lot from the dot-com bubble in the United States. Ponny Ma said many years later that he even considered selling Tencent at that time.
Luckily, the MIH and PCCW invest Tencent at this moment, the capital and support from MIH and PCCW helped Tencent got through their most difficult time. However, Tencent could not depend on other people’s products again.
As a new start, Tencent changed the name of OICQ to QQ in 2000. Besides, it also changed the UI design and added more useful functions in QQ. For example, it cooperated with China Unicom in Shenzhen to combine QQ and text message together, letting users send their message in a more effective way.
Apart from that, Tencent also added the function of chatting groups into QQ. It was the very first online chatting program that provides people to form their own chatting groups in China. At the end of 2002, Tencent’s active users increased to 30 million, and 70% of China Unicom’s users send their messages through QQ.
With huge success came with huge problems, Tencent soon found out that they could not make too many profits through QQ’s present business model. A change needs to be done. But, generally, Tencent had survived as a young startup in China’s digital business.
At the beginning of the new millennium, Tencent had just got through the collapse of the dot-com bubble in the United States and it finally had their own products. But, their business model still needs to be optimized.
Looking back on the first few years of Tencent, it is true that Tencent is very lucky enough not to go bankrupt. However, it is also true that Ponny Ma and other co-founders keenly sensed the changes in Internet technology and seized opportunities.
The success of OICQ and is an excellent example of Tencent’s acuity and the ability of adoption. This character helped Tencent a lot in the future development of Tencent.
In the next article of Dragon Story, we will introduce the path of Tencent into a great company. Moreover, we will also introduce the birth and development of WeChat and how WeChat helped Tencent conquered the market.