Pony Ma steers Tencent to 20th anniversary with eye on industrial internet

The arthritic lifts heave their way up the scaffolding-encased building, twitching to a stop before disgorging the smartphone-glued occupants into hospital-like corridors, who promptly disappear into offices that bear signs warning off door-to-door salespeople.

It may be hard to imagine, but back in 1998, this well-kept but now ageing building in SEG Science and Technology Park in Shenzhen's Huaqiangbei electronics wholesale district was home to a scrappy little messaging outfit called Tencent, started by a group of mostly Shenzhen University alumni including one called Pony Ma Huateng.

Tencent Holdings has since become one of China’s most celebrated companies, the first Asian company to breach US$500 billion in market cap, though the recent global sell-off has cut that valuation by almost half. The company’s success has propelled Ma into the ranks of China’s wealthiest private entrepreneurs, with an estimated net worth of US$29 billion.

As co-founder, chairman and chief executive, the 47-year-old is at the helm of a sprawling internet empire built on the pillars of online gaming, social networking and mobile payments, with a growing portfolio of investments in companies involved in everything from meal delivery to steel trading.

But as the Shenzhen-based company turns 20 next week and completes its move into a brand-new 50-storey headquarters, Ma is faced with reinventing the company yet again, this time by shepherding its resources to the industrial internet which provides services for businesses instead of consumers.

“We believe that the first stage of the mobile internet, the consumer internet, is drawing to a close and the second stage, the industrial internet, is kicking off,” Ma wrote in an open letter on Wednesday. “It became clear to us that if objects and services are not fully digitalised, the connection between them and people cannot be improved.”

The strategic rethink comes amid a clampdown on its cash cow of online gaming by a government concerned that addiction to video games is enfeebling the young. Tencent is also having to play catch-up in e-commerce, largely missed out on the short-video boom and only recently began to step up its investments in cloud computing and artificial intelligence.

Compared with Jack Ma of Alibaba Group Holding, which owns the South China Morning Post, and Robin Li Yanhong of Baidu, who made the cover of Time magazine in January, Pony Ma prefers to keep a low profile.

Ma met officially with media for the first time only in 2005, seven years after establishing Tencent. By then, the company has been listed for a year in Hong Kong.

“At that time, the speech was well-prepared beforehand but he was still very nervous and he kept practising reading on the plane,” according to Xu Chenye, Ma’s classmate and co-founder, in the Tencent biography.

Ma was not available to be interviewed for this article. Many of the details about Ma's personal life and early days of Tencent came from an authorised biography of the company published in 2017 by Wu Xiaobo, a financial writer.

Tencent says it has not cut back on investments, citing 30 ongoing projects

Ma, who has an elder sister, was 13 when he moved with their parents to Shenzhen from Hainan in 1984, among the thousands of families who migrated to the test bed of China’s economic reforms and opening up. He would go on to start Tencent years later with three of his secondary school classmates, Xu Chenye, Zhang Zhidong and Chen Yidan.

In high school, Chen and Ma would challenge each other to recite from memory the numerals of pi, the mathematical ratio of a circle’s circumference to its diameter, eventually reaching a hundred digits.

Ma was a diligent student, never skipped class and got on very well with his classmates, according to his teacher Gao Jialing in the Tencent biography. His homework was always neat, but beyond that, Gao had no deeper recollection of Ma at school.

He was also an aspiring astronomer and earned his first sum of money for his report and photograph of Halley’s Comet using the 70mm telescope that cost his father four months of wages. His parents had initially refused to buy the instrument but relented after Ma’s mother chanced upon a diary entry in which the young Ma said “they had killed the dream of a scientist.”

In 1989, in the midst of student unrest and the Tiananmen Square crackdown, Ma opted to stay close to home and enrolled at Shenzhen University, which started only six years before, even though his test score would have qualified him for a place at Beijing’s prestigious Tsinghua University or Shanghai’s Fudan University.

Walking around Shenzhen University’s sprawling and leafy campus, Tencent’s old headquarters building cuts a familiar sight with its distinctive penguin logo for the QQ chat service, Tencent’s first hit product. At the other end of the grounds is Tencent’s new headquarters, featuring an indoor basketball court, running track and climbing wall. Both locations were chosen so that Ma could have a line of sight of his alma mater.

The student dormitory that Ma and Chen lived in during their time at the university is still standing, though in need of a fresh coat of paint. “Sure, I know Ma Huateng once stayed in this dorm, but not sure which exact room,” said one dormitory resident. The quarters now house mostly undergraduates from the civil engineering and arts faculties.

While the undergraduates the Post spoke on campus knew who Ma was, they also were not that familiar with his time in university. As one of its most illustrious alumni, Ma cuts a relatively low profile here on campus, like he does in his business and personal life.

Ma wanted to go into business after graduation. At first, he thought of assembling personal computers at Huaqiangbei, but “could not compete with the primary-school leavers” so he switched to higher-end software programming, before working at Runxun Communications.

It was on a business trip to Hong Kong in 1995 that he got the idea of starting an internet-related business. There was no internet on the mainland then, and Ma saw the potential of the technology. He was among a crop of aspiring Chinese internet entrepreneurs in the late 1990s who were inspired by what was happening overseas.

“[Back then] almost all Chinese internet companies were copying the business models from foreign firms to some extent – Alibaba copied Amazon, Tencent copied Microsoft’s MSN, and Baidu copied Yahoo and Google,” said Liu Xue, a professor at the Guanghua School of Management at Peking University.

“China had hardly any original business models or technology models in the internet industry, only some innovations in localising some of the workable foreign models. We copied because if a brand new business model had not proven to be successful yet in the US or other foreign markets, an entirely innovative Chinese model would have had little chance of winning the backing from investors,” Liu said.

In 1998, Ma quit his job to start a business with his classmates, but they never would have survived without outside capital to help fund operations and expansion. An early investor recalled why he decided to back the unproven entrepreneur.

One day in 1999, Ma was feeling ill but was pulled out of bed by his colleagues to take a meeting with IDG Capital’s Wang Shu. Perhaps expecting the usual over-the-top, overconfident pitch from start-up founders, Wang asked Ma about how he saw the future of Tencent. To which Ma replied, after a long pause, “I don’t know.” That answer convinced Wang that Ma was different.

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“Ma struck me as an honest leader, someone worth trusting and cooperating with,” Wang recalled in an interview with Shenzhen Special Zone Daily in 2010. The following year IDG – together with Hong Kong telecoms company PCCW – agreed to invest in Tencent. South Africa’s Naspers came into the picture in 2001, when David Wallerstein, who was to join Tencent later, noticed everyone he met in China was using OICQ, which later became known as QQ.

In the early days of developing the messaging product, Ma even had to pretend to be a user to start conversations. Sometimes he would change his profile photo and pretend to be a woman, so to make the forum “seem livelier”, Ma said in a 2015 speech at the University of Hong Kong. Things improved as “our system was more stable, the coding was good and the computer would not hang,” he said. “After buying our own servers, a large number of users began streaming in and things got better and better,” he said.

What is Ma like then at Tencent? The picture that emerges from conversations with former and present employees is of a soft-spoken executive known within the company by the affectionate moniker “xiaomage”, or “Little Brother Ma”, who likes to keep things cordial and does not employ the sort of confrontational, fire-and-brimstone management approach chronicled at many Silicon Valley tech giants.

Ma is known to work late and to reply to emails past midnight. He has been described as “polite and gentle” and a “peacemaker” who likes to ease tensions with humour.

Ma is also more expressive online than in real-life, those who know him say. Thomas Wang, a former employee, said he remembered “Pony did not say anything after he read my presentation, but sent me a message later saying good job and thanks.” He also leaves comments on colleagues’ WeChat timelines, reminding them to take care when they say they would be jogging along the road.

When it comes to his family, Ma is fiercely guarded. Not much information is available publicly about them, except that he married in 2004, the same year Tencent listed in Hong Kong and has possibly two children. Employees say they have not seen his family at company events even though other senior managers bring their family members.

The low-key demeanour does not mean he is a pushover. Ma can be demanding and ambitious when he has to be, such as during the testing period before the roll-out in 2010 of WeChat, the social media platform that has evolved to become an everyday super-app used by more than a billion users each month.

That period was “life-or-death” for Tencent, according to Ma, who said he kept testing the functions of WeChat even in the wee hours of 3am to 5am. “We used it round-the-clock, pick up flaws, then improve. We kept up such high-intensity work for one month,” he said.

Despite the phenomenal success, Ma is keenly aware that continued success means being able to meet the fickle and shifting needs of online users.

“Sometimes, I’m worried that I don’t understand the world of young people,” Ma said in 2015. “I tried the hot social networking app Snapchat. It is very popular among teenagers but I find it boring after I tried it.”

“Sometimes, you do nothing wrong, but your product is dumped only because you are too old,” he said. “And users want to try something new and cool.”