Tencent Owns China, But It Wants The World
Bloomberg Businessweek|July 03 - July 16 2017

It’s up to the company’s president, Martin Lau (left, in his Hong Kong office), to help Tencent do what no other Chinese business has done: become a worldwide consumer-tech power.

Brad Stone and Lulu Chen

The leadership committee of Tencent, the Chinese internet colossus, usually holds its annual off-site at a comfortable Japanese resort or Silicon Valley hotel. Last fall it went for something more epic: a two-day hike through the harsh wastes of the Gobi Desert.

The committee traveled in a manner befitting the 14 most senior executives of China’s most valuable company. Helpers assembled their tents, and water was trucked in at considerable expense for showers. Yet by the end of the first day’s 26-kilometer (16-mile) hike, some members were petitioning to pack it in and go home early. Martin Lau, Tencent Holdings Ltd.’s president, and “Pony” Ma Huateng, its co-founder and chief executive officer, insisted on forging ahead.

On the second day they hiked another 26 kilometers and, weary and blistered, made it to Dunhuang, once a frontier town on the Silk Road. While the executives had been wandering the desert, Tencent’s stock had risen to make it the most richly valued company not only in China, but in all of Asia—a record it now trades back and forth with its archrival, Alibaba Group Holding Ltd. The Tencent team launched into an enthusiastic celebration during a hotel banquet.

The executives would like it to be known, though, that their exuberance wasn’t about the stock. It was about the journey. “The trip is representative of the culture of the company,” says Lau, months later, from the comfort of Tencent’s high-rise offices in Hong Kong. “We are much more focused on the direction of where we are going and the process than the share price.”

Where the company wants to go, eventually, is outside its home market. Tencent, which is based just north of Hong Kong in Shenzhen, permeates daily life in China. More than two-thirds of Chinese people use its two messaging apps, WeChat and QQ, for everything from texting to shopping, flirting, dating, watching videos, playing games, and ordering food and taxis. According to venture capitalist Mary Meeker, Chinese users collectively spend 1.7 billion hours a day on Tencent apps, more than they spend on all other apps combined.

Ma founded Tencent 19 years ago in a cramped Shenzhen office with three college classmates and a friend. For their first product, they cloned an Israeli-made instant messaging service and adapted it for the Chinese market. Unlike Jack Ma (no relation), the billionaire co-founder of Alibaba, Pony Ma had little overseas exposure, knew only rudimentary English, and rarely appeared in public. Colleagues and friends say he’s a typical Guangdong province businessman, shy and wary of the spotlight. In a widely distributed photo, taken at a 2015 meeting of Chinese President Xi Jinping and 28 of the world’s most famous technology executives, including JeffBezos, Tim Cook, and Jack Ma, everyone is smiling and looking at the camera. Except for Pony Ma, who’s staring at his feet.

While Ma is Tencent’s chief visionary, Lau, 44, is the lead strategist and steward of day-to-day operations, as well as the one who fields questions during Tencent’s quarterly conference calls with investors and analysts. Slender and bespectacled, he’s a devout Christian, an avid gamer, and widely liked and respected—at least among those who’ve heard of him.

“I actually think most people in Silicon Valley have no idea who Martin Lau is at all,” says Sean Liu, a China-born investment manager at the San Francisco office of venture firm Vy Capital. “It’s shocking, because it would be the equivalent of people not knowing who Sheryl Sandberg is if they cared about Facebook. Except that Martin Lau is even more powerful and influential within Tencent and in China’s technology community.”

Indeed, though Lau attended college in the U.S., speaks English fluently, and is what passes for the public face of Tencent, he has until now largely evaded Western media attention. But there’s no hiding any longer, now that he has one of the most formidable challenges in all of business: taking a quintessentially Chinese company to the world.

Lau first encountered Tencent in 2003, when the company was five years old and he was still a banker at Goldman Sachs Group Inc. Back then, Tencent had about 1,000 employees and was known primarily for its QQ messaging service— the first to allow Chinese youth with common interests and backgrounds to find each other online—and for its winking, scarf-wearing penguin mascot.

Tencent made 735 million yuan ($108 million) in revenue that year selling ads and upgraded services (such as fancier user names) on QQ, and it was beginning to add games. But the dot-com bust had left its original investors skeptical of its prospects, and they’d sold the majority of their interest to the South African media company Naspers Ltd. Now, Tencent was planning to go public—one of the first listings of a Chinese internet company since the downturn. Lau specialized in telecommunications and media for Goldman’s Hong Kong office. In the course of angling to handle the initial public offering, he and his colleagues scrambled to appear savvy, even skirting their firm’s computer-network firewall by asking a colleague in Beijing to sign them up for QQ accounts. Then they printed their user names on new business cards before meeting up with Tencent.

Goldman got the IPO. The Tencent management team was so impressed by Lau, in fact, that on the roadshow before going public, they offered him a job. Ma and his co-founders had computer science backgrounds, but they had little international experience and knew they needed help building a sustainable business. As their banker, Lau thought it was a conflict of interest. But he also admits that he wasn’t entirely sold on the job’s prospects. “To a certain extent, I was trying to see if this was real or not,” he says.

The company went public in June 2004, raising HK$1.4 billion ($180 million). Its early games showed promise, boosting revenue 55 percent that year. By the end of 2004, Pony Ma and his co-founders, by then multimillionaires, once again offered Lau a job.

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