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July 3. 2017 Bloomberg Businessweek • Shenzhen, China • By Brad Stone and Lulu Chen • Photograph by # Hong Kong Pierf rancesco Celada Bloomberg Businessweek Global Tech July 3, 2017 It's up to the company's The leadership committee of Tencent, Ma founded Tencent 19 years ago in president, Martin Lau (left, the Chinese internet colossus, usually a cramped Shenzhen office with three holds its annual off-site at a comfortable college classmates and a friend. For their in his Hong Kong office), Japanese resort or Silicon Valley hotel. first product, they cloned an Israeli-made to help Tencent do what no Last fall it went for something more epic: instant messaging service and adapted it a two-day hike through the harsh wastes for the Chinese market. Unlike Jack Ma other Chinese business has of the Gobi Desert. (no relation), the billionaire co-founder done: become a worldwide The committee traveled in a manner of Alibaba, Pony Ma had little over• consumer-tech power befitting the 14 most senior executives seas exposure, knew only rudimentary of China's most valuable company. English, and rarely appeared in public. Helpers assembled their tents, and water Colleagues and friends say he's a typical was trucked in at considerable expense Guangdong province businessman, shy for showers. Yet by the end of the first and wary of the spotlight. In a widely dis• day's 26-kilometer (16-mile) hike, some tributed photo, taken at a 2015 meeting of members were petitioning to pack it in Chinese President Xi Jinping and 28 of the and go home early. Martin Lau, Tencent world's most famous technology execu• Holdings Ltd.'s president, and "Pony" Ma tives, including Jeff Bezos, Tim Cook, and Huateng, its co-founder and chief exec• Jack Ma, everyone is smiling and looking utive officer, insisted on forging ahead. at the camera. Except for Pony Ma, who's On the second day they hiked another staring at his feet. 26 kilometers and, weary and blistered, While Ma is Tencent's chief visionary, made it to Dunhuang, once a frontier Lau, 44, is the lead strategist and steward town on the Silk Road. While the exec• of day-to-day operations, as well as utives had been wandering the desert, the one who fields questions during Tencent's stock had risen to make it the Tencent's quarterly conference calls most richly valued company not only in with investors and analysts. Slender and China, but in all of Asia-a record it now bespectacled, he's a devout Christian, trades back and forth with its archrival, an avid gamer, and widely liked and Alibaba Group Holding Ltd. The Tencent respected-at least among those who've team launched into an enthusiastic cele• heard of him. bration during a hotel banquet. "I actually think most people in The executives would like it to be Silicon Valley have no idea who Martin known, though, that their exuberance Lau is at all," says Sean Liu, a China- wasn't about the stock. It was about born investment manager at the San the journey. "The trip is representative Francisco office of venture firm Vy of the culture of the company," says Capital. "It's shocking, because it would Lau, months later, from the comfort be the equivalent of people not knowing of Tencent's high-rise offices in Hong who Sheryl Sandberg is if they cared Kong. "We are much more focused on about Facebook. Except that Martin the direction of where we are going and Lau is even more powerful and influ• the process than the share price." ential within Tencent and in China's Where the company wants to go, technology community." eventually, is outside its home market. Indeed, though Lau attended college Tencent, which is based just north of in the U.S., speaks English fluently, and Hong Kong in Shenzhen, permeates is what passes for the public face of daily life in China. More than two-thirds Tencent, he has until now largely evaded of Chinese people use its two messag• Western media attention. But there's no ing apps, WeChat and QQ, for every• hiding any longer, now that he has one thing from texting to shopping, flirting, of the most formidable challenges in all • dating, watching videos, playing games, of business: taking a quintessentially and ordering food and taxis. According to Chinese company to the world. venture capitalist Mary Meeker, Chinese users collectively spend 1.7 billion hours Lau first encountered Tencent in 2003, a day on Tencent apps, more than they when the company was five years old and spend on all other apps combined. 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 MAYBE common interests and backgrounds • Bloomberg Businessweek Global Tech July 3, 2017 •4 to find each other online-and for its backgrounds, but they had little interna• Stanford and an MBA from the Kellogg winking, scarf-wearing penguin mascot. tional experience and knew they needed School of Management at Northwestern Tencent made 735 million yuan help building a sustainable business. As University. After school, he went to work ($108 million) in revenue that year their banker, Lau thought it was a conflict at McKinsey & Co., then Goldman. selling ads and upgraded services (such of interest. But he also admits that he Tencent's second offer resonated as fancier user names) on QQ, and it wasn't entirely sold on the job's prospects. with him, he says, because it would was beginning to add games. But the "To a certain extent, I was trying to see if allow him to tap his engineering skills. dot-com bust had left its original inves• this was real or not," he says. He accepted-taking, he says, a signifi• tors skeptical of its prospects, and they'd The company went public in cant pay cut. Ma initially gave Lau the sold the majority of their interest to June 2004, raising HK$1.4 billion title of chief strategy officer and placed the South African media company ($180 million). Its early games showed him in charge of investor relations and Naspers Ltd. Now, Tencent was planning promise, boosting revenue 55 percent mergers and acquisitions, two fields to go public-one of the first listings of that year. By the end of 2004, Pony largely unknown at the time in China. a Chinese internet company since the Ma and his co-founders, by then Lau brought standard U.S. corpo• downturn. Lau specialized in telecom• multimillionaires, once again offered rate practices, such as setting revenue munications and media for Goldman's Lau a job. goals, to Tencent and developed a five- Hong Kong office. In the course of In a sense, Lau had been working year plan to enter new businesses such angling to handle the initial public offer• toward such a role all his life. His as social networking and digital media. ing, he and his colleagues scrambled to parents, both electrical engineers, were "This was a discipline that was urgently appear sawy, even skirting their firm's foreign-born Chinese (his father was needed for a young company growing computer-network firewall by asking a born in India, his mother in Indonesia) extremely fast in 2004," says Hans Tung, colleague in Beijing to sign them up for who'd met and married in Beijing. Lau managing partner at GGV Capital and a QQ accounts. Then they printed their and his older sister were born during the co-investor with Tencent in Didi, the user names on new business cards final years of the Cultural Revolution. Chinese ridesharing company. before meeting up with Tencent. The family left for Hong Kong when he In 2006, Ma promoted Lau to presi• Goldman got the IPO. The Tencent was 6, during the reformist regime of dent and put him in charge of day-to-day management team was so impressed by Deng Xiaoping. "History happened, operations. Although Tencent's revenue Lau, in fact, that on the roadshow before and eventually they needed to find a doubled that year, the five founders real• going public, they offered him a job. Ma better future for their kids," Lau says ized the company would soon need and his co-founders had computer science in lightly accented English. "It was a more professional management. In painful period of time." an internal exercise at the time, they Lau, whose full Chinese name is Lau all named hypothetical successors. Ma -•Tencent vs. the World Chi Ping, spent the rest of his childhood chose Lau. in Hong Kong, playing video games on Top ¡0S apps by country, Developer his family's Apple lie and dreaming Tencent grew quickly in the following May 2017 LIFacebook about building rockets. His parents, he five years, scouring Asia for games and Google Tencent says, "gave us this notion that if you're adapting them for QQ. It had four of an engineer, you can always survive in the five most popular titles played in a lot of turbulence, because your skill Chinese internet cafes in 2011 and did is always needed." He tested at the top a brisk business selling virtual body Russia of his prep school class, then, after armor, healing potions, and other digital France concluding that only Americans could baubles to gamers. The company also Italy join the space race, decided instead had a popular social network, Qzone. Brazil to study electrical engineering at the "The combination of social and gaming is U.K.

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