Chapter 470: Always Second Best

Ma Huateng and Zhang Zidong.

Among the five founders these two were the central figures.

“We weren’t expecting someone other than CEO James Han. The sudden schedule change caught us off guard”

The moment he sat down Zhang Zidong made no attempt to hide his displeasure.

“James couldn’t make it to Shenzhen due to an urgent matter. He asked me to convey his apologies.”

Ma Huateng silently studied me while Zhang Zidong continued his questioning.

“Are you Korean?”

“Yes I am.”

“James is Korean-American and now he sends a Korean as his proxy.”

Zhang Zidong’s tone carried an edge reflecting his dissatisfaction with my presence instead of Han Gyeong-yeong.

It was a natural reaction from someone who didn’t know who I was.

How much should I explain? After a moment’s consideration I spoke in a gentle measured voice.

“I make all investment decisions regarding Tencent. There’s no need to worry about James’s absence. After all I was the one who decided to invest in Tencent. It wasn’t coincidence that I proposed investment when no one else showed interest in the company.”

Even Han Gyeong-yeong hadn’t been interested in Tencent. What these people wanted now I could provide.

In a way my presence here was a golden opportunity for them.

“Do you really have complete decision-making authority?”

“Yes I do. And in my opinion I’m better suited for this meeting than James. I’m the only one who knows what you want and can help you achieve it.”

Ma Huateng who had been quietly listening spoke for the first time.

“You say you know what we want? What might that be?”

I raised an eyebrow at his skeptical question. Time to provoke them a little.

“Well you won’t be content with being called copycats forever. I imagine someone like CEO Ma Huateng must have other plans by now. Am I wrong?”

The atmosphere in the meeting room instantly grew tense.

Tencent started as a portal. Then they began offering OICQ a service that plagiarized ICQ.

However when AOL acquired ICQ they sued Tencent for plagiarism. Tencent lost and had to pay damages to AOL.

Fortunately investors from America and Hong Kong invested 4 million dollars allowing them to pay the settlement.

Afterward Tencent changed the program’s name to QQ.

They adapted QQ for the Chinese market which fortunately worked and helped them establish their position.

But they lacked a clear revenue model.

Because of this Ma Huateng tried to sell the company but no buyers stepped forward.

That’s when we appeared. James secured a 46.5% stake for 40 million dollars.

He became the largest shareholder surpassing Ma Huateng and the other founders.

QQ grew into China’s leading messenger with 100 million users by 2002 and earlier this year they launched ‘QQ Show.’

True to Tencent’s copying nature QQ Show was modeled after Korea’s Cyworld.

“Copycats you say?”

“Isn’t QQ copied from ICQ and didn’t you copy QQ Show from Korea’s Cyworld and Sayworld?”

They took the avatar paid service from Cyworld and copied both the mini-homepage and acorn paid currency system from Sayworld to create QQ Show.

Ma Huateng seemed unbothered by my provocative words smiling as he replied.

“The Greek philosopher Aristotle said ‘Imitation is the mother of creation.’ Nothing is completely new.”

Pretty bold. I smirked at Ma Huateng’s response.

“You know that’s just sophistry CEO Ma. If imitation were truly the mother of creation why do patent rights exist and why did you lose the ICQ lawsuit? Am I wrong? You even outsourced QQ Show’s avatar design to Korea fearing another lawsuit.”

Despite my sharp questioning Ma Huateng remained smooth in his response.

“I don’t deny the copying. I’m not ashamed of it. Yes we referenced those two companies. But we won’t stop at avatars. While Cyworld and Sayworld simply sold clothes for cyber avatars we’re selling real clothes. Can you call that mere copying? If you do then no innovation would ever be possible.”

While not outwardly aggressive Ma Huateng seemed quite stubborn.

But growth often requires someone who stands firm in their convictions.

While Sayworld and Cyworld would eventually fade QQ Show’s growth came from having someone like Ma Huateng at Tencent.

Since I’d only meant to test him I didn’t argue further.

If they were just copying everything I wouldn’t have invested in Tencent in the first place.

Ma Huateng continued.

“Innovation isn’t about creating something completely new. It’s not about creating something from nothing but about improving what exists. In time Tencent will be the one that survives not Cyworld or Sayworld.”

“We’ll see about that. So what’s next? Planning to copy something else and claim it as innovation? You can’t become the best through imitation alone. You’ll always be second best.”

Ma Huateng shrugged.

“I disagree with that opinion that you can’t be number one through imitation. Even Earth’s life forms evolved through iterations. The end result of imitation is innovation. Creative imitation evolving from copying to reach innovation that’s the future I dream of for Tencent.”

Ma Huateng maintained his composed attitude throughout. He seemed to have grasped the intent behind my words.

I wasn’t trying to criticize Ma Huateng. I was curious about his thoughts.

I suddenly recalled Ma Huateng’s interview where he emphasized the importance of timing and choosing the right targets for imitation.

“Was that response to my provocation sufficient?”

As expected Ma Huateng had already known my words were deliberately provocative.

“More than sufficient. If you weren’t at Tencent Ma Huateng I wouldn’t have invested a single penny in this company. I’m essentially investing in you rather than Tencent.”

“Thank you for that. Now let’s hear about what you said earlier about knowing what we want and being able to provide it. I’ll be disappointed if those were empty words.”

This time Ma Huateng was provoking me.

“I suppose it’s my turn now.”

I interlaced my fingers on the table and lifted one corner of my mouth. That’s not how you provoke someone Ma Huateng.

“QQ’s user base is growing exponentially and will continue to grow. But your business model has limitations. Last year’s agreement with China Mobile was unilaterally terminated. They took your idea and launched the same SMS service.”

This incident had been shocking for Ma Huateng.

After always copying others he’d experienced being copied himself.

“If you say imitation is the mother of creation others can follow your example. How did it feel being on the receiving end?”

“…”

“Now you must be thinking about developing your own content. You made QQ free to gather users and attempted monetization through QQ Show. People are starting to get used to that. When you have users money follows. You could put ads in QQ’s top banner or draw those users into new areas. For example… creating a new portal and bringing in online games from other countries.”

Ma Huateng’s composed expression changed for the first time.

“How did you know? Less than ten people including Zhang Zidong here know about that. How did you…”

How did I know? Because that’s how you grew Tencent.

“Well wouldn’t anyone with half a brain be able to figure that out?”

“…”

When their secret project came from my lips Ma Huateng and Zhang Zidong exchanged surprised looks.

I dangled an even bigger bait before them.

“The important thing now is which games you secure and import first. What if I told you I own significant shares in Korea’s major game development companies?”

Ma Huateng and Zhang Zidong turned to me with dumbfounded expressions.

I continued with a deep smile.

“If you want I could arrange for Tencent to distribute those games.”

“Is that true?”

It was Zhang Zidong not Ma Huateng who asked. His earlier discomfort had vanished his voice now excited.

Ah right I recall hearing rumors that Zhang Zidong was planning the game publishing.

“More precisely an investment company associated with me holds the shares. Well it amounts to the same thing.”

“Perhaps TJ Soft…”

Zhang Zidong cautiously mentioned Korea’s top gaming company.

“Yes we’re the majority shareholder.”

“Are you saying HS Ventures is the investment company connected to you?”

Zhang Zidong asked in an astonished voice. If they know this much there’s no need for lengthy explanations.

I nodded and answered honestly.

“Park Hyeonseong the CEO of HS Ventures is an old friend. While his investment philosophy is to invest without interfering in management he’ll move whenever I ask.”

HS Venture Capital.

A venture capital firm where Hyeon-seong serves as CEO. They’re famous for investing exclusively in Korean IT companies both listed and unlisted.

It was also a venture capital shrouded in mystery.

Only the CEO’s name was known the list of investors in the venture capital remained undisclosed.

Hyeon-seong Myeong-su and I shared the ownership with no other investors.

While I provided the initial capital Hyeon-seong and his partner and wife Kang Mi-jin worked so well together I hadn’t needed to intervene since.

Their first investments were in TJ Soft and Green.com.

Both companies are now publicly listed and HS Ventures has earned hundreds of times their initial investment.

They’ve invested in various game companies and IT firms all successfully.

While I occasionally offered advice most investment decisions were made by those two.

Moreover HS Ventures didn’t sell their shares even after companies went public.

Usually other venture capital firms liquidate their shares after IPOs.

But HS Ventures stayed with their companies even after going public.

Perhaps because of this venture companies called HS Ventures an angel.

They were constantly approached by companies seeking investment carrying their business plans.

“Is that really true? Really?”

Zhang Zidong asked again for confirmation.

“If you’d like we can call CEO Park Hyeonseong of HS Ventures right now.”

At the mention of possibly speaking with Hyeon-seong right here they adjusted their posture.

“That’s why I said I’m a better partner than James. What do you think? Isn’t it fortunate that I came instead?”

“It seems we misjudged you. I apologize. If we offended you in any way please forgive us.”

Zhang Zidong stood and bowed. Since it was rare for Chinese to apologize so readily I smiled and said.

“We broke our promise first so I completely understand. Please sit down now. We should continue our discussion.”

Zhang Zidong sat back down. Ma Huateng took over asking me questions.

“I understand HS Ventures is the major shareholder in most game development companies. Are you saying you can help us become the Chinese partner for the online games we want?”

Of course. I nodded with an even deeper smile.

“That’s why I came in person.”