Huayu: Starting from joining the mainstream entertainment industry in 96

Chapter 291, page 289: Medical Consultation in Shenzhen and Malaysia

April 18, 2000, Beijing.

Wang Sheng did not return to the set of "My Sassy Girl" nor participate in the script discussion for the Sino-Korean co-production. Instead, he had his driver take him to a quiet teahouse near Houhai.

The teahouse, named "Zhuyuxuan," is hidden deep in a hutong. With its blue bricks and gray tiles, pushing open the wooden door reveals a completely different world—a secluded courtyard, shaded by lush bamboo, with flowing water. There are only a few private rooms, offering excellent privacy.

The waiter, who had clearly been instructed, silently led Wang Sheng to the innermost room, "Listening to the Rain Pavilion."

Push open the sliding door, and the aroma of tea wafts out.

Two people were already waiting inside.

Upon seeing Wang Sheng enter, the two immediately stood up.

The man in the lead was about thirty-five years old, wearing gold-rimmed glasses, with a refined appearance; he was Wang Wenjing, chairman of Yonyou Software.

He greeted Wang Sheng with a smile, warmly shaking his hand and saying, "Mr. Wang, I apologize for disturbing you, thank you for your presence!"

"Mr. Wang, you're too kind. It's been a long time." Wang Sheng smiled and returned the greeting, his gaze then falling on the slightly thin young man with black-rimmed glasses behind Wang Wenjing.

This man looked to be no more than twenty-seven or twenty-eight years old. He was wearing a suit that didn't fit particularly well, and there was a lingering anxiety between his brows, but his eyes were clear and revealed a kind of persistence unique to technologists.

This is none other than Ma, the "Little Ma" from Pengcheng, who will shake up the Chinese internet landscape in the future.

“Mr. Wang, this is Mr. Ma, the founder of Pengcheng Tencent Computer Systems Co., Ltd., whom I mentioned to you on the phone,” Wang Wenjing introduced, stepping aside.

"Mr. Wang, hello! I've heard so much about you!"

Little Ma quickly stepped forward, grasped Wang Sheng's hands with both of his, and spoke with obvious nervousness and respect.

He looked at the media tycoon in front of him, who was a few years younger than himself, and felt a mix of emotions.

The other person was composed and exuded the ease of someone who had long held a high position, a stark contrast to my current predicament.

"Mr. Ma, it's a pleasure to meet you." Wang Sheng responded calmly, his gaze sweeping over the future tycoon with a peaceful expression.

At this time, Pony Ma was far from the composed internet leader he would later become; he was more like an entrepreneur who was running around advocating for his own product and encountering setbacks everywhere.

The three sat down, and the tea master, dressed in an elegant cheongsam, quietly performed the tea ceremony before quietly leaving and closing the door behind her.

"Mr. Wang, it's been several years since we last met at the Youth Federation. Your business has grown bigger and bigger, and you're now a benchmark figure in the cultural industry." Wang Wenjing, acting as the middleman, took the initiative to speak, his tone tinged with envy.

Although his Yonyou software has gained a foothold in the domestic financial software market, its scale and influence are still far behind those of the "Shengying Group" built by Wang Sheng.

"Mr. Wang, you flatter me. It's just that I'm living in a good era and doing what I enjoy," Wang Shengqian said, steer the conversation back on track: "I heard from Mr. Wang on the phone that Mr. Ma has some ideas about financing?"

Little Ma took a deep breath, knowing that the crucial moment had arrived.

He adjusted his glasses and began to introduce Tencent, trying to keep his tone steady, but his speaking speed involuntarily increased:

"Mr. Wang, Tencent was founded at the end of 1998. Our main product is OICQ, launched last February, now renamed Qiuqiu. It mainly provides instant messaging services for internet users. To date, the number of registered users has grown rapidly and has exceeded... five million."

He announced the number with a hint of pride, but his eyes immediately dimmed.

“User activity is very high, especially among college students and young netizens. But…” He paused, a bitter look on his face: “Our main source of income is currently just barely enough to survive by doing some system integration projects for telecommunications and paging stations. Qiuqiu itself has not yet found a stable and reliable profit model. The pressure from server bandwidth and maintenance costs is enormous.”

Wang Wenjing added from the side, "Hua Teng's team has strong technical skills and their products have great potential. It's just that the internet industry right now... sigh."

He sighed, not saying it outright, but all three of them knew perfectly well—the internet winter was upon them.

In early 2000, as the US NASDAQ index plummeted from its historical high in March, the global internet bubble burst rapidly.

The frenzy in the capital market cooled abruptly, and investors' attitudes toward internet companies shifted from blind enthusiasm to extreme caution, and even panic.

Countless ".com" companies that relied on venture capital funding and lacked the ability to generate their own revenue went bankrupt.

This cold wave quickly swept across the globe, and the Chinese market was not spared.

Internet companies that were once bustling with customers are now deserted.

Fundraising has become extremely difficult, and investors are no longer concerned with "attention economy" or "user scale," but rather with real profitability and a clear business model.

This is undoubtedly a fatal blow to Tencent, which has seen a surge in users but is unable to monetize them.

“To be honest, Mr. Wang,” Little Ma said in a heavy tone, “we are indeed currently conducting our first round of financing. We are also in contact with PCCW Digital Power in Hong Kong and IDG Capital in the United States. Mr. Li Ka-shing is optimistic about our prospects with PCCW, and introducing Hong Kong capital may help us with our future listing on the Hong Kong Stock Exchange. We are also in talks with IDG... However, in the current environment, the negotiations are progressing very slowly, and the conditions are... rather harsh.”

He spoke subtly, but Wang Sheng understood.

In the midst of the internet downturn, even well-known institutions like IDG and PCCW will be cautious in their investments, keeping valuations low and imposing very strict terms.

Historically, around April 2000, Tencent reached a difficult investment agreement with IDG and PCCW, with each contributing US$1.1 million to acquire a 40% stake (the exact timing and amount may vary slightly, but this is the general outline).

This money was a lifeline for Tencent at the time, but the price was the sale of a significant percentage of its equity.

The reason why Xiao Ma found Wang Sheng through Wang Wenjing was not only because Sheng Ying Media had a reputation for abundant cash flow, but also because he valued the resources behind Wang Sheng.

Wang Sheng's close ties with official media and the cultural propaganda system, as well as his influence in the business world and within the system, are unmatched by purely financial investors. The addition of such a powerful, local figure as a shareholder would undoubtedly provide a crucial safeguard for Tencent's development in the mainland market, especially in mitigating potential policy risks.

Wang Sheng listened quietly, his fingers unconsciously stroking the purple clay teacup.

Fragments of information about Tencent's future flashed through his mind: the continuous surge in QQ users, the later launch of value-added services such as QQ Show and QQ Membership, the rise of the gaming platform, and WeChat, which ultimately built a vast commercial empire... This is an aircraft carrier about to set sail.

Now, an opportunity to board this ship at an extremely low cost is right in front of us.

Internet winter?
What is a disaster for others is a once-in-a-lifetime opportunity for him to buy at rock-bottom prices.

Although Wang Sheng doesn't know much about stock trading, financial markets, or the internet industry, he is still very interested in investing in internet companies like Tencent, which have extremely high growth potential.

In addition, he himself has absolutely no intention of building his own team and conquering the internet industry, as it would be too energy-consuming and his financial resources would not allow it.

“Five million users…” Wang Sheng began slowly, his voice calm and even: “That is indeed an astonishing number. It means a huge network covering the earliest batch of netizens across the country. Its value is beyond doubt.”

Little Ma held his breath, waiting for him to continue.

"The profit model is a problem, but it's not a problem either."

Wang Sheng looked at Pony Ma with a profound gaze: "When your network is large enough and sticky enough, ways to make money will naturally emerge. Value-added services, virtual items, advertising, and even future wireless services... the possibilities are huge."

Little Ma's eyes lit up, as if he had met a kindred spirit.

The directions Wang Sheng mentioned are possibilities that their team has repeatedly discussed internally.

"Mr. Wang's insight is brilliant!" he couldn't help but exclaim.

Wang Sheng smiled slightly, then changed the subject: "However, in the current environment, risks do exist. Can the user base continue to grow? Will policies change? Will competitors emerge? These are all unknowns."

Little Ma's heart jumped again.

“So,” Wang Sheng leaned forward slightly and offered his proposal, “Shengying Media is a viable investment opportunity.”

A look of joy instantly spread across Little Ma's face.

"but,"

Wang Sheng's tone left no room for argument: "We need a solution that is fair to both parties and reflects our sincerity in long-term cooperation."

He paused briefly, as if calculating, then said clearly:
“I understand that you are in talks with IDG and PCCW. I have a general idea of ​​the valuation and terms they have offered.”

Little Ma was shocked, thinking to himself that this Boss Wang was indeed well-informed.

"My proposal is for Shengying Media to invest $200 million in Tencent separately."

When this number was announced, both Little Ma and Wang Wenjing were stunned.

It's higher than either IDG or PCCW's rumored offer!

“Shareholding ratio,” Wang Sheng looked into Pony Ma’s eyes, “30%. And I need a preemptive right of subscription. If Tencent needs further financing in the future, under the same conditions, Sheng Ying will have the right of first refusal to increase its capital.”

Holding onto 30% is unrealistic. Wang Sheng's goal is to hold 10%-15% of the shares in the future. The right of first refusal is a prerequisite for securing this share, which is the so-called prevention of dilution.

The room fell silent.

Little Ma's rapid mental arithmetic.

$200 million, representing 30%, means that Wang Sheng's valuation of Tencent is approximately $667 million.

This valuation is by no means low given the current downturn in the internet industry; in fact, it can be described as very generous!
The terms are far more favorable than those offered by IDG and PCCW. Moreover, the other party is Sheng Ying Media, a company with ample cash reserves, whose decision-making process may be faster than that of foreign institutions.

The only concern is that giving up 30% of the shares at once is a significant proportion.

But considering the company's dwindling funds and the enormous resources that Wang Sheng might bring... this deal seems worthwhile!

Wang Sheng looked at Little Ma, who was deep in thought, and did not urge him.

He knew that this plan was a lifeline for Tencent, which desperately needed funds, and an irresistible temptation.

$200 million was a huge sum of money at this time, which could greatly alleviate Tencent's urgent needs.

While a 30% stake is a lot, it's still within the founding team's acceptable range and lays the groundwork for him to further expand his influence in the future. The preemptive right further ensures that he can remain on this giant ship indefinitely.

“Mr. Wang…” Little Ma raised his head, his eyes filled with determination: “We accept your proposal in principle! As for the specific details, I need to go back and discuss them with the founding team, and give you a formal reply as soon as possible!”

Wang Sheng picked up his teacup, gestured to him, and said calmly, "Sure. I look forward to formal cooperation with Mr. Ma and the Tencent team."

Media companies or film and television companies may not be as profitable as internet companies, but their status is much stronger than that of ordinary internet companies. After all, they have a publicity system behind them. Just ask around and find out what their three magic weapons are.

Wang Sheng has now entered the legitimate field of cultural export, although it is within the East Asian circle, which is not something that the heads of various Chinese Internet companies can currently compete with.

(End of this chapter)