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Tencent's Chief eXploration Officer, David Wallerstein on WeChat, QQ, and Gaming
58 minutes 30 seconds
🇬🇧 English
Speaker 1
00:00
Well, hello everyone. Thank you so much, David, for being here. I want to introduce David Wallerstein, who is the Chief Exploration Officer at Tencent. David joined Tencent in 2000, when the company had only 45 employees, and today you have about 38,000.
Speaker 2
00:18
I believe so. Yeah, we'll have to check with our head of HR. Give or take a thousand,
Speaker 1
00:22
you know, something like
Speaker 2
00:23
that, a few thousand here and there.
Speaker 1
00:24
Well, it is clearly 1 of the world's largest internet companies, as well as the largest gaming company in the world. And as many of you know, Tencent is also the creator of WeChat. So thank you, David, for joining us today.
Speaker 1
00:38
And also for speaking at our private event.
Speaker 2
00:41
For YC, anything.
Speaker 1
00:42
Thank you. So let's go back to even pre-2000. You know, you grew up in the US.
Speaker 1
00:50
What took you to China?
Speaker 2
00:52
That's a very long answer, and I'm gonna try to make it short. But it kind of relates to my work today. I was always pretty deeply concerned about the world and trends in the world.
Speaker 2
01:03
And I felt that going back to, I guess, the early 1990s as a student studying global trends and studying global history, I felt China was destined to become a very important country that the economy was going to continue to grow. It had been growing in the early 90s, but China was not a popular country for at least Americans back then, or at least myself, the way I viewed the world. It was kind of like on the side, and other countries like Japan were a much bigger deal. I actually had spent time living in Japan.
Speaker 1
01:33
You went to high school
Speaker 2
01:34
in Japan.
Speaker 1
01:34
I went to
Speaker 2
01:34
high school there. I was an exchange student. I lived with a Japanese family.
Speaker 2
01:39
And yeah, I was a Japanese person basically for the time I lived there. I've lived in Japan on and off for about 4 years. And that made me very comfortable just speaking a foreign language, an Asian language, and being the only non-Asian in the room has always seemed very natural to me, even since before I was 16. But then when I got interested in China, I kind of redeployed the skillset that I had developed to kind of survive in Japan as a kid, which is like, you just have to learn the language super fast.
Speaker 1
02:08
So you went from Japan to China. How, you know, and I know you also talked about NASPERS sort of exploring, in fact, potentially acquiring Tencent, you know, pre-2001. So talk about how did you first come across.
Speaker 2
02:21
Okay, yeah, so I was doing management consulting in China. So take all that background I told you about, and I ended up having a passion for getting foreign companies into China. Again, oh, the theme I was talking about with China is going to be very important for the rest of the world.
Speaker 2
02:35
I was thinking the theme in my mind, really from the mid-90s, was how do we help China integrate to the rest of the world? So China is a productive member. All the great international institutions out there work for China as they do America and the other countries in China is just part of our global community, right, in a very proactive way.
Speaker 1
02:54
And I
Speaker 2
02:54
thought the best way to do that would be to integrate the Chinese economy with the rest of the world and to accelerate that. So I was very interested in the 90s to bring US companies to China. I was working as a management consultant, predominantly for like telecommunications and what we called IT related issues back to this pre-internet.
Speaker 2
03:14
And then I started helping these different companies and in 1999, very early, I think it was February 1999, I came across a company called NASPERS, who became my client. I was very young at the time, I was like 20-something, 21 maybe. And they wanted to enter China's internet market and they had recently done a Nasdaq listing and had quite a bit of capital to back their plans. Maybe it was like a hundred million dollars or something, which was a lot of money back then and still a lot of money today, right?
Speaker 2
03:46
So we started working together to invest in different companies in China, social networking companies, we didn't call them that. They were like dating sites back then, or chat sites, or blogging sites, although that wasn't a word either, posting sites. I was very fascinated by these kinds of websites because they created a lot of traffic and the users seem to want to spend a lot of time there and that made a lot of sense.
Speaker 1
04:09
It was more like it wasn't a trend back then.
Speaker 2
04:11
Yeah, it was about page views and I was always interested to find engagement, like deep user engagement. But something happened when I was doing this kind of M&A investment type work for NASPRESS in China. And that's that I noticed all the entrepreneurs tended to use this tool called OICQ at the time.
Speaker 2
04:30
And often they wouldn't include any method to contact them, like email or phone, other than this tool. And 1 day it kind of hit me saying, wait a second, this seems really important. I was totally overlooking it. I was looking for websites, basically.
Speaker 2
04:45
And instead I could see that like the whole Chinese internet seemed to be kind of connected or somehow like structured by everyone's use of this tool. We later changed our name to QQ in the year 2001, but in the year 2000 I had this idea that I should go down to Shenzhen, which seemed a little far for us foreign type people back then, we were pretty much all living in Beijing and Shanghai. And that's kind of like where the hipsters used to all aggregate, Beijing, Shanghai, and we're having a great life there, partying at night and stuff like that, feeling really good about ourselves and and we didn't really tend to get out of those cities very often. So I remember kind of feeling proud of myself getting on a plane to go see Pony Ma, Ma Huateng, our co-founder, and there's a team of 4, 5 co-founders that started Tencent and running the company as the executive team.
Speaker 2
05:37
At the time I went down to Shenzhen to go visit them and that's where the whole relationship with Tencent started is middle of around June 2000. June 2000. I went down there to propose to Tencent that we should try to acquire them.
Speaker 1
05:52
And what was their response?
Speaker 2
05:53
Yeah, well, I had a lot of different kinds of meetings over the years in China, being a consultant, and was pretty accustomed to having those meetings go well. Generally people were happy to see me and wanted to find a way to work together. I think the Tencent folks pretty politely told me that it wasn't gonna work out.
Speaker 2
06:11
Thank you for coming and goodbye. And I was kind of shocked. I'd never really had that experience quite in that way before, but in the meetings it was clear to me that these were some of the smartest people I'd ever met in my life, Chinese, American, whatever. I was just completely blown away by how strategic they were in thinking about their business, how realistic they were in having this discussion with me.
Speaker 2
06:36
And I didn't wanna just have the meeting end on a sour note, so.
Speaker 1
06:41
You didn't give up, right? You actually ended up, like NASPERS led the investment in Tencent a year or 2 later.
Speaker 2
06:47
We did later. That's where things ended up. But it started off pretty difficult.
Speaker 2
06:53
Ultimately, I felt like we had to demonstrate that we could bring some unique value. So I started, well, first of all, I invited everyone to dinner and we proceeded to get, I recall things, we got pretty drunk that night. I do not recommend this for the children at home, but it did happen. And then the next morning I went back to the company just to see if there's anything we could do together.
Speaker 2
07:14
And I remember bringing in some ideas from the US, from the foreign market, that seemed actually pretty interesting. To Pony and the other guys. And I said, that's it. I think the way to actually have a relationship here is to see what kind of value we could bring to Tencent from the outside world, and how could we help Tencent with expansion.
Speaker 2
07:37
Even from those early days, like mid-2000, it was pretty clear that was going to be the basis of a viable relationship. Ultimately, it took about a year to buy effectively half of Tencent as NASPERS. And really the day after we signed the deal, I did a few things, but the most important 1 was I said I'm moving to the US. So we're gonna leave you guys alone entirely.
Speaker 2
08:02
And this wasn't just only my idea, up to the top of NASPERS, everyone very much supported this kind of structure where, okay, we may have a meaningful share in the company, but to make this thing work, we absolutely have to never do anything to bother this company and be good shareholders and really get out of the way. And so to make that very clear, I moved to the US really immediately. And at the same time, I said, I'll be back in 2 weeks. And I did that for until maybe a couple years ago, I was going back and forth between the US and China.
Speaker 1
08:34
And were you employing?
Speaker 2
08:34
Every 2 weeks or so.
Speaker 1
08:36
When did you become an employee of Tesla?
Speaker 2
08:37
Yeah, that was June of 2001. Like really as soon as we signed the deal. Okay.
Speaker 2
08:40
Even before we signed the deal, I was spending a lot of time with the company and we were working together on different ideas to build the company. It was kind of like as if, like I know this deal is gonna happen, let's not worry about these papers and documents and all this frustrating legal stuff, let's just get to work. Yeah. Meanwhile, we're sitting around here, let's build the company.
Speaker 2
08:59
And therefore it was very clear what the relationship would be like after the deal closed because they know what it's like to work with me. And then the other person who worked with me on the deal, Charles Searle, he went on the board of Tencent. We're still here to this day. So here we are.
Speaker 2
09:12
We started the deal together 17 years ago. We're still doing it today. Charles is on the board, I'm still on the executive team, and there's been this really wonderful continuity between NASPERS and Tencent where the principles that I just described to you have remained true all of this time. And I think that's a great guideline in general for complex shareholder relationships, by the way.
Speaker 2
09:34
This may not be exactly the thing for the YC crowd right now, but it's a model that could come up later for founders. You don't necessarily just have to go public or get acquired. There's this other model where you could potentially sell a big chunk of your equity to a third party and have this more nuanced relationship, which could actually be an interesting outcome because you could sell a lot of shares but still retain a lot of shares. And you can even ask for more shares over time, like more options and things like that.
Speaker 2
09:58
It's not unheard of. But we actually find the model
Speaker 1
10:01
can work really
Speaker 2
10:02
well with the right teams. And we always thought this would be a very common model in business, and it turned out that there aren't so many of these types of deals being done.
Speaker 1
10:10
Yeah, it's a very unique model for that matter. In fact, not a lot of investments work that way, even to this day in the US as we see with companies.
Speaker 2
10:17
I would love to do more of them, but it's hard to find that team that is willing to do it. And it's helpful if the company is profitable because then you know how to value the company going forward based on profits versus like just only user growth or some other metric. So, you know, it works better with profitable companies, but
Speaker 1
10:32
it's a great option. Yes. Let's talk about that a little bit.
Speaker 1
10:35
So you joined the company in 2001, pretty much when they had only 45 employees and maybe just QQ.
Speaker 2
10:41
Yeah, that's right.
Speaker 1
10:41
Today, Tencent, to the outside world, feels like they do a lot of things. They are also known as the biggest gaming company. They also have WeChat, probably 1 of the best messengers.
Speaker 2
10:53
Just 1 of many teams, but it's an important 1. But yeah, there's so
Speaker 1
10:56
many teams. So talk about, you know, it's broad from 2000 to 2017 is almost like, you know, I'm talking about 17 years, but how did you, what, you know, how did Tencent decide to evolve from QQ to all these other products, and what sort of motivated the decision-making to move to these areas?
Speaker 2
11:13
So, It's a great question. I hope I can do justice to it. How do you cover 17 years in a few minutes, right?
Speaker 2
11:22
There are a few important things to understand about Tencent that inform the product strategy. So when I first met the company in 2000, we had a couple of key things going for us. 1 was pretty much most all of the Chinese internet was inside QQ. So the strategic question for the company and us as investors, myself, you know, getting involved would be like, okay, we seem to have pretty close to a hundred percent market penetration.
Speaker 2
11:45
Can we maintain that going forward? What could possibly make that go wrong? But we were starting kind of with the wind at our backs. And I think that situation was true roughly from early 2000.
Speaker 2
11:57
The company, by the way, QQ started in February, 1999.
Speaker 1
12:00
And QQ just for the audience, is it just like
Speaker 2
12:02
a messenger? Well, we started as a PC-based instant messaging service. So think of it, I know the media probably makes too big of a deal of this because they always think Chinese companies copy everything, but they'll say it's the Chinese version of ICQ or AIM or MSN Messenger, Yahoo Messenger.
Speaker 2
12:16
So Yahoo Messenger is the Yahoo version of ICQ, I guess, but it was the IM client. Got it. But it still has a lot of users today. And so that was really, usually for a Chinese user back then when they would get on the internet, they'd start their session with QQ, and often they were logging in via an internet cafe, a shared PC, and then you know at the end of their session doing their stuff in the internet cafe they would log off QQ.
Speaker 2
12:40
So our average usage times, the second factor, first was like having this ubiquity in the market, like almost everyone using it. The second thing was, the users tend to stay in about 4 hours a day.
Speaker 1
12:50
4 hours a day? Yeah.
Speaker 2
12:51
Like an average aggregated time for a user. Yeah. Which is a long time.
Speaker 2
12:57
Yeah. And so we started thinking, okay, Things could go wrong, but so far they're going really well. Almost all users are in here 4 hours a day. So is it 4 hours
Speaker 1
13:06
a day because they're chatting with someone?
Speaker 2
13:10
Yeah, they're logged in and QQ did 2 things. It did instant messaging and it did something called presence. And presence was basically just a way to indicate by lighting up your avatar that you were online.
Speaker 2
13:22
So if you're offline, your avatar would be black and white. If you're online, it would be in color. And that was very valuable back then because people would want to talk to each other and be in touch with each other in real time, and you want to know if someone there or not. And then you can start adding subfields to presence, like you could add a little, like a tweet.
Speaker 2
13:39
Yeah. Like, I'm really sad today, I'm really happy today.
Speaker 1
13:41
Got it.
Speaker 2
13:42
Or here, I just did this. You know, like It's kind of like the precursor to Twitter and all that kind of stuff, bundled in with your messaging. All nicely packaged in this app.
Speaker 2
13:52
Okay, so that's how we started. So we faced this question. We've got a great situation going. How do we continue?
Speaker 2
13:59
What could get in the way? And we felt pretty early on, the answer was like, well, we have to keep innovating and we have to really deeply understand our users and what they need to anticipate the next thing that they want. Now, we did find something that worked really well in the early days. From early 2001, we started doing mobile instant messaging, what we call mobile QQ.
Speaker 2
14:23
And this is really how we went public on the NASDAQ in 2004, was on the back of this mobile service, which connected the PC-based QQ application to your mobile phone. So you could send a message between your PC to a mobile user and back and forth. To enable that service on your mobile phone, a mobile phone user would have to pay us 5 RMB a month, about 60 cents. So if you didn't want it, then who cares, you don't have it.
Speaker 2
14:49
But if you wanted to be able to on the go with your SMS back to there, it was all feature phones, it wasn't smartphones. If you wanted to be able to text back and forth to QQ, you would pay us 5 RMB a month. And there were so many users on QQ and this feature became sufficiently demanded that it really drove our financial performance right up to the IPO in 2004. So based on this, it's important for everyone to know that we became profitable as a company in June 2001 And we've never not been profitable since.
Speaker 2
15:18
So this is pretty much the time when NASPERS closed the deal. They're closing a deal on a company that's profitable, cashflow positive, based on rolling out these mobile QQ services across the country. And we would bring the service to maybe Guangdong and it would have nice growth. Then we'd bring it to like another province like Hunan and we're saying, okay, what's going to happen in Hunan?
Speaker 2
15:35
And the next day it's like, ooh, you know, get a big explosion of users. And it's like, great, now the revenue is coming in. And then it became really a battle in the first few years, 2001, 2002, to make sure we had ubiquitous presence across all of the mobile networks in China. China Mobile, China Unicom, so on and so forth.
Speaker 2
15:52
And each deal would drive more cash for the company because the users were there. So we had cash, we had profitability, we had this engagement with users, we had the 4 hours roughly plus minus on average, and logged into QQ. So, and I don't think I fully answered your question. People would do other things on the Internet.
Speaker 2
16:08
They would just always have QQ logged in in the background, and then they might go in and start having multiple chats with different people, sharing information, whatever they're going to do. But then they might also do other things on the internet. But QQ is just kind of always on the desktop somewhere. So we felt like we had this latent opportunity.
Speaker 2
16:24
So we started to do more experimentation to drive products for our users, both for user value perspectives and also like we had to make money because, okay, something to clarify, very different than the US market here, is that the ad market from our perspective has always been pretty challenging in China compared to the US. And particularly for us, we found our users did not like ads in their messaging experience. So they would go through great lengths to develop software and these kind of hacks so they wouldn't have to see the ads in the software. And we felt like that was kind of endangering the user experience.
Speaker 2
17:00
So we did always have an ad team and we're getting much better at it. We have different kinds of inventory today, but the ads and the messaging window was never really a viable option for us. Unlike our friends at maybe like Google or other companies, you know, they
Speaker 1
17:13
even Facebook.
Speaker 2
17:14
Yeah. They just driven these massive businesses.
Speaker 1
17:16
So how did you monetize that?
Speaker 2
17:18
Right, so I want to make that clear because Tencent historically, like the rule of thumb, things are changing over time. We've traditionally made 90% of our revenues. That's like the rule of thumb historically in my mind from our users paying directly for our services and we call them value added services.
Speaker 2
17:33
And then the 10% would be like ad-related revenues.
Speaker 1
17:35
And what are these value-added services?
Speaker 2
17:38
Right, so starting with the Mobile QQ service, the 5 RMB a month.
Speaker 1
17:42
Got it.
Speaker 2
17:43
So, you know, we'll have very, you know, hopefully strong, dedicated product teams thinking about nothing other than, how can I get users to convert to mobile QQ? What more value can I add? And these are subscription services, so you have to keep your churn rate very low.
Speaker 2
18:00
So you really have to understand why someone values it and then what might cause them to leave. And then we have to build all these features around the service to discourage someone from ever wanting
Speaker 1
18:09
to
Speaker 2
18:09
leave it. We wanna have them forever. That was the first major value added service of Tencent.
Speaker 2
18:15
And we launched something around the same time, which also grew pretty significantly, would be kind of like our number 2 big service, which we call Premium QQ. So I was always kind of dumbfounded that we didn't really see many US companies build, at least our peers in social networking, build like a premium version of our service, especially when it's been so successful and so important to our product strategy. Premium QQ is kind of like how it sounds. It's just a better version of QQ.
Speaker 2
18:41
We have to put more types of value added services in there. And in the early days, I remember a key aspect of premium QQ was you could choose your own QQ number. What does this mean? Okay, so I have to explain these things.
Speaker 2
18:53
Yeah. It's a different market, right? The QQ number before was your identifier. It wasn't like david at Tencent.com.
Speaker 2
19:00
We didn't use email identifiers, we used an actual number. And we did that because we wanted to have the numbering system of QQ work with the telecom network.
Speaker 1
19:08
Got it.
Speaker 2
19:08
We never really pushed that far in that direction, but we always thought maybe the QQ number is their telecom number, the future, and it'll just map really nicely with the switches in China. We did different things around that. It never really took off, but that was like the thinking, like numbers are better than names
Speaker 1
19:21
because you
Speaker 2
19:21
can just punch it into a keypad. So you can choose your own. And in China, numbers are very important.
Speaker 2
19:27
For example, some of the people watching may not know, 8 is a very lucky number in China. So if you're gonna deal with China, remember that. Eight's lucky. If you got some eights in your phone, it's a good thing to
Speaker 1
19:36
have,
Speaker 2
19:36
a phone number or whatever. It means fa, to get rich, I think, you know, like prosperity. So if you're a user and you wanna kind of stand out from the crowd.
Speaker 2
19:47
I mean, what young person doesn't want to have a little edge out there, right? Get some eights in your number, and then maybe when you show up in the chat room, your name shows up in a different color, like a red color, and you kind of quickly establish yourself as a bit of a high roller. And you've kind of emerged from the crowd. So the other thing I need to tell you is there was a lot of dating going on in QQ back in the day.
Speaker 2
20:07
I don't know what happens in there today.
Speaker 1
20:09
That's true for most social networks, even in the US too. I mean, I think when Yahoo Messenger and other instant messengers that launched, I mean, there were rooms that were really dedicated, chat rooms dedicated for dating.
Speaker 2
20:20
I'll definitely say that was probably part of the experience. Not that I would know personally, of course, but I just heard from a friend of a friend of a friend that that's the case. So if you can kind of get an edge in such an environment by having a premium service that gives you more status, maybe, but in a fair way, and then more functionality.
Speaker 2
20:35
Maybe we'd give you more storage space. I know storage became less of a big deal with Gmail and all those things later on. But we would continuously be building out our premium services package to make it like the ultimate thing to reduce churn. And we'd have very dedicated teams, very committed to just thinking nothing, about nothing other than the premium service package every day of the year.
Speaker 1
20:58
Which drove also the monetization.
Speaker 2
20:59
Which drove monetization. So these were kind of like, I'd say, really 2 of the key pillars of our monetization leading up to the IPO. But we had to diversify.
Speaker 2
21:07
So now I'm gonna get into like, the whole diversification discussion. Because we felt, as a pure IM company, doing mobile instant messaging on 1 side, that's like kind of, you have like PC in here, then you got like mobile kind of sticking off here. And then like this premium top of the pyramid here, like service and maybe both are only getting like 10% of users. So of 100%, you only get 10% paying.
Speaker 2
21:28
We felt like as a company, we could just get taken out overnight by like we mentioned Yahoo Messenger, MSN Messenger, AOL, ICQ. In fact, we were particularly concerned about Microsoft. I think no discussion of Tencent's history is complete without a serious discussion about Microsoft because around this time, 2001, 2002, I believe Microsoft did something very important for us. They bundled Windows Messenger into the operating system.
Speaker 2
21:59
So you would get your Windows PC and all of a sudden you got Windows Messenger just popping up. And we thought, this is absolutely going to kill us. And they were, I know they're a competitive company today. Back then, they really scared the hell out of us.
Speaker 2
22:11
Excuse me. It was scary times, so we figured, what can we do to be competitive against this kind of, you know, such a powerful, like, no resources or a limit type company like Microsoft? We really did 2 things. We went very local, and we started building more value-added services.
Speaker 2
22:30
So let me talk about the local part. We said, you know, our products may change over time. This really informed our strategy and the kind of customer engagement and product strategy. As our core value, we absolutely need to know our users better than anyone else in the world.
Speaker 2
22:48
We have to, at the most fundamental level, know everything we can about them in terms of their product preferences, what kind of features they like and don't like, what kind of colors they like and don't like.
Speaker 1
23:01
And how do you do that? I know Tencent, especially, is very unique for really understanding the value of the customer versus just looking at metrics. In fact, you coined the term CE, customer engagement.
Speaker 1
23:13
Yeah, so can you talk a little more about What methods do you use to really understand the customer?
Speaker 2
23:17
Let's dig into that and then you'll have to remind me to do the
Speaker 1
23:20
product most casually.
Speaker 2
23:21
I think it's something that's really about the people who run Tencent and the culture of the company. And it really goes to why, caring about users really goes to why we exist. And ultimately every business is established for some reasons.
Speaker 2
23:38
It's often not apparent to the employees sometimes or the users sometimes, because you say, this company just says X and I love X, but you don't really know why. And it's often a very personal story, or there's a personal journey that takes you there. I think for our 5 core founders, they always just struck me as being very, they care a lot about people. They're really people people, and they cared a lot about China.
Speaker 2
24:05
But you have to remember, like in 1990s, China was very poor, and people in China didn't necessarily have a lot of confidence that they could even build a Good company or that the company could even have an international presence. I spent quite a few years trying to unpack some of those ideas because I felt they were false, but China came into the world having been totally cut off until 1978 and then gradually opening up and trying to figure out what's been going on outside of China for all these years, and now it seems crazy talking about that, but that's really where the world was like 20 years ago, okay? So I think, you know, our founders really were always very interested to spend time with the users online, like on the bulletin boards, responding to users directly, responding in chat rooms or making friends. I mean, they were power users of QQ themselves.
Speaker 2
24:56
Some of them might even be guilty of being power daters in there, like they're just meeting people. They're like, they're making the service for them. They're just as much users of the service as other people are, and they're inherently curious about people and very good natured. So I think what happened to the company is, it started with an idea, but it quickly became successful.
Speaker 2
25:16
And we got a lot of traffic and the way our founding team and executive committee responded to that was by actually feeling like a sense of responsibility for the users and a deep curiosity to figure out like what more could we do
Speaker 1
25:31
and
Speaker 2
25:31
what do these people really want. And back in China, you know, you're just actually triggering a memory right now. China had a lot of fundamental needs then that are maybe surprising to people now, because in the late 1990s, early 2000s, there was almost no investment in private media
Speaker 1
25:48
in China.
Speaker 2
25:49
So all television, all film, most all the magazines, certainly all the newspapers, I think even to this day, most of them were state funded. So you had this big gap with respect to like, just private media, by everyday people. And there are so many services, it was clear that people needed back then just because they're human beings, they want to laugh, they want to tell dirty jokes, they want to date, you know, they want to play games.
Speaker 2
26:16
We were filling in this gap. And I think, you know, as a class of companies, the internet companies in China, this is the role we've played. We've really led the role of bringing private capital and entrepreneurship to media and connections and services for consumers in China. But it really filled a vacuum where there was nothing there before.
Speaker 2
26:37
And I think that was very much in the minds of our founders that this required, this entailed a lot of responsibility if you're gonna manage all these users. So- So when they were, maybe to
Speaker 1
26:48
tie it back to the local point you said. So, how did they figure out what the local needs were to diversify?
Speaker 2
26:54
So, okay, like the methodology, right? And I love answering that question because it's a pretty simple 1. Basically, From a pretty early point on, we knew that it's essential to understand our users as deeply as possible, and we should use basically any methodology that we can learn about to deepen that understanding.
Speaker 2
27:14
And we didn't settle on any preference for any kind of methodology, because each situation seems to need its own methodology. But we got very fascinated by what we were learning about what was happening overseas. I remember I did a specific trip, probably in 2005 or 2006, to learn about things that like Intuit was doing, called like Follow Me Home. Like how do you kind of go crazy with respect to like really getting into users' heads?
Speaker 2
27:41
And I thought that's a really cool idea. I can just remember that example very specifically. So we wanted to learn from Intuit and others, like how do you do a follow me home session? Like how do you actually work with someone?
Speaker 2
27:51
I don't know if you've heard about that, but like you can go into their house and you can see, I wanna watch you using internet services in your home. Got it, oh,
Speaker 1
27:58
so pretty much like.
Speaker 2
27:59
But I wanna see your home and I wanna see like how it fits in to your life. And maybe you're having an argument with a spouse on the side or some kids just got home and the TV's on. And where's the computer sitting?
Speaker 2
28:09
Is it in the kitchen? Is it in the bedroom? And why did you put it in the bedroom? You don't have space?
Speaker 2
28:14
Is that it? Or like, you know, what's... We wanted to get into the deepest possible narrative behind the users use of our service. We wanted to understand their entire lives, their broader needs, like at the most fundamental level, and then how internet services were playing into those needs.
Speaker 2
28:34
And we started having very difficult conversations with ourselves. So if I skip forward a little bit, a few years down the road, we built something called Avatars.
Speaker 1
28:41
And
Speaker 2
28:41
the Avatar service would grow for a while, then it would kind of like recede and have high churn rates, and we're kind of wondering why. And I think it was very important for us to ask these deeper questions like why do people really like avatars? Because you could have a service that's working, that's earning revenue and maybe getting a lot of recognition, but even the product director, the person who came up with the product, themselves, they weren't really very clear why people liked it.
Speaker 2
29:03
They didn't ask deep questions, they just kind of got lucky, threw it out there. People liked it and you kind of did new things and some things worked, some things didn't. But we started going to a more fundamental level, really in the mid 2000s. I think we always had the thinking going early on.
Speaker 2
29:17
But I think we've been getting better and better at these, they're kind of deeper, almost existential questions. Like when you say people like avatars, because well, they want to look better online. They're like, well, why do they want to look better online? Because they're meeting other people.
Speaker 2
29:30
Why do they care about meeting other people? You know, because they wanna make friends, why do they wanna make friends? You know, you just keep going down, down, down.
Speaker 1
29:37
Like the users in their desire. Yeah, maybe
Speaker 2
29:40
they're lonely, ultimately, or you say they want affirmation, they, you know, everyone wants to feel appreciated. And so if you came to that kind of conclusion, if that was like the conclusion, but sort of like everyone wants to feel appreciated, you would say, okay, interesting, how can we deliver a sense of appreciation to our users through our product? Like how can those values somehow be captured through the user interfaces and the structure of the product?
Speaker 2
30:05
And maybe we don't even get that right, and maybe we were wrong about some of our conclusions, but we're constantly trying to iterate at that.
Speaker 1
30:11
So what was the next big thing that came after Mobile QQ?
Speaker 2
30:14
Yeah, Thank you. So we did some of these services. I remember avatars probably came out around 2003.
Speaker 2
30:19
We built our portal around 2003. What we were trying to do, let me explain it again. I'll get into the specifics, but at a strategic level, we wanted to offer, I thought about it, in my mind anyways, as like a spider web type configuration of value. Here's what it is.
Speaker 2
30:37
You have QQ at the center, then you have like mobile QQ here, you have premium QQ here. Now, if we can add something else, let's say it's like music. The question is, how can music not only add value between users in QQ, but also add value to mobile QQ? Have a premium QQ offering, like, okay, if it's premium QQ, then maybe there's a new album that's going to come out next week that only premium QQ users can listen to for like 2 weeks, something like that.
Speaker 2
31:01
And we constantly find an opportunity. And then how can the music service not just be about streaming music, but maybe the ringtones inside QQ, like when you send someone a message, the notification could use the music service. It's like, give us any kind of resource and we'll try to find the most efficient way to distribute it intelligently in different kinds of iterations and ways throughout the network. And then you add something else.
Speaker 2
31:23
You have a fourth service and a fifth service. And then you're going back to the other ones and you're trying to see how they're all going to strengthen each other. Like exponentially. So it's
Speaker 1
31:31
like an interconnected network. You're driving the value of all your services. Yeah, I
Speaker 2
31:34
mean, that's what we did as a company, between users, is that you see how users are connected and each 1 might have 150 friends and then you get these amazing relationship grids between friends, but we also kind of felt that way about the services and the value themselves. I guess it's just habitual thinking because we're always thinking in that mode. You add something new into the network and how can it like basically from a business perspective, a value perspective, connect to all the other aspects of the service and what I found we did over time is we started to build like these really intricate webs of product experiences that like our competitors just weren't doing and it's hard to replicate.
Speaker 2
32:10
And we thought this would be very valuable to differentiate us from other typical instant messaging companies. The more kind of value-added services we had around QQ and the more complex ways we could integrate them for user value, we felt like that would be very defendable and be very unique versus like other services where they might bring in music, but Like when another service brought in music, they might say, click this button and stream the music. Okay, that's cool. It kind of sounds like iTunes, but can you do
Speaker 1
32:37
a little more? You're done after listening to the music.
Speaker 2
32:38
Yeah, like how could you make that more interesting? And we would be challenging ourselves to do that and working with those product managers, like in the music team, to make sure they had that mentality, that they were kind of pushing the boundaries to say, how can I maybe work with another product team? Oh, got it.
Speaker 2
32:52
And where the executive team would often get involved, because we have to do something other than just the general managers. What are executives supposed to do? It's like, we're looking out for those opportunities. When are there disagreements?
Speaker 2
33:05
When is it that 1 team really wants another team to work with them but the other team isn't willing to because of deadlines or they don't like the idea? Our goal would be like saying what do like reduce the friction and come to quicker decisions, like, okay, you guys really should be working together. We've heard the arguments, work together, kind of a thing, or yeah, this doesn't make sense. Like, okay, we totally get it.
Speaker 2
33:28
Yeah. Back down, you know, like, kind of, how do you decide when to accelerate a certain kind of integration or to just let it go? And then we have sometimes some okay ideas ourselves. We're like, oh, we want the company to do this.
Speaker 2
33:41
Sorry, everyone do this thing. But really kind of driving that strategic integration between products. This is something that we established, I think, very early on, like 2002, 2003, we kind of really started driving these integrations. When we did our portal, I remember shortly after we have a, like a CNN.com type news portal, we started doing these, what I thought were fantastic, news updates in QQ.
Speaker 2
34:06
So when a major global event happened, you would just get a pop-up on your desk from QQ. And that was another great example of the integration that happened fairly shortly after. And now I see it in like iPhone, you get these like news alerts and things like that.
Speaker 1
34:18
I was
Speaker 2
34:18
like, oh, kind of reminds me of what we did like back in 2003 with QQ.
Speaker 1
34:21
Yeah, almost 14 years earlier. But I think that's very unique that you mentioned, which is, it was not just about building different products. And even though it looks for the outside world that Tencent has a lot of things.
Speaker 1
34:33
It's about that real integration across each of these products and services that increases the value.
Speaker 2
34:38
It's like an ecosystem of value. And it's like, the question would be, how can music fundamentally transform the whole QQ experience, top to bottom and other value added services that we have like the premium service. Remember that example I said, okay, there's new releases coming up, maybe there's a concert coming in town, but because we work with the music label, we can inform them of the concert.
Speaker 2
34:58
And then also that premium group can be a helpful group for the music labels to work with too in some cases. So we're like constantly kind of trying to drive these webs of value in all these different ways and it becomes a thought process in an operating system for the company and I think we've become pretty good at it and it let us like scale and scale and then so now if I just fast forward to WeChat. Yeah. It's really hard for people outside of China sometimes to understand WeChat.
Speaker 2
35:27
First of all it's in Chinese I understand but It's also a pretty complex product. There's a lot of different things happening in there.
Speaker 1
35:33
Fortunately- Actually, I had a question before you jumped into WeChat. You started off as a IM service, QQ and mobile and premium. So why acquire WeChat?
Speaker 2
35:42
Oh, well, no, WeChat was developed internally. Oh, that's right. We acquired FoxMail team.
Speaker 2
35:46
But we acquired FoxMail, yeah, Alan's company, I think this was around 2005, and he joined us. And he worked on mail for many, many years. And then he had the idea for WeChat. I recall it being around 2010 and he went for it and it was pretty successful right out of the gate.
Speaker 2
36:00
And we really wanted to foster a mobile-first IM service, even though QQ was very successful on mobile. It started off as a desktop. Yeah, but we had been doing mobile since, I think, late 2000, you know? And we had always built mobile QQ for all the different operating systems like Symbian or Java or whatever it was going to be.
Speaker 2
36:23
But we felt like things were pivoting so much to mobile that we also had to have a mobile-first messenger while still embracing QQ. And QQ still has a very healthy audience today.
Speaker 1
36:34
And that is something very unique to Tencent because, you know, we had Yahoo Messenger, we had AOL, but actually none of the PC messengers went to mobile first here. But, you know, Tencent was the first to do that.
Speaker 2
36:46
Yeah, for us we had to. It was the only way we could think of making money at scale back then and our users demanded it. They wanted, they were on the move, they wanted to be able to text back and forth and so we did that.
Speaker 2
36:59
But the WeChat point, we can talk about WeChat more but I feel like just in a nutshell, it's kind of like, as an executive team and as a company, we learned so much from building QQ over the years. When we got to WeChat, it was a new platform, but also had some great organic growth and all this really important core interaction around it. When it came time to building value-added services around WeChat, it just came to us very naturally because we had learned so much over a decade, probably like 12 years of learning by the time we got to WeChat. And we had also matured as people too.
Speaker 2
37:34
Before we were very focused on games and more like avatar like cute services and WeChat has plenty of that too. But we also started thinking more about the economy, more about financial services, about e-commerce, about how do you really transform a business or a hospital or a government using WeChat. And I think we had so much experience with platform services and tying services together in a seamless way that when it came time to WeChat, it was like, okay, good, fresh platform. Let's get everything right this time, or let's do some things that we couldn't pull off the last time around in QQ.
Speaker 2
38:05
I feel like that was part of the thought process. Do you want me to talk a little bit about gaming? I think gaming.
Speaker 1
38:11
Yeah, I was wondering how did V Tencent decide to do gaming?
Speaker 2
38:14
Because part of the story. Outside of
Speaker 1
38:15
all the mess and, yeah.
Speaker 2
38:16
Yeah, yeah, And I think it's a really good example for people to think about for us. Because the thing I love about the gaming case is that the first 4 years of our gaming attempts were characterized by utter failure.
Speaker 1
38:31
And Why did you decide to do gaming?
Speaker 2
38:33
Yeah, so around 2003, what we call massive multiplayer online games started becoming very popular in China. Have you ever played World of Warcraft before?
Speaker 1
38:43
I have heard about them.
Speaker 2
38:44
You've heard about it, but you know, you get kind of really deep into this experience. It's got a big software client, usually a couple of gigabytes that you download, and then it's kind of this whole world. And these were becoming, these kind of games were becoming very popular in China.
Speaker 2
38:58
And we started thinking, It is possible that users like to interact with each other so much in these worlds that they're not going to want to interact via QQ anymore. This could be potentially like an existential threat to us. QQ was really text-driven at the time. Most of the interaction was text.
Speaker 2
39:17
There was some voice, some video you could do, video instant messaging, things like that, but it was predominantly text. And therefore it's pretty black and white. You would go into these worlds and you could feel like you're really deeply interacting with someone. So we felt like this is an existential threat for the company.
Speaker 2
39:34
We have to find ways to integrate QQ more with games or else we could just be like out of the picture, right? So I think that was before we had the idea that this could possibly make money. It was more like if we don't do it, our users might just go into all these games and they're like, why do I want to talk to someone in QQ when I can be dressed up as an avatar and I can have a deep, rich, environmental experience. It's a software environment.
Speaker 2
40:01
So we started trying to license games and build games ourselves. And pretty much everything we did for the first 3 or 4 years were spectacular failures.
Speaker 1
40:12
I thought you were gonna say we're spectacular, but spectacular failures.
Speaker 2
40:15
Well, I mean, whether or not we liked what we did, it doesn't really matter because the users didn't. So that's all that we can hear about. That's a very important thing for Tencent.
Speaker 2
40:24
I think we can pivot fast as a company because especially when we went to the gaming area, there's a lot of artists and designers in games and they have something that they want to do. They want it to look a certain way. They want to have people experience a design a certain way. And that's like their goal.
Speaker 2
40:37
And for us, we've always been like, we want to find what users love. We want to find a gaming experience that they love. So if the colors need to change, if the artwork needs to change, if the design needs to change, great. Like users will show you a bunch of options, we'll test those options, but show us the way.
Speaker 2
40:52
And that's kind of, in the gaming world, it's a bit of a different philosophy than some others that like kind of have a top-down, beautiful vision for an experience, and then they have to realize it. We were always very practical, like, oh, that doesn't work,
Speaker 1
41:03
let's
Speaker 2
41:03
pivot it. No worries about it.
Speaker 1
41:05
But you did try gaming for 4 years.
Speaker 2
41:07
Yeah, well, so what did work was our casual gaming experience. That's like really simple card games and things like that. And we found quickly that that was a very nice compliment to QQ because he'd be talking, we'd be chatting on QQ.
Speaker 2
41:21
Hey, what's up? Yeah, nothing much. Hey, let's go play a little pool, you know? Let's go play some whatever, blackjack.
Speaker 2
41:27
Okay, you know, now we've found something more fun to do because typically we'd just be texting, but then it's like, hey, I haven't seen you for a while, let's do something else in here. You know, it gave like the users kind of like a playground and added a depth to the interaction. But for a long time, that was the only thing we could claim that was working. And I have this, I was very involved with our gaming strategy, particularly on the international front.
Speaker 2
41:51
So there's nothing more exciting than going to like a gaming company in the US and saying, hey, we'd love for you to come to China. Would you like to work with us? And them saying like, no, like, like there's not gonna be any market there. It's clear like how big is your market?
Speaker 2
42:04
And we'd be like well we think it's gonna be big, we're not too sure yet exactly how fast it'll take but let's figure it out together and they'd be like yeah I don't think so. I was kind of, I had a frustrating period as a professional for a while trying to find any Western companies to work with us.
Speaker 1
42:23
I
Speaker 2
42:24
love saying that because the moral of the story is we're the largest gaming company in the world for quite some time now. I think it's been at least 5 years we've held that position. So it's kind of like, wow, how quickly the world can change, right?
Speaker 2
42:35
Nothing new to Silicon Valley, but you know, I lived through it. So what happened? Well, we had all these kind of licenses that didn't go so great, games we built that didn't go so great, but we signed a game called Crossfire. It's a first-person shooter game, okay, you know, like, shooting game.
Speaker 2
42:55
Okay. And it just took off. And when it took off, it started making a lot of money. And that's all most people need to see.
Speaker 2
43:04
Like, they don't wanna hear your argument, they don't wanna hear your philosophy, the whole reason why QQ's amazing and China's amazing. They just wanna, you know, show me the money. And yeah, it just took off. And then we signed up another game called Dungeon Fighter.
Speaker 2
43:18
And that took off too. It did really well. And I think with those 2 games, those were both licensed from Korea by the way, with those 2 games it became clear like okay Tencent's a player. We hadn't really become a leader yet, we became maybe like number 4 or number 5 in the gaming industry, but it was clear there's something going on with
Speaker 1
43:32
our network and games.
Speaker 2
43:34
And then these games just kept growing. They're still very popular games. These are probably over 10 years old in the market.
Speaker 2
43:40
They're still doing very well.
Speaker 1
43:42
I think that's what's really phenomenal about Tencent. You are at the core of it now. People recognize it as a gaming company, yet you have this amazing product called WeChat, which has actually got a lot of international attention over recent years, and QQ is still strong, and you have this integration of services that just increases value to the user.
Speaker 1
44:01
So I think it's very unique to see a company that was founded in 2000 or 2001 to constantly evolve as trends have changed.
Speaker 2
44:09
That's what we do. But we still embrace the old stuff. Like QQ is still operating.
Speaker 1
44:14
Yes, that's right.
Speaker 2
44:14
With Hundreds of millions, many, many hundreds of millions of users. It's a little smaller than WeChat now, I believe, but it's not that much smaller.
Speaker 1
44:20
It's a little smaller, but not as much smaller, because WeChat itself is 890 MAU, so it's a million MAU. Maybe a
Speaker 2
44:26
little more than that. A little
Speaker 1
44:27
more than that. Okay, the last time I checked was 2 months ago.
Speaker 2
44:29
This isn't that kind of discussion, David. Yeah. Yeah, so we managed to, and we keep moving on, and I think we have, I can't even explain it sometimes, we do have this interesting ability to scale quickly.
Speaker 2
44:42
Like when we see a few games that are working, We can build a model for how we forecast the performance of a game, how we license the game, the templates, all the contracts and things like that. And then we can just replicate it. Really well. That's good.
Speaker 2
44:56
Because once our games became profitable, it's like, OK, great, let's invest in great game licenses from around the world. And then it's just about the pipeline. And the amazing thing about the China market, especially with respect to games, if I think about very specifically, is that there's a lot of users there. And a lot of users mean there's a lot of different needs for games.
Speaker 2
45:13
And we haven't found a situation yet where it feels like all the needs have been met, even though there's big successful franchises and new things coming out all the time, there's always a niche. There's another 5000000 or 10 million, a group of 5 or 10 million people that want a certain kind of experience that when you deliver it to them, there's a good business there. So switching gears
Speaker 1
45:34
a little bit, you know, your current title is the Chief Exploration Officer. What does the Chief Exploration Officer do?
Speaker 2
45:41
It's a good question. I wanted a title, so I've been with the company for a long time. I wanted a title that deliberately is always gonna make sense no matter what I'm doing
Speaker 1
45:52
and
Speaker 2
45:53
it can suit my needs whenever. It was, I wanted it to be serious but at the same time I just wanted it to be like kind of a crazy title, deliberately. And it actually started because I said, I wanna be called a C something.
Speaker 2
46:08
We had this discussion a few years ago. I was always senior executive vice president. I thought it's like, no 1 thinks I'm like a C level guy. This is really frustrating because I don't care about titles at all, but I found other people cared, even inside the company they cared.
Speaker 2
46:19
Like, and I was always puzzled by that, so I kind of like, about 2 or 3 years ago, I said, okay, just give me some kind of C title. I said, well, what should that be? Should be like CX something. I said, that's it, See, the X, the X is cool.
Speaker 2
46:32
Like, people like the X. I think it's cool. Yeah, it's sort of cool. It's a cool title.
Speaker 2
46:35
And then it'll be exploration, which is what I've always tried to do. So I've really always wanted my role in Tencent to be going back to those days when I left Shenzhen right after our transaction with Tencent and I became part of the executive team and I said, okay, I'm moving to Silicon Valley, we're only 45 people, we're gonna have 46 people now, 1 of them's in Silicon Valley, like we're gonna be a global company. And we're gonna be a global company because we're gonna be part of Silicon Valley, we're gonna be working with all our peers here. We're going to be exposed to technology trends.
Speaker 2
47:04
We're going to be contributing. We are a global company from the early days and that was not in people's minds. For a Shenzhen-based company in 2001, like not even sure if they're going to survive or not, not even sure if they could handle the China market, and you know, like, feeling a little outgunned by the Beijing and Shanghai players because, you know, Shenzhen didn't have a lot of technology. It's like, to say like we're going to be international, it was, it was kind of a new idea.
Speaker 2
47:27
It was a new idea at the time. Yeah. So I've always tried to just, what I consider to do, which is like pushing the frontier at Tencent in any way, like just I always want to like shake things up over there. Now, there got a point 17 years now I've been with the company, about 4 or 5 years ago, 1 thing we talk about in Tencent is that we want to use technology to improve people's lives.
Speaker 2
47:50
We want to use the Internet to improve people's lives. And hopefully we're doing some of that with everything we do. I personally always felt a little bit like there's a lot more we can do. Like I think we've in some ways we've kind of become very adept at understanding people's emotional needs, what the brain needs, information, entertainment, games, education, all that, you know, music, art, all that kind of stuff.
Speaker 2
48:13
I think we're we lead in those spaces in China. But I was always kind of thinking about our mission and looking at the entire human being, right? And when you start thinking about the human being, a couple ideas really started to resonate with me and I couldn't get them out of my head. 1 is that I wanna see people living healthier lives.
Speaker 2
48:34
How can technology help everyday individuals live healthier lives? I just felt like there's so much happening with technology that can contribute to that. And if we did it as a company, even if I'm kind of driving some of this stuff on the cutting edge, we can't be wrong. Even if we get it wrong, we can say we tried and I think that's good for our users, it's good for our employees, it's a good use of some aspect of our profits, right?
Speaker 2
48:57
So it's always the right battle to be fighting, right? So I felt even though it's risky, I can just push this forward and just everyone better get out of my way kind of a thing. The other thing is when you think about an individual though and you wanna have them live healthier lives, you can understand their body, their blood, do they have cancer, all those kind of things. But then you also have to think about the ecosystem that the individual's living in.
Speaker 2
49:21
And if you think about cancer, for example, you have to be very sensitive to like, thoughtful about environmental circumstances. Air pollution, water, contaminants in water, food. I mean, what are the causes of cancer? There's so many of them that are traced to be somehow environmental in nature.
Speaker 2
49:39
So I started thinking more about ecosystem impacts on the individual. And that's how I kind of really started thinking about this title and this role and kind of trying to encourage the company to go in like a very new direction, which is really thinking about how can we use technology to create a more resilient planet. I call it planetary resilience. It's a bit of a mouthful.
Speaker 2
50:04
I want to find a better way to describe this quickly to people. It should be something that everyone's talking about now. So, I just started with these baseline concerns based on things that I knew at the time. What I started doing more systematically with a small team that I have, I have what's called an exploration team based in Palo Alto.
Speaker 1
50:23
How big
Speaker 2
50:24
is the team? It's about 5 people. Yeah, I believe small is beautiful.
Speaker 2
50:27
And we have a lot of people at Tencent that can support us with any specific initiative, but at least for myself and working with a team every day, for me it has to be like maybe no more than 8 or something like that. We kind of thought we would be like VCs, okay? And VCs look for great entrepreneurs and great technologies and great products and traction, right? I thought we wanna do that too.
Speaker 2
50:48
We love that discipline. It's something that we feel like we know pretty well and we can do a good job at, always can improve, but I thought we should do it with a twist. We spend about half our time, roughly speaking, thinking about the problems in the world. That might be a little different.
Speaker 2
51:05
And not really thinking about markets. That's different than saying, where are the markets? Where's the next movie ticket you can sell or something like that. I'm talking about problems.
Speaker 2
51:13
We try to forecast what are the biggest challenges the world is going to face in the coming years as like a strategic trajectory? And then you'll start looking at factors when you ask those questions, baseline factors like what does population growth look like on Earth, human beings? When I invested in Tencent in 2000, 2001, the planet had 6.1 billion people. It was a different planet then.
Speaker 2
51:36
Now we're at 7.4, 7.5, roughly. So in just that period of time. And then the forecast, which looks pretty likely to be realized, will be to add another billion people in 13 years. So if you can just track and understand these types of fundamental trajectories, it gives you a lot of power to forecast the future.
Speaker 2
51:55
Because you know, all these humans, we're all gonna need to eat.
Speaker 1
51:58
We
Speaker 2
51:58
need some fresh water. We like when our air is clean. We need to get around.
Speaker 2
52:01
We need energy, right? And we want to actually distribute these benefits to all, even if in an undistributed world there's going to be a lot of demands for these resources, let alone improving the world, right? So when you start thinking, that's what we really do as the CXO, as the Chief Exploration Officer in our team, we spend a lot of time thinking about problems on 1 side. Then on the other side, we're kind of acting like a VC, but with a little bit of a twist.
Speaker 2
52:26
So we're interested in all the latest trends. And we think what Tencent is well-suited to do is work in kind of with new technologies. Things like artificial intelligence, new types of sensors like satellites or you know there's so many kinds of sensors coming out now, genetic engineering, advances in like energy or transportation. So we're interested in all those things, but we wanna see those technologies, when our team works on these things, we wanna see those technologies being applied to the world's biggest challenges.
Speaker 2
52:56
So it's taken us in all these kind of new directions, which makes every day very exciting. We started just thinking about agriculture maybe a year or 2 ago, and not really knowing anything about agriculture. But just like when you learn about the problems and the stresses on a planetary scale, let alone local scale, you know, for agriculture, it's just completely amazing. And then you discover that the agriculture industry is fairly antiquated, you know, and there's a lot of trends that suggest that world agriculture and food security is going to get more difficult over time, whether it's like problems with fertilizer, topsoil erosion, water scarcity, like just loss of land, arable land and things like this.
Speaker 2
53:36
I mean, you can just go on and on, right? The world's addiction to meat, I can go on, I can get a little political about it, right? Like, and so we'll start with the problem And then we'll look for companies that we think are going to tackle that thesis. And we might meet with like dozens, you know, hundreds of companies that don't really do it for us or, you know, we'll meet with a lot of companies.
Speaker 2
53:58
And then finally, you know, we hope we can find as many as possible, but finally we'll find a few that can work out. And then we just want to keep building on our experience and what we've learned and what we're continuing to learn in these areas. So it's an area where I think by focusing on the problems we're very willing to go into like some, like an area like agriculture where we knew nothing about it and we're kind of applying these skills. I feel like, at least myself, I was applying the same skills when we were trying to get into gaming in 2003.
Speaker 2
54:30
So I think I left this out of the story about gaming, but we started doing gaming. We were complete Nobody's
Speaker 1
54:35
yeah,
Speaker 2
54:35
like we didn't know what questions to ask we didn't know how a game was built Yeah, I didn't know that you had to have art or designers And I thought this is really cool like like I'm kind of artistic person myself I get to work with artists now in the gaming era? Well, it was like, I didn't even think about that when we started getting into games. And it's amazing that with a lot of determination, you can learn a lot in a short amount of time.
Speaker 2
54:56
Maybe like to get to 50%, it can be pretty quick. And then like getting the last 50% is why you have to have so much mastery and artistry and going to school and whatever you have to do. But getting up to speed, half the way for a lot of areas can be pretty quickly if you just want to do it. And I think this is a really important skill set that Tencent has across the board is that We've been down this road so many times, like going into new business areas, like gaming and types of gaming, that when we do the next 1, like a lot of the management in the company, a lot of our executives, they have experience doing the exact same thing.
Speaker 2
55:27
So we kind of all share this operating system, like, oh, you're good at agriculture now? Like, okay, what are the key questions to ask and unit economics and all the, and I'm not saying it takes time to get good at it, but at least in terms of a willingness and a culture of being like excited and curious to get up to speed on a lot of issues quickly, I think we have that in the company. So everyone's very supportive. And, yeah.
Speaker 2
55:48
It
Speaker 1
55:48
ties together almost like, you know, that has been the theme of Tencent. It is not known as 1 company. It is a company which does really good things in many areas, and now here you are, you have an exploration team trying to solve real big problems
Speaker 2
56:04
in human life.
Speaker 1
56:05
And what
Speaker 2
56:05
I want to do in Tencent with this position is say people in Tencent start thinking, yeah, we should be doing stuff in agriculture. We've got our cloud, we've got all this, we're using WeChat, so many farmers are using WeChat, like why don't we do that early? I want to be catalyzing those moments and finding those opportunities where these things that seem to be far off actually can rather quickly kind of merge into the broader ecosystem and become part of the ecosystem.
Speaker 2
56:30
But the intention of why we're doing it is very important. We're not just seeking profits. Although I think agriculture is very profitable
Speaker 1
56:37
if
Speaker 2
56:37
you're playing in it in the right way. That's why everyone's getting fed for the most part, at least for the most part. Right, so that's really the idea there in what we're doing.
Speaker 2
56:48
So we act as a VC, we have about roughly 70 companies that I'm and my team are managing directly. We have more that we kind of manage with other teams and then we also have other Tencent teams doing investments in other areas, sometimes also in these kind of resilience related areas. I tend to think my team is driving most of it, but I love it when other teams at Tencent also do these investments, especially in China. And so yeah, There's quite a few teams at Tencent doing investing.
Speaker 2
57:16
By the way, it's not just only my team. We have what we call the M&A team. They're also, that's just the name from the past. They're also doing investments.
Speaker 2
57:25
So there's, you might, a company could get contacted by 1 of many different investment teams at Tencent. And that's also kind of part of the philosophy of the company, that we want to be very market driven. We want to make sure that we have multiple teams approaching multiple strategies in an area. Like we have QQ and WeChat,
Speaker 1
57:41
and we
Speaker 2
57:42
have multiple teams doing investments for different reasons. And a different team might look at it from a different perspective and either get excited or be less excited. But in a way, it allows our executive team to have a lot of different strategies in play in the market.
Speaker 2
57:57
And that way we kind of have a lot of optionality.
Speaker 1
58:00
That ties it all together.
Speaker 2
58:01
Yeah, and what's actually gonna happen going forward.
Speaker 1
58:04
Thank you so much, David.
Speaker 2
58:05
Thank you
Speaker 1
58:05
for joining us for the Q&A and really appreciate you
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