Chen Tianqiao has moved from his Shanghai beginnings to having created a massive fortune and simultaneously fulfilled every young Chinese person's dream. Aged only 31 he is energetic, dynamic, and forward thinking. Camilla Chen takes a closer look at the man behind the company.
Timothy Chen Tianqiao, 31, with no special connections or rich family background, has single-handedly created a US$1.05 billion fortune in just five years. His story bears all the hallmarks of every young Chinese's dream.
Chen, chairman and CEO of Shanda Networking, is distinctly Chinese in style. Today he is wearing a shirt and collar with smartly pressed trousers instead of the Silicon Valley style T-shirt and jeans. His hair has a distinctively Chinese cut too. Growing up outside the technology world and without international experience, he looks more like a seasoned strategist than a young IT entrepreneur. In the China of today, where it seems that many young people are leaving their heritage behind in a headlong rush for modernisation, Chen is a strong supporter of traditional Chinese culture: his family motto is hung impressively on the wall behind his desk; Shanda's corporate gift is a small wood carving of Sun Tzu's “The Art Of War;” and the “Selected Works of Mao Zedong” is his favourite book.
None of this remotely conflicts with Chen's grand vision for his business. Shanda expects to employ no less than the world's best managers and this summer won a Nasdaq listing, becoming the largest Chinese stock on Nasdaq and largest online game company in the world by market value.
This “very Chinese” Chen has taken the world by surprise.
No upstart
A few hours before the interview, along with millions of other Chinese, Chen was watching the Chinese Women's Tennis Doubles on television as they won their Gold Medal at the Athens Olympics. In the post match interview they were excited but realistic: “We may have won an Olympic gold, but that does not mean China has become a powerful tennis nation.”
Can this be applied to Shanda? Chen firmly denies any similarities, saying, “Without Li Ting and Sun Tiantian ( China 's Tennis Doubles winners) China could not have won a tennis gold, but without Shanda , China 's online games industry would certainly have come about. The difference lies in the fundamentals. China 's tennis has no widespread public basis; its success was by chance. But given the opportunity, an auspicious geographical position, and the support of the people, the success of online games in China was inevitable. It is not Shanda that made the industry, but the industry that made Shanda.”
Chen speaks with enthusiasm and leadership, allowing no room for doubt. Almost everyone who has met or talked to him notices his self-confidence. He rarely takes part in forums or public activities because, “I know what to do next. The only thing I lack is time. Moreover few people in China really understand online games.” Another reason for not taking part in public activities is a “fear of losing myself,” because many people might compliment him on being “extraordinary.” Chen continues, “What we want most now is time. We cannot let success get to us, but must knuckle down and concentrate on the next step. Opportunity is like a fast revolving door: when the gap turns to you, you must get in rapidly.”
Such wisdom and efficiency usually go hand in hand with passion. An investment banker at Citigroup comments, “It is not surprising to be passionate at Chen's age; but it is rare to be so level headed.”
Softbank Asia Infrastructure Fund, a venture capital house, invested US$40 million into Shanda 14 months ago and has seen the value of its investment rise more than eightfold, making it the most successful venture capital investment last year. The risks were high. “Shanda had approached many other investors only to be turned down,” says Huang Jingsheng, managing director of Softbank Asia Infrastructure Fund. “There were many related party transactions and a major legal dispute to consider, as well as the fact that 95% of its revenues came from one game only.” Softbank, nevertheless, took the plunge, basing its decision on Shanda's revenue-generating ability. “There were hundreds of online games in China , most of them free. People were prepared to pay for “The Legend of Mir II”. That is its core competitiveness.”
Competition knocking at the door
Competition in IT is intense. Today's success story often bears little relation to tomorrow's success story. So where is Shanda looking for its long-term success?
“The ability to execute lies at the heart of Shanda's competitiveness. “We do our best to meet customers' requirements. Many businesses promise to meet their customers' demands, but few can actually execute. During expansion or diversification, many concern themselves with the ‘what I can do?' rather than the ‘what do the customers want me to do?'” Chen believes there are three issues to consider when meeting customers' needs:
1) whether he can meet these needs promptly;
2) whether he can improve his products and services;
3) how to prioritise the most common and important needs.
Shanda considers itself a service provider. Chen believes that it is service, rather than product, which attracts and keeps customers. “South Korea's top online game “Lineage” today attracts little more than a hundred thousand people playing online at Sina, whilst “The Legend of Mir II”, which used to rank only twelfth in South Korea - and Shanda has not received technical support for two years due to its lawsuit against Korean game supplier Webzen - maintains an average of five hundred thousand people playing online simultaneously.”
At Shanda's systems monitoring room the number of online players for over ten games is displayed on a screen. It was just past eleven o'clock on a Monday morning when we entered. The screen showed 460,000 online players for “BNB”, 390,000 for “The Legend of Mir II”, and 310,000 for “The World of Legend”.
A small proportion of Shanda's more than ten existing games was developed internally, such as “The World of Legend”. By the end of the second season of 2004 the average aggregate number of online players for Shanda's games was 1.7 million. This number increased 30%, to over 2.2 million when Shanda recently purchased the game websites Bian Feng and Hao Fang.
Wisdom, hard work and luck
Chen's management philosophy draws deeply on China 's cultural heritage. “Confucianism is applicable for managing a network community of less than 100,000, to help them feel that Shanda is with them like a family; but Taoism should be applied to a network community of more than 100,000 - no specific action is necessary because equilibrium is accomplished internally. It is not necessary to interfere.”
Wisdom is necessary for running an enterprise; so too is diligence. But Chen never attempts to conceal his luck. His wife comments, “You may be more intelligent or harder working than others, but that alone is not sufficient to create such a fortune.” Chen believes others can share the same luck he has had: “It was not due to having had a good father or that a piece of gold dropped from the sky in front of me.” The South Korean game “The Legend of Mir II” had approached many companies before Chen took it, but nobody wanted it. “Maybe my luck is more attributed to foresight, seizing opportunities and taking advantage of them. Each of my successes resulted from rational judgement.”
Using this rational judgement Chen appointed Tang Jun, former President of Microsoft China , as President of Shanda several months ago. Tang has spent many years overseas and has a Western business sense. His qualifications were extremely valuable to Shanda, which was then just about to be listed in Nasdaq. With the halo that Microsoft had given him, Tang - and his job move - drew tremendous attention, and was indeed an effective advertisement for Shanda. Chen drew much praise for being spotting the value of hiring Tang.
“It only took half an hour with Chen to make up my mind,” says Tang. “I was looking for a boss with the ambition to do big things, someone honest and capable. Chen had them all.” When asked about his expectations, Tang replied “to become China 's largest internet company, which we have already achieved by market value; to become the biggest online games platform in the world, which we are close to achieving; and to become China 's biggest IT company, for which we still have a couple more years to go.”
Chen's business sense has on occasion been reflected in knowing when to give up. At the last moment, when Shanda was to be listed in Nasdaq in May of this year, he decreased the share bidding range from US$13-US$15 to US$11. The financing scale was reduced by 40%. Some commented it was a “bleeding listing.” However this lower price gave investors more confidence. The share prices went up to US$24 within three months, and today Shanda has a market value of US$1.7 billion.
Luscious green bamboo, a symbol of Chinese culture, grows in Shanda's gardens. They seem to mirror the development of Shanda: young, tall, straight, fast growing - and quick enough to get through that fast revolving door.
