With 500k in Capital: How Ding Lei Coded the China-Changing '163.com' in a Small Guangzhou Room

Prologue: The "Darkest Hour" in Guangzhou

In early 1997, Guangzhou, Ding Lei was experiencing the most confusing period since he had moved south.

After leaving the Ningbo Telecom Bureau, he had worked for two of the top domestic internet companies at the time—Sybase and ISP company Feijie. With his solid technical skills, he earned a high salary and lived comfortably, but deep down, the feeling of "working for others" made him increasingly uneasy.

He longed to create something that was truly his own.

"What do I really want to do?" This question tormented him repeatedly during that time.

He saw many people around him starting to create "websites," earning advertising fees through simple information aggregation. But he had no interest in that; he felt it was just "information porting" with no core technical substance.

What he truly wanted to do was create a technology product that could serve hundreds of millions of users, like Hotmail. This idea had never faded since that late night in the Ningbo Telecom Bureau.

Finally, on a restless night, he made up his mind: I can't wait any longer, I have to do it myself!

This decision meant giving up a high monthly salary of nearly 10,000 RMB and spending all his savings to bet on an uncertain future.

Act I: The 8-Square-Meter "Dream Incubator"

In May 1997, in an ordinary residential building on Tiyu East Road in Guangzhou, a room of less than 8 square meters became the place where the NetEase dream began.

Ding Lei took out all the savings he had accumulated over several years of work, pooled some money from friends, and with a total of 500,000 RMB, he registered "NetEase Computer System Co., Ltd." The initial team consisted of only four people, including himself.

There was no luxurious office, no exciting press conference; everything began quietly in this stuffy, crowded little room.

The company's first target product was very clear: to develop a fully Chinese free email system.

At the time, this was an absolutely crazy idea. The total number of internet users in China was less than one million, internet access was extremely expensive, and applying for an email address was not only a cumbersome process but usually required a fee.

"Free? How will you make money?" This was the most frequent question Ding Lei heard at the time.

But Ding Lei firmly believed that email would become the "first internet identity ID" for all Chinese netizens, a massive and essential market. And "free" was the only lever to pry this market open.

"Let's not think about how to make money first," he told his team. "Let's first figure out how to make the best, easiest-to-use free email that everyone will use. As long as we have users, we will definitely find a way to make money."

Act II: Victory of a "Tech Maniac"

Over the next six months, Ding Lei showed his "tech maniac" side.

He practically lived in the office. He would sleep on a camp bed when he was tired and continue coding when he woke up. He was the boss of the company, but he was also its chief programmer.

Developing a complete email system was no easy task under the technical conditions of the time. Every part, from the underlying server architecture to the front-end user interface, was full of challenges.

The most difficult part was solving the common problem of "mojibake" (garbled characters). Due to inconsistent Chinese character encoding standards, the emails users received were often a jumble of unreadable characters.

To solve this problem, Ding Lei locked himself in the room, studying various encoding technologies day and night. He eventually wrote a smart conversion program that perfectly handled various Chinese encodings, completely solving the mojibake problem.

In November 1997, after six months of hard development, NetEase's "163 Free Email"—Netease Free Mail—was officially launched.

To make it easier for users to remember, Ding Lei chose the number "163" as the domain suffix, which originated from the number "163" that Chinese people had to dial for internet access at the time. This distinctly Chinese idea made "@163.com" quickly become a household name.

After its launch, the product went viral across the Chinese internet through word-of-mouth, with almost no large-scale promotion.

"Did you know? There's a website called 163 where you can get a free email account!"—this became the most fashionable opening line in internet cafes at the time.

Epilogue: An Era's "Identity ID"

The success of 163 Free Email completely changed the fate of NetEase and the life of Ding Lei.

In just two years, the number of NetEase email users exceeded one million, making it the largest email service provider in China at the time. The massive user base brought huge traffic to NetEase, as well as its first pot of gold—advertising revenue.

More importantly, the "@163.com" suffix has since become a collective memory for an entire generation of Chinese netizens. It was not just an email address; it was the first "digital identity ID" that countless Chinese people received when they first "touched the net."

Looking back at those entrepreneurial days in the small Guangzhou room, Ding Lei's success seems accidental but was, in fact, inevitable.

He seized the biggest user pain point on the eve of the Chinese internet explosion and, with his outstanding technical skills, solved this pain point in the most extreme and thorough way (for free).

This was a victory of a business model, but even more so, it was the purest victory for a believer in "product and technology."