The Million-User Nightmare: How Ma Huateng Almost Sold QQ for Pocket Change

Imagine your product has a million users, gaining tens of thousands daily, but you're facing bankruptcy. Monthly server costs reach hundreds of thousands of dollars while revenue sits at zero. Banks refuse loans, investors avoid your calls, and nobody wants to buy your product.

This was Ma Huateng's nightmare in 2000. QQ's user base was exploding, but every new user pushed Tencent closer to death.

If you were in his shoes, would you persist to the end or cut your losses?

This is the story of how success nearly killed the company that would become worth hundreds of billions.

What you'll learn from this survival story:

• How to find survival paths when cash flow breaks down
• Why persistence sometimes requires more courage than quitting
• How to convert user value into business value
• Why psychological resilience is crucial for entrepreneurial success

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The Success Trap

User Explosion, Cash Implosion

In February 1999, OICQ officially launched. Ma Huateng and Zhang Zhidong originally hoped for 10,000 users—that would be success. Reality far exceeded their imagination.

The first month brought 100,000 registered users. By year-end, that number hit one million. The growth speed caught everyone off-guard, including Ma Huateng himself.

"Every morning, the first thing we did was check user numbers," Zhang Zhidong recalled. "Watching those numbers climb gave us mixed feelings—excitement and panic."

Why panic? Because every new user meant more server costs, more bandwidth fees, more technical support. And Tencent couldn't collect a penny from any of it.

The Money-Burning Machine

By early 2000, OICQ had become a money-burning machine.

Monthly server hosting costs reached 200,000 yuan ($24,000), bandwidth costs 100,000 yuan, plus salaries for five employees and office rent. Tencent's monthly expenses approached 400,000 yuan.

Revenue? Zero.

"We were like drug dealers giving away free samples," Ma Huateng later joked bitterly. "Everyone loved our product, but nobody paid for it."

The Math of Doom

The mathematics were brutal and simple:

• Initial capital: 500,000 yuan
• Monthly burn rate: 400,000 yuan
• Runway: Less than two months

"I calculated that if we didn't find revenue or investment immediately, we'd be dead by summer," Chen Yidan, Tencent's chief administrative officer, remembered. "Every day we delayed, we got closer to the cliff."

But the worst part wasn't the money—it was the helplessness. They'd built something millions of people loved, but couldn't figure out how to make it sustainable.

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The Desperate Search for Buyers

Knocking on Every Door

Faced with imminent death, Ma Huateng made a painful decision: sell OICQ.

"I didn't want to sell," he later admitted. "But I had a responsibility to my partners, my employees. I couldn't let everyone go down with the ship because of my stubbornness."

He began approaching every major Chinese internet company:

Sina: "We already have chat rooms. Why do we need instant messaging?" Sohu: "Your user numbers look impressive, but where's the business model?"
NetEase: "We're focused on email and portals. This doesn't fit our strategy."

The Humiliating Rejections

The rejections weren't just business decisions—they were personal humiliations. Ma Huateng would prepare detailed presentations showing OICQ's user growth, engagement metrics, and potential. Company after company would listen politely, then pass.

"One executive told me directly: 'Your software is just a toy. Real businesses don't make money from toys,'" Ma Huateng recalled. "I wanted to argue, but I couldn't. We weren't making money either."

The most painful rejection came from a major telecom company. After reviewing OICQ for weeks, they offered 600,000 yuan—barely more than Tencent's original investment.

"They basically offered to buy our user base for 60 cents per user," Zhang Zhidong said. "It was insulting, but we were so desperate we almost took it."

The Meeting That Almost Changed History

The closest call came with China Telecom's subsidiary. They were interested in OICQ as a value-added service for their customers.

The meeting took place in a sterile conference room in Beijing. Ma Huateng presented his vision: OICQ could become the primary communication tool for Chinese internet users.

The telecom executives listened, nodded, asked technical questions. Finally, the lead negotiator spoke: "We'll offer 1 million yuan for the entire OICQ system, including source code and user database."

One million yuan. It would solve Tencent's immediate cash crisis and give everyone a modest return on their investment.

"I sat there for what felt like an eternity," Ma Huateng remembered. "My partners were looking at me, waiting for an answer. One million yuan could save us all."

But something stopped him. Maybe it was pride, maybe it was intuition. "I told them we needed time to consider," he said. "They gave us 48 hours."

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The Darkest 48 Hours

A Sleepless Night of Soul-Searching

That night, Ma Huateng couldn't sleep. He walked the streets of Beijing, thinking about the decision that would determine everyone's future.

"I kept asking myself: am I being selfish? Is my attachment to OICQ worth risking everyone else's financial security?" he later wrote in his diary.

He called his father, a port executive who had always supported his entrepreneurial dreams.

"Son," his father said, "you've always been able to see things others can't. If you think OICQ has a future, trust your instincts. Money can be earned again, but opportunities like this don't come twice."

The Partner Meeting

The next morning, Ma Huateng gathered his four partners in their Beijing hotel room.

"We need to make a decision," he began. "We can take the money and walk away with our dignity intact, or we can bet everything on a future we can't guarantee."

Zhang Zhidong spoke first: "I believe in what we've built. Our users love OICQ. There has to be a way to make it work."

Chen Yidan was more cautious: "I support whatever decision we make, but we need to be realistic about our runway. We have maybe six weeks left."

Xu Chenye and Zeng Liqing agreed: if they were going to reject the offer, they needed a concrete plan for survival.

The Decision That Changed Everything

After hours of debate, Ma Huateng made the call that would define Tencent's future.

"We're not selling," he announced. "We're going to find another way."

He called the telecom company and declined their offer. The executive was incredulous: "You're turning down a million yuan? For what?"

"For the chance to build something that could be worth a hundred times that," Ma Huateng replied.

After hanging up, the room was silent. Everyone understood the magnitude of what they'd just done—and the risk they'd just taken.

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The Miracle of Timing

The Investment That Saved Everything

Just when things seemed hopeless, salvation appeared from an unexpected source.

IDG Capital and Pacific Century CyberWorks (PCCW) had been quietly watching China's internet market. They'd seen OICQ's user growth and were impressed by the team's technical capabilities.

"We got a call from IDG saying they wanted to meet," Ma Huateng recalled. "I thought it was another potential buyer trying to lowball us."

Instead, they offered something different: a $2.2 million investment for 40% of the company. Not a buyout—a partnership.

The Validation They Needed

More than the money, the investment provided psychological validation.

"For months, everyone had told us we were crazy," Zhang Zhidong said. "Suddenly, sophisticated investors were saying we were onto something big."

The investment came with conditions: Tencent had to develop a business model within 18 months. But it also came with resources—expertise, connections, and most importantly, time.

The Breathing Room to Innovate

With financial pressure temporarily relieved, Tencent could focus on what they did best: building great products and serving users.

"The investment didn't just save us financially," Ma Huateng reflected. "It gave us the mental space to think creatively about monetization instead of just desperately trying to survive."

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Lessons from the Brink

The Courage to Say No

Perhaps the most important lesson from Tencent's near-death experience is the courage to reject "safe" options when you believe in something bigger.

"Selling OICQ for a million yuan would have been the rational choice," Ma Huateng admitted. "But entrepreneurship isn't always about rationality. Sometimes it's about conviction."

The key is distinguishing between stubborn pride and genuine belief. Ma Huateng's conviction wasn't based on ego—it was based on observing how deeply users loved OICQ.

User Love as Business Foundation

When everything else failed—revenue models, investor interest, buyer enthusiasm—one thing remained constant: users loved OICQ.

"We had millions of people using our product every day, for hours at a time," Zhang Zhidong noted. "That level of engagement had to be worth something. We just hadn't figured out how to capture it yet."

This user devotion became the foundation for everything that followed: QQ coins, QQ Show, gaming, and eventually WeChat.

The Value of Patient Capital

The IDG/PCCW investment taught Tencent the importance of finding investors who shared their long-term vision.

"Quick money comes with quick expectations," Chen Yidan observed. "Patient capital gives you time to build something sustainable."

This lesson influenced Tencent's approach to future fundraising and eventually their own investment philosophy as they became one of China's largest venture investors.

Psychological Resilience

Perhaps most importantly, surviving near-bankruptcy built psychological resilience that served Tencent through future challenges.

"After you've been that close to death and survived, other problems seem manageable," Ma Huateng said. "It's like inoculation—you build immunity to fear."

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From Near-Death to Immortality

Today, Tencent is worth over $400 billion. QQ, the product Ma Huateng almost sold for $120,000, has generated hundreds of billions in revenue and spawned an ecosystem serving over a billion users.

But the most remarkable part isn't the financial success—it's how close it came to never happening.

If Ma Huateng had accepted that telecom company's offer in 2000, QQ would have become a footnote in Chinese internet history. WeChat would never have existed. Tencent's gaming empire, social commerce innovations, and countless other contributions to the digital world would have remained unrealized dreams.

The difference between failure and unprecedented success was one word: "No."

For entrepreneurs facing their own dark nights of the soul, Tencent's story offers both warning and hope. Warning: success without a business model is just expensive failure waiting to happen. Hope: if you're building something people truly love, there's almost always a way to make it work—if you have the courage to keep searching for it.

The question isn't whether you'll face moments when selling out seems like the only rational choice. The question is whether you'll have the conviction to bet on a future only you can see, even when everyone else thinks you're crazy.

Sometimes the difference between a footnote and a legend is simply refusing to give up one day too soon.