The Cramped Office That Built an Empire: How Five Friends Started Tencent in 20 Square Meters

Imagine starting a company. Would you choose to begin in a luxurious office building or a cramped little room?

In 1998 Shenzhen, Ma Huateng and his four partners faced this reality. Their pooled startup capital of 500,000 yuan ($60,000) wasn't much in a city like Shenzhen. Rent a luxury office? That would quickly drain their funds.

Instead, they chose a 20-square-meter office in Shenzhen's SEG Science Park. This office was incredibly humble: secondhand desks, mismatched chairs, five people crammed together developing products. To save money, they sometimes slept directly in the office.

This choice ultimately hatched the Tencent empire.

What you'll learn from this inspiring startup story:

• How to maintain startup passion in extremely limited environments
• Why harsh startup conditions can actually strengthen team bonds
• How cost-cutting extends company runway and survival time
• Why shared struggle experiences become a team's most valuable asset

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The Humble Beginning

The Small Room in SEG Science Park

In November 1998, Tencent officially established in Shenzhen's SEG Science Park. This choice wasn't random—SEG was one of the few places in Shenzhen specifically providing office space for tech companies, with relatively cheap rent and many other tech startups nearby.

The office Ma Huateng's team rented was just 20 square meters, barely fitting five desks and several chairs. "We developed right there in that small room, five people crammed together, with secondhand desks and makeshift chairs," Tencent founders recalled years later. "Sometimes, to work out a feature, we'd discuss until deep into the night, even sleeping directly in the office."

This office had no air conditioning—sweltering in summer, freezing in winter. But in this environment, OICQ (QQ's predecessor) began its development journey.

Saving Every Penny

Early-stage financial pressure was enormous. 500,000 yuan seemed substantial, but supporting five people's lives, renting office space, buying servers and development equipment—this money was actually very tight.

"We had to save every penny," Zhang Zhidong recalled. "Office furniture was all secondhand—we saved wherever possible. We often ate boxed lunches in the office for lunch, sometimes sharing dishes to save money."

More memorably, to save rent, they often worked late into the night, sometimes sleeping in the office. Several chairs pushed together became temporary beds. "We often slept in the office then," Xu Chenye said. "Partly to save money, partly because we were genuinely too busy—sometimes fixing a bug until 3 or 4 AM."

The Power of Constraint

Looking back, these constraints weren't obstacles—they were advantages. Limited resources forced them to focus on what truly mattered: building a great product.

"If we'd had too much money initially, we might have wasted it on unnecessary things," Ma Huateng later reflected. "Limited resources forced us to concentrate on our core mission."

This constraint-driven focus became Tencent's early competitive advantage. While competitors might spend money on marketing and fancy offices, Tencent invested every penny in product development and user experience.

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Daily Life in the Cramped Office

The Morning Routine

Every morning around 8 AM, five young men would arrive at this small office and begin their day. The space was so cramped that when someone stood up, others had to make way.

"Our 'conference room' was actually just pushing our chairs together," Chen Yidan remembered. "All important decisions were made in this tiny space."

Despite the cramped conditions, the team maintained high spirits. They'd joke about their situation, calling themselves the "Five Tigers of SEG" and their office the "Imperial Palace."

Lunch Hour Economics

Lunch became an exercise in frugality. The team often ordered boxed lunches from nearby restaurants—the cheapest option available.

"We'd calculate carefully," Zeng Liqing recalled. "If a boxed lunch cost 8 yuan, we'd see if we could find one for 6 yuan. Every saved yuan meant more runway for the company."

Sometimes they'd share dishes to save money. "It wasn't just about saving money," Ma Huateng explained. "Sharing meals brought us closer together. We were literally sharing everything—dreams, struggles, even food."

Late-Night Development Sessions

The magic often happened after regular hours. With fewer distractions and cooler temperatures, evening became prime development time.

"Our best ideas came during late-night sessions," Zhang Zhidong noted. "There's something about working together in a small space late at night that sparks creativity."

These sessions weren't just work—they were bonding experiences. The team would debate features, share technical insights, and dream about the future while surrounded by empty coffee cups and takeout containers.

Sleeping Arrangements

When work ran past midnight, going home seemed wasteful—both time and money. So they improvised sleeping arrangements.

"We'd push chairs together to make beds," Xu Chenye remembered. "It wasn't comfortable, but it was functional. And waking up together in the office created a sense of shared mission."

These overnight stays weren't occasional—they happened multiple times per week during crunch periods. The office became not just their workplace, but their second home.

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The Unexpected Benefits of Hardship

Forced Innovation

The cramped conditions forced creative solutions. With limited space, they had to be extremely organized and efficient.

"We couldn't afford to be messy," Chen Yidan observed. "Every square meter had to serve a purpose. This discipline carried over into our product development—no wasted features, no unnecessary complexity."

The physical constraints created mental discipline that became part of Tencent's DNA.

Intense Collaboration

In a 20-square-meter space, privacy was impossible. Every conversation was shared, every decision was collaborative.

"You couldn't hide from problems or avoid difficult discussions," Ma Huateng noted. "If someone was struggling with code, everyone knew immediately and could help."

This forced transparency created unprecedented collaboration. Knowledge sharing wasn't a policy—it was a necessity.

Shared Sacrifice Builds Trust

When everyone makes the same sacrifices—sleeping on chairs, eating cheap meals, working in uncomfortable conditions—it builds unbreakable trust.

"We all suffered together," Zhang Zhidong reflected. "Nobody could claim they were working harder or sacrificing more than others. We were genuinely equal partners in struggle."

This shared hardship created loyalty that survived decades of success and wealth.

Focus Without Distractions

The humble office eliminated distractions. No fancy amenities, no comfortable lounges, no elaborate meeting rooms—just pure focus on building a great product.

"There was nothing to do except work," Zeng Liqing said. "No temptation to waste time on non-essential activities. The environment demanded productivity."

This laser focus accelerated development and created a culture of execution that persisted as Tencent grew.

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The Transformation

First Signs of Success

By mid-1999, OICQ was gaining traction. User numbers were growing rapidly, and the team could feel momentum building.

"We started getting excited emails from users," Ma Huateng recalled. "People were actually using and loving what we'd built in this tiny room."

Success brought new challenges—mainly server costs and bandwidth expenses—but also validation that their sacrifice was worthwhile.

The First Upgrade

As OICQ's user base exploded, the tiny office became genuinely inadequate. By late 1999, they needed more space for servers, equipment, and additional team members.

"Moving out of that first office was bittersweet," Chen Yidan remembered. "We were excited about growth, but that little room held so many memories."

They moved to a larger space in the same building—still modest by corporate standards, but palatial compared to their original 20 square meters.

Preserving the Culture

As Tencent grew and moved to better offices, the founders worked hard to preserve the culture born in that cramped room.

"We never wanted to forget where we came from," Ma Huateng said. "The values we developed in that tiny office—frugality, collaboration, focus—needed to survive our success."

They instituted policies reflecting their early experiences: no excessive spending on office amenities, open floor plans encouraging collaboration, and emphasis on product development over corporate perks.

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Lessons from the Cramped Office

Constraints Breed Creativity

Tencent's early success demonstrates how limitations can spark innovation. When you can't throw money at problems, you must find clever solutions.

"Our best early decisions came from necessity, not choice," Zhang Zhidong observed. "We built OICQ to be efficient because we couldn't afford inefficiency."

This constraint-driven thinking became a competitive advantage that persisted even after resources became abundant.

Shared Hardship Creates Unbreakable Bonds

The founders' shared experience of sleeping on chairs and eating cheap meals created trust that survived decades of business challenges.

"When you've literally shared everything with someone—space, food, dreams, struggles—you develop loyalty that goes beyond business relationships," Ma Huateng reflected.

This deep trust enabled rapid decision-making and risk-taking that gave Tencent competitive advantages.

Environment Shapes Culture

The physical environment of that first office shaped Tencent's culture permanently. Collaboration wasn't a policy—it was a survival necessity. Efficiency wasn't a goal—it was a requirement.

"Culture isn't what you say in mission statements," Chen Yidan noted. "It's what you do when resources are scarce and pressure is high."

Focus Beats Resources

With limited space and money, the team had no choice but to focus obsessively on what mattered most: building a product users loved.

"We couldn't afford distractions," Xu Chenye said. "Every hour, every yuan had to contribute directly to our success."

This laser focus produced better results than many competitors with superior resources but divided attention.

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From 20 Square Meters to Global Empire

Today, Tencent occupies millions of square meters of office space across dozens of cities worldwide. The company employs hundreds of thousands of people and serves billions of users.

But the values forged in that first cramped office remain central to Tencent's identity:

• Frugality: Avoiding unnecessary expenses and waste
• Collaboration: Open communication and shared decision-making
• Focus: Prioritizing user value over corporate comfort
• Resilience: Thriving despite resource constraints

"Everything we became started in that 20-square-meter room," Ma Huateng often tells new employees. "Not because of the space itself, but because of what we learned about working together under pressure."

For today's entrepreneurs, Tencent's humble beginnings offer powerful lessons:

1. Embrace constraints as creative catalysts, not obstacles
2. Share hardships to build unbreakable team bonds
3. Focus obsessively when resources are limited
4. Preserve founding values as success brings abundance
5. Remember that culture is forged through shared struggle, not corporate policies

The most successful companies aren't always those that start with the most resources—they're often those that learn to do more with less. Tencent's cramped office proved that when the right people come together with shared commitment, physical limitations become irrelevant.

Sometimes the most important ingredient in building an empire isn't money or space—it's the willingness to start anyway, wherever you are, with whatever you have. Five friends in a 20-square-meter room changed the world because they focused on what they could control: building something people needed, one line of code at a time.