Self-made Billionaire at 32

By QIU JIANGHONG

His bespectacled face and mild expression gives him the look of a young Bill Gates. Ding Lei, 32 year-old founder of Netease, has no known kinship with this dollar billionaire, nor is he on the international Forbes list. But Ding, with his 7.5 billion RMB, is the richest man on the Chinese mainland.

How did he make so much so young?

Lively Curiosity

Ding Lei.

Ding Lei, a microwave communications major, graduated from the Chengdu-based University of Electronic Science and Technology of China in 1993. Professor Feng, Ding's teacher, and present dean of the university's Guoteng Software Institute, says of him: "Ding Lei was not the top student in his class, but had an enquiring mind and broad interests."

Professor Feng best remembers Ding for his energy and enthusiasm, recalling how he successfully apportioned time to his whole body of studies as well as his major, rather than concentrating solely on the latter.

In the course of his studies Ding stumbled upon the concept of Compuserve, one of the early forms of data communication, and forerunner of today's Internet. He could see this idea had huge potential, but was not exactly clear what it was or how it worked. Everything gelled with the onset of the Internet.

When the Internet first emerged in the West, it was still an alien concept in China, even to teachers of computer science. But Ding knew he was on to a good thing, and followed up every piece of information available on it. After graduation, he worked for a telecommunications bureau for two years and gained a grasp of basic TCP/IP technology, at the same time increasing his Internet know-how, in the certainty that it would become an enormous market.

Says Ding Lei, "I finally resigned my job and went to Guangzhou in pursuit of personal development. I saw it as the first step towards creating opportunities that could change the course of my life."

The First Brave Step

An eaglet's mother took him to the top of a cliff and said, "You are an eagle. You can fly." The eaglet said, "I can't, I'm afraid." His mother pushed him off. The eaglet faltered, then spread his wings and flew.

Ding Lei tells this story to his employees. He wants them to be aware that everyone has his or her potential, but that it might be obscured by habits and circumstances, or lost with the passage of time. Ding's message is that everyone should be constantly aware of his potential, and not be afraid to spread his wings when the opportunity comes.

In his early years in Guangzhou, Ding Lei had neither money nor support from any specialized company. He initially worked in a small office with his two employees, and earned his first nest egg after two years of hard work writing software.

In 1997, when Internet was still largely unknown to the common people, Ding Lei registered Netease in Guangzhou with a registered capital of 500,000 RMB. Its free emails and personal web page service were masterstrokes that brought his company the support of millions of users. A year later Netease took four positions in The Best 10 Websites of 1998 poll held by the Internet Information Center of China,.

In April of 1994, Ding Lei transferred his modest workforce to Beijing and founded Netease Beijing, where it developed very rapidly from a concern with just a handful of employees to one with over 100. On June 30, 2000, Netease had a NASDAQ listing at $15.5 per share. With his 50 percent proprietorship, Ding Lei soon became the new business star of the Internet and was listed on the China Forbes list.

Don't Despair

"Life is like a box of chocolates. You never know what you're going to get." This famous line from Forrest Gump aptly describes Ding Lei's experience in the Internet business.

In 2001, when Netease's business was growing steadily, the company discovered an internal contractual error, which although immediately rectified, triggered a trust crisis.

The subsequent NASDAQ enquiry impacted heavily on the confidence of investors in Netease. The company's stock dropped vertically till it reached the dregs of stock priced at less than $1 per share. It was then advised to halt all transactions.

Fortunately, the company's business was not affected. Its users, on the contrary, grew beyond all expectation, as new services like Online Education, Dating in the Same City, Online Games and Mobile Messaging rapidly developed.

The constantly changing NASDAQ situation was like a rollercoaster ride on which Ding Lei and Netease experienced thrills and near spills. Eventually, Netease reappeared on NASDAQ, and reinstated transactions at about $1 per share.

Netease then enacted an ambitious profit-making plan: to strengthen and stabilize its online advertising business, and at the same time reinforce efforts to develop its online games and mobile messaging business. In its financial report for the second quarter of 2002, Netease announced that it was the first of all Chinese portal websites to make a profit. At 38,000 RMB it was modest, but nonetheless a milestone.

A huge black cloud -- SARS -- hung over most of China for the first six months of 2003, but Netease found a silver lining in the huge earnings made from its mobile messaging business. Netease's stock on NASDAQ grew rapidly and broke its own record by hitting $70 on October 14, 2003. As 50 percent proprietor of Netease, Ding Lei's individual assets exceeded 1 billion US dollars, and he became the richest man on the Chinese mainland.

Foresight makes Fortunes

A portal website usually makes its money from online advertising, but a glance at Netease's financial report shows that it has long had other profitable irons in the fire. Its gross income in the third quarter of 2003 was 17.7 million US dollars. This was made up of $7.6 million from wireless and other services, representing 43 percent, and $6.8 million from online games, representing 38.4 percent. Only 20 percent of its total profits came from advertising. Compared with the same quarter in 2002, its online games showed an incredible 366.8 percent growth.

It was Ding Lei's foresight that enabled him to clean up on the online games market. He went to the US early in 2000 and was astonished at the maturity and scale of the American video game market. He decided to found the first large-scale online game company in China as other portal websites like Sohu and Sina continued to rely on attracting advertisers.

Finding suitable games was Ding Lei's first task, and in March 2001 Netease successfully purchased Tianxia Technology, a leading game software developer. It then developed the game Journey to the West Online, and released it at the end of 2001. Since then Netease has developed from a "war heeler" to a major player in the billion dollar online games market.

Ding Lei sees the future success of online games in interactivity, which he predicts will become mainstream in the games market. He believes that in the next three to five years there will be ten times the market space there is now, which can also be explored from the angle of market sub-allocation.

His new ideas keep coming, and so do the profits. As long as Ding Lei keeps this up, Bill Gates had better watch out.