Investing in ICQ

Wiesger, Wadi, Goldfinger.

After a brief conversation and introductions, Zucker learned the names of the three men. They had just completed their military service in Israel and, after hearing about the gathering in Silicon Valley, had flown all the way to America.

A few months earlier, they had come up with the idea of creating ICQ.

They had noticed that email inboxes on the internet were often flooded with unimportant messages, causing important ones to get buried and go unanswered. So they decided to invent a faster, more direct way to communicate.

And so the world's first chat software, ICQ, was born!

Even QQ, the chat software from Great China, had been modeled on QICQ. And QICQ itself had been copied from ICQ.

A café.

"Gentlemen, may I ask roughly how far along you are with developing ICQ? Of course, if that's a trade secret, you don't have to answer," Zucker said.

Wiesger, Wadi, and Goldfinger exchanged glances.

"Mr. Wald, there's nothing we need to keep secret. We've just finished our military service, so for now we've only completed the preliminary work on ICQ. Once we return to Israel, we'll start the actual development and programming."

The three creators of ICQ were no ordinary people.

Especially Wiesger!

After succeeding with the ICQ project, Wiesger went on to invest in more than eighty internet companies, five of which successfully went public. In the future, he would become a billionaire worth tens of billions of dollars.

He was a shrewd man!

Or rather, successful people didn't get where they were by chance; they were all sharp-minded. He was willing to speak up because he had noticed that Zucker was interested and seemed inclined to invest.

"Gentlemen, if you're open to it, I'd like to invest in your ICQ project," Zucker said without hesitation.

At that, Wiesger and the others were beside themselves with joy.

"Wonderful! We can get started on our project right away."

"That's right, Wiesger. We'll be successful in no time."

Wadi and Goldfinger were visibly excited, immediately starting to dream about the future.

Wiesger looked at Zucker and said gravely, "Mr. Wald, we appreciate your confidence in us, and we're willing to accept your investment. But there's one condition: as the founding team, Wadi, Goldfinger, and I need to retain control of ICQ through the angel investment round."

"No! No!"

Zucker shook his head. "Gentlemen, there's no question that you're the founding team, but I'm putting up real U.S. dollars. In the first angel investment round, I should have a controlling stake in ICQ. That's what I'm entitled to."

"Mr. Wald, we can't agree to that."

Wiesger rejected the proposal.

Zucker and Wiesger spent the next while discussing who would control ICQ. The other two creators weren't as shrewd as Wiesger; they watched the whole thing unfold like spectators.

During the argument, Zucker had considered ditching the three of them and putting together his own team to develop ICQ.

But—

These three guys—or, more accurately, Wiesger—were damn cunning. Wiesger had brought the idea to Zucker because he was confident he could make him compromise. As soon as they set foot in America, they had contacted a lawyer and applied for an ICQ patent.

(In America, things could be ridiculous: not only could completed technology be patented, but even technical ideas could be registered as patents.)

With the patent in hand, Wiesger had completely blocked Zucker's path to making a knockoff.

Of course, Zucker wasn't really worried about that.

So what if it meant going to court? Was he supposed to be afraid of that, living in America?

But not being afraid was one thing; Zucker didn't have the time—or, more precisely, the energy—to spare. The main thing was that he knew how to use QQ and ICQ, but he didn't know how to develop them! Even if he found a group of IT professionals to do the programming, by the time they finished, Wiesger and the others might already have taken ICQ public.

He gave in!

That was right—Zucker had no bottom line!

"All right, you've convinced me," Zucker said.

"Thank you, Mr. Wald. I promise we won't let you down."

The next morning, Zucker and the three men signed the investment agreement in the presence of a lawyer.

Zucker invested $400,000 in the ICQ project in exchange for a 40% stake. He also had the right of first refusal to invest more in the subsequent Series A, B, and C rounds.

"Wiesger, I don't think we should set up the company's offices in Israel. Silicon Valley is the center of the internet world today," Zucker advised.

The three men readily accepted Zucker's suggestion about the company's location.

After all, Zucker owned a building on the outskirts of Silicon Valley. There'd be no problem renting them a floor.

Rent?

That was right—rent! One thing was one thing, another was another. They mustn't be confused. It was in keeping with the rules of business, and it was Zucker's principle.

After Wiesger and the others left, Zhang Wei, Zucker's personal lawyer, said, "Boss, $400,000 is nothing to you, but do you really think this will succeed?"

"Heh." Zucker smiled mysteriously.

Would the ICQ project succeed?

It both would and wouldn't!

As soon as the software launched, it caught on around the world. Thanks to its unprecedented concept, it quickly amassed a huge user base in just six months. Even in Asia, where the internet was still underdeveloped, it captured 70% of the market, and in Great China it reached 80%.

In 1998, AOL acquired ICQ for the then-staggering price of $407 million.

In that sense, ICQ was a success. After all, at the time, Pony Ma hadn't even founded Tencent yet.

But if you said ICQ wasn't a success, that was true too.

Because it never achieved the profits it had expected!

During its development, a series of poor decisions kept ICQ from taking the right path. It failed to make effective use of its enormous user base to nurture related industries like gaming and film. It also failed to develop versions of ICQ in languages other than English.

That was especially fatal!

As a result, many non-English-speaking countries spawned chat software in their own languages. In Great China, for example, QQ was born.

(Actually, even if ICQ had developed a Chinese version, it still wouldn't have been able to capture the Great China market. Looking back from 2020, Amazon and Google were both world-famous names, yet they'd both met their match in Great China, hadn't they?)

In 2010, AOL "sold off" ICQ to the Russian investment company DST for $187.5 million.

"Investing in ICQ was such a sweet deal!"

Zucker felt great, and decided he would attend more events like this in the future.

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