alibaba: The Inside Story Behind Jack Ma and the Creation of the World's Biggest Online Marketplace

251 Pages·2009·6.22 MB·English

by  Liu Shiying

alibaba
The Inside Story Behind Jack Ma
and the Creation of the World’s Biggest
Online Marketplace
Liu Shiying and Martha Avery

Contents
Introduction
Martial Arts Moves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .vii
Chapter One
Put Up Your Fists!. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Chapter Two
Darkest Before Dawn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Chapter Three
Two Small Enlightenments . . . . . . . . . . . . . . . . . . . . . . . . . .45
iv
Chapter Four
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .85
Photographic Insert
Chapter Five. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taobao: A New Weapon in Jack Ma’s Arsenal. . . . . . . . . . . .117
Chapter Six
Alipay: A New Milestone in E-Commerce . . . . . . . . . . . . . . .137
Chapter Seven
How Can You Catch a Tiger if You Don’t Go into His Lair?. . .147
Chapter Eight
How Can You See the Rainbow if You Don’t Go Out
in the Rain? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .167
Chapter Nine
The Personal Life and Thoughts of Jack Ma. . . . . . . . . . . . .177
Chapter Ten
Keep It Up! Reorganization and IPO . . . . . . . . . . . . . . . . . .191
Appendices:
1. Jack Ma’s Personal Chronology
(with Key Events in China’s Recent History) . . . . . . . . . .199
2. Alibaba Chronology . . . . . . . . . . . . . . . . . . . . . . . . . . . .202
3. Glossary of Names. . . . . . . . . . . . . . . . . . . . . . . . . . . . .209
4. Glossary of Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . .214
Index. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .219
About the Authors
Credits
Cover
Copyright
About the Publisher

introduction
Martial Arts Moves
Alibaba was founded by a man
named Jack Ma in 1999, in
Hangzhou, China. This is
the story of how he leveraged his initial capital of $60,000 into a
company valuation of billions of U.S. dollars in less than ten years.
More than that, it is the story of an unlikely hero—short, scrawny,
unaristocratic, and poorly educated—who saw an opportunity, a
dream, and scrambled to make it real.
On November 6, 2007, Alibaba.com approached the pub-
lic for funding: it issued shares on the Hong Kong stock market
in an IPO, or initial public offering. The listing was to receive
$1.5 billion at the offering price of HKD (Hong Kong dollars)
viii
13.50 ($1.74). The share amount represented 17 percent of the
total value of one part of the company, since only 17 percent of
Alibaba.com shares were allocated to the public listing. The total
valuation of Alibaba.com stood at $10 billion at the offer price,
but on the day shares were issued, they rose to HKD 39.50, put-
ting the valuation of the company at nearly $26 billion.
Jack Ma failed the college entrance examination in China
twice; he barely passed on the third try. He believes that if he
has been able to succeed, most people can do the same. But not
everybody has set out to restructure the way business is done
around the world by creating a new model for use of the Internet.
By systematically putting together the elements of a new model,
what he calls an “ecosystem,” Jack Ma started a global movement
from a small corner of China. He enabled millions of small com-
panies to use the Internet as a primary business tool, to a degree
allowing Internet functions inside China to evolve beyond what
they are in the West. Through use of this tool, he has effectively
leveraged China’s ability to trade; over the past several years, this
has changed the weighting of China on the world’s stage.
Despite Jack Ma’s “anyone can do it” claim, the fact remains
that not just anyone did. The following chapters address the ques-
tion of what he did that was different. They describe the story of
a scrappy child in southern China who embarrassed his parents
by fighting and by failing, who had no educational background
in IT industries or business, and whose management style leans
heavily on stories of historical outlaw heroes from China’s past.
Martial arts devotees will enjoy much of what Jack Ma feels is the
secret to success.
Almost everything about Jack Ma is counterintuitive—he
looks at the world from a unique perspective. His greatest delight
is using small to conquer big, quick to conquer slow, and intui-
tive insight to conquer conventional wisdom. The abstractions by
which he formulates strategic plans are based on the moves of
Martial Arts Moves ix
martial arts more than mathematical equations, and the mental
discipline behind those moves informs his every thought. In Jack
Ma, we are looking at the incarnation of a traditional martial arts
master.
Alibaba.com is only one of the network of companies under
the Alibaba umbrella. Others include an online payment service
called Alipay, the largest online payment platform in China, and
an online consumer marketplace called Taobao, which has all but
chased eBay out of China. They include a software development
company called Alisoft, which creates business software that “lives”
on the Net. All of these lie within the embrace of the Ali family
and are ultimately controlled by Ali management and employees.
Key investors in the network include Softbank in Japan and Ya-
hoo! in the United States. The founders of those companies have
been keys to Jack Ma’s vision of creating a global company—but
one that is owned by and managed by Chinese nationals.
In reading Jack Ma’s story and the story of Alibaba, it is useful
to place the company in the context of global Internet business.
Up until the end of 1995, China officially forbade any news about
the Internet in Chinese media. By 1997, however, this policy was
overturned, and the steep curve of Internet use in China had
begun. Today, there are more than 230 million Internet users in
the country, according to the government-backed China Internet
Network Information Center (CNNIC). China has more Inter-
net users than any other country, including the United States,
which it surpassed in early 2008. More than one-half of China’s
users, more than 163 million, are connected via broadband, due
to the remarkable fiber backbone that the Chinese government
has funded throughout the country. China’s telecom growth has
also been driven by the expansion of mobile telephony, which
contributes to wireless Internet access as well.
While China has one of the most sophisticated Internet
filtering technologies in the world to censor information, the