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He would later draw on his experiences when taking Alibaba into battle against eBay, in the David versus Goliath struggle that would raise his profile on the global stage.
Jack also points to China Pages as influencing the way he would structure his subsequent ventures: “From then on, I have held a firm belief: When I start businesses in future, I will never hold the controlling stake of a company, making those controlled by me suffer. I will give plenty of understanding and support to lower levels. I have never once had a controlling stake at Alibaba. I am proud of this. I am the CEO of the company, because I lead it with [my] wisdom, courage, and resourcefulness, not capital.”
Alibaba might as well be known as “1,001 mistakes.” But there were three main reasons why we survived. We didn’t have any money, we didn’t have any technology, and we didn’t have a plan. —Jack Ma
Other entrepreneurs, especially those who had set up Internet service providers (ISPs) to roll out dial-up services to consumers, found themselves squeezed out by large SOEs like China Telecom.
On the visit Jack also took Jerry and Heather to meet the vice minister of MOFTEC. Jack’s charm offensive paid off. In October 1998, Infoshare was appointed the exclusive sales agent for Yahoo in China.
Jack was attracted, he said, by the “open sesame” imagery, since he hoped to achieve an opening for the small- and medium-size enterprises he was targeting.
But Jack is a very savvy businessman, he has that innate ability to say, ‘All right, I’m gonna trust this guy.’ A lot of entrepreneurs don’t trust other people.”
For Alibaba to thrive he would have to foster a relentless work ethic, ensuring a clean break from the bureaucratic culture that he and some of his colleagues had just left behind in Beijing.
“learn the hard working spirit of Silicon Valley . . . If we go to work at 8 A.M. and get off work at 5 P.M., this is not a high-tech company, and Alibaba will never be successful.”
We are just charging forward. Team spirit is very, very important. When we charge forward, even if we lose, we still have the team. We still have each other to support. What on earth are you afraid of?”
Alibaba was cofounded by a total of eighteen people, six of whom were women. None came from privileged backgrounds, prestigious universities,13 or famous companies. This was a team of “regular people,” bound together by Jack’s energy and his unconventional management methods.
Joe remembers how Jack outlined his ambitious goal for Alibaba: to help millions of Chinese factories find an outlet overseas for their goods. The factory owners lacked the skills to market their products themselves and, Jack explained, had little choice but to sell their goods through state-owned trading companies. Jack was proposing to cut out the middleman, always a compelling idea.
Later on Jack told me that there are three kinds of people he doesn’t trust: Shanghainese, Taiwanese, and Hong Kong people.” But somehow Jack and Joe, a Shanghainese-speaking Taiwanese who lived in Hong Kong, hit it off. “It was fate that the two of us ended up working together.”
“I went back a second time because I saw something in Jack. Not just the vision, the sparks in his eyes. But a team of people, his loyal followers. They believed in the vision. I said to myself, If I am going to join a group of people, this is the one. There is a clear leader, the glue to the whole thing. I just felt a real affinity to Jack. I mean who wouldn’t?”
When I first met Joe, I found him very calm and reserved, in many ways the polar opposite of Jack’s exuberance and unpredictability. As I spent more time working with them, I came to appreciate how Joe’s professionalism in, say, carefully drafting a contract created the structure for Alibaba to harness Jack’s energy and enthusiasm.
But having just escaped the clutches of government, Jack was convinced that his customer-first approach would prevail over other websites that focused foremost on wining and dining government officials.
Although Alibaba was struggling to convince investors to back it, the company started to have more success with the media, all thanks to Jack’s charisma and gift of gab.
“Jack came to see me with what was then an idea for Alibaba. I thought it was a great business but a terrible name. Needless to say, he didn’t take my advice, but we’ve remained friends since.”
His “know who” approach, based on relationships, was beaten out by the “know how” smarts of China’s new generation of tech-savvy Internet entrepreneurs.
I was immediately struck by Jack’s infectious enthusiasm and capacity to charm, influenced no doubt by growing up in a household where both his parents practiced pingtan, the traditional art form that includes comedic routines.
“If you plan, you lose. If you don’t plan, you win.”
Shirley remembers being impressed by how hard Jack’s wife, Cathy, was working. She and Jack toiled away, she recalled, like “revolutionary comrades.”
If Goldman took a controlling stake in his company, he explained, he couldn’t feel like a true entrepreneur. Jack told her how he’d put everything into the venture. “This is my life,” he said.
Goldman would invest the $5 million for 500,000 shares, half the company, while retaining veto rights over key decisions.
Jack had succeeded in securing a big-name investor in what would prove a critical step in Alibaba’s story. But he would also come to regret selling such a large stake in the company, 50 percent, which he would never recoup. In reality, though, Jack had little choice.
“Most SMEs [small and medium enterprises] have a very changeable dynamic. Today they might sell T-shirts, tomorrow it could be chemicals.”
If visitors to Alibaba.com were able to make new trade leads, he figured, they would demonstrate increasing loyalty, or “stickiness” to the website.
For the price of one engineer in Beijing or Shanghai, Alibaba could hire two.
To] keep one programmer happy [in Silicon Valley] takes $50,000 to $100,000. For that much money in China, I can keep ten very smart people happy all the time.”
Jack liked the distance from Beijing: “Even though the infrastructure is not as good as in Shanghai, it’s better to be as far away from the central government as possible.”
When building up his team Jack preferred hiring people a notch or two below the top performers in their schools. The college elite, Jack explained, would easily get frustrated when they encountered the difficulties of the real world.
From the outset, Alibaba has been driven by a Silicon Valley–style work ethic, with every employee issued share options in the company, vesting over a four-year period. This is still a rarity in China, where the traditional setup in private companies was an emperor-like boss who treated employees as disposable and salaries as discretionary.
Keeping the team focused, cofounder Simon Xie recalled, Jack was “a culture, a nucleus.”
“Today is brutal, tomorrow is more brutal, but the day after tomorrow is beautiful. However, the majority of people will die tomorrow night. They won’t be able to see the sunshine the day after tomorrow. Aliren11 must see the sunshine the day after tomorrow.”
In a 2000 Harvard Business School case study on the company, she commented that “Alibaba employees don’t need experience. They need good health, a good heart, and a good head.”
I never witnessed Jack lose his cool, even when he dinged the fender of his car one day on a concrete column when we were parking at a restaurant where he’d invited me to lunch.
But Jack quickly emerged as the star of the show, especially when he confessed to the audience that he really had no idea what Alibaba’s business model was, adding “and yet I got investment from Goldman Sachs!”
“I did not get an education from Harvard . . . I went to Harvard to educate them.”
Because schools teach knowledge, while starting businesses requires wisdom. Wisdom is acquired through experience. Knowledge can be acquired through hard work.”
Meeting Son, Jack knew he had found a kindred spirit. “We didn’t talk about revenues; we didn’t even talk about a business model. . . . We just talked about a shared vision. Both of us make quick decisions,” Jack recalled.
“When I went to see Masayoshi Son, I didn’t even wear a suit that day. . . . After five or six minutes, he began to like me and I began to like him. . . . People around him have said that we are soul mates.”
Around the time of Alibaba’s 2014 IPO, Son was asked what it was that prompted him to bet on Jack back in 2000: “It was the look in his eye, it was an ‘animal smell.’ . . . It was the same when we invested in Yahoo . . . when they were still only five to six people. I invested based on my sense of smell.”
This impulsiveness was typical for Son. “Masa is Masa. He has ADD [attention deficit disorder] and can’t sit still. He just wants to give you money now, now!” commented a former business associate.
Jack also liked to joke about their appearances: “The difference between me and him is that I may look very smart, [but] in fact I am not; that guy seriously doesn’t look very smart, but he is a very wise person.”
“Son has a lot of self-confidence, he’s even conceited, but his appearance is always one of modesty. He’s crazy, but Ma’s also crazy. It’s very common for crazy people to like each other.”
Jack, with a background as an English teacher, was keen to ensure that his own ignorance of technology was not replicated in Alibaba. “For a first-class company, we need first-class technology. When John comes, I can sleep soundly.”
John jumped from Yahoo to Alibaba, he explained, because Alibaba’s idea was an original one.
Shirley Lin at Goldman Sachs had been attracted to Alibaba for its “localness.” John Wu saw the same merits: “There are a lot of Internet companies started by people who studied in the U.S. and came back to China. . . . Jack Ma is different. He has been in China all his life.”
Connecting suppliers in China with global buyers was clearly a good idea.
There was no “Ministry of Internet,” but the Internet touched so many areas that it set off bitter turf battles between existing regulators.
