The Chinese tech giant is a reflection of its founder
Since Alibaba’s IPO in September last year which got the company not only in the news, but at the top of the list of the world’s largest public offerings, the Chinese e-retailer has received a lot of attention and scrutiny. There is a single point at which its past performance and future plans intersect – the person who started it all.
Jack Ma was born in 1954 in Hangzhou, a city with over 2 million people, in a family of storytelling performers. His rags to riches story starts with the fact that he was short and had a slender build. Subjected to jokes about it, he often got into fights and claims to have never backed out even against bigger opponents. Something quite useful when you have to face-off against Amazon, eBay and Google later in your life.
He taught himself English from tourists visiting the city (one of which gave him the nickname “Jack”). After several failed attempts in passing university exams he managed to get into college and graduate as an English teacher.
His entrepreneurial spirit started to shine and he founded a translation company through which he traveled to the U.S. in 1995. There a friend showed him the Internet and Ma immediately saw his first big opportunity – he searched for Chinese beer.. and nothing came up – the stage was set for an online search and market platform that provided connectivity for 99% of China that was offline.
After returning, he created China Pages, but the attempt failed after too much interference from the government and possibly being too early in the market’s development. Following this came a crucial period in his career – he worked in the Ministry of Trade (where he met Jerry Yang, the future CEO of Yahoo, paving the way for a $1 billion investment). Understanding the inner world of the state and the communist party allowed him not only to create Alibaba in an environment that is substantially different than the West, but also to forge the crucial relationships which propelled it at different phases of development.
Some even argue that these relationships have allowed Alibaba to exist in the first place. But the focal point was and continues to be Mr. Ma himself. Being able to network and keep everyone happy is one thing, but understanding a business and predicting what is going to happen on a grand scale is another. Combining the two – by gathering investments from power players and their rich heirs, while still steering the wheel – ensured the domination of the local market.
When it comes to the technical part, the current chairman of the board of Alibaba relies on others. He has basic programming skills and his focus has always been on business development – part of the reason he founded the company with 17 ( talk about having a lot of co-founders) friends. These 17 still have the largest say in company dealings, even after the IPO. Just one of the things that has been done differently by Alibaba and Jack Ma.
Investors and traders don’t seem to care too much about the lack of transparency compared to Western public companies. Although the share price has wobbled a bit (largely in sync with the overall market trend of late) the prevailing notion is that Alibaba, or at the very least most of its businesses, still have a lot of room to grow.
Things didn’t always look so rosy and there were challenges. In 2001, after the first international expansion had run aground with a lot of cash burned up without creating the needed market share, Jack had his doubts if they would succeed. But the foundations stood the test of time even after laying off all overseas personnel and they managed to beat off eBay in the following years on the local market.
The second nickname “Crazy Jack” came about in the following years, the time of flashy press conferences and bold statements. Free PR never hurt anyone, especially those who can look back and say that the bold statements came true.
This flamboyance and adaptability made him China’s richest person after the IPO, but in a recent interview he shared his thoughts on the challenges this has brought (many might say “boo-hoo”, but we think it’s worth a listen). It shows where his thinking is focused and it’s definitely not on living a lavish lifestyle (despite purchasing a $50 million jet). Yesterday saw him drop to number three in China, so he might be celebrating somewhere right now.
Alibaba’s chairman has an undoubtedly colourful personality – he is an avid martial arts (movie) fan and is obsessed with Tai chi. Not to mention his styling for the 10 year celebrations of the company. But he’s managed to flourish in a society which still values collective effort and abiding by rules that come from above without discussion. Of course these rules bend for people with power and Jack Ma managed to twist and turn when the opportunities came.
In many ways he resembles the partially authoritarian communist party, even making statements in support of the government actions on Tiananmen square. But in many others he is the prime example of capitalism, proven by his openness to anyone with good ideas, even if they were part of the Umbrella movement. A sign of the future of entrepreneurship and what companies will need to be in a changing world?
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Our next article will be online tomorrow at 4:00pm GMT – “Can a company really have a negative value?”