The Billionaire Behind Alibaba’s Global Charge: Jack Ma

The Billionaire Behind Alibaba’s Global Charge Jack Ma 1

The Billionaire Behind Alibaba’s Global Charge Jack Ma 1

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.

The Billionaire Behind Alibaba’s Global Charge Jack Ma 2

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?

Alibaba is available for trading in the Trading 212 PRO platform.

Our next article will be online tomorrow at 4:00pm GMT – “Can a company really have a negative value?”

Why are German Billionaires Different?

Why are German Billionaires Different 1

Why are German Billionaires Different 1

Is there something to be learned by traders from their low-key demeanor

Last time Forbes Magazine counted them, there were 1645 billionaires in the world. Although most headlines come from the U.S. and China when it comes to the people on that list. Warren Buffett and Bill Gates are frequently in the public eye and the meteoric rise in the number of billionaires in the Asian powerhouse has eclipsed even those from Russia.

Germany has 85 names on the list, but there is something interesting in how they behave and conduct themselves. Many see it as an example of how to treat money and the risks that come with its accumulation and preservation.

The companies owned by the country’s richest vary from discount supermarkets like Aldi and Lidl, to software giants SAP and BMW. Although the people running or owning them are different, there is a recurring theme among them – limited or no public appearances, no showboating of wealth and a strict work ethic.

This isn’t to say that billionaires elsewhere are inferior, or that respecting your own privacy is something reserved only for Germany, but it does make an impression when the late owners of Aldi, Karl and Theo Albrecht (whose $25 billion fortune has now been inherited by their many children), as well as Lidl owner Dieter Schwarz, literally have one or two photos in the public domain.

The Albrecht brothers fought in WW2 with Karl being wounded on the Russian front and Theo serving in the Africa Corps. After they returned home the crippled state in which Germany was, changed their perspective on life and money. After taking over their mother’s small grocery shop they employed an extremely frugal business system, ridding their growing number of stores of anything that brought expenses and focusing on products that were sold quickly. No decorations, no advertising budget and everything placed on the pallets it was brought in.

After becoming wealthy and famous Karl Albrecht was kidnapped in 1971, subsequently being released for a ransom paid by his brother. Their approach to life was evident when Theo offset the money against tax, effectively marking it as an expense.

Why are German Billionaires Different 2

This event is thought to be one of the reasons behind German billionaires fear of the spotlight. But it would miss a big part the reasons the lifestyle choice they’ve made. Point in case are the family who control the largest percentage of BMW.

Herbert Quandt is credited as the one who lifted the company to its present status, and after his death in 1982, his wife and two children who have appr. 46.7% of the company’s stock are nowhere to be seen in interviews, papers or magazines. Even more so, his daughter Susanne Klatten (who took her husbands name) started off as an apprentice in a BMW factory with a false identity, so that she could learn the business from the bottom up. It even crossed into her personal life, where her husband understood who she actually was right before they were married.

All this can be seen as relative to how traders share their success or mishaps with others. Most don’t realise it, but it’s actually a part of trading. The adrenaline rush of closing a successful trade, or a losing one, is highest when that last click or swipe happens, but there is another great (or bad) feeling that follows with some delay – when you tell someone about it.

In a time of increased social sharing the number of messages and communication channels has grown, but our mental approach hasn’t changed that much. Most people continue to overshare their success and keep their failures to themselves and in an emotionally charged activity like trading, this can erode your mental state, motivation and perception of market conditions.

Sharing what happens with your trades (both the winners and losers) is generally beneficial, it reduces stress in most people and if there is no negative feedback from the other side (be it family, friends, partner etc.) it can reassuring and provide a sort of constructive confidence. However if someone does have a bad opinion this can be quite damaging.

Perhaps there’s something to learn from the German billionaires. Not that someone will kidnap you if you share everything and flaunt your success, but rather that picking one way to handle it gives you the necessary peace of mind. Either keep it all to yourself, or share it in full – the highs and the lows. Everything in between will just mix up things and can affect your trading.

German stocks and the DAX are available for trading in the Trading 212 PRO platform.

Our next article will be online tomorrow at 11:00am GMT – “Stock of the Week: JP Morgan Chase before their earnings report”

A Success Story of Winning at the Market to Pay for Grad School

A Success Story of Winning at the Market to Pay for Grad School

A Success Story of Winning at the Market to Pay for Grad School

Abhinav Singh has made winnings on Tesla, GoPro and Netflix

Tech stocks are notoriously hard to predict before they become famous. With so much competition and a breakneck pace of new technology development, it’s hard for many investors to find the next big thing. For all the winning examples like Facebook, Google and Amazon, there are companies that have lost some sort of race.

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The Richest Man in Europe Looks Over an Empire Made of Fabric

The Richest Man in Europe Looks Over an Empire Made of Fabric

The Richest Man in Europe Looks Over an Empire Made of Fabric

Amancio Ortega is the third richest person in the world, but is probably the most secretive billionaire

With Inditex becoming available for trading in Trading 212 PRO, we take a look at the company and the man behind it – Amancio Ortega. His wealth is estimated at around $57.5 billion making him the richest person in Europe and the third richest in the world. With brands like Zara, Massimo Dutti, Bershka and Pull & Bear among others, it’s not entirely surprising that he’s achieved such a stature.

Continue reading “The Richest Man in Europe Looks Over an Empire Made of Fabric” »