On this edition of Digging Deeper, we will explore Jack Ma's story that does not just have the lure of a mythical folk tale but also has the grit of a martial arts fighter who never gives up though he is ready to take a much needed break.
Rima M. | Rakesh Sharma
It is hard to find the taproot of folk tales and last we checked Ali Baba was a character from a simple allegorical tale about the golden path between greed and aspiration and a secret den packed with unimaginable treasures. The story was part of Arabian Nights, the English translation of a collection of Middle Eastern folk tales though some say, it was added to existing tales in the 18th century by Antoine Galland, who supposedly heard it from a Syrian storyteller, Hanna Diyab.
There are multiple legends also about how the protagonist of a modern tale about aspiration found his treasure and named his business venture after the simple woodcutter who discovered secrets nobody else could have. There are many versions of how Jack Ma started Alibaba.com but the bigger story is where he did it.
On this edition of Digging Deeper, we will explore Jack Ma's story that does not just have the lure of a mythical folk tale but also has the grit of a martial arts fighter who never gives up though he is ready to take a much needed break, at least symbolically in 2019. The origin story of Alibaba and how it came to lead the digital innovation story in China first and the world next are the topics of our discussion on this edition of Digging Deeper with Moneycontrol with me Rakesh Sharma.
As CNN Wire posted in 2018, Jack Ma, the billionaire pioneer of China's internet industry, will step down as Alibaba's executive chairman in the near future to make way for the company's next generation of leaders.
As the piece says and everyone who is not living in a cave knows, Ma has become arguably the most public face of China's internet boom since he started e-commerce giant Alibaba 20 years ago in his apartment, and then saw it turning into a $420 billion raging success.
But last year, Ma wrote a letter to customers, employees and shareholders to indicate that no company, not even Alibaba, could rely solely on its founders, and in a moving acknowledgement of his own limitations, he conceded that no one could shoulder the responsibilities of chairman and CEO forever.
Sources say that CEO Daniel Zhang will succeed Ma in September 2019. And as is usual for him, Ma is leaving nothing to chance and has been quietly working on a seamless succession plan for the last ten years.
He will however remain, as CNN reports, on the company's board of directors until 2020.
The beginning of a fable
There was very little in Ma’s journey to indicate where he would go. He was never an obvious success story. As multiple articles and books about his life have repeated, he failed his college entrance examination in China twice, and barely scraped past the third one. That he has been able to reshape the way people use internet globally to do business in an ecosystem imagined by him is, quite simply, incredible. But the bottomline is this. Global investor allies like Yahoo! may have helped create an international conglomerate but it remains in the capable hands of a Chinese superman. He has all the traits of a true leader. Many modern balladeers have recounted how he has over the years inspired his team with songs, with motivational speeches, but most of all, by showing them that he is never going to let them down because he knows what they represent: the true equity of a company that was built from nothing.
That Ma was able to pull off this feat in China gets his observers curiouser and curiouser. After years of stifling state control, it was in 1997 that internet use in China began to boom. China now has more Internet users than any other country and the use of broadband and mobile phones has fuelled this surge. Jack Ma saw the potential to use this boom and turn technology into a business tool for small companies. Given the fact that China boasted 32 million small companies, Ma was onto something.
Having grown up in the aftershocks of the Cultural Revolution in China, Ma knew what it meant to deal with a polarising idea of nationhood and perhaps his symbolic unification of China with technological innovations is a response to the social censorship and exclusion his own family suffered when he was young.
Ma also loved martial arts novels and the idea of social equity he imbibed from them is also a common thread in his business models and in his philanthropy.
He is also a natural born warrior. One who fights the hardest when he is dealing with the cruelest of lows. His fierce loyalty to friends and his ability to bring together people have also helped him forge a seemingly invincible company.
Much like Elon Musk, who was bullied as a kid, Ma channelled his rage as a young boy who was always underestimated, in improving his mind and famously bought a radio to learn English by listening to broadcasts.
On his way to success, he took every possible route to challenge himself and to make a living. He worked as a labourer, transported stuff, rode a pedicab long distance with stacks of magazines, copied documents, and then was inspired to rise above his circumstances when he came across the Lu Yao book, A Common World. He got himself into a college and was even elected president of the entire League of Student Unions of Hangzhou.
Later, he started teaching English at the Hangzhou Electronics Technology College. Such was his charisma and commitment that the weakest of students thrived under his guidance. This was another sign that he would go on to do something more and influence even more people. While teaching night classes to fledgling entrepreneurs, he came in touch with those who became ultimately his mates in his journey towards a secret den called Alibaba.
Like Winston Churchill, Ma believes in the ideal of never giving in—never, never, never, in nothing great or small, large or petty. And with a net worth of around $40 billion now, he is today one of the richest people on the planet and presents a version of China to the world that is not stifling but liberating and inspiring.
How it all began
On 4 April 1999, Jack Ma and 17 of his friends and students founded Alibaba.com, in his Hangzhou apartment with an initial capital of $60,000. By October, Alibaba had bagged a $25 million investment from Goldman Sachs and SoftBank.
The roadmap was simple and effective. Alibaba.com would smoothen the creases in the disorganised domestic e-commerce market and provide a well-ironed e-commerce platform for small and medium-sized enterprises (SMEs), to help export Chinese products
By 2002, Alibaba.com had not only broken even but started raking in profits and to further ease the e-commerce system, Alibaba launched Taobao Marketplace, Alipay, Alimama.com, and Lynx.
Today, Alibaba Group Holding Limited is a staggering Chinese multinational conglomerate spanning the sectors of e-commerce, retail, internet and technology, and is China's biggest and most beloved tech giant where merchants continue to sell everything and anything to the country's growing number of online shoppers.
Digital wallet Alipay is now part of Alibaba-affiliate Ant Financial.
At a time when China’s evolving algorithmic surveillance system is beginning to raise anxieties about a dystopian future for its citizens, Alipay remains one of the few positive digital tools that the citizens can use for their convenience and is today China's most popular digital-payment service.
Alibaba went on to raise $25 billion on Wall Street in the world's largest ever IPO after going public in 2014 and aggressively invested in video streaming, online food delivery, dockless bike-sharing and ride-hailing start-ups in China and beyond.
The company as we said before, now fuels B2B (Alibaba.com), C2C (Taobao), and B2C (Tmall) marketplaces that are among the most successful in the world. Its shopping search engines and cloud computing services are growing more and more refined and its range of businesses across 200 countries and territories, is diverse and even if Fortune had not acknowledged it, Alibaba would have thrived as one of the world's most admired and envied companies.
By 2018, Alibaba had the 9th highest global brand value and in 2015, its online profits surpassed all US retailing giants including Walmart, Amazon and eBay put together.
To say that Alibaba revolutionised internet-based and AI-powered services in China would be appropriate but even more important is the story of a man who worked within a regimented economy with free-spirited ideas, and made life easy for legions of sellers and consumers.
Jack Ma can now be credited with creating one of the biggest venture capital firms, and one of the biggest investment corporations in the world. And for giving China a sense of pride in a homegrown business that not only rejected eBay's buyout of Alibaba's subsidiary Taobao but also forced it out of the Chinese market. And attracting as early as in 2005, a global ally like Yahoo! which invested in Alibaba, and bought a 40 percent stake in the company for $1 billion. On 11 June 2014, Alibaba even launched a US shopping site 11 Main where it hosted more than 1,000 merchants in multiple lifestyle categories.
Ma wants to ensure that his legacy travels far and wide, and in January 2017, Alibaba and the International Olympic Committee jointly announced a $800 million deal till 2028 via which the company would sponsor the Olympic Games. Not a bad place to be for a company that began in a living room in Hangzhou.
The Alibaba reference
Ma’s parents performed ping tan, a traditional style of storytelling and ballad singing in Suzhou, and in retrospect, it is easy to see why Ma named his company after a character in a fable. Trivia has it that when the idea to name the company struck Ma in San Francisco, he asked random strangers what the name meant to them and most of them came up with, "Open Sesame” and the thought that Alibaba opens doors for small- to medium-sized companies, took root and grew like another allegorical beanstalk that too belonged to another Jack in another story. The name "Alimama", was also registered as a quirky aside just in case someone wanted to marry Alibaba!
alibaba.com as an English language portal indeed has that universality that Ma was looking for and today it handles sales between importers and exporters from more than 240 countries and regions.
For domestic B2B trade, there is the Chinese portal 1688.com and then there is the transaction-based retail website AliExpress.com, which allows smaller buyers to buy small quantities of goods at wholesale prices.
Taobao Marketplace with its free registration and commission-free transactions using a free third-party payment platform, offers products for retail sale and is currently, China's largest C2C online shopping platform and one of its most visited websites.
Ma has pioneered many disruptive digital innovations and spinoffs in the market like the group shopping website Juhuasuan, offering "flash sales” and eTao, a comparison shopping website that offers search results from mostly Chinese online shopping platforms by Alibaba.
According to multiple news sources, in 2013, Alibaba and six large Chinese logistics companies (including SF Express) established a company called Cainiao for the delivery of packages within China. This network gradually grew to 14 local logistics companies in 2014. All these ideas underscore Ma’s commitment to create the most reliable logistics network in China and around the world.
He also took the idea of the Black Friday sales in the US and gave us what is nothing short of sales on steroids in the form of the Singles Day Sale.
Cloud is the limit
In 2009, Alibaba acquired HiChina, a large domain registration service and web hosting service company in China and on its 10th anniversary, Alibaba Cloud was launched with the ambition to create a cloud computing service platform, including e-commerce data mining, e-commerce data processing, and data customization. Today it is the largest high-end cloud computing company in China.
In March 2014, thanks to Ma’s keen interest in entertainment content, Alibaba acquired a controlling stake in ChinaVision Media Group for $804 million. The company was renamed Alibaba Pictures Group. In March 2015, AliMusic was launched.
As early as in 2004, Alibaba Group had launched Aliwangwang, an instant messaging software service for interactions between customer and online sellers and by 2014, it had become the second largest instant messaging tool in China and the story of changing China’s ideascape with new innovations continues.
The unstoppable ambition of Ma
Ma is today a big hit at motivational conferences and talks and has a genuinely refreshing take on success, business and personal values. And his 2018 letter to his team revealed why he has succeeded not just with entrepreneurial ideas but with people.
He wrote, “Teachers always want their students to exceed them, so the responsible thing ... for me and the company to do is to let younger, more talented people take over in leadership roles.”
His equation with Daniel Zhang is case in point who, as CNN informs, joined Alibaba in 2007 and held a range of senior management roles before taking over as CEO in 2015.
CNN quoted Duncan Clark, the author of "Alibaba: The House That Jack Ma Built” and he said insightfully, "Daniel is very low profile, he's quiet. He's mild mannered, he's more Clark Kent, and Jack's the Superman.”
The point being that Ma does not care for pyrotechnics. He can provide them on his own. He cares about a job well done and Daniel seems to fit that brief.
As for Ma, in the future, you may see more philanthropic initiatives from him and perhaps even a starring role in another Kung Fu movie or a search for another secret cave of untold treasures.
He will turn 55 this year and the dream to change the world is still young.
But CNN informs that for now, after stepping away from Alibaba's senior management and board, Ma will continue to shape the company's future through his lifetime membership of the Alibaba Partnership, a group of 36 people that can nominate a majority of the directors to the board.
Is the timing of his departure right? CNN has reported that the announcement of Ma’s departure came at an uncertain time for Chinese tech companies. We quote, "The stocks of Alibaba and other top firms have been hit by concerns about the health of China's economy and Beijing's increased scrutiny of the sector.”How Ma and Alibaba will navigate the transition will be watched avidly around the world by business analysts. Chances are, Ma will succeed as he always has because of his astute reading of entrepreneurial headwinds and his vision for a better connected world.