alibaba

1. Jack Ma: The Unlikely, Resilient Visionary

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.

Childhood struggles. Jack Ma's early life was marked by adversity, growing up as a "social outcast" during China's Cultural Revolution due to his grandfather's political affiliations. Despite being small and scrawny, he was a "terrific fighter" and profoundly influenced by martial arts novels, which instilled in him a chivalrous approach to justice and a determination to defend his friends. He struggled academically, particularly with mathematics, failing the college entrance exam twice.

Persistence pays off. Ma's turning point came at age twelve when a geography teacher inspired him to learn English, leading him to haunt West Lake shores to practice with foreigners. This diligence laid the foundation for his future global ambitions. After two college exam failures, he was influenced by Lu Yao's book Life, which taught him that "the path of life is long, but there are critical moments when things change." This spurred his third, successful attempt at college, where he excelled in English and student leadership, eventually becoming a dynamic English professor.

Contrarian spirit. Ma's character was formed early, marked by a hatred for mediocrity, falseness, and bullying, and a determination to work for ideals. He embraced a contrarian view, stating, "Men are made bigger by adversity and injustice." He learned to disregard criticism, developing a "skin tough as leather," and saw himself as a "white stallion" striding the heavens, transcending conventional business roles to pursue fundamental social change.

2. From Humble Beginnings to Internet Pioneer

I spoke for two hours,” Ma said later, “and they didn’t get it. I myself didn’t know what I was talking about. One person said he would take a chance, but if it didn’t work he would turn tail right away. So I thought about it for one night. The next morning, I decided to do it. Even if twenty-four had been opposed, I would have carried on.”

First internet spark. After teaching English for five years, Ma founded the Haibo Translation Agency in 1994, seeking real-world business experience. His first encounter with the internet in the US in 1995 was pivotal: searching for "Chinese beer" and "Chinese" yielded "no data," sparking his vision for China Yellow Pages. Despite his own discomfort with computers, he grasped the internet's potential to connect Chinese enterprises to the world.

Overcoming skepticism. Ma's idea for China Yellow Pages was met with widespread skepticism from friends and businesses, who regarded him as a "trickster" trying to sell "nonsense." He faced immense challenges, including:

• Lack of direct internet access in Hangzhou
• Government regulations restricting internet use
• Public wariness of information industries
• His own "country bumpkin" selling style

Despite these, he slowly built the business, proving its value through early successes like the Lakeview Hotel.

Lessons from early failures. Ma's initial foray into the internet culminated in the sale of China Yellow Pages to Hangzhou Telecom in 1997, a move he considered a "failure" due to conflicting visions. This experience, along with a fourteen-month stint developing trade websites for MOFERT in Beijing, taught him invaluable lessons:

• The importance of a macro perspective on China's development
• The need for concrete business models over theoretical ones
• The dangers of government bureaucracy and "overly cautious" approaches
• The power of team loyalty, as his entire Beijing team chose to "come home" with him to Hangzhou, starting Alibaba from scratch.

3. The "Ecosystem" Strategy: Empowering Small Businesses

The revolutionary significance of the Internet is that it will enable small enterprises to operate independently.”

Two profound enlightenments. Ma's vision for Alibaba was shaped by two "satoris." The first, observing graffiti on the Great Wall, revealed a fundamental human need to connect and declare "I'm here too," an embryonic form of the internet's bulletin board system. The second, at a Singapore e-commerce conference in 1999, led him to declare that Asia needed its "own unique model," one that would empower small enterprises, not just large corporations, to operate independently.

Founding Alibaba's mission. In February 1999, Ma and his eighteen co-founders pooled $60,000 to start Alibaba in his Hangzhou apartment. He laid out three ambitious goals:

• To create a company that lasts for 102 years
• To provide e-commerce services to China's small and medium-sized companies (SMEs)
• To establish the world's largest e-commerce company, among the top ten global internet sites

This focus on SMEs, which constitute 85% of China's business, was a contrarian move, as most competitors targeted large corporations.

Building the "ecosystem." Alibaba developed a comprehensive "ecosystem" to support SMEs, recognizing that "where there is a need, there is a market." Key initiatives included:

• TrustPass: A service launched in 2002 to authenticate and verify enterprise documentation, building trust in online transactions.
• TradePass: Business software developed to increase ease of doing business, including online translation and customer management.
• China Suppliers Program: A membership service (launched 2000) to help Chinese exporters display products, access buyers, and navigate international trade.
• "Net Business": Ma's concept that the internet would transition from social networking to a dominant tool for commercial activities, with Alibaba positioned to lead this shift.

4. Mastering the Art of Strategic Competition

eBay may be a shark in the ocean, but we are a crocodile in the Yangtze River. We will be defeated if we fight out on the open seas. If we fight here in the river, there’s no chance they are going to win.”

Taobao's secret launch. In May 2003, during the SARS crisis, Jack Ma secretly launched Taobao, a consumer-to-consumer (C2C) auction marketplace, with a $12 million investment. This was a high-stakes gamble against eBay-EachNet, which dominated China's C2C market with 80% share. eBay's global head, Meg Whitman, famously predicted Taobao would "survive at most for eighteen months."

The "free" strategy. Ma's decisive move was to offer completely free transactions on Taobao, directly "kneecapping" eBay-EachNet, which charged user fees. He understood that China's internet culture was not ready for transaction fees and prioritized market growth over immediate profit. This policy caused eBay-EachNet's customer base to "irrevocably melt away," forcing them to eventually revise their strategy and acknowledge a "protracted war."

Localization and alliances. Taobao's success stemmed from its deep understanding of local conditions and strategic alliances.

• Localization: Ma emphasized being a "crocodile in the Yangtze River," focusing on China's unique market needs rather than blindly copying Western models.
• Advertising: Faced with eBay's exclusive portal agreements, Taobao innovated by advertising in subway stations, buses, and elevators, and later formed a strategic alliance with MSN China.
• B2C Innovation: In 2006, Taobao launched a new B2C model, distinct from Amazon's, by providing a platform for sellers to keep more profit, fostering innovation and benefiting consumers by shortening the supply chain.
• eBay's Retreat: By 2006, eBay conceded majority ownership in its China operations to Li Ka-shing's TOM Group, a clear victory for Taobao's localized, free-service model.

5. Building a Culture of Values, Trust, and Teamwork

If you can win people’s hearts, you can rule all under heaven,” and “Human talent is the greatest asset; success or failure depends on people,” are truisms that show up in a myriad of ways in Chinese philosophy and also in the most ancient classics.

Navigating growth pains. Alibaba's rapid expansion in 2000, including international offices, led Ma to feel he was "losing control." The dot-com bust and internal conflicts brought the company close to disaster. Ma initiated a "strategic contraction" ("returning to China") and brought in experienced COO Guan Mingsheng from General Electric to improve quality and narrow the company's focus, demanding employees align with Alibaba's core goals or leave.

Maoist management campaigns. To unify the company during its most urgent crises (2001-2003), Ma implemented Maoist-inspired management campaigns:

• Yan'an Rectification Movement: Aimed to unify views and strengthen confidence, purging those who didn't share common goals.
• Military and Politics University: Cultivated a professional cadre of team managers through intense training.
• Opening Up the Wastelands: Fostered a pioneering spirit, training salespeople to prioritize helping customers make money, embodying the "customer first" philosophy.

Teamwork and core values. Ma emphasized "Priest Tang" teamwork, drawing an analogy from Journey to the West: a diverse team (like the wise Tang Seng, powerful Monkey, and loyal Pig) with shared values is essential. Alibaba institutionalized "Six Sacred Swords" values, which are factored into annual employee evaluations, shaping corporate culture and hiring decisions. Despite low salaries, Alibaba attracted talent through its "happy work" culture, flat hierarchy, and Ma's charisma, as exemplified by Yale-educated CFO Cai Chongxin joining for a mere $60 monthly salary.

6. Alipay: The Linchpin of China's E-Commerce

Wall Street has predicted that whoever holds the initiative in online payment systems will control China’s e-commerce markets.

Solving the payment bottleneck. Recognizing that "there can be no true e-commerce in China without resolving payment security problems," Alibaba established Alipay in October 2003. This online payment platform, similar to PayPal, initially served as an escrow service, holding funds until products were received, thereby building trust between buyers and sellers. Alipay's ability to resolve security issues was a significant breakthrough for China's e-commerce.

Rapid expansion and services. Alipay quickly became the largest online payment platform in China, boasting over 58 million active users and 300,000 merchants. Its services expanded beyond escrow to include:

• Credit-based loans: Offering loans to customers based on their online transaction volume and credit rating.
• International ties: Collaborating with Visa to facilitate overseas payments.
• Monetization: Alibaba.com earns a revenue share (60-85%) from transactions processed through Alipay, effectively monetizing its marketplaces.
• Security: A "Scotland Yard-like operation" within the company investigates fraud, achieving a low problem ratio comparable to Western markets.

Strategic independence and "free" model. In 2005, Ma spun Alipay off as an independent entity, aiming to make it the online payment standard for the entire Chinese e-commerce industry, not just Taobao. He famously declared that Alipay transactions would be "free" for both buyers and sellers, absorbing the costs himself to gain market share. This "trump card" differentiated Alipay from competitors like eBay's An-Fu-Bao and PayPal, which struggled in China due to reliance on credit cards and regulatory restrictions. Alipay's strong relationships with major Chinese banks further solidified its leading position.

7. The Yahoo! Acquisition: A Bold Move for Global Search

I tell them that in China Jerry Yang should report to me. I am chairman of the board. He is a board member. I am his boss, he is not my boss. All of the decision making is right here in China.”

Yahoo! China's struggles. Despite being an early internet portal, Yahoo! China struggled for seven years due to slow decision-making from headquarters, inadequate localization, and intense competition from local players like Baidu and global giants like Google. Its market share in search plummeted from 30.2% in 2004 to 15.6% in 2005, leading to low morale and employee departures. Jerry Yang, Yahoo!'s co-founder, eventually adopted a "total localization" strategy, deciding to "open his hand" and transfer Yahoo! China's assets.

A strategic "marriage." In August 2005, Alibaba and Yahoo! China announced a "strategic cooperation" valued at $1 billion, the largest merger in China's internet history at the time. Alibaba acquired all of Yahoo! China's assets, including its portal, search technology, and advertising businesses, along with $1 billion in investment. In return, Yahoo! received 40% of Alibaba's economic benefits (shares) and 35% of voting rights, becoming Alibaba's largest strategic investor. Ma humorously called it a "marriage" after seven years of "sweet-talking."

Ma's leadership and vision. Jack Ma firmly asserted his leadership, stating that "in China Jerry Yang should report to me." He immediately began a "total revision" of Yahoo! China, aiming to transform it into China's premier search platform with an e-commerce focus. He delivered a provocative speech titled "Edison Tricked the World" to new Yahoo! employees, advocating for "lazy" but clever innovation over mere diligence. His strategy included:

• Simplified homepage: A stark, Google-like interface emphasizing search.
• E-commerce integration: Molding search capabilities to serve Alibaba's e-commerce goals, viewing search as a tool for business, not just technology.
• Entertainment focus: Investing $3.75 million in "Yahoo! Searches for the Stars," a talent contest leveraging famous Chinese directors to drive traffic and brand recognition.

8. Navigating Challenges: Lawsuits, SARS, and Market Shifts

I generally assume that something terrible is going to happen tomorrow, and so I prepare for it mentally. When it happens, it doesn’t seem so bad. I’m able to deal with it. I begin to say, ‘Come on, what else can you do to me?’ It gives you self-confidence.”

Legal battles for brand protection. Alibaba faced early legal challenges, including a lawsuit in 2001 from Beijing Zheng Pu Science & Technology Development Company, which claimed rights to the "alibaba" domain name. The court ruled in Alibaba's favor, recognizing its established brand and preventing "unfair competition," a landmark decision affirming intellectual property rights in China's internet space. Later, Taobao accused Yahoo! China of "siphoning large quantities of data," highlighting the fierce competition and data security issues in the nascent market, though this was resolved by their eventual merger.

The SARS crisis as a catalyst. In spring 2003, the SARS epidemic swept China, forcing quarantines and business shutdowns. An Alibaba employee contracted the virus at the Canton trade fair, leading to the quarantine of the entire Hangzhou office. This crisis, however, became a turning point:

• Remote work: Employees continued working from home, accelerating the adoption of broadband and remote management.
• Cohesion: Ma's heartfelt letter to employees and their families fostered a strong sense of solidarity and optimism.
• Validation: The crisis inadvertently proved the value of e-commerce, as it allowed business to continue without physical contact, leading to a fivefold increase in Alibaba's revenue in 2003.

Resilience and growth. Ma's philosophy of anticipating and preparing for adversity, coupled with his unwavering confidence, allowed Alibaba to emerge stronger from these challenges. The company's ability to adapt to market shifts, regulatory complexities, and unforeseen crises demonstrated its inherent resilience. The CNNIC's 2008 report highlighted China's explosive internet growth, with users surpassing the US, rural penetration, and a shift towards entertainment and e-commerce, validating Ma's long-term vision for Alibaba's role in this evolving landscape.

9. The Power of "Lazy" Innovation and Relentless Execution

Is it better to have a third-rate idea and first-rate execution, or is it better to have a first-rate idea and third-rate execution?” and both men have concluded that execution, performance, is key.

"Lazy" but clever. Jack Ma often humorously describes himself as "lazy," but this "laziness" is a metaphor for seeking efficient, innovative solutions that reduce effort while maximizing impact. His "Edison Tricked the World" speech to Yahoo! China employees exemplified this, arguing that true success comes from clever shortcuts and systems, not just brute force. This contrarian thinking, rooted in wu xia philosophy, allows him to conceptualize scenarios others miss.

Wu xia mental discipline. Ma's business strategy is deeply influenced by martial arts, particularly the concept of "moves" (mental discipline and focus) and the idea that "no moves trumps having moves." He believes in:

• Strategic foresight: Visualizing "far-focus" and "near-focus" realities, and adapting strategy as the "weiqii board" (the world) shifts.
• Leveraging weaknesses: Attacking an opponent's strengths, as they are often their most vulnerable points.
• Contrarian opportunities: Finding "great opportunities hiding inside" strategies that everyone else perceives as dangerous.

This multidimensional training allows him to apply ancient traditions to modern business with remarkable success.

Execution is paramount. Ma emphasizes that "execution, performance, is key" to success, even over a first-rate idea. He regards Alibaba as a "team of doers, not thinkers," believing it's better to execute a mistaken decision and learn from it than to remain indecisive. This focus on high efficiency and relentless implementation is a core management practice. He believes that "products not advertised are... like the suggestive glances of a hopeful lover on a pitch-black night: they get nowhere," highlighting the need for active promotion and execution of even the best ideas.

10. Reorganization and IPO: Fueling Alibaba's Global Ambition

Listing should be a means to really growing the company, not just to getting some fast money.”

Strategic reorganization. In 2007, Alibaba underwent a major reorganization in preparation for listing part of the company, Alibaba.com, on the Hong Kong stock exchange. This involved:

• Alibaba Group: An umbrella parent company, 39% owned by Yahoo!, 29% by Softbank, and 32% by management/employees.
• Alibaba.com: The B2B online marketplace, 75% owned by Alibaba Group, with 17% sold to the public in the IPO.
• Separation of entities: Taobao, Alipay, and other lower-margin businesses were spun off as separate entities under the Alibaba Group, allowing Alibaba.com to present strong financials focused on profitability.

A historic IPO. The Alibaba.com IPO in November 2007 was the second-largest internet IPO in history, raising HKD 13.1 billion and valuing the company at nearly $26 billion on its first day of trading. This success was attributed to:

• Strong financials: Rapid growth in paying customers, over 80% gross margins, and excellent cash flow.
• Professional guidance: The process was shepherded by major investment banks like Goldman Sachs, Morgan Stanley, and Deutsche Bank.
• Strategic management: A new management team, including CEO David Wei and CFO Maggie Wu, was installed to lead Alibaba.com.

Global market dominance. Alibaba's business model thrives on charging membership fees for its international and domestic online marketplaces, providing suppliers with global exposure and value-added services.

• Scale: Hosting 2.4 million supplier storefronts and serving 24 million registered users from over 200 countries.
• Revenue: Three-quarters of income from the English-language international marketplace, with fees around $6,500 for Gold Supplier status.
• Value-added services: Authentication, payment platform access (Alipay), storefront creation, and even loans based on trade volume, converting non-paying suppliers to paying ones.

Ma's ambition is to lead the world's "Net people" into the age of "Net business," leveraging China's position as the primary global supplier. As Alibaba continues its global expansion, potentially through affiliations with giants like Microsoft, all eyes remain on the "wu xia master" and his next strategic moves.

Last updated: August 26, 2025