Friends Thought Jack Ma Was Telling a Lie When He First Talked About the Internet
NEW YORK—Jack Ma is a funny guy. He again demonstrated this in an entertaining speech at the Economic Club of New York on June 9, 2015.
He shared anecdotes about how difficult it was starting the business, how he thinks about his wealth and income inequality, Chinese traditional culture as well as Alibaba’s plans for future expansion, including America.
Here are selected topics with his abridged remarks. We encourage readers to also read up on some of the controversy surrounding his claims in the links and as part of the suggested reading.
Alibaba’s Difficult Beginnings
Twenty years ago I came to America—my first trip to America was to Seattle. I learnt so much about America. Books, teachers, parents. I think I know enough about America.
America is not what I learnt from the books. In Seattle I found the Internet. I came back and said I am going to open a company called ‘Internet.’
My friends said: ‘Forget about it. Don’t do it.’ One person said: ‘I trust you, go ahead and try it.’ I was 30 years old. I started my business without knowing anything about the computer business—my wife and I, and a schoolmate. We had $1000 to start the business.
It was so difficult. I survived until today. For the first three years life was really bad. I tried to borrow $3,000 from a bank. I had to borrow it from friends.
[My friends said] Jack is telling a lie because there is no such network called Internet in 1996. Later in 1996, China was connected to the Internet.
I invited 10 friends to my apartment, I am not telling a lie: there’s a network. It took 3.5 hours to download the first picture. ‘Yes it worked, but not today, in 10 years it will work.’ It proved I was not telling a lie.
We tried getting small business to sell online. Nobody wanted to sell because nobody can buy.
So at first we buy everything they sell, in order to tell people that it works. It was not easy from 1995 to 1999. We failed. Nothing was ready. In 1999 I invited 18 friends to my apartment; we try to do it again. We founded Alibaba.com. We believe the Internet is a treasure island for small businesses.
We focus on small businesses. American focus on big business. We in China don’t have many big companies, we have many small businesses. If we use Internet technology to help small businesses, it will be fantastic.
We should help the small guys. We should not help small guys to reduce costs. Small businesses should learn how to make money.
We want to make the company last for 102 years. Alibaba was born in 1999. Over 102 years, it will cross three centuries. No matter how much we achieve, we want to make 102 years. We have another 86 years to go. If we die at any time, we are not successful.
Alibaba’s Future Strategy
[People say] Alibaba, you are like Amazon: in the American point of view, Amazon is the only model for ecommerce. We don’t buy and sell. We help small businesses buy and sell. We have 10 million small businesses on our site buying and selling every day.
We don’t deliver our packages ourselves. We don’t own warehouses, but we manage tens of thousands of warehouses for small and medium enterprises. We don’t have inventories. We have 350 million buyers coming to shop every day on our site.
We grew from 18 people to 34,000 people. Amazon is a shopping center, the product is exactly like in the picture. At Alibaba people the product you see in the picture look like this, and reality it’s different. People love it.
In China, ecommerce is a lifestyle. They use it to exchange ideas and communicate. You don’t go to Starbucks to taste coffee—it’s a lifestyle.
In a couple of years we will sell $1 trillion of gross merchandise. This is my goal, and I believe it.
Eighty percent of buyers and sellers online are created by our company. Our future is to grow our business globally. We want to globalize the infrastructure of ecommerce.
Because the infrastructure of commerce in China was so bad, in China we have nothing nowhere. Ecommerce in America is a dessert—it’s complementary to the main course.
If we globalize our infrastructure, like the payment systems, we help the global small and medium enterprises to sell everywhere, help the global consumers buy everywhere. Our vision in the next years, we will help 2 billion consumers to buy everywhere.
In China, if you shop online you will receive the product in 24 hours. Our focus is still focused on small businesses. Help them to do business the most efficient way. We give them the traffic, payment system, logistic system.
We will have 40 percent of our business outside China—today we only have 2 percent outside China.
How to Conquer the American Market
[People ask] when are you going to come to invade America? When are you going to compete with EBay?
The opportunity and the strategy for us is helping small businesses from America go to China. We think in 10 years, 500 million people in China will be middle class.
China today cannot afford good services for themselves; the terrible air and water we have. I don’t think China will be able to do that. China has focused on exporting. I think for the next 20 years China should focus on importing. They should learn to buy. They should spend money.
Big companies from America are all over China. This is a great opportunity for small business to go to China. We have helped small American farmers to sell to China.
[One company asked:] Can you help us sell cherries from Seattle? We pick the cherries and ship them to China to 80,000 families. Last year we sold over 300 tons of cherries.
We also have Alaskan seafood; we help Canada to sell lobster.
If we can help to sell lobsters and cherries, why can’t we help small and medium enterprises selling to China, using our system?
My purpose of coming here is that we need more American products in China. We not coming to compete, we are coming to help small and medium enterprises.
We can work together against disease, poverty and climate change. Nations should be united and fight together, solve society’s problems. This is what I am passionate about, it’s not about the money, it’s about the dreams.
The way is not easy. Today is difficult, tomorrow is more difficult, but the day after tomorrow is beautiful.
When I graduated in 1988 my pay in my first job was $10 a month for three years. After some time I could buy a bicycle. And today I have that much money I don’t have time to spend the money.
If you have less than $100,000 you don’t’ have to worry. If you have $10 million, you start to worry about valuation.
If you have $1 billion, it’s not your money. It’s the trust people put in you. My wife said: [Become] a respected business person because you will never be rich.
I never believe this money belongs to me. It will not last long if it is the money in my pocket. This is the money I spend on behalf of society. I spend it more efficiently than the government.
The Counterfeiting Scandal Involving Western Luxury Brands
For Alibaba business model, we don’t buy and we don’t sell. When people buy fake products, they complain to us. We have 2000 people working full time working against counterfeit products.
It’s the war against the criminals, against the bad guys. I am so angry and I wrote a letter to my employees and to [the bad] guys. I will shut down the company if we say sorry to them.
They went to Hong Kong and burned my picture [as part of a fake funeral ritual.]
Who is the buyer, who is the seller, who is the manufacturer? We track them down. I got a lot of personal threats.
This is the cancer. It will destroy our business. We will do anything against it. I got death threats from these guys. The police doesn’t understand this.
Let’s work together with your experience and know how. This is a war and we are getting somewhere. I have confidence that with your support and help we win the war.
The Company’s Culture
We feel proud because 18 people turned into 32000. I learnt from GE Microsoft, Walmart. The mission, the values. People [in China] got crazy about me.
I remember 10 years ago when I came to US to speak. We operate Alibaba by the value system of the mission and vision. In China talking about value and vision, it’s impossible.
People who are crazy never think they are crazy, they think people on the outside are crazy. We want to help small business, we want to add value.
If you join the team you have to follow the rules we have. We are going to have 50,000 people in five years. When I was talking about a headcount freeze, [I thought] 34,000 people is big enough.
In 2019 we will reach $1 trillion in gross merchandize sales, but I want less 50,000 people in the company. The more people we have the less jobs there are elsewhere. People say: If you freeze the headcount it means your business is terrible.
Ten, twenty years later what kind of culture should we have? Decision Technology is to make the others powerful. Decision Technology is to make sure everybody knows. The culture of the company should be to make the other people, your employees and your customers more powerful than you are.
If we can understand young people better we can create a new culture. My grandfather learned the world by the newspaper. He trusts everything the newspaper said. My father listened to the radio and watched TV. My son thinks: Internet. Born, breathe, and think everything internet.
This makes me happy every day. How can we have a better organization a better culture? Rely on those young people. Their future will be our future.
The future culture of our company will be better than today.
Why Alibaba Chose to IPO and why they chose the United States
If I have another life I will keep my company private. I don’t do it for myself, I do it for the shareholders, customers, employees. I don’t need it. Before the IPO it was already tough. After IPO it’s much worse.
I can help more people, the company is more transparent. It helps us to improve. We may not like the criticism, but we have to get used to it. Every time I hear some rumors in America it’s a great opportunity to learn for us.
Why America? We were rejected by Hong Kong. We have a partnership system. I had 57 percent of the shares at the beginning. I give the 18 founders shares. More than 70 percent of employees have shares now. My percentage went down to less than 7 percent. I share the prosperity.
Jack Ma will make a lot of mistakes. Jack Ma will die. We have to look for successors. I started looking when I was 40 years old. Now I’m 61. I like the American system of doing business but I don’t like the independent board of directors. It’s like a lawyers meeting. Nobody makes the final call: Everybody says: “Let me check with my lawyer.”
We should find the people who have the same passion, mission, and values. Keep the culture of the company, mission of the company.
The Hong Kong guys don’t agree. They say this has been [the accepted way] for 100 years. Why does Jack Ma want change? Yes, Jack Ma is for change.
The $25 billion [raised in the IPO] is not the money, that’s the trust, that’s the credit. We will use the money in a way to help more and more small businesses.
Alibaba was founded in China but it was created for the world. That’s why the name Alibaba and not some Chinese character nobody knows.
The customer is number one, employee number two, shareholder number three. If you take care of customers and employees, shareholders will be taken care off.