Jack Ma and Alibaba.com Success Story

Jack Ma, the president the CEO of Alibaba has shared his thoughts on the ecommerce in china, the 12 year journey that he has been with Alibaba in the China 2.0 conference. I would like to share with you guys today as in my opinion, it was quite interesting talk.

Jack said that Alibaba got no chance that it can survive today, it is really lucky company. Jack had no good background or backup like a rich father or rich uncle, etc. In 1999, he came to Silicon Valley looking for venture capitalists. He talked to a lot of them and they all rejected. They looked at him: “Alibaba? What are you talking about?” So there was no money from any venture capitalists, nobody wanted to invest in him, in the business. So he went back to China, no money, but he was full of confidence. He saw the American dream.

At that time, people asked how you can do B2B in China. Normally B2B focused on big companies, focused on buyers. But he saw no big companies in China. Big companies in China several years ago were only SOEs, and SOEs, they did not need ecommerce, they only need government policy. So he focused on small businesses because he believed small businesses would be the future of China. B2B in the US, focused on the buyers, helped buyers to save the cost and save the time. But for Jack, he said “do not teach small businesses to save the cost because they know much better than you do. We should help them to make money”. So his focus was on helping small businesses to make money, to sell things abroad.

That model didn’t sound sexy, compared to Baidu, Alibaba didn’t make that much money. It didn’t make money on online gaming. But he can sleep well at night because the company helped small businesses to survive, to have opportunity and Jack felt proud of that. He didn’t proud of how much money he made and the company made, he was proud of how much impact that Alibaba can help the small businesses. Before the history of the internet, nobody could help more than 50 millions SMEs. Today the company is trying. And He was very proud of that.

For Taobao, he said when he created that business; everybody said it was competing with Ebay. Why not? At that time everybody said it had no chance. But if you never try, how do you know that you have no chance? “If Ebay is the shark in the ocean, we are crocodile in the swamp of the river. It was difficult at that time, but it was a lot of fun.” At the beginning, Ebay got around 90% of the market share. Today, Taobao got 90% of the market share for C2C business. He felt it was very lucky, just lucky.

People often write about the successful story of Alibaba, but he didn’t think that he was smart. The company has made so many mistakes. “We were so stupid at that time.” In the future, Jack said he would write about Alibaba, 1001 mistakes. These are the things that people should learn. If we try to learn about other people successes, on their successful stories, it is very difficult because there are a lot of lucky things out there. But if you want to learn, you should learn how people fail, because the reasons why they fail are almost the same. That really matters.

For Alipay, at first people say to that how he can do ecommerce in China? The logistics were terrible, not very good credit system, banking system etc. Jack replied that yes, because China didn’t yet have good logistics system, credit systems and banking systems, that’s why entrepreneurship was needed. If there was no such thing, you should build it up so that would become the standard of China. 

He believed China needed that. A lot of people several years ago said Alipay was stupid escort services. If John wanted to buy things from Steven, John didn’t want to wire the money to Steven and Steven didn’t want to send the products. So Alipay opened the account and said: “wire the money to us. If you’re happy, we would wire the money. If you’re not happy, return the products, we would return the money.” People said how stupid the model was. But Jack didn’t care whether it was stupid or not. He just care whether the customers want it or not. After 07 years, it has more than 600 million users in China. So even if it’s stupid, if you improve it every single day, it would become very smart.

The colleague of Jack said to him one day and said 03 things: “I never know that in my life, I can do that much.” Second, I never know in my life, the things that I’m doing are that meaningful. Third, I never know that, life is damn that hard.” The company has helped a lot, a lot of people and small businesses. Years ago, if you had the good record, lots of trust but you weren’t rich yet. Today if you have good record on Taobao, you would get rich. He believed in teaching the consumers to be smart. People often come to him and say “Jack, I bought something so cheap in Taobao, is that a fake product?” A cost of wine bottle was $9 on the site but was $300 in the street. Why? Because of channel, advertisement, TV shows. Why consumers have to pay that much? He said it was not because Taobao was selling cheaper, but because the shops was selling too expensive.

Jack didn’t believe in trying to make a lot of money. As for him, if anyone has $1 billion, it is not his money, it is the society trust on him, it was the shareholders, the people that believe that he can spend that money smarter than other people. The challenge is how he can treat that trust well. He shared his thinking: “If you want to be a successful company, you have to learn how to solve the problem of the society, instead of catching one or two opportunities.”

Where did the idea for Alibaba come from?

The idea for Alibaba.com traces back to my early Internet experience. In 1995, I went to Seattle to visit some friends and that was the first time when I ever touched a keyboard and heard the word “Internet”. My friend told me to search for whatever I wanted on the Internet, and the first word I typed was “beer” – I found American beer, Japanese beer, but no Chinese beer. Then I typed “China” and “beer,” and nothing came up.

When I returned to China, I decided to start an Internet company to make Chinese businesses searchable by foreign companies. That’s why China Pages was set up.

From my early experience, I realized what small businesses were in real need of, and what they could benefit most from, e-commerce. So I founded Alibaba.com with 17 other people in 1999 with a dream of helping small entrepreneurs grow their businesses through e-commerce.

What is the key characteristic unique to successful entrepreneurs?

Successful entrepreneurs believe in their dream and believe in themselves. They learn quickly, and learn from others the strategies, tactics and skills, but they stick with their dream. If there are nine rabbits on the ground and you want to catch one, just focus on one.  Change your tactics if you need to, but don’t change the rabbit you’re focused on.  Just stick with it.   There are so many opportunities out there that you cannot catch them all. Get one first, put it in you pocket and then catch another.

Also, being successful isn’t just about making money. Successful entrepreneurs create value for people and take care of their employees. They focus on helping others, and if they are successful, good things come their way.  Success and profitability are outcomes of focusing on customers and employees, not objectives.

What is the biggest mistake that young entrepreneurs make and how can they avoid it?

The biggest mistake some young entrepreneurs make is to be afraid of making mistakes.  They don’t completely believe in themselves, and this hinders them.

In my case, I have no regrets about anything. We are a strong company today because we’ve learned from the hundreds of mistakes we’ve made along the way. I think the most important thing is that we believed in our dream from day one.  I remember that when I talked about my story for B2B and e-commerce in China in 2000, everybody thought I was crazy. Of course we made many mistakes, like any company, but we are still here today because we learned from our mistakes, improved each year, and never abandoned our dream.

What kind of entrepreneur/business do you look for when deciding who to give the Alibaba SME loan program?

Alibaba.com is a community built on trust. Right from the beginning we recognized that trust is fundamental to e-commerce, as it is for all areas of business. So we entered into a partnership in early 2007 with Industrial and Commercial Bank of China and China Construction Bank to help facilitate loans to our small business customers in China.  In 2008, we helped banks make nearly $150 million (USD) in loans to our small business customers.   We hope to facilitate nearly $1 billion (USD) this year in loans.

Under this Ali-loan program, Alibaba.com helps our small business customers make applications for loans and also provides the online transaction history and trust rating of our small business members to the banks. This online financial solution has helped companies with limited assets or credit history, but who have proven record of doing business with integrity online, secure financing to expand their business. We are also broadening the program to include the Bank of China, China Merchants Bank, China Postal Savings Bank, Shanghai-Pudong Development Bank, Agriculture Bank of China, City Merchants Bank. The Ali-loan program is now expanded to more provinces and cities in China apart from our home base Hangzhou, including Guangzhou and Shanghai.

What are the major differences between building a startup and leading a large established company?

Over the past 10 years, Alibaba has transformed from a bulletin board service for businesses to post, buy and sell trade leads to a vibrant global marketplace for SMEs. We have become a truly global company serving more than 200 million registered users in more than 240 countries and territories in B2B, B2C, online payment, software and classified listings through our five major core businesses.  We operate the largest B2B marketplace in the world (Alibaba.com) and the largest online retail platform and online payment platforms in Asia (Taobao and Alipay).

The major difference between 10 years ago and now is the size of our company and the need to continue to protect our culture as we expand around the world.   Alibaba Group’s team has grown from 18 founders to more than 12,000 people.  Although the majority of staff is still based in China, we have offices in the US, the UK and Asia-Pacific.  

As the company becomes stronger, we have more resources to utilize compared to the past, and we need to be very stringent and prudent in allocating our resources so that we can achieve our corporate goals.

Our vision is to build a company that lasts 102 years (so we span three centuries). Today we have only traveled 10 years. We have a very long-term view, but our mission will never change:to make it easy to do business anywhere in the world.  This reminds us to stay focused and facilitate the creation of a level-playing field on which everyone can compete on equal terms. Also, one thing that has not changed in the past 10 years, and that will never change, is our six core corporate values, of which the most important one is Customer First. This core value has been keeping us on the right track no matter where we are and it will continue to serve as our No. 1 guiding principle.

source:( http://viralogy.com/blog/hot-topics/jack-ma-ceo-and-founder-of-alibabacom/)