Chapter one: The Iron Triangle

Did you know that the United States two-third (2/3) economy is equal to average American household expenses, while in China it is barely one-third (1/3) of the economy? It seems that perhaps Chinese people do not consume more than other developed countries. These people save money for their education, medical expenses, or retirement.

But Old Habits is hard to give up. But now a new habit of online shopping is bringing a change in the behaviour of the people of China. And Alibaba is the main reason behind it. Why? Because Alibaba first launched Taobao in 2003, which today is China’s 3rd most visited website and the world’s 12^th most visited website. Jack Ma considers the success of his company to be an accident. In his early years, he described three reasons for his company’s rise to the top: “We didn’t have the money, the technology, and the plan.” But that was the old scenario.

Here we list the three real factors, which boosted the success of Alibaba so much: –

1) The E-commerce Edge: Online shopping is as interactive as it is in real life. Taobao has always given priority to the customer, that’s why it is so successful, it gives customers the same vibes in online shopping, as the Chinese people feel while doing street shopping. Customers can check products or even discuss prices from Alibaba’s chat application. Some packages are shipped with extra samples or toys which gives great satisfaction to the customers.

2) The Logistics Edge: If Alibaba had not provided low-cost delivery service, it might not have been so successful today. In 2005, Alibaba offered China Post to work together in e-commerce. Jack remembers that when he had putted up that proposal, he was mocked and told to keep up with his business. But today more than 8000 private delivery companies are doing business due to e-commerce.

Alibaba’s home division is almost the largest courier firm in all of China. So in this way Alibaba invested in a firm named China Smart Logistics along with these companies and others and today all of them together handle more than 30 million packages a day and provide jobs to more than 1.5 million people of Six Hundred Cities. The idea behind this was that by sharing orders, delivery status, and feedback, each company could improve its service quality and efficiency. And the result was that Alibaba’s customers started increasing and it also gained the trust of the merchants. Lastly,

3) The Finance Edge: The final edge of the Iron Triangle is finance. Alibaba’s strength in financial services is Alipay. In China, Alipay handles more than three fourth of trillion dollars a year, that too through online transactions. Alipay is considered a trustable payment solution in the e-commerce world of Alibaba. Customers are confident that by making a payment through Alipay, their account will be debited only when the product is delivered to them. Although Alipay is no longer under Alibaba, it is still the company’s largest asset, which is managed by Jack personally. The iron triangle is a key factor in Alibaba’s success in China’s e-commerce market. But not only that, it was “Jack Magic” that connected the people and the capital that took these foundations forward.

Chapter Two: Jack Magic

One thing I love about Jack is that he made a career in a field that was always underestimated. By the way, he says that he is not as smart as people think, but maybe he acts to be dumb. Jack once told that he is a big fan of the lead character of the movie Forrest Gump, because everyone thinks he is stupid but he knows what he is doing. Jack is Charming, he has created his fame as well as his Charmingness which is also a big region that talent from all sides got attracted towards Alibaba.

His communication skills are amazing: His style of speaking is so amazing because there is clarity in his words and everyone agrees with his words. There are many stories about what kind of challenges he faced in his life, how he overcome the difficulties, which brings tears to the eyes of his listeners.

Jack’s mantra is known to every employee of Alibaba, which is: “Customers First, Employees Second and Shareholders Third”. Jack calls it the Philosophy of Alibaba. By the way, even if Jack kept Employees Second, his efforts is that his team should always be motivated to come out of any obstacles. And this thing is critical for the success of the company. The shareholders come in third position in Jack’s list because he does not need any kind of short term pressure to earn profit, which diverts him from his ambition.

Moreover, the great thing is that Alibaba’s culture anchors a sense of informality in the workplace. Like every employee of Alibaba has kept a nickname and everyone calls him by the same name. Alibaba has been a team effort company since its starting. Jack keeps on communicating with his staff and he never forgets his ambition, that’s why the company is completely under his control. But till date no company has reached this height without going through challenges and obstacles. So let’s take a look at the man who is the founder of Alibaba.

Chapter Three: From Student to Teacher

Jack Ma was born on September 10, 1964. His mother Wencai “Cui Wencai” worked in a factory production line. Jack’s father Ma Laifa was a photographer at Hanzhou Photography Agency. Jack was born at a time when private enterprises were almost on the verge of collapse. Most of the industrial production was taken under the state’s control. As a child, Jack had a love for English literature and language, and when he turned fourteen, the country started an “open door” policy that allowed foreign trade and to encourage in investment.  Jack did not leave any chance for his English practice. He toured many Americans and Europeans for 9 years.

Apart from this, he was also adept in martial arts but not in maths. High school students in China who wanted to pursue higher education had to pass a merit-based national higher education entrance exam called Gokao. Jack gave the entrance exam but failed miserably. All his dreams were shattered, he applied for many jobs but was rejected everywhere. Even K.F. C also rejected him.

Now he had only one option left to study and memorize maths formulas and equations so that he can clear the test. He had not studied in any prestige university in Beijing or Shanghai, but when he turned 19, he had got enough marks to take admission in the local university. But today Jack takes his failures or gokao as a badge of honour in his public appearances. Jack’s university time was not as carefree as it used to be. Money was always tight. Tuition was free but there was the problem of live-in fee. Then a family friend Ken Morley helped, whom Jack used to call his Australian father and mentor.

After taking a bachelor’s degree in English, Jack became a lecturer in English at the Hanzhou Institute of Electronic Engineering. And before turning 30, he decided that he would launch his own business, his first company “Hope”.

Chapter Four: Hope and Coming to America

In January 1994, 29-year-old Jack opened Hanzhou Haibo Translation Agency. There were only five staff members at the start of the company, of whom were retired school teachers from the Jydar Institute itself. Jack’s first business was to help local companies find customers all over the world. Jack wanted to enter the business world completely but was hesitant because he had not yet thought of leaving his teacher’s job. Then he soon realized that his dream of becoming an entrepreneur could not be fulfilled by translation service alone. But Jack’s reputation had become that of an expert English speaker and because of his famous evening classes and Hope Translation Agency, Jack got a chance to resolve a dispute.

Conflict was going on in American companies regarding a new highway construction. Despite several years of negotiations, both the companies were not able to reach any conclusion. Jack went on his first trip to the United States to end this disaggregation, where the company’s funds were kept.

The work that Jack had gone for did not happen, but he definitely got one benefit of this trip. He got internet exposure which changed him. He was in Seattle when he first logged in internet.

By the way, when Bill Aho, an English teacher working with him, told him about the Internet for the first time, Jack felt very strange to hear. Jack’s friend Stuart gave him his first online session, and he helped Jack create the first website for his company, Hope Translation. There were no pictures in this website, only text in which phone numbers and prices were mentioned. Jack was surprised when he saw that he had created a website in Morning at 9:40 and at exactly 12:30 he received a call from Fred telling him that Jack had received five e-mails. Jack did not know then what an e-mail was. Three mails came from the US, one from Japan and one from Germany. And this was a turning point in Jack’s life. Jack partnered with VBN but dealing with VBM was not easy.

Stuart told Jack that if he wanted the right to make web pages in China, he would have to deposit $200,000. But Jack told him “I borrowed money for a US trip and now I have nothing.” Well, despite this, Stuart signed the agreement without a deposit, but he put a condition that Jack should get all the money quickly. will have to return. And thus Jack returned to China with a computer with an Intel 486 processor. Now the time had come for him to say bye-bye to his teaching job.

Chapter Five: China Is Coming On

Soon after returning from Seattle, he resigned from the job of a teacher. Now teaching or translating was no longer his dream, now he had to build an online index. Jack started China Pages with one of his friends, Yibing, who was a computer science teacher at Jack’s Former Institute. To fund his start-up company, Jack had to borrow money from his family and his wife Kathy was his first employee. China Pages wanted customers, wanted money. Jack’s company got a boost when Hanzhou was selected for the Formula One Powerboat World Championship to be held in May. This event was happening for the first time in China and Jack’s company won the contract to create the official website of this race. In order to get more orders for the company, Jack asked his former students to tell people about his company. But still China Pages needed more clients to run the company. But it was not that easy to explain what China pages do.

The reason was that until that time the Internet was not popular in Hanzhou. But Jack took a different approach: First, he asked his friends and acquaintances to tell everyone what the Internet is and how to do business with it. Then people who were interested in sending him marketing materials, he asked them to introduce their companies and products. Next, he, along with his colleagues, translated this material and mailed it back to Seattle VBN. VBN designed and made websites online, took screen shots of the websites, printed them and mailed them back to Hanzhou.

It was a big struggle because there was no internet in Hanzhou. But in 1995, Zhejiang Telecom started providing Internet service in Hanzhou. Without the Internet, Jack’s dream of connecting entrepreneurs to the worldwide market would never have been fulfilled. By the end of 1995, China’s telecom and internet service started getting attention. Jack and his customers were now finally able to connect to Hanzhou. Jack again took a trip to U.S. Now he wanted to end his venture with VBN and start his own server and a new China Pages site.

Chapter Six: Bubble and Birth

There is a saying “third time is a charm” and it is true. Apart from the difficulties faced in running Hope Translation and China Pages, Jack also had an uncomfortable work experience with the government. Then in the beginning of 1999, Jack started Alibaba, but there were no less problems in it. Yahoo was also started in 1996. It didn’t get much attention at first, but there was some improvement in 1998 when Yahoo’s shares rose by more than 80% in just five weeks, with Stanford co-founders Jerry Yeung and David Philo joining the Billionaires club.

Suddenly, there was high interest in Yahoo’s “portal” business model, and with it came many more Chinese portals. Except Jack, all founders were from technical backgrounds and excelled in their studies. Jack was frustrated. The portal pioneers had become millennials. He realized how everything was changing rapidly with the advent of the Internet. But his government perch gave him an Opportunity – His first meeting with co-founder of Yahoo – Jerry Yeung. Jerry Yeung and his colleagues had come to Beijing in search of New Opportunity in Beijing.

Jack was asked to meet him and provide a tour guide. Jack’s charm worked and thus the unofficial launch of Alibaba took place. When it came to naming the company, Jack chose Alibaba, although the domain name was registered in the name of a Canadian man who was asking for $4,000 for it. Alibaba was finally launched by buying the name. Apart from Jack, there were 18 other people in Alibaba, including six women. None of these people were from a hi-fi background. It was a team of regular people whom Jack had brought on a platform. The Internet was becoming popular, so Alibaba and companies like it were also getting a chance to enter the Asian business. Although it was still a difficult task for Alibaba to convince investors, but with the media, the company started getting its initial success. In the same time, the China Internet bubble was also growing slowly. New dot com ventures were coming in the market and now the competition was going to be tough for Alibaba.

Chapter Seven: Backers: Goldman and SoftBank

When I went to meet Jack for an interview, his charm and enthusiasm impressed me a lot. One of my colleagues, Ted Dean, wrote an article on Jack in which Jack said, “If you plan, you lose. If you don’t plan, you win.” Foreign professionals were now swarming around Jack, Alibaba started getting international flavour as soon as funding was available. While choosing members for his team, Jack choose only those who were not top performers in their schools. His point of view behind this was that people who dropped out of prestige schools would not be able to face the challenges of real life, easily frustrated. So he needed a tough team because working for Alibaba meant, there will be no picnic. Payment will be less, seven days of the week, but sixteen hours of work will have to be done.

Jack also told them to find a place to stay which would be 10 minutes away from the office so that time is not wasted in commuting. As the popularity of the Alibaba.com website increased – with the help of free services offered – the team was bombarded with incoming e-mails. As the members of the website increased, the use of the website also increased in China to connect with world-wide companies and each other. But the problems were not over yet. Some used to complain that the cost of the computer is very high and some did not even know how to operate the computer. Another major challenge was the lack of trust, a trust that the company was yet to build. Many suppliers were upset thinking that customers they had never met would not pay their dues and customers were worried that they did not know how the quality of the product would be.

Jack could not come up with an immediate solution to so many problems. He just wanted to insure that Alibaba does not take legal responsibility, it is just a platform where companies and business people can connect with each other. The second milestone in Alibaba’s career came when Softbank, a Japanese investment firm, decided to invest $20 million in Alibaba. It was as if the founder of Softbank, Masayoshi Son, and Jack were each other’s soulmates. Both the founder CEOs did amazing business together. He did many new recruitments, more than 150,000 people signed up to Alibaba in 188 countries. Overall, there was some stability in the business now.

Chapter 8: Burst and Back to China

By the spring of 2000, Alibaba had become so popular that more than a thousand people were signing up to Alibaba. Connecting suppliers from all over China to worldwide buyers was certainly a great idea, but difficulties arose when other companies were also entering the market with the same idea. Now to deal with so many competitors, Alibaba made a plan to expand. The company also wanted to attract overseas consumers, so foreign employees were hired. And above all, special attention was paid to advertising. What was then, the company was completely covered in the market. This was the first time that ads from a China-based tech start-up company were appearing on CNBC and CNN. But then the stock market went down. And this situation was going against internet based companies because it started reducing the number of conferences. Meanwhile, some problems were also going on in Alibaba’s office in California. Alibaba had hired more than thirty engineers in its new Fremont office, but working with its colleagues in China, that too with the fifteen-hour time difference, was a major headache for them.

And there was also a problem that in both the offices, their Chinese engineers were facing a lot of problems in communicating with the non-Chinese colleagues. The team in Hanzhou insisted on the development of one product, and the other product in the Fermont office, due to which the teamwork was not being done properly.

Now Jack had to intervene personally. He told both the teams that this problem should be fixed as soon as possible. The idea of ​​dividing the technology team into two places had failed. Alibaba should move its core function back to Hanzhou. On the dark days of 2001 and 2002, Jack is proud because he was the last man who could stand. Alibaba had found a way to increase its revenue in the coming time after the dot.com crash. The focus was on word-of-mouth marketing and saying bye-bye to the expensive advertising. The company also expanded its sales team to focus on promoting the fee paying service. Alibaba was once again on its feet.

Chapter Nine: Born Again: Taobao and the Humiliation of eBay

There were many such entrepreneurs who had entered the business market with the dream of becoming China’s e-bay. One of the most famous companies was Shanghai’s Itch Net which was started by Shao Yibo. He came from Harvard Business School. The success of Itch net was far ahead of other Chinese companies. In the United States, eBay was serving a population of over 100 million online, which could depend on a well-developed credit card market and reliable nation-wide delivery system. There were few people in China who paid online or accessed the goods delivery system. Because people did not have trust about online shopping.

The China market was almost non-existent and the local consumers were also very few. Itch Net had to find new ways to make money, so Yibo, also known as Bo, thought of finding solutions to online shopping problems: payment, package delivery, product quality and trust of people. Itch Net was much smaller than eBay, yet it attracted the CEO of eBay, Meg Whitman.

And he specially came to Shanghai to meet Bo. In March 2002, Itch Net surprised the market with a land mark deal, when it announced that Itch Net was selling 33% of its stake to eBay for $30 million. Whitman was desperate for some good news so that his investors could be reassured. Just one month before this announcement, Yahoo Japan had lost a lot in the Japanese market. eBay’s strategy was messy from the start. In Japan, Yahoo Japan did not take any charge, but in the eBay commission was charging. And credit cards were not as popular in Japan in those days, yet customers were asked to use the card when signing up on eBay.

All these reasons caused eBay to fail in Japan. It got a lot of success in South Korea and Taiwan, but it was China where the most impact occurred. By 2002, China’s Internet population had reached 27 million, the fifth largest population in the world. And it was a chance for eBay. But despite this, due to the cultural difference among the employees, eBay had to withdraw from Asia. eBay had to bear the loss of a few hundred million due to its China market exploration, but soon it was going to bring a small change in Alibaba.

Chapter 10: Yahoo’s Billion Dollar Bet

Despite being China’s most famous site, Yahoo was also lagging behind – that’s when a billion-dollar deal with Alibaba changed everything. Yahoo was a content-based site when viewed from the outside and this thing was a bit difficult in China because there is strict control of the government over every type of media. When Yahoo opened its office in Hong Kong, Jerry Yeung, the man who launched Yahoo, was asked about the issue of censorship. He said he would stay under the law and try to be as free as possible.” Yahoo was no longer just a directory linking third party managed websites.

After an early partnership with writers, the company added news content to its site, then added chat rooms and then Yahoo Mail. Yahoo’s launch in the country was like an announcement that sounded like a ban on all foreign investment in the Internet. Yahoo was forced to enter into a partnership with the founder.

But it was not the gatekeeper of China as the Jerry had imagined. Content got boring and Chinese users were noticing that Yahoo was losing the battle to stay relevant in China. After being hit twice by two companies in China, Jerry made a bold decision, he gave Jack $7 billion in exchange for a 40% stake in Alibaba, and held the keys to Yahoo China’s business.

Although even after that it took some time for both Jack and Jerry to realize this, but this deal proved to be transformative for both Alibaba and Yahoo. This deal immediately supported Alibaba and Taobao, Taobao was a new company that Jack had opened to help Alibaba. Alibaba was finally able to reward its employees now – Jack told how the deal gave him a much needed experience that will be of great importance in the coming future.

Chapter 11: Growing Pains

The clouds of trouble were once again hovering over the company. Alibaba.com had always been dependent on foreign trade, but the U.S. economy condition was deteriorating and this was directly affecting the business of China exporters. Alibaba’s shares began to fall sharply, so low that they had gone below the initial public offering price in March.

Alibaba.com CEO David Wei was expecting Jack to be tense about the falling share prices, but David remembers that Jack did not call or visit him even once. Jack never spoke about profit growth either. Then what did he do? Jack realized that these challenges gave him a chance to increase the loyalty of his customers. And he thought of doing a dramatic reduction in their subscription cost.

There was panic in the stock market but there was a method in this risky step of Jack. Recalling about this, David says that it was a decision taken at the right time as the revenue never dropped, not even once. Rather the customers kept on increasing due to which the price drop was balanced. Alibaba did not increase its prices even after the financial crisis was over. But not only that happened. On January 7, 2008, a surprise event from Microsoft caused Jack to be upset. Microsoft made an offer of $44.6 billion to Yahoo, but the deal did not materialize because Yahoo CEO Jerry Yeung rejected the offer. Yahoo’s investors were angry about this and Yahoo’s share prices started dropping.

In November, Jerry stepped down from the CEO post and the position went to Carol Bartz. Although Jack turned the tide, the tension did not subside as Bartz was the exact opposite of Yeung. A warm relationship did not develop between Jack and Barz. Both did not contact each other for a long time. But Jack got relief when in September 2017 Yahoo fired Carol Burges from the job. But before leaving his post, two such crises came in front of Alibaba which could had break people’s trust in this company. First was an internet incident, a fraud case. And the second was the negotiations over the transfer of Alipay out of Alipay’s ownership, which could have completely ruined the reputation of Alibaba Group with some investors.

Chapter 12: Icon and Icarus?

By now Jack had become famous as the Philosopher CEO of China. And most importantly, he had built up a reputation of a philanthropist and environmentalist. Jack showed a lot of concern about environment and health to the people and it is not limited to corporate responsibility. Alibaba got huge success, that today it is one of China’s leading investors who are involved in film, television, and online video. Jack Already was a standard bearer of China’s consumer and entrepreneurial revolution and now he is trying to actively involve in new fields like finance and media too, and no one can stop him.

Because if someone had stopped, today he would not have reached this position by facing so many challenges, after doing so many fraud encounters and leaving behind so many competitors. But his quality was that he never got angry, he never took rash decisions. His image was always that of a wise and patient CEO who had complete trust in his ambitions and his people. He always took care of his customers and people. He wanted people to be healthy, happy, young generation to enjoy their life. People were optimistic about the future, that’s what Jack wanted. Jack never gave up on Challenges and Obstacles – his success story continues even today, inspiring people. A leading Chinese Internet entrepreneur described it as follows: “Alibaba seems to be a story for most people, but it’s not a story, it’s a strategy”.