Jack Ma’s US inspiration set path to Alibaba IPO: Page 2 of 2

‘Internet dream’
Jack Ma’s US inspiration set path to Alibaba IPO: Page 2 of 2 
“Don’t worry, I think the Internet dream will not die,” Ma was filmed saying at the February 1999 meeting, which was later aired by China’s state-run broadcaster, CCTV. “The reward we will receive for the price we pay in the next three to five years is not this apartment, but 50 of these apartments.”
 
Among the 18 founders was Joseph Tsai, a Taiwan-born Canadian lawyer working for Sullivan & Cromwell LLP in New York whom Ma had persuaded to join the team and help secure funding. By 2000, Alibaba had raised US$25 million from investors including SoftBank Corp and Goldman Sachs.
 
Alibaba.com, which had struggled to find a way to generate revenue, learned that merchants were willing to pay for better displays of their goods. The website attracted one million users in 2002 and became profitable that year, according to details released by the company.
 
It didn’t take Ma long to tackle a bigger challenge: eBay’s expansion in China. To counter it, Alibaba started Taobao, a platform where individual sellers could trade with each other, in 2003. Taobao publicly declared war against eBay, and the resulting media coverage drew attention to the website.
 
Countering eBay
 
“By generating a public-relations battle with eBay, there would be a lot of buzz about Taobao, and therefore with every dollar that eBay spent, it would help feed this buzz about Taobao,” said Erisman, a former executive at the company including in the marketing department.
 
He cites Ma’s professed interest in Chinese martial arts as a motivating strategy: using an opponent’s strength against him.
 
“eBay is a shark in the ocean; we are a crocodile in the Yangtze River,” Ma was quoted as saying on numerous occasions at the time. “If we fight in the ocean, we will lose, but if we fight in the river, we will win.”
 
They did. Using search-engine technology that came with Yahoo’s stake in 2005, Alibaba made Taobao listings free for merchants. eBay, which charged them, announced in December 2006 that it would close its unprofitable site in China.
 
Tai chi

Jack Ma’s US inspiration set path to Alibaba IPO: Page 2 of 2

Ma’s management philosophy has roots in tai chi. He sometimes travels with a personal tai chi trainer and formed a company spreading awareness of the Chinese martial art with movie star Jet Li.
 
Ma also cites motivation in the works of Hong Kong novelist Louis Leung-Yung Cha, who writes under the pen name Jin Yong, and encourages employees to give themselves nicknames based on the novels’ characters.
 
Inside Alibaba, Ma goes by ‘Feng Qingyang,’ who in one of Ma’s favourite books is a reclusive swordmaster and kung fu guru who trains his apprentice to become a hero.
 
Naming himself after the unpredictable-yet-nurturing Feng traces to Ma’s own roots as a teacher, Ma told Chen Xiao-Ping, a professor at the University of Washington in Seattle, in an interview published last year by the International Association for Chinese Management Research.
 
“Jin Yong’s martial-arts novels are the most down-to-earth way of explaining Confucianism, Buddhism and Taoism,” Ma said in the interview. “They cherish brotherhood, morality, courage, emotion and conscience.”
 
New leaders
 
Ma has handpicked Alibaba’s next generation of leaders, including CEO Lu and two women: Chief financial officer Maggie Wu, and Lucy Peng, who oversees one of the fastest-growing areas of Alibaba’s future, Alipay and its investment platforms including Yu’E Bao. The financial arm isn’t included in the entity Alibaba is listing in New York.
 
“The success of a CEO should be determined by the number of people he trained that can surpass him,” Ma said in the Chen interview. “If someone warns me about an employee who is trying to overstep me, I reply that I’m a teacher, and that’s the way it should be.”
 
Ma was born Sept 10, 1964. His parents were Chinese traditional musician-storytellers in Hangzhou, according to details confirmed by company spokesmen. The city of 8.8 million people about 100 miles southwest of Shanghai is a favourite of foreign tourists because of its West Lake, stone bridges and other historic sites.
 
Meeting foreigners
 
When he was a teenager, Ma began meeting foreigners just starting to make China a tourist destination again following the Nixon-Mao rapprochement of 1972. For nine years, Ma hung around outside the Hangzhou Hotel, now a Shangri-La, getting up at 5am to talk with travellers, according to the Crocodile in the Yangtze documentary and the Chen interview.
 
Ma failed China’s national university entrance exam twice before he was admitted to what is now Hangzhou Normal University. He graduated in 1988 and spent five years teaching English at a local university, earning US$15 a month, according to details confirmed by company spokesmen.
 
With Ma’s net worth now set to be five times what it was in 2012 -- when Alibaba delisted its business-to-business unit Alibaba.com from the Hong Kong Stock Exchange after share prices slumped -- he’s come a long way from a teacher’s wages.
 
Ma’s economic interest in Alibaba is about 7.4%, after subtracting for stakes he controls through a non-profit organisation.
 
Maintaining control
 
By listing in New York instead of Hong Kong this time, Alibaba will set up a partnership of executives to nominate the majority of board members. A breakdown in talks with Hong Kong’s stock exchange last year led Alibaba to seek its IPO listing in the United States, where Alibaba’s partners will be allowed to maintain greater control over the company.
 
Arrangements allowing shares with different voting rights helped Facebook founder Zuckerberg and Google Inc cofounders Larry Page and Sergey Brin maintain control after they went public.
 
Controversy in Hong Kong over the move to list in New York, the rift with Yahoo in 2011 over the handling of Alipay, and Ma’s public outspokenness on a number of issues sometimes damages his reputation and draws scrutiny, said Teng Bingsheng, a Beijing-based professor at Cheung Kong Graduate School of Business.
 
“Ma has a controversial reputation,” said Teng. “He’s willing to take a bet on really big decisions and not be bound by concerns for his reputation.”
 
Just like Larry Ellison, Richard Branson, Ted Turner and other billionaire founders the world over.
 
Lulu Yilun Chen ([email protected]) is a technology reporter with Bloomberg News. This story first appeared here and is reprinted on DNA with Bloomberg News’ kind permission.
 
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