Alibaba: The House That Jack Ma Built pdfdrive com

Ali People
When building up his team Jack preferred hiring people a notch or two below the
top performers in their schools. The college elite, Jack explained, would easily
get frustrated when they encountered the difficulties of the real world. For those
who came aboard, working for Alibaba would be no picnic. The pay was low:
The earliest hires earned barely $50 per month. They worked seven days a week,
often sixteen hours a day. Jack even required them to find a place to live no
more than ten minutes from the office so they wouldn’t waste precious time
commuting.
From the outset, Alibaba has been driven by a Silicon Valley–style work
ethic, with every employee issued share options in the company, vesting over a
four-year period. This is still a rarity in China, where the traditional setup in
private companies was an emperor-like boss who treated employees as
disposable and salaries as discretionary.
As the Alibaba.com website grew in popularity—aided by offering its
services for free—the team in Hangzhou struggled to keep up with the volume of
incoming emails. Alibaba’s customer service team found themselves at times
acting as free tech support to clients, responding to questions about how to
reboot a computer. But wedded to its “customer first” tenet, Alibaba resolved to
respond to every email within two hours.
Keeping the team focused, cofounder Simon Xie recalled, Jack was “a
culture, a nucleus.” Jack greeted new recruits with a sobering message, and a
promise:
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Then trotting out one of his favorite sayings: “Today is brutal,
tomorrow is more brutal, but the day after tomorrow is beautiful. However, the
majority of people will die tomorrow night. They won’t be able to see the
sunshine the day after tomorrow. Aliren
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must see the sunshine the day after
tomorrow.”
Cofounder Lucy Peng, Alibaba’s first human resources director and later its
“chief people officer,” also played an important role in the hiring process and in
shaping the company’s culture. In a 2000 Harvard Business School case study
on the company, she commented that “Alibaba employees don’t need
experience. They need good health, a good heart, and a good head.”
As the website’s members grew, companies in China began to use the site
to connect with one another as well as to the outside world, prompting the
launch of a Chinese-language marketplace
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for wholesalers in China seeking
domestic trade leads.

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Yet Alibaba still encountered difficulties winning converts to the e-
commerce cause. Some balked at the high costs of buying computers; others
lacked personnel with a sufficient understanding of IT. An even bigger obstacle
was a pervasive lack of trust. Suppliers worried that customers they had never
met might never pay for their orders. Buyers overseas were concerned about
fake or defective goods, or shipments that never arrived.
Alibaba couldn’t wave a magic wand to make these risks go away, as Jack
emphasized to the media: “We are just a platform for businesspeople to meet,
but we do not take legal responsibility.” Alibaba kept its focus as a bulletin
board for businesses. But others, such as MeetChina, were talking up their plans
to expand into areas like market research, credit checks on suppliers, quality
inspections, shipping, insurance, and payments.
Jack argued this was premature: “Small-and medium-sized companies do
not trust transactions online yet. And we believe the current banking system is
good enough for small business. As long as our members feel it’s easy, they’d
prefer to do their transactions offline.”
Alibaba was struggling to define itself in ways that investors could
understand: “We don’t really have a clearly defined business model yet,” Jack
admitted. “If you consider Yahoo a search engine, Amazon a bookstore, eBay an
auction center, Alibaba is an electronic market. Yahoo and Amazon are not
perfect models and we’re still trying to figure out what’s best.”
Goldman’s cash had helped, but the commitment to free listings meant that
Alibaba had to raise more capital soon, something made more pressing by the
opening of the new Hong Kong office and another in Shanghai, which Alibaba
announced would serve as its new China headquarters. To sign up more
customers, Alibaba started to host gatherings of SMEs in hotel ballrooms,
arranging tables to group together companies from similar industries.
Despite the hectic pace during the Internet bubble, and the growing sense of
inevitability that it would soon pop, Jack betrayed few signs of anxiety. I visited
Hangzhou several times in late 1999 and 2000 and witnessed Alibaba sprout
from the Lakeside apartment through a series of ever-larger offices.
I never witnessed Jack lose his cool, even when he dinged the fender of his
car one day on a concrete column when we were parking at a restaurant where
he’d invited me to lunch. I always found my visits to Hangzhou enjoyable.
Spending time with Jack was invariably good fun. Like many visits before and
since, I enjoyed seeing the city’s sites. On one visit Jack’s wife, Cathy, took me
to visit the famous Long Jing (Dragon Well) tea plantations, including a walk
through the bamboo forest nearby—a breath of fresh air (literally) after Beijing.
Jack was now spending much of his time away from Hangzhou, speaking at

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industry and investor conferences. In January 2000 we were both invited to
speak at a student-organized event
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at Harvard. I met up with Jack before the
conference. As we walked along an icy pathway on the banks of the Charles
River I noticed one of his entourage was filming the scene, something I later
discovered she had been doing for years already.
The conference featured a number of other China Internet entrepreneurs,
most with much stronger academic pedigrees than Jack. Some were recent
returnees to China like Shao Yibo of EachNet, who had actually studied at
Harvard. Peter Yip from China.com was also there.
But Jack quickly emerged as the star of the show, especially when he
confessed to the audience that he really had no idea what Alibaba’s business
model was, adding “and yet I got investment from Goldman Sachs!”
Jack reveled in the attention he received at Harvard, including the moniker
“Crazy Jack” that 
Time
magazine gave him shortly after. He particularly enjoyed
talking about the reversal of fortune of being once rejected
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by Harvard but
later being invited there to give a talk. “I did not get an education from Harvard .
. . I went to Harvard to educate them.”
Jack has always been dismissive of business schools: “It is not necessary to
study an MBA. Most MBA graduates are not useful. . . . Unless they come back
from their MBA studies and forget what they’ve learned at school, then they will
be useful. Because schools teach knowledge, while starting businesses requires
wisdom. Wisdom is acquired through experience. Knowledge can be acquired
through hard work.”

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