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party of a short-lived but Gatsbyesque era. CNN and the Australian broadcaster
ABC were there to videotape the scene. Viewed today, the graininess of the
videos conveys how long ago it was but also the unbridled exuberance of that
time.
For Jack, the bursting of the bubble represented a great opportunity for
Alibaba. “I made a call to our Hangzhou team and said, ‘Have you heard the
exciting news about the Nasdaq?’ . . . I’d like to have had a bottle of champagne
on hand,” adding, “This is healthy for the market, and it’s very healthy for
companies like us.”
He felt confident that now the IPO gate had closed, venture capitalists
would stop funding Alibaba’s competitors. “In the next three months more than
sixty percent of the Internet companies in China will close their doors,” he said,
adding that Alibaba had spent only $5 million of the $25 million it had raised.
“We haven’t touched our second-round funding. We have lots of gasoline in our
tank.”
With the field opening up, Alibaba increased its hiring of foreign
employees to market the company to buyers overseas. Jack started to travel
intensively around the world to attend trade shows and meet chambers of
commerce. Jack was by this time quite familiar with the United States. On his
first trips to Europe, though, he experienced some culture shock. I advised
Alibaba on its expansion strategy there, recommending a Swiss friend of mine,
Abir Oreibi, who would oversee the company’s European operations for the next
eight years. On his first visit to London, Jack was booked into the city’s
prestigious Connaught Hotel but couldn’t understand why he had to stay in such
an old building. In Zurich, Jack and Cathy were perplexed by the fact that all the
shops were closed. Abir explained that it was a Sunday, prompting Cathy to
exclaim, “Oh, I see, they’re all working second jobs today.” Coming from the
nonstop business culture of China, the concept of shopkeepers taking a whole
day off to rest was unimaginable.
Alibaba stepped up its advertising, too. Suddenly the company’s signature
orange blanketed print and online media in the mainland, including on the
Chinese portals. Alibaba commissioned a glossy television ad that ran on CNBC
and CNN, a first for a China-based tech start-up. Todd Daum, an American
executive who had recently joined Alibaba in Hong Kong, oversaw the
production of the video, which Jack described to him jokingly as “my second
favorite video, after
Forrest Gump.
”
TV ad campaigns aside, Jack continued to be Alibaba’s most effective
marketing tool. Despite the dot-com downturn, people came in droves to hear his
speeches. When he spoke in Hong Kong in May 2000 at an I&I (Internet &
Information Asia) event in the Furama Hotel, more than five hundred people
turned up. Jack was gaining profile overseas, too, invited as a global Internet
luminary to an Internet event in Barcelona, Spain. As Alibaba surpassed the
300,000-member mark, Jack was featured on the cover of
Forbes Global
magazine, which named the company—along with Global Sources—as “Best of
the Web” for B2B e-commerce. That was followed by a full-page profile in
The
Economist
titled “The Jack Who Would Be King.”
But as the stock market continued its downward slide, enthusiasm for
Internet companies of any description began to dwindle. In August 2000,
NetEase’s shares sank below a third of their IPO price, and Sohu’s under half. In
late July, only five months after a blockbuster Hong Kong IPO, the local portal
Tom.com, backed by billionaire Li Ka-shing, laid off eighty employees.
China.com followed suit soon after.
The Internet conferences started to thin out. I&I even dropped the word
Internet
and then faded into oblivion along with many of the companies that had
once presented at its events. Dot-com had become dot-bomb.
At a venture capital investor conference in Hong Kong that fall, Jack was
one of the featured speakers. In a dramatic reversal from the crowds that Jack
had drawn just a few months earlier, Goldman Sachs had to scramble to find
people to fill an empty conference room to hear his pitch. Standing at the
podium in front of a skeptical audience, an investor recounted to me, Jack
cupped his hands in front of his face, squinted his eyes, and declared, “I can see
the end of the tunnel.” But in the face of growing investor cynicism about the
sector, Jack Magic was wearing off.
Meanwhile, in California, Alibaba’s efforts to build an R&D center under
John Wu’s leadership were running into problems. In an effort to overhaul the
company’s disparate software platforms, Alibaba had hired more than thirty
engineers in its new Fremont office, but coordinating with their colleagues in
China across a fifteen-hour time difference was proving a headache. Forced to
use English for the benefit of non-Chinese-speaking colleagues in California,
Chinese engineers in both offices struggled to communicate among themselves.
The team started to fracture and tempers frayed as Hangzhou pushed to develop
one product and Fremont another. After an infrastructure upgrade, the whole
Alibaba.com site went down. Jack was visiting Fremont at the time and had to
step in personally to force better cooperation between the two teams so that the
problem could be fixed. It was clear that splitting the technology team across the
Pacific had failed. Alibaba started to move core functions back to Hangzhou.
Alibaba was about to embark on a new, defensive strategy: “B2C,” or “Back to
China.”
Pressures were mounting on Jack, including from his first investor
Goldman Sachs, to prove that Alibaba could actually make money.
“Alibaba.com has a revenue plan for today, tomorrow, and the day after
tomorrow,” Jack commented. “Today we are focused on revenues from online
marketing services. Tomorrow, we will add revenue sharing with third-party
service providers. And the day after tomorrow, we will add transaction-based
revenues.”
To reassure investors and his team, Alibaba agreed to look at offering third-
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