Alibaba: The House That Jack Ma Built pdfdrive com

Chapter Eleven: Growing Pains
1
. A number of Alibaba veterans left the firm, including cofounder Toto
Sun, CTO John Wu, and COO Li Qi, whom Jack had first worked with at
China Pages.
2
. Maggie Wu (Wu Wei), who still serves today as the company’s CFO.
3
. Before starting his own private equity fund, Vision Knight Capital.
4
. And its domestic site alibaba.com.cn.
5
. And hold for two years.
6
. Peter Woo’s Wharf, Robert Kuok’s Kerry Properties, and the Kwok
family’s Sun Hung Kai Properties.
7
. The offering priced Alibaba’s shares at more than 106 times its 2007
forecast earnings versus forty-one times for Google, or forty-five times for
its old rival Global Sources.
8
. A five-bedroom, 7,000-square-foot property for which he paid more than
$5,400 per square foot. He purchased the penthouse apartment complete
with private roof garden from developer Kerry Properties, one of the
cornerstone investors in the IPO.
9
. The previous year Alibaba.com generated $170 million in revenues and
$28 million in net profit.
10
. On its Alimama platform.
11
. In September 2008, Alibaba launched the first phase of its “Big Taobao
Strategy,” integrating Taobao.com and the online advertising platform
Alimama to build “the world’s largest e-commerce ecosystem.”
12
. After a four-and-a-half-year life span as a publicly listed company, in June
2012 Alibaba.com was absorbed back into parent Alibaba Group, with
shareholders paid the same price as in the original 2007 IPO.
13
. Valuing Yahoo’s shares at a 61 percent premium over the market price.
14
. Estimated at over 99 percent.
15
. Including Carl Icahn. But Yahoo’s efforts to strike a search deal with
Microsoft’s rival Google killed any prospect for the deal.
16
. Who was still the representative for Yahoo on Alibaba’s board.
17
. Gady Epstein at 
Forbes
.
18
. The sale for about $100 million netted them a pretax paper gain of $98
million. The sale released cash Bartz badly needed to shore up investor
support.
19
. In 2009 and 2010.

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20
. Elvis Lee.
21
. Alibaba said that majority ownership was transferred in 2009 to comply
with regulations, then full ownership transfer completed in 2010.
22
. Governing Internet payment, mobile phone payment, bank card–related
services, issuance and acceptance of prepaid card payments, and currency
exchange.
23
. The talks had been initiated with Jerry Yang and were continued by the two
companies’ CFOs before breaking down that summer.
24
. In an interview on July 7, 2011, with 
China Entrepreneur
magazine
(
Zhongguo Qi Ye Jia)
.
25
. In a June 2011 interview at the 
Wall Street Journal
’s All Things Digital
conference in California.
26
. By June 2015, when Alipay was valued by private investors as high as $50
billion, the $6 billion cap on a stake then worth more than $18 billion would
look like a very raw deal for Alibaba investors like Yahoo.
27
. Three months earlier Alibaba had announced it would take its Hong Kong–
listed subsidiary Alibaba.com back into private hands, paying the same
price for the shares as the company had listed in 2007 (a 60.4 percent
premium on the shares). This cleaned the way for the IPO of the whole
Alibaba Group in 2014.
Chapter Twelve: Icon or Icarus?
1
. Losing in the process the long-standing arrangement to hosting U.S.
presidents visiting New York City.
2
. A year earlier Jack had become chairman of Alibaba, with Joe Tsai
becoming executive vice chairman. Jonathan Lu would last barely two
years in the job. Both he and his successor, Daniel Zhang, would face the
unenviable task of trying to fill Jack’s shoes.
3
. Including any impairment of the “trusted status of the ecosystem” or
Alibaba’s “culture, mission, and values.”
4
. The ranks of the Alibaba Partnership can be refreshed through the
admission of new partners each year. Those appointed typically have more
than five years’ service, and their election is subject to the approval of 75
percent of all partners. A Partnership Committee of five, including Jack and
Joe, administers the structure.
5
. Drawn from Alibaba’s finance and logistics affiliates.
6
. Jack, Lucy Peng (Peng Lei), Trudy Dai (Dai Shan), Jane Jiang (Jiang
Fang), Jin Jianhang, and Eddie Wu (Wu Yongming).

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7
. The new members are: Yongfu Yu, president of Alibaba’s mobile
business unit and its advertising platform Alimama; Junfang Zheng,
Alibaba Group’s deputy CFO; Ying Zhao, vice president of Ant Financial;
and Lijun Sun, general manager of rural Taobao marketplace. This is the
first time that Alibaba has added new members to its partnership since the
IPO in September 2014. In its prospectus, Alibaba said that to be eligible
for election, a partner candidate must have “continued service with Alibaba
Group and/or our related companies or affiliates for, in most cases, not less
than five years,” in which case Yongfu Yu is an exception. Yu was the
chairman and CEO of UCWeb, a mobile Internet technology and service
provider that was acquired by Alibaba in 2014.
8
. The Securities and Futures Commission.
9
. In 2007 in Hong Kong, one-quarter of the Alibaba.com IPO shares went
to individual investors.
10
. After New York, Alibaba’s global road show took in Boston, San Francisco,
Hong Kong, Singapore, and London. Management divided up into two
teams, each fronted by Jack or Joe.
11
. As the company approached the one-year anniversary of the IPO, concerns
grew about the expiration of the “lockup”—shares that key investors were
not permitted to sell for the first year—of 1.6 billion of its 2.5 billion shares.
12
. In November 2013, Zhejiang Alibaba E-Commerce Company Limited was
restructured to become Alibaba Small and Micro Financial Services Group.
Jack saw his shareholding reduced from 80 percent to about 8 percent in the
new company, or no greater than his shareholding in Alibaba Group.
13
. Variously described as a “white paper” or as merely minutes of a meeting.
14
. Sina Weibo.
15
. The head of the SAIC’s department of online commerce.
16
. And one day after Yahoo announced it was creating a new structure—which
it hoped would minimize its tax liabilities—to spin off a 15 percent stake in
Alibaba.
17
. Revenue rose 40 percent to $4.22 billion, but came in below the average
estimate of $4.45 billion, according to Thomson Reuters.
18
. Zhang is the son-in-law of Gu Mu, a former key aide to Deng Xiaoping who
had accompanied him on his tour of southern China, opening the door to
entrepreneurs.
19
. At a dinner in London in October 2015.
20
. Which given anticorruption campaigns requires careful curation.
21
. Xi had recently finished up a stint as party secretary of Zhejiang Province.
22
. China has a reputation as a wild west for a lack of respect for intellectual

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property rights, justified by the rampant piracy in the market. But it isn’t
due to a lack of laws. Since its accession to the World Trade Organization
in 2001, China has set up an elaborate framework of trademark, patents, and
copyright laws. A survey conducted in 2015 by the American Chamber of
Commerce in China found that 85 percent of respondents believed China’s
IPR enforcement had improved in the last five years, but 80 percent were
concerned about ineffective enforcement.
23
. Or selling a range of fake items on four occasions.
24
. Where merchants are suspected of committing a criminal offense, Alibaba
will escalate the case to the local Administration of Industry and Commerce
or to the police, which has an officer stationed at Alibaba headquarters who
is dedicated to tracking the sale of illicit goods, or the sale of illegal
products such as guns.
25
. Tmall merchants are required to furnish more evidence of their authorization
to trade from brand owners.
26
. Taobao’s and Tmall’s search algorithms are heavily driven by historical
trading volumes.
27
. Known as the “Big Four Unions,” based in Hangzhou and other locations.
28
. VIP Shop, Melishuo, and Mogujie.
29
. Jumei.
30
. Dangdang and Amazon.cn.
31
. Womai and Yihaodian, invested by Walmart.
32
. 19.9 percent. Suning, shelling out 14 billion yuan—$2.3 billion—became a
1.1 percent stakeholder in Alibaba.
33
. Also known as Jingdong, formerly 360Buy.
34
. In the run-up to JD’s IPO, Alibaba rival Tencent took a 15 percent stake and
folded its own struggling e-commerce offerings into the company.
35
.
Wei xin
(micro message) in Chinese.
36
. By Andreessen Horowitz.
37
. WeChat’s popularity owes much to its personalized feel, tailored to the
needs and mind-sets of China’s mobile masses. But users can control the
information they share with strangers, and unlike the Twitter-like Weibo the
total number of followers on WeChat is capped at 5,000. Building on
Weibo’s success as a home for celebrities and brands, WeChat also offers
more than 8.5 million public accounts.
38
. A modern twist on the traditional seasonal offerings of money to family and
friends.
39
. The initiative ran into headwinds in 2012 when its launch partner, the
Taiwanese hardware company Acer, pulled out. This was reportedly

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following pressure exerted from Google, which leveled accusations that
Alibaba was deploying a “noncompatible” version of Android.
40
. Alibaba acquired an 18 percent stake in Sina Weibo in 2014. But by this
point Weibo had lost much of its luster to WeChat.
41
. UCWeb.
42
.