Alibaba: The House That Jack Ma Built pdfdrive com

Six Vein Spirit Sword
Alibaba has codified its own company values in something it calls the Six Vein
Spirit Sword. The term originates in the work of Jack’s favorite novelist, Jin
Yong. The sword he writes about is not an actual weapon, but the art of building
up one’s own internal strengths in order to defeat any opponent. In Alibaba’s
case, the strengths that form the Six Vein Spirit Sword are akin to those outlined
in the “Mission, Vision, and Values” of Jack’s favorite corporate guru, Jack
Welch, the former CEO of General Electric (GE).
Welch’s 2005 book, 
Winning,
recommends an almost messianic culture in
the workplace: “Leaders make sure people not only see the vision, they live and
breathe it.” Jack (Ma) has always held GE in high regard.
The “Six Veins” of Alibaba’s “Spirit Sword” are “customer first, teamwork,
embrace change, integrity, passion, and commitment.” Generic-sounding as they
are, the company treats them very seriously. Commitment to the Six Vein Spirit
Sword accounts for half of employee appraisals.
“Customer first” is reflected in the power given to Taobao’s 
xiaoer
referees
and in the composition of Alibaba’s workforce. Most of Alibaba employees
work in sales, a much higher proportion than the more technical bent of
competitors like Tencent and Baidu. Face-to-face visits are a key part of
Alibaba’s sales methods.
5
“Teamwork” at Alibaba means regular group games, songs, and outings.
These can come as quite a culture shock to employees joining Alibaba from
firms based in Silicon Valley. But for those fresh out of college, the system of
apprentices and mentors is well received, including the routine of holding
regular meetings to “kick off in the morning and share in the evening.” One
former employee summed it up: “Lots of companies focus only on results: You
have to complete a certain number of orders. Alibaba takes the opposite
approach: If you want to complete a certain number of orders this month, what
do you need to do every day? By breaking it down into phases, each day could
be dedicated to one key step in the process—and eventually you wouldn’t be far
off from your goal.” Recognition of high performers in company-wide
announcements helps, too, as do the prizes awarded to the “A-teams” (
lao A,
a
military reference), ranging from Louis Vuitton wallets, belts, and limited-
edition sneakers to monthly bonuses of tens of thousands of yuan or even a car.
The call to “embrace change” is reflected in Alibaba’s frequent rotation of
its employees, switching them regularly between various new products or

---

between regions of the country, regardless of performance. This creates lots of
challenges, but Alibaba asks its employees to “embrace setbacks,” a radical
departure from traditional Chinese culture, where failure is seen as something
shameful. Alibaba’s approach is in line with the Silicon Valley practice of
entrepreneurs celebrating previous failed ventures on their T-shirts, a recognition
that on the fast-moving battle lines of the China Internet, some failure is
unavoidable, or even desirable.
The “integrity” vein of the sword highlights the fact that corruption is a
constant risk for Alibaba: Millions of merchants are constantly looking for ways
to promote their wares on Taobao, overseen by only a few thousand 
xiaoer
referees. The Communist Party of China regularly uses rotation of personnel to
avoid alternative centers of power from developing, in an effort to keep
corruption under control. David Wei, who served as the CEO of Alibaba.com,
experienced Jack’s penchant for rotation even before he had joined the company.
In the nine months between leaving his previous employer and joining Alibaba,
David recalled, “[m]y job description and titles changed four times before I
joined. First I was going to be head of Taobao, then head of Alipay. I didn’t
know what I was doing until one month before I was on board.” Once he finally
joined as CEO of Alibaba’s B2B business, David joked to Jack, “You changed
my job so many times before I joined you couldn’t change it anymore.”
Whatever the inspiration for regular rotation, Alibaba devolves a lot of
autonomy to its business units, an effort to maintain a relatively flat management
hierarchy and minimize the temptation to shame and blame.
The need to demonstrate “passion” when working for Alibaba was summed
up by one employee as “being a swordsman is all about being hot-blooded.”
Compared to other firms, “people at Alibaba are more passionate about their
work, more honest, and more hardworking.” Jack’s emphasis on “commitment”
is reflected in his frequent invocation of the phrase to “work happily but live
seriously.” The whimsical approach he encourages at Alibaba is, he says, in
stark contrast to most companies who emphasize “working seriously but living
happily.”
Measuring how employees live up to the Six Vein Spirit Sword is the job of
Alibaba’s human resources department, which plays a critical role, overseeing
the hiring of twelve thousand people in one year alone. Relegated in some
companies to a purely administrative function, HR at Alibaba has tremendous
power over promotions and hiring. With its constant emphasis on culture and
ideology, people at Alibaba refer to HR informally as the “Political Commissar”
(
zheng wei
). The HR department also oversees extensive training, with manuals
of more than one thousand pages for new employees and a sophisticated

---

database, matching performance closely with promotions and pay raises.
The culture of Alibaba endures even in the employees who have left the
company. Given the long history and rapid growth of the company, they number
over twenty-five thousand. Many have banded together in a nonprofit
organization called the Former Orange Club (
qian cheng hui
) to help its
members share investment opportunities and career advice. One member, Hu
Zhe, who left Alibaba in 2010 after working there for five years, described
6
his
reason for joining: “Former Alibaba employees are closely connected, as if there
is a bond linking us together. The club serves as a very important platform for us
to communicate and exchange ideas.”
A number of members
7
have founded their own Internet companies or
investment vehicles, some of which have established links with one another,
active in a range of sectors including e-commerce, online travel booking,
Internet financial services, online music, online recruiting, O2O, venture capital,
and health care. A search in a database
8
of Chinese Internet-related start-ups
reveals that former Alibaba employees have been associated with 317 start-ups,
compared to 294 from Tencent and 223 from Baidu. While not all of these start-
ups will be successful, indeed some of them have already failed, the web of
entrepreneurial activity is important both as a source of future innovation and
acquisition targets for Alibaba.
A common thread in many of the ventures founded by Alibaba veterans is
what some have described as a “Long March” culture, an ambitious management
ethos that involves personal sacrifice, and huge investments of personnel and
time. In contrast, in their new businesses, the veterans of Alibaba’s rivals such as
Tencent are known to focus more on reducing “time to market,” launching
products that they can perfect later, an approach some refer to as “running with
short steps.”
Alibaba has been a team effort from the start. Jack doled out much more
equity, and at an earlier stage, than many of his Internet founder peers. But he
has kept a firm control on the company through his gift for communicating and
his lofty ambitions. A modern-day Don Quixote, Jack relishes tilting at
windmills, from retail to finance, to entertainment, health care, and beyond. To
gain a sense of how likely Alibaba is to conquer these new horizons, let’s look at
the events that made Jack and the company what they are today.

---

Chapter Three