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party services such as credit, transport, and insurance services. Together these
accounted for as much as $300 billion in annual revenues on total global trade of
$7 trillion. Grabbing even a small slice of this pie could be extremely lucrative.
This was the strategy already touted by MeetChina. The company claimed
that more than 70,000 Chinese suppliers and 15,000 prospective purchasers had
joined its site. Although few transactions had been facilitated online, it disclosed
it planned to take 2 to 6 percent of all transactions on its site. Bucking the
investment downturn, MeetChina surprised the market with a fresh venture
capital infusion of $30 million, taking its total haul to over $40 million, some
$15 million more than Alibaba. Cofounder Thomas Rosenthal told reporters,
“The volatility of the Nasdaq actually made it relatively easier to get private
financing. You have a large amount of money chasing fewer deals.” Recently
appointed CEO Len Cordiner pursued a vision for the site as a place where “you
cannot only find buyers but also negotiate online.” But MeetChina would never
make much headway in China. Talking up partnerships with third parties was
much easier than making them work, and many of the tie-ups ending up being
nothing more than links to its partners’ websites. A former employee
4
later
summed up MeetChina’s experience as spending $30 million to “train Chinese
enterprises to use the Internet.” Eventually the company switched focus to
Southeast Asia, launching MeetPhilippines.com and MeetVietnam.com (in the
presence of President Clinton) and inking partnerships in India, Indonesia, South
Korea, and Thailand, before it folded.
5
Jack had long been dismissive of MeetChina, and as it fell to the wayside
he turned his guns on Global Sources, now Alibaba’s main rival, and its founder,
Merle Hinrichs. Jack dismissed Global Sources as an “old economy” company
that had misunderstood the nature of online trade: “They are a company pushing
a publication.” Merle Hinrichs in turn dismissed Alibaba as “a mile wide and
half an inch deep.” Although Global Sources’ (recently listed) shares
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had
tanked along with the Nasdaq, it was buoyed by substantial profits generated
from its offline print business.
Later in 2000, Jack and Hinrichs were both keynote speakers at an Internet
conference in Hong Kong. Although he never referred to Hinrichs by name, Jack
later told a story about a rival (who owned “a beautiful yacht”) who after paying
a $50,000 fee to be a keynote speaker was incensed to find that Jack had been
invited to give a keynote speech without having to pay a fee. The conference
organizers explained to his rival, so Jack’s story goes, that “it is because you
want to be a keynote speaker, but the audience wants Jack Ma to speak,” to
which his rival vowed, “I will sail the yacht to Hong Kong and will invite all the
keynote speakers and speakers of the conference to have a party on my yacht,
but I have one condition: that Jack Ma is not allowed.” Merle Hinrichs’s office
declined to comment on the spat, but the rivalry is something that Jack, the
philosopher CEO, invested with a deeper meaning: “If you can’t tolerate your
opponents, you will be definitely beaten by your opponent. . . . If you treat your
opponents as enemies, you have already lost at the beginning of the game. If you
hang your opponent as a target, and practice throwing darts at him every day,
you are only able to fight this one enemy, not others. . . . Competition is the
greatest joy. When you compete with others, and find that it brings you more and
more agony, there must be something wrong with your competition strategy.”
But in the latter half of 2000, it looked like there was something wrong with
Alibaba’s strategy. Although it had raised $25 million and signed up more than
half a million users, its revenues that year wouldn’t even hit the $1 million mark.
Alibaba did start to charge some fees—helping build and host websites for some
of its members—but expenses were increasing far more rapidly than revenues.
Alibaba’s hiring spree was creating more problems than it solved, as new
recruits arrived before reporting and budgeting systems had been put in place.
The international nature of its business was also a challenge, both in dealing with
clients and in managing human resources. Trying to market a Chinese company
with an Arabic name to clients in the United States and Europe wasn’t proving
easy, and Jack admitted that “managing a multinational organization is no easy
task with the language and cultural gaps.”
As the tech downturn continued into 2001, Jack and Joe recognized that
things needed to change. In January 2001 they brought on board as chief
operating officer Savio Kwan, a fifty-two-year-old veteran of GE,
7
who gave a
frank assessment of the company: “We need to ground [Alibaba] in reality and
make it into a business.”
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