Jack Ma: Success Story

Frustrated with his lack solid employment opportunities after graduation in the early 1990s, Ma relied on his English to teach at the local university he had attended a few years prior and to start a translation service business. Upon his first visit to the United States in 1995 as a translator, Ma became aware of the internet. After doing a search for beer from various countries, he was shocked to learn that there were no representatives from China online. Ma immediately saw the potential business opportunities of the internet and how it could facilitate the way small and medium Chinese enterprises could do business with the rest of the world.

Ma's Early Internet Forays

Ma and his friends decided to launch a site about China and Chinese products online. Known as “Chinapage,” the site listed Chinese businesses and their products. Although Ma received inquiries from around the world, the interest was marginal enough that Chinapage struggled.
In hopes of better funding, Ma decided to partner with a governmental body, giving away majority control of Chinapage in the process. Unfortunately, that entity brought along rigid bureaucracy, stifling Ma’s control and his ability to execute his vision for the company. Eventually, Ma departed the company.

Ma: "Be in love with the government, but do not marry them"

Following the Chinapage fiasco, Ma took up a government job, working for a short period at the Ministry of Foreign Trade and Economic Cooperation in the latter half of the 1990s. It was in this role that Ma encountered Jerry Yang, a co-founder of Yahoo. The two became friends, and Jerry would eventually secure a Yahoo investment of roughly $1 billion in Alibaba in 2005.

Thanks to his experience in the government and his failed partnership surrounding Chinapage, Ma developed a general distaste for governmental bureaucracy. Later, in speaking of this period in his life, Ma cautioned young entrepreneurs to "be in love with the governments, but do not marry them.” Nonetheless, Ma’s experience would prove valuable to Alibaba later on. When government officials approached Alibaba for help solving a crashing ticket vending system, Ma and his team offered to help fix the problem free of charge. In exchange, government agencies tended to leave them alone.

In 1999, after leaving the government job, Ma tried his hand at internet-based business ventures another time. He gathered a group of potential investors at his home and sold them on his dream to found Alibaba with the goal of facilitating international trade for small and medium ventures based in China. Alibaba was born out of Ma’s unfulfilled dream of using the internet to facilitate business activities for Chinese SMEs and frustration with the bureaucrats he worked with in Chinapage. In the earlier case, his idea to use the internet as a means to facilitate the trade of Chinese-made products in the international market was repeatedly rejected. Alibaba, on the other hand, allowed exporters to post listings for products for direct purchase by customers.

In the early stages of the Alibaba, Ma attempted to raise funds in Silicon Valley. He was generally unsuccessful, receiving criticism of his business model at the time. By late 1999, however, Ma had succeeded in enticing Goldman Sachs and SoftBank to invest $5 million and $20 Million in Alibaba, respectively.

In 2003, still unprofitable with Alibaba, Ma and his team lunched an online auction site named “Taobao.com.” Taobao charged zero commission, aiming to take on multinational e-commerce giant eBay, which already had the lion’s share of the Chinese online auction market. Determined to win against eBay, Taobao remained a commission-free marketplace for millions of online traders, putting the fledgling Alibaba under significant financial strain. To stay afloat while maintaining the platform's commission-free policy, Ma and his team began offering peripheral value-added support services (such as custom webpages for online merchants) for a small fee. Taobao eventually gained traction in the Chinese market, and eBay subsequently withdrew from China. Ma reflected on this challenging period later on, suggesting that “if eBay are the sharks in the ocean, we are the crocodiles in the Yangtze River.” Taobao was the first successful subsidiary of Alibaba, with many additional offshoots to follow in subsequent years.

As the dotcom boom came to an end after 2000, Alibaba faced serious challenges due to its aggressive expansion into international markets. Jack Ma successfully reorganized the company's operations, including closing many international branches and focusing on strengthening Alibaba's position in the Chinese market. Thereafter, Ma expanded the services of Alibaba and reengaged its international expansion strategy.

Alibaba and Yahoo Symbiosis

After Ma and Alibaba reorganized their operations and made their mark by successfully overtaking eBay in the Chinese market, and with the help of Jerry Yang, Ma successfully convinced Yahoo to invest $1 billion in exchange for a 40% stake in Alibaba in 2005. Besides securing crucial funds necessary to help Alibaba execute its international growth strategy, that investment earned Alibaba a valuation of $2.5 billion at just six years of age. The gamble paid off for Yahoo as well; the American internet company earned about $10 billion during Alibaba’s IPO.

In 2013, Ma stepped down from his post as CEO of Alibaba, although he retained his position as executive chairman. The company went public on September 19, 2014. The IPO earned $150 billion, the largest offering for a U.S.-listed company in the history of the NYSE. Instantly, Ma became the richest man in China, with a net worth of about $25 billion. By November of 2017, Alibaba’s market cap was more than $486 billion, making it one of the 10 largest companies in the world. It enjoys 550 million active monthly users across its various platforms.