Alibaba's World (18 page)
Behind Jack Alibaba’s stock price rose on the ticker board of the Hong Kong Stock Exchange. As we watched, we began to realize that Alibaba.com’s IPO had just made the company
China’s largest Internet business and the fifth most valuable Internet company in the world. And this was just one of the companies in Alibaba Group—Alibaba.com. I could only imagine
what the entire company might be worth some day if it went public. Through a long glass window we could see onto the trading floor below, where red-vested traders sat behind computer screens
furiously trying to keep up with orders for
Alibaba’s stock, the volume of which was beginning to destabilize the stock exchange’s computer system.
It had taken seven years longer than Jack had originally planned, but we’d finally taken Alibaba.com public. To get there we’d survived the bursting of the Internet bubble.
We’d crushed eBay. We’d clashed swords with Google. And we’d managed to buy Yahoo! China along the way. We hadn’t been successful at everything. But we’d been
successful enough. And despite our run-ins with the American Internet titans, we’d managed to build China’s first global Internet company and pull off the second-largest IPO in Internet
history.
After a few minutes Jack and the senior executives of Alibaba.com were called to the floor of the stock exchange for the listing ceremony. Stock exchange officials made a few formal remarks,
welcoming Alibaba.com to the Hong Kong Stock Exchange.
Surrounded by traders on the stock exchange floor, Jack stepped up to the microphone and said a few words in Chinese:
“Today is an important step for Alibaba and a giant leap for China’s Internet industry. We trust Alibaba.com’s IPO will help us better serve our investors, customers,
employees, and our country. Going public is like stopping at the gas station to refuel. It’s an important milestone but not our final destination. We have come a long way to get here, and
still have a long way to go.”
I looked around the room at my smartly dressed colleagues, the men in suits and ties, the women in sleek dark dresses. It was hard to believe this was the same rag-tag team I had first met when
I decided to join the company on that rainy night back in Shanghai. This was the team that, from the beginning, almost no one had taken seriously. This was the team that had
been discounted as a cute novelty in an Internet world dominated by US giants. This was the team that Alibaba’s first batch of international managers had tried to push aside to
make way for “real management.”
Yet these 18 founders had prevailed, and in that moment I couldn’t help but think how different my colleagues’ lives would have been without the Internet. The Internet had given them
an outlet—something their parents never had—for their passion and creativity. Not only had my colleagues changed but China had changed. The very movement that Alibaba had created had
spawned a new generation of entrepreneurs, millions of whom bought and sold products online, shared ideas, and educated each other. In a country where free speech still had limits—lots of
them—they had found self-expression through a singular company.
As the Internet grew, the very fabric of Chinese society was changing. Despite government firewalls, ordinary Chinese were connecting to the outside world more than ever. They might not yet have
Western-style political freedoms, but they had something they never would have had during the Cultural Revolution—self-determination.
After a few minutes Jack returned to the observation room, and our colleagues continued to mill about, congratulating each other and reveling in the moment. Then a colleague tapped me on the
shoulder and whispered, “Porter, you’d better get Jack out of here. They’re about to open up the restraining line and allow the photographers and journalists to move in. If you
don’t leave now, Jack’s gonna get mobbed.”
I eventually coaxed Jack away from the crowd and into the hallway. As we worked our way toward the exit, journalists
swarmed us in the hope of getting a few last
comments from Jack as he left the stock exchange. I walked at Jack’s side, flanking him so we could move past the journalists who buzzed with questions, most of which he didn’t have
time to answer.
“Jack, are you happy with the stock price?”
“Jack, which of your companies do you plan to take public next?”
“Jack, can I get your autograph?”
As we reached the exit and stepped outside into the bright sunshine, the door shut behind us with a loud
whomp,
sealing out the chatter behind us and propelling us into a sudden and
eerie silence. It was an exciting day that I didn’t want to end. But the IPO was now behind us, and there would be no turning back.
With a wry smile Jack turned to me. “So where do we go next?”
Good question,
I thought. I had no answer. Given the tumultuous ride of the previous eight years, it was hard to believe we’d gotten even this far.
W
ORKING IN A
fast-growing start-up is a bit like running a marathon. It’s an endurance test, filled with highs and lows. At times you want to give up. And at times you
feel the wind at your back. It pushes you to your limits—mentally, physically, and emotionally. It always requires 100 percent commitment, and there is no such thing as cruise control.
The only thing more difficult than deciding when to join a start-up is deciding when to leave. It’s hard to leave something you’ve put so much of your heart into. But it’s
important to recognize when it’s time to take a step back and pass the baton.
As we entered 2008, I realized it was time for me to pass the baton. With the IPO of Alibaba.com we’d reached an important milestone. And with eBay no longer in the China market, the field
was wide open, and Taobao had a strong head start, way beyond our competition. It seemed a natural time to take a break. During the nearly eight years I’d worked at Alibaba, I’d moved
six times for the company. And I was on the road about 50 percent of the time. I’d loved every minute of it but wanted to have more time for friends, family, and relationships outside
Alibaba. It was tough to tell Jack and Joe Tsai I’d be leaving the company. But they were understanding and asked that I stick around while they looked for a
successor.
Despite my sadness it was nice to see that I was leaving behind a company that was in good shape. And it was encouraging to see that the company was energized and in a celebratory mood by the
time the 2008 all-hands kickoff meeting ushered in the Year of the Rat. The entire Alibaba staff piled into a large arena for a raucous event filled with speeches and performances punctuated by
cheering and the chanting of “A-li-ba-ba, A-li-ba-ba.”
It was the first time we’d all gathered since the IPO, and the staff surely felt Alibaba was poised for global dominance. As the day of performances and celebrations came to an end, Jack
took the round stage in the center of the arena to address the employees who surrounded him. Ever the contrarian, Jack’s message was a sobering one, meant to both inspire and humble the
staff.
We need to be looking out ten years. In ten years people won’t be talking about “the Internet” or “e-commerce.” It will be a part of our
daily lives. We have only ten years to make Alibaba great, because in ten years the infrastructure for e-commerce will already be built. After that it will be too late.
So many companies rise and fall quickly. The environment changes so quickly. A few years ago Yahoo! was our hero. Who would have ever imagined that it would fall from its pedestal to be
where it is today? So many of our heroes from yesterday have come and gone. In ten years, when people talk about e-commerce, we want them to be talking about
Alibaba. We don’t want people to look back and say, “Alibaba was once a great company.”
We must stick to our promises. Today you’ve begun to have a little money. You’ve begun to have a little prestige. Don’t change because other people see you differently.
Don’t change because you have money in your pocket. Because there is one thing that can never change: our dreams, our values, and our promises.
2007 was a great year for Alibaba, ending with the exclamation mark of our B2B IPO. Alibaba’s social impact is huge. But we have to remember that we are still a small company, not a
big company. We are small, but I already notice we are sometimes wasteful. We are small but sometimes we move too slowly. We should prepare for any crisis, and if that crisis comes, we all
need to ask, “What can we do to help the company?”
We want it to be the case that if you have a business, no matter where you are, you can plug into Alibaba’s ecosystem. We need to be bigger than Walmart someday. Some of you think
that is crazy. But one thing is for sure: if you don’t imagine it, it will never happen.
Maybe you think that our outlook is great, the economy is great, the stock market is great, and Alibaba is doing really well. But I want to tell you that 2008 is going to be a difficult
year. Why did we go public last year? Because we sense that a winter is coming and we have to prepare.
In 2008 Alibaba is going to lie low and prepare for a new winter. And during this winter we have to remember our goals from long ago—to be the last man standing. No matter what, we
must be the last man standing.
The crowd applauded his somewhat dire prediction. We had learned from experience that high moments usually preceded low moments. But I took comfort in the knowledge
that the team still powered ahead and that Jack had not lost his fire. He’d come a long way from that first time I’d seen him give a speech on a rainy Shanghai night. Just as Alibaba
had changed, Jack had changed—from a starry-eyed English teacher into a poised and confident CEO.
Six months later I was in my Beijing office packing personal items in boxes and cleaning out my desk. The team in Hong Kong had offered to organize a going away party for me, but I had
declined—it was just too hard to say good-bye to something that had meant so much to me. I thought my departure might go unmarked, but on the morning of my last day Jack’s assistant
called to let me know that Jack was in Beijing and wanted to take me to lunch.
Over wonton noodles at the China World Hotel, Jack and I shared a few laughs and reflected on the time we’d worked together.
“So what do you plan to do next?” he asked.
“Take some time off to travel, and then I want to spend some time sharing my experiences at Alibaba with entrepreneurs and students. So I hope it’s still okay with you that I write a
book or make a documentary about my experience here.”
“Sure,” he said. “You’re probably the best person to do it. You’ve seen the international side and the China side of things.”
“But you realize, Jack, don’t you, that even though I had a positive experience, I’m going to tell the good and the bad, the successes and the mistakes, from my own
perspective?”
“I know,” he said with a smile. “Alibaba has a responsibility to share our experience with others, so they can learn from us.”
Most CEOs would have been paranoid about the idea that a former employee would be sharing the company’s inside story. But at his core Jack was still a teacher.
We shook hands and I headed home. It meant a lot that he’d made the effort to give me a proper thanks and good-bye. I’d joined Alibaba thinking I might learn something about
business. But the most valuable things I’d learned from Jack were about life.
A
FTER LEAVING ALIBABA
, I took time to travel. After living in China for so long, I used it as a way to remind myself that there was a whole world out there beyond China’s
Great Wall. But Jack’s predictions of a winter for the company soon proved all too prescient. And as I read the headlines, I couldn’t help but feel some regret, that maybe I’d
quit the fight before the job was done.
At about the time I was packing up my office, Lehman Brothers collapsed. Only later would it become clear just how much the global economy would suffer. During the next couple of years, as the
global economy melted down, exports from China cooled off, directly impacting Alibaba.com’s customer base. With exporters struggling to stay afloat, they cut their advertising on Alibaba.com,
which put downward pressure on Alibaba. com’s stock. Within a year Alibaba’s once high-flying stock had lost nearly 90 percent of its value, falling from HK$40 per share to almost HK$4
per share.
But even that paled in comparison to the next blow—a scandal among Alibaba’s sales team involving criminal fraud. To
Jack’s dismay he and
Alibaba’s senior managers discovered that 100 sales team members had knowingly signed up shady suppliers and certified 2,300 storefronts as Gold Suppliers, even though they didn’t meet
Alibaba’s qualifications. Some of the illegitimate suppliers had gone on to defraud international buyers using Alibaba.com. Savio Kwan, who had years earlier left the COO position and
recently returned to Alibaba as a member of Alibaba.com’s board of directors, was brought in to lead the company’s internal investigation and described the situation in dire terms:
“The company was at risk of developing a culture of pursuing short-term financial gain at all cost.”
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Jack’s reaction to the scandal was swift. Once he knew the full scope of the problem, he called for Alibaba.com’s CEO, David Wei, and COO, Elvis Lee, to resign. Although they
weren’t personally implicated in the crime, Jack felt he had to send a strong signal to the market because the company had built its reputation on trust and because he believed that the top
executives had to take responsibility for allowing an environment in which this could occur.
A series of other crises followed. When Taobao adjusted the policies on its Tmall shopping website to favor larger, more qualified sellers over smaller, less professional ones, hundreds of
Taobao users assembled outside its offices and held demonstrations against the company. Public demonstrations of any kind were highly unusual in China, and the government stepped in to assert
itself in the dispute, reprimanding Jack for changing Taobao’s policies too quickly.
