It’s best to prepare early if there’s a change coming, believes Alibaba Executive Chairman Jackc Ma.
Fending off competition on its home turf from online marketplace eBay well in its early days, that philosophy served Alibaba, now a Chinese e-commerce behemoth.
“When we see something is coming, we have to prepare now,” Ma said in a television interview. “My belief is [that] you have to repair the roof while it is still [sunny].”
eBay became one of the early entrants into the market when internet commerce in China was still in its nascent stages. Charging users a fee for each transaction, it ran a consumer-to-consumer online platform called EachNet.
Helping small- and medium-sized companies in China go online to do business was stilt e focus of Alibaba.
Ma had “realized that eBay, sooner or later, as it grew in China, would start coming after Alibaba’s customers,” Porter Erisman, a former Alibaba vice president, said.
A secret project: an online marketplace that could directly compete with what eBay was offering, was set off by Ma as he assembled a small group of Alibaba employees, to combat that potential threat from eBay. The famous Taobao marketplace that currently handles huge volumes of transactions each day, was thus created by Alibaba.
Putting pressure on eBay’s pay-per-transaction model, Taobao started free for the first three years, Erisman said. EBay’s reaction was “to put out a press release and say free is not a business model”. But Alibaba knew that ultimately it could make money as more buyers and sellers began to move onto Taobao, Erisman said.
Alibaba has become a mainstay in the tech world in nearly two decades since Ma co-founded the company from his apartment in Hangzhou. It has a market capitalization of about $473 billion.
“As an entrepreneur, one of the quality I have is that when I’m rejected by people, I get used to them,” Ma said talking about a string of rejections that he faced early in his career.
There were ups and downs in the process of transition from a fledgling business to one of China’s most valuable companies. In fact, raising of venture capital funding was a struggle initially for Alibaba.
before it found a major backer in another tech visionary – SoftBank CEO Masayoshi Son, Alibaba was rejected by about 30 venture capitalists, Ma has previously said.
Then Ma was forced to lay-off staff around the world when the dotcom bust came.
“Alibaba went from this sort of optimistic expansion phase to this somewhat depressing phase of cutting back,” Erisman said. “That was the only time I ever saw him doubt himself, when he was laying off people, and I think for just a moment in time, he even wondered if the company would survive.”
“Being a CEO means making the tough decisions and sometimes cutting back in order to allow the company to survive,” Erisman said.
Now, as new technologies and ways of doing business are discovered, Ma is already thinking about what the future will entail for Alibaba.
“Next 30 years,” he said, “the technology is going to challenge a lot of job opportunities. People already are unhappy because a lot of machine learning, artificial intelligence are killing a lot of jobs.”
“What Alibaba wants to do in the next 10-20 years is to enable the innovation of traditional business,” Ma said.
(Adapted from CNBC)