How he made Alibaba the role model for a gen­er­a­tion of Chi­nese startups


Long be­fore he be­came China’s most glob­ally prom­i­nent busi­ness fig­ure, Jack Ma was just an English teacher try­ing to per­suade his friends that they would one day be buy­ing things over the In­ter­net.

His vi­sion changed China. As Ma, 54, makes plans to leave Alibaba Group Hold­ing Ltd, his legacy will be an en­dur­ing one. He did far more than just cre­ate and build an e-com­merce jug­ger­naut into the most valu­able com­pany in Asia He showed that an in­no­va­tive pri­vate en­ter­prise could thrive un­der a Com­mu­nist party regime once hos­tile, and still at times sus­pi­cious, of am­bi­tious cap­i­tal­ists.

His path-break­ing suc­cess created a tech­nol­ogy in­dus­try that ri­vals Sil­i­con Val­ley, pro­pel­ling a Chi­nese econ­omy on track to eclipse that of the US.

Ma is now China’s rich­est man, worth about $40 bil­lion, and a head­liner at global talk­ing sa­lons like Davos. At the same time, he has com­plied with — and fiercely de­fended — his coun­try’s rul­ing party even as it ex­erts ever tighter con­trol over me­dia, the In­ter­net and any hint of dis­si­dent speech.

He has gone so far as to praise the sta­bil­ity of one-party rule and chas­tise West­ern com­pa­nies like Google that ob­jected to China’s cen­sor­ship prac­tices. His ap­proach demon­strated how en­tre­pre­neur­ial suc­cess can co­ex­ist with the Com­mu­nist regime, paving the way for a new wave of startups.

"He’s been a role model for our gen­er­a­tion," said Peiran Wei, a 36-year-old who says he had the con­fi­dence to co-found a startup, an app de­vel­oper called Videoup, in large part be­cause of Ma and Alibaba.

Jack Ma’s per­sonal story is now the stuff of school­yard leg­end. He was born in 1964 to tra­di­tional Chi­nese mu­si­cian-sto­ry­tellers in Hangzhou, an an­cient cap­i­tal known for its his­toric sites and nat­u­ral beauty. He honed his English by hang­ing around the town’s main ho­tel to prac­tice with tourists.

Af­ter work­ing as a teacher, Ma turned to busi­ness, start­ing Alibaba.com in 1999 with 17 co-founders. He was not the most tech­ni­cally savvy en­trepreneur, nor would he claim to be the smartest. But he proved an in­spir­ing leader who could rally his forces to fight for­eign in­trud­ers while ar­tic­u­lat­ing a vi­sion for mod­ernising China’s econ­omy.

"In­tel­li­gent peo­ple need a fool to lead them,” he once said. “It’s eas­ier to win if you have peo­ple see­ing things from dif­fer­ent per­spec­tives."

Alibaba has brought e-com­merce to re­mote vil­lages of China and ex­panded into ar­ti­fi­cial in­tel­li­gence, health­care and Hol­ly­wood movies. Less than 20 years af­ter its found­ing, the busi­ness that Jack built is val­ued at $420 bil­lion, more than any of the older state-backed en­ter­prises in his coun­try.

"He started his com­pany with 18 peo­ple in an apart­ment and even to­day when­ever I pass that place I think of him," said Wei, who is also from Hangzhou. "It’s a 20-year-old apart­ment com­plex that does not look posh, but I still get in­spi­ra­tion from it."

One of the first to see the prom­ise of Ma was Ja­pan’s Masayoshi Son. His Softbank Group Corp led a $20 mil­lion in­vest­ment in Alibaba in 2000 and now holds a stake worth about $120 bil­lion.

“He had no busi­ness plan, zero rev­enue,” Son said of Ma on the

David Ruben­stein Show. “But his eyes were very strong. I could tell from the way he talked, he had charisma, he had lead­er­ship.’’

It was Alibaba’s record-setting ini­tial pub­lic of­fer­ing that al­tered the coun­try’s tech in­dus­try for good. Ma and his team raised $25 bil­lion, more than any other com­pany be­fore or since, a wakeup call for ven­ture cap­i­tal­ists that there were for­tunes to be made on the coun­try’s startups.

The im­pact was im­me­di­ate. Bei­jing-based smart­phone maker Xiaomi Corp raised ven­ture fund­ing a few months af­ter the IPO at the high­est valu­a­tion in the world, at $46 bil­lion. It was soon sur­passed by Uber Tech­nolo­gies Inc, but the flood­gates were open.

Ven­ture deals in China rose from $4.4 bil­lion in 2013 to $16.6 bil­lion in 2014 and reached $62.6 bil­lion in 2017, ac­cord­ing to the mar­ket re­search firm Pre­qin. This year, China is on track to sur­pass the US in both ven­ture cap­i­tal raised and IPOS.

“The Chi­nese startup scene wouldn’t be the same way with­out Jack Ma,” said Wil­liam Bao Bean, a Shang­hai-based part­ner at ven­ture cap­i­tal firm SOSV. “The celebrity of Jack Ma and the suc­cess of Alibaba made startups an ac­cept­able ca­reer choice, which has fu­elled one of the big­gest tech­nol­ogy mar­kets in the world."

Ma was not just suc­cess­ful. He broke the mould for China’s busi­ness lead­ers, typ­i­cally face­less chiefs run­ning mam­moth state-owned en­ter­prises like Petrochina and China Mo­bile.

"To many he’s the face of China’s In­ter­net — no one re­ally knows what Pony Ma looks like," said Bean, re­fer­ring to the CEO of Ten­cent Hold­ings Ltd.

In that role, Ma would oc­ca­sion­ally crit­i­cise his home coun­try, in­clud­ing for its pol­lu­tion prob­lems, a po­ten­tially dan­ger­ous propo­si­tion given the power of the rul­ing party. But es­pe­cially un­der cur­rent Pres­i­dent Xi Jin­ping, he was forced to tone down his in­de­pen­dent voice and of­ten de­fended the gov­ern­ment’s prac­tices against its crit­ics.

“Face­book and th­ese com­pa­nies, if they come here, they have to fol­low the rules and laws,” said Ma in De­cem­ber. “Google, they left — we did not kick them out. When you do busi­ness in any coun­try you have to fol­low its rules and laws.”

Mark Natkin, manag­ing di­rec­tor of Bei­jing-based Mar­bridge Con­sult­ing, said busi­ness lead­ers in­clud­ing Ma have faced pres­sure to sup­port the gov­ern­ment un­der Xi, who has emerged as the coun­try’s most pow­er­ful leader since Mao Ze­dong.

"In the past four years, the en­vi­ron­ment has be­come one in which one must toe the gov­ern­ment pol­icy line much more closely," Natkin said.

China’s gov­ern­ment re­paid Ma’s fidelity, mak­ing it dif­fi­cult and in some cases im­pos­si­ble for for­eign tech­nol­ogy com­pa­nies to op­er­ate in the coun­try. Face­book and Twit­ter Inc, for ex­am­ple, are blocked in China.

In the field of busi­ness, Ma is of­ten com­pared with Ama­zon’s Jeff Bezos be­cause both of their com­pa­nies are in e-com­merce. But a more fit­ting par­al­lel may be Bill Hewlett and Dave Packard, the founders of Hewlett-packard Co, who de­vel­oped break­through in­no­va­tions and gave birth to the next gen­er­a­tion of tech­nol­ogy com­pa­nies.

"Dur­ing the Cul­tural Rev­o­lu­tion there was no en­trepreneuri­al­ism — it was punished," said Wang Huiyao, an ad­viser to China’s Cabi­net and founder of the Cen­tre for China and Glob­al­i­sa­tion. "Ma rep­re­sents the first in­ter­na­tional gen­er­a­tion of Chi­nese en­trepreneurs."

The celebrity of Jack Ma and the suc­cess of Alibaba made startups an ac­cept­able ca­reer choice.” Wil­liam Bao Bean, part­ner, SOSV

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