How did an eccentric Chinese man, who came from nothing, go on to become one of the richest men in the world. Well let me tell you a quick story about Jack Ma, and his little company called Alibaba….
Lets Introduce Jack Ma
Many of you may now know who Jack Ma is. He is an eccentric billionaire that owns a piece of one of the world’s largest e-commerce websites, Alibaba. However, how we got to this point is an interesting story in itself. Ma was born in in Hangzhou, China to a lower class family. Ma strived to get ahead in life, and quickly realized learning English was key to moving up in this world. Ma started to study English at a young age and practiced English daily by conversing with English speakers at a hotel near his home. He would give them tours around the city for free to improve his English. Doing this for nine years, in the hopes of helping himself gain a college education. However, his new found mastery of English didn’t help him pass the national college entrance exam, which he managed to fail three times in a row.
Ma’s life was filled with hardship following his college failures. Ma applied for 30 different jobs and got rejected by all of them. “I went for a job with the police; they said, ‘you’re no good,'”. “I even went to KFC when it came to my city. Twenty-four people went for the job. Twenty-three were accepted. I was the only guy …”. Ma’s life seemed to be heading for nowhere, until he heard about this little thing called the internet.
Alibaba’s Humble Beginnings
In 1994, Ma heard about the Internet. In early 1995, he went to the US and with his friends’ help, and was introduced to the Internet. During his first encounter he searched the word “beer”, and this little word helped fuel his obsession for the internet. Ma was surprised find no information about beer from China. Further, he tried to search for general information about China and again was surprised to find none. So he built a website to meet this need.Within five hours of creating the website he had received emails from several Chinese companies wishing to know more about him and his new site. This is when Ma realized that the Internet had something great to offer.
In 1999, he quit his current job working for the goverment and returned to Hangzhou with his team to found Alibaba, a China based business to business marketplace site in his apartment with a group of 17 friends. He started a new round of venture development with 500,000 yuan.
What Is Alibaba
Some may define Alibaba as a marketplace, a search engine, and a bank all rolled into one e-commerce platform. It is China’s and by some measures, the world’s biggest online commerce company. What’s interesting about this is that Alibaba limits itself to a purely domestic operation, working only with in China. While some may say this is a limiting operation, many disagree. Alibaba through its various sites hosted $248 billion of online shopping transactions last year, which is, according to the Wall Street Journal, is more than eBay and Amazon.com combined. The Journal cites data from a group called iResearch projecting that China’s e-commerce market has gone from $74 billion in 2010 to $295 billion by the end of 2013, with a projected total of $713 billion by 2017.
Alibaba owns stakes in all sorts of things, but operates chiefly through three sites: Taobao, China’s biggest shopping site; Tmall, which specialises on online sales of branded goods and focuses on China’s fast-growing middle class; and Alibaba.com, which connects Chinese exporters with companies around the world. Between them they host millions of merchants and businesses, and have hundreds of millions of users. In terms of the amount of business handled, one can argue that Alibaba is actually the world’s biggest online commerce company, not just China’s. On top of its core sites it owns alipay.com, a Chinese equivalent of Paypal; and has large stakes in Sina Weibo, China’s version of Twitter; and Youku Tudou, the closest Chinese equivalent to YouTube. Lately, Ma has taken to making some different kinds of acquisitions, buying a film business and half of the Chinese football club Guangzhou Evergrande. He has even talked about entering the banking industry, and already has a remarkably popular mutual fund called Yu’e Bao.
Even though Alibaba pulls in more total sales then it’s competitors, it’s revenue has yet to reach the same levels. Most sites, charge people to post products on their site. Alibaba however strays from this method, and instead lets people list for free, but charges for advertising. Alibaba’s revenues were $8.5 billion, compared to $74.5 billion for Amazon, which is surprising considering that Alibaba dwarfs them in sales. However, this potential for revenue growth is what excites investors, and has led to many grade A investment banks and investors to line up in order to back the company.
Alibaba recently smashed it’s sales record on their annual Singles Day event (China’s equivalent of Black Friday). The company said sales this year had reached $18 billion, a rise of 32% on last year’s sales which were worth $14.3 billion. Alibaba has been ahead of the technology curve with regards to this event. Registering 82% of sales through mobil phone purchases. The company has also been experimenting with new technology including augmented reality and virtual reality to give shoppers other ways of buying items. Events like this show the power that Alibaba has within China, and the purchasing power that a Chinese economy has as we move into the future.
All in all Alibaba is a pretty interesting company, led by a very cool guy. Something and someone we should all keep an eye out for as the world moves forward.
Until next time….