Jack Ma’s Journey From A Tourist Guide To Alibaba
Alibaba is used by 755 million users, larger than the entire population of the United States. Approximately 12.7 billion annual orders are made using the platform. How did a man with no experience and countless failures manage to raise money for Alibaba, a product helping local businesses in China by introducing them to the world. In his own words “I call Alibaba ‘1,001 mistakes”, Jack Ma.
Born on October 15th, 1964 in Hangzhou, China, Ma’s parents were musicians who told stories to keep food on the table. Jack started from modest beginnings and grew up at the height of communism. Young Ma wanted to learn English, as learning English would create opportunities, but because his family could not afford English classes, he took it upon himself to get what he wanted. In the early 1970s, as Hangzhou was welcoming tourists, Ma seized the opportunity and decided to work as a tourist guide; this would help him score a few free English lessons. He would ride his bike to a hotel nearby and speak with foreigners; this interacting helped him learn what he always wanted to, a new language, to future improve his speaking skills he bought a radio and started listening to English broadcast every day. This experience taught him his first lesson in business:
Do not allow, not knowing about something stop you from pursuing it, as time pass by, you will learn and get better.
Ma’s youth started off with personal setbacks and academic struggles. He struggled through primary school education and failed exams not once but multiple times
“I failed a key primary school test two times, I failed the middle school test three times, I failed the college entrance exam two time”-Ma
Who knew a kid who was having difficulty passing exams would go on to do what he did. Despite his track record, he applied to Universities, where reportedly he scored 1 out of 120 on his entrance exam. He also applied to Harvard but was rejected 10 times. Eventually, he was accepted at Hangzhou University, where he graduated with a Bachelor’s in English. To Ma, graduation was exciting; with his Bachelor’s in English, he saw endless opportunities. Nothing in the world could stop him, but his struggles continued. He was rejected by the first thirty companies he applied to. He even applied to the local police service, where his rejection officer told him ‘you’re no good.’ Famously out of the 24 people who applied to KFC, he was the only one who was rejected.
By now he figured to use his ability to speak English and started teaching English at a local university for $12 a month. On a trip to the US, he saw the Internet. As he was a thinker he decided to introduce China, a nation of nearly 1.3 billion to the online world.
The plan was to create a platform for small and medium-sized Chinese businesses so that they could connect with the rest of the world.
His first venture was a website called Chinapage. Chinapage did not work out as expected. Ma was tired of not getting a break though, at one point he found himself complaining, saying that people like Bill Gates and Warren Buffet have taken opportunities away from him. But Ma soon realized that complaining does not get you anywhere, as he was known for trying things out more than once, four years later, Ma took another stab at another online business. He called his second company Alibaba. He managed to find funds of roughly $60,000 from friends and launched Alibaba as a business-to-business marketplace in 1999. The company started with a workforce of 17 friends on a cement-floored apartment in Hangzhou. Ma told his team that
“Our competitors are not in China but in Silicon Valley, we can beat government agencies and big, famous companies because of our innovative spirit.”
The team set to work, building an online marketplace. But, as time went by, more money was needed. He pitched the idea to many venture capitalists in silicon valley. None of them, saw the potential in his business model, to make matters worst this was also the time of, the dot-com bubble in the United States. Finding an investor for an internet company was not the easiest.
Countless visits, emails and telephone calls later, the company finally raised $5 million from Goldman Sachs and $20 million from SoftBank in October 1999. The CEO of Softbank, Masayoshi Son said that Ma didn’t have any idea on how to operate a business, but he had a fire in his eyes and it was this fire that led Masayoshi to invest in Alibaba. Raising money is one thing, making the company profitable is another, because of enormous cash, Alibaba went big and international quickly, they were not profitable for the first three years.
To start transactions on the platform, the team at Alibaba started to buy items off of each other, and with the bubble on the corner they faced severe financial challenges, Alibaba had no option but to close some of their foreign branches. After shutting down the US office, Ma was questioning, whether or not he was a bad person. That fire in his eyes was still alive and he shifted his focus to strengthen Alibaba in the Chinese market as Alibaba was only 18 months away from bankruptcy.
Many Chinese citizens were discovering the Internet, the company ran a marketing campaign to introduce and make citizens feel comfortable with the online platform. As it turned out, transactions from the public started to happen, Alibaba was now a company with profits. Local businesses preferred Alibaba over eBay. Ma’s success was not only seen in China but thought out the world and also by Yahoo, in 2005 Yahoo invested $1 billion in Alibaba. With the profits coming in, Ma provided the team at Alibaba with cans of Silly String and told them to have fun. And then after ten years of growth, Ma steered an IPO of $21.8 billion after going public on the New York stock exchange.
Today, the company created by the man who was told ‘he is no good’, Alibaba is valued at $80 billion. His story teaches us that successfully navigating through traditional education is not always an indication of future outcomes. As Ma humbly once said: ‘I call Alibaba ‘1,001 mistakes’.
